Dave and his company have a free software they offer for landlords to help manage their properties and tenants. They really have what sounds like a great software and program for struggling landlords, or even just a landlord that could use a little extra help as they are growing. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!
Best Ever Tweet:
Dave Spooner Real Estate Background:
- Co-founder of Innago
- Provides simple, effective, and intuitive tenant management software for small to mid-sized landlords
- Based in Cincinnati, OH
- Say hi to him at https://innago.com/
- Best Ever Book: What Every Real Estate Investor Needs to Know About Cash Flow
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Best Ever Listeners:
Do you need debt, equity, or a loan guarantor for your deals?
Eastern Union Funding and Arbor Realty Trust are the companies to talk to, specifically Marc Belsky.
I have used him for both agency debt, help with the equity raise, and my consulting clients have successfully closed deals with Marc’s help. See how Marc can help you by calling him at 212-897-9875 or emailing him mbelsky@easterneq.com
TRANSCRIPTION
Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any of that fluffy stuff.
With us today, Dave Spooner. How are you doing, Dave?
Dave Spooner: I’m good. How are you doing, Joe?
Joe Fairless: I’m doing great, nice to have you on the show. A little bit about Dave – he is the co-founder of Innago, which provides simple, effective and intuitive tenant management software for small to medium size landlords. Based in Cincinnati, Ohio. The company’s website is in the show notes, so feel free to click that and go check it out. With that being said, Dave, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?
Dave Spooner: Absolutely. I founded another startup before Innago. It was focused on student housing, and primarily in connecting students to landlords, looking for a place to live. It was entirely successful, we’ve learned quite a lot from it, and one of the challenges that we ran into was that student occupancy — occupancy rates in student housing are sky high; they’re 98%-99% plus. Some campuses, some landlords have 100% most of the year, not all of the year.
There wasn’t a ton of need on the landlord side for any sort of service that would better connect them to students, but we’ve learned a lot from those landlords, and a lot of student housing landlords are independent, and that’s where we got connected to these small to mid-size independent folks, and that’s kind of what started the early germination of the idea for Innago. So that’s kind of the background that brought us here today.
Joe Fairless: What happened to the first startup?
Dave Spooner: We just dissolved it. We made a lot of good connections there, we learned a lot from it, but we ended up just shutting the doors on it, as we were not able to find quite a perfect market fit there.
Joe Fairless: And do you keep some of the team when you start a new one, or is it just “learned some stuff, starting fresh, and now we’re gonna launch Innago”?
Dave Spooner: It’s a little of both. My partner and I – we were working on the other one together. That’s where we actually met. He’s kind of the key piece that came out of that with me, and then he and I started fresh, and from the ground-up built Innago after that.
Joe Fairless: I believe it’s a relatively crowded space with what you do, but perhaps I’m just way too close to it, so I’m more exposed to it than most. One, would you agree with that, and then two, regardless of if you agree with that or not, how do you differentiate your company?
Dave Spooner: That’s a great question and a great point. I think it is crowded, however it’s not crowded throughout the whole spectrum. What I mean by that is there are a lot of property management software packages out there that are specifically tailored to what we call large-cap landlords; folks that have hundreds, thousands, tens of thousands of properties. You’re talking about AppFolio, Yardi, Entrata, different softwares like that.
There’s not nearly as many that are tailored specifically to this small to mid-size crowd, and those that have existed in the past are typically really outdated. There’s not a lot of modern software that makes it easier to manage and communicate back and forth with the tenant. There are a few others there, but not a ton.
The way we’ve kind of differentiated ourselves beyond just obviously targeting this market is in the way in which we’ve targeted it. What you find often times is there are some top list solutions, as I’ve mentioned, that are designed for smaller landlords… But most of those solutions are designed for landlords that have one, two, three, four, five units. Once you get beyond that, it becomes fairly clunky, fairly cumbersome… They’re just not built for expansion and for growth.
On the other side of the spectrum you have property management softwares built for hundreds of units, as I said. So there’s not a lot in-between, and there’s not a lot that really follows the journey of the landlord. You don’t get into real estate to buy a single-family home and say “Okay, I’m done. I got my property. I’m all set with my investment.” You get into real estate to buy multiple properties.
Innago – we call it software that grows with you. When you start off with just a single unit and you grow your portfolio all the way up to 100, Innago is gonna work great that entire time. It’s gonna be effective, it’s gonna be simple, it’s gonna be easy to use, and perhaps most importantly, it’s gonna be free.
Joe Fairless: And what are some specific ways that you deliver on the “grows with you” value proposition?
Dave Spooner: I think it’s all about an attention to detail and the way in which the software is structured. When you approach some of these challenges from a technical standpoint, depending on how you’re approaching it, it’s a lot easier to solve those problems. So if we say “Okay, we know our landlords are just gonna have 4-5 units”, it totally changes the way that we build out our user interface, the way that we build out the technical aspects of it, the way that the platform itself can grow.
But if we approach it with the idea in mind that this is gonna work with landlords at varying levels, varying sizes, it totally changes that equation. That attention to detail has been really critical, and beyond that we also have a number of features that I think work great for a landlord of any size. They include running background checks, tenant screening reports etc, running online leases, accepting payments online, automating rents, automating rents, automating late fees, communication, maintenance ticketing etc.
Joe Fairless: And you said it’s free, so you make money from the different services that the landlord offers to the resident, and the (prospective) resident pays a fee and you get a cut of that fee?
Dave Spooner: Sort of. Actually, the software itself is free to use. Everything that I’ve listed there is included at no charge to the landlord. The only piece that we do charge for is when the tenants pay rent online. Then we take a very small cut of that. It depends a little bit on the unit size, but we do take a transaction fee on each [unintelligible [00:08:31].17] card payment.
Joe Fairless: What’s the percent range?
Dave Spooner: Our standard flat rate is gonna be 1% capped at a maximum of $5 for an entire unit. So we’re never taking more than $5 on the entire unit, for both eChecks and credit card payments. And that’s for your first 25 units. Every unit after that is just a dollar, and the key point there is that it’s for the entire unit, so it’s not per tenant or per transaction, and it’s also only when they pay online. If they don’t take advantage of online payment services, then you don’t pay a dime for it.
Joe Fairless: PayPal is 3%, so… Much cheaper than PayPal, that’s for sure.
Dave Spooner: Exactly, yeah.
Joe Fairless: The challenge that you have building the business, my guess, is getting landlords on board, because if you get landlords, then you’ll get tenants, because landlords are your recruiters to bring more people in… So first off, is that your primary audience, landlords?
Dave Spooner: Yeah, absolutely.
Joe Fairless: How are you identifying ways to reach out to them and bring them onto the platform?
Dave Spooner: Really the best way to attract landlords these days is just to put out really great content online. Our blog is really active; we put out white papers, we put out information online, and we try to just provide resources to landlords… Landlords that need help with advice on managing their tenants in certain ways, communicating with their tenants, what should their late fee policy be… Are online leases safe? If so, how do you structure your lease? What clauses are important, etc.
So we’re constantly putting out what we believe to be really high-quality content, and in doing so we attract landlords that are curious and that are looking for answers to these types of questions. And as I mentioned, we’re mostly looking for growth landlords. As you’re growing as a landlord, you often times encounter new challenges, new questions, and having a really dynamic and engaging blog that answers to those questions is a great way to find those landlords.
Joe Fairless: Do you have a dedicated in-house person who does your blogging?
Dave Spooner: Yeah, we have a couple, and also the team itself kind of takes turns on occasion writing posts, depending on expertise. If we have somebody that has a lot of expertise in leasing, then they might put the post together. Of course, we have a single editor on the team that kind of makes sure everything is grammatically correct, is spelled correctly… But we all kind of take turns, and then we have a couple of people that really spearhead most of the operation.
Joe Fairless: How many blogs do you put out a week?
Dave Spooner: We typically put out one per week…
Joe Fairless: That’s it?
Dave Spooner: …sometimes more than one.
Joe Fairless: That surprises me.
Dave Spooner: Yeah, one really good, high-quality blog post is really all you need. It’s not just like a 300-word post, like “Hey, here’s what you should be doing for blah-blah-blah.” It’s more like an in-depth analysis on whatever topic was taken on that day/week.
Joe Fairless: Okay. So the number one way to attract landlords, your audience, is to blog, and you’ve determined that doing one blog post of high quality per week is the best way to optimize that, versus doing multiple blog posts during the week.
Dave Spooner: Well, the thing about — I don’t wanna get too nitty-gritty into the…
Joe Fairless: Please do. No, that’s what I wanna do…
Dave Spooner: [laughs] Okay, cool. The thing about content is content continues to feed on itself. So we can put out a blog post today, that is gonna continue to attract readers 3-4 years into the future. As long as the content is good, high-quality and relevant. So it’s more about building on that quality content than it is throwing out a large quantity of lower quality content.
We build in this once-a-week sort of mentality, so that we ensure for ourselves that we are taking the right time and attention to detail to make sure that the information that we’re providing is really substantive and really useful. We’ve been posting on this blog for almost two years now, so there’s a lot of posts in there. There’s a lot to dig through, there’s a lot of really good information, and we wanna continue to add value to that, rather than just kind of throw out posts right and left.
Joe Fairless: The reason why I’m asking about this is because a lot of the Best Ever listeners have a target audience of landlords too, because we want to buy off-market deals… And that’s why I was asking you about this, because what you’ve learned certainly could be helpful for listeners who are attracting or attempting to attract landlords to acquire off-market deals.
Dave Spooner: Yeah, I think that makes a lot of sense. The key piece there you’ve gotta understand your audience and you’ve gotta understand the types of people you’re attempting to attract. So for landlords that are trying to attract off-market deals, depending on the area you live in, you might find that social media is the best avenue to go with.
What we always do is whenever we’re taking on a blog topic, we typically cluster them up… So we say “Alright, we’re gonna spend some time on leasing for the next month, month and a half.” When we do that, we identify online all the relevant forums, all the relevant Facebook groups, LinkedIn groups etc. that attract people that are having conversations about that topic. And that’s really what you wanna do from the start, and then you kind of word your content around that, to make sure you’re hitting all the right notes, and then you’re gonna put out information that’s gonna resonate with those communities that are already active online.
Joe Fairless: You work with landlords… Are you a landlord?
Dave Spooner: I am not.
Joe Fairless: How come?
Dave Spooner: That’s a great question. I’ve actually kind of been looking for taking my first dip into the pool here. We’ve spent a lot of time and a lot of money, of course, or getting Innago launched, so it’s been in part cashflow and timeflow issue… But that’s starting to settle down, so I would like to join in and possibly get my first rental property here in the not too distant future.
Joe Fairless: What are the reasons why landlords don’t sign up for your service after they’re made aware of it?
Dave Spooner: Good question. I like to think that they all sign up… [laughter] But of course, that’s not true. I would say that some of the things that we hear when landlords choose not to go with our service include — even though our service is free to use, inherently there are some costs associated with online transactions, and they’ll say “No, I’ll keep accepting my paper checks. I don’t wanna pay any money.” And what they don’t necessarily realize is that the time that they’re saving through a platform like Innago is well worth the very small fee that’s associated with that.
I think that’s probably the most common complaint. I think other complaints we hear – it’s really just about time. Landlords, as you know, are extremely busy. Often times they’re working a full-time job, and then they own properties on the side, or the properties just take up a lot of their time, and they may say “I don’t have enough time to learn this system and to get this all set up.” So what we’ve really tried to work hard to do is produce a product, produce a service that does not require a lot of learning, but communicating that to landlords can obviously be a challenge and a bit of a hurdle.
Joe Fairless: What are some things that you’ve done to optimize Innago based on the lessons you’ve learned about either the features that landlords do or don’t want, or just the overall user experience?
Dave Spooner: That’s a great question. So I would say a couple things. First of all, we always talk to our landlords directly. One of the big value-adds of Innago is that we have full support, both phone and e-mail. You actually get a dedicated account rep, so they kind of know the challenges that you run into, they get familiar with you, they know your voice, they know your phone number; anytime you have a question, they kind of handle it personally.
What that allows us to do is have a real ear to the ground as far as what landlords need and what they’re looking for. So whenever we’re wanna come out with a new feature, or whenever we’re kind of taking another look at a feature that we’ve had for a long time, we always get direct feedback and direct input from our active landlords, from our active partners.
That being said, we also really emphasize the attention to detail. I always say with the various teams at Innago, it’s death by a thousand cuts. It’s not about making big mistakes and big errors, it’s about making a ton of little ones that you don’t foresee at the beginning.
So whenever we wanna release a new feature, whenever we wanna release a new platform, we always really try to think the whole thing through, understand it from all perspectives, think about how different types of landlords would interact with it. A commercial landlord is gonna be different than a residential landlord, it’s gonna be different from a student housing landlord… And then there’s a ton of variance in between all those.
We just try to approach every single challenge from a broad perspective, and then have a really tight attention to detail and make sure that those features are not only useful, not only effective, but also simple and easy.
Joe Fairless: Based on your experience working with landlords, what’s your best advice ever that you’ve learned from landlords that perhaps could be helpful for landlords listening to this?
Dave Spooner: I think the number one thing I always stress with landlords whenever they ask my advice is it’s all about communication. As far as tenant management is concerned, it’s all about communication. If you don’t have a solid formal communication process in place, then you’re gonna end up with some gaps, especially when rougher tenants come through or when you have a problem tenant. If you haven’t communicated effectively, if you haven’t established ground rules and information sharing, then you’re gonna run into some challenges.
That goes from communicating late fees, communicating when somebody is actually late, when there’s a change in the rental rate, when maintenance ticketing comes through etc. Having that tight communication is really critical to having a good relationship with your tenant and having the tenant appreciate you as a landlord, and also pay on time and be a good resident for you.
Joe Fairless: And I imagine those features are all built into your platform.
Dave Spooner: Yeah, of course… [laughs] It’d be pretty strange if we [unintelligible [00:17:55].22] and we didn’t. I think there’s always room for improvement, and that’s the key – we’re always thinking about how can we improve that communication with tenants and between landlord and tenant. But yeah, a lot of those features are, of course, built in and automatically services through Innago.
Joe Fairless: We’re gonna do a lightning round. Are you ready for the Best Ever Lightning Round?
Dave Spooner: Yeah, let’s do it.
Joe Fairless: Alright. First, a quick word from our Best Ever partners.
Break: [00:18:21].10] to [00:19:08].07]
Joe Fairless: Best ever book you’ve recently read?
Dave Spooner: I would say on real estate it is “What Every Real Estate Investor Needs to Know About Cashflow”, which is by Frank Gallinelli, I believe. It’s a really solid book. Outside of real estate, I always love and will always go back to Hitchhiker’s Guide to the Galaxy. [unintelligible [00:19:23].09] for that book.
Joe Fairless: Best ever advice you have to a Best Ever listener who wants to start a tech real estate company?
Dave Spooner: A tech real estate company, okay… I would say first know and define your customer and talk to your customer as much as you possibly can. You’re gonna learn so much from your customer that you cannot possibly figure out on your own, and also try to get a lot of wide perspectives – try to find customers from all different ends of the spectrum, and also folks that maybe you wouldn’t think would be a great customer, but are kind of tangential or tertiary to the space that you’re trying to operate in; talk to them too, because they’re going to have great advice, they’re going to understand the market in different ways that you might not expect.
Joe Fairless: What’s something that you’ve done during this startup that if you made a different decision, then it’d be a completely different result? I know that’s a broad question, but feel free to take that in whichever direction.
Dave Spooner: Something that we’ve done that if we had done differently the results would have been totally different?
Joe Fairless: Yeah, like maybe you made a decision on having a certain feature, and as a result you got a lot more business, or maybe made a decision to remove something from your platform, and as a result it focused you in a direction that you didn’t even know you were gonna take?
Dave Spooner: Hm… Yeah, that’s a really good question.
Joe Fairless: It might be a really bad question, actually… I don’t know. I just made it up. [laughter] We can skip it if you don’t have anything top of mind.
Dave Spooner: Let me try to come back to it. I don’t know if that’s how lightning rounds work, but…
Joe Fairless: Yeah, that’s fine; I think it’s actually a really bad question, but I appreciate the flattery initially… Best ever way you like to give back?
Dave Spooner: I volunteered for a bunch of years as a swim coach locally, here in Cincinnati. I have not been able to do that the past year, because of just the tax on my time… But I try to do whatever I can, whenever I can. I find it really relaxing, and obviously it feels great to give back any way you can… So if it’s taking part in Give Back Cincinnati events, or Paint the Town or anything like that, I try to do it whenever I can.
Joe Fairless: What’s a mistake you’ve made when creating this company?
Dave Spooner: A mistake we’ve made… I would say – not to beat a dead horse here, but anytime we kind of lose sight within a feature or within a set of features of ultimately what the landlord is looking for. And what I mean by that is if we stray away our attention to hearing out our customers and hearing out our landlords, and getting all the different perspectives.
If we zero in on “Okay, this is what a student housing landlord — this is how they would functionally want to use this feature” and we’re not thinking about other landlords and other types, then we end up putting out a feature that really causes a lot more problems and challenges for landlords than it’s necessary. Anytime we do that, that’s always a big mistake and a big learning opportunity for us.
Joe Fairless: How can the Best Ever listeners learn more about your company and what you’ve got going on?
Dave Spooner: Well, they can always go to Innago.com. As I said, we have really personalized and open support and service, so they can also just shoot me an e-mail directly. My e-mail is really simple, it’s dave@innago.com. I’d be happy to have a conversation with them, show them how Innago can help them out, and learn a little bit more about what they’re looking for.
Joe Fairless: You’re looking to attract landlords, we’re looking to attract landlords, and that’s why it was really interesting hearing how you’re doing that – you’re focused on quality content online. Best Ever listeners, I recommend checking out their blog. Nicely formatted, that’s for sure, and very clean. I love the picture of the dog; I think it’s a dog with some sunglasses — no, a dog just squinting. [laughter] I imagine the dog with sunglasses, for some reason. But a dog squinting… A very cool blog, number one.
Number two is – one takeaway I got from the very beginning of the conversation is student housing, be a landlord in student housing, because you had a startup directed at landlords, to connect landlords and students for housing, but occupancy is sky high, so landlords didn’t need help, because there’s so much demand… So if you’ve got some units that you can split up, make them into beds and house some students – do it; make more money. I’ve talked to many landlords who do student housing…
And then also, congrats on your launch of Innago, and best of luck to you. I’m grateful that you were on the show, and looking forward to continuing to hear how it goes, and thanks for being on the show again, and talk to you again soon.
Dave Spooner: Thanks so much, Joe. It was great being on here, and a pleasure talking with you.