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Tech Nest is the proptech podcast where we discover all the latest in proptech by interviewing the innovators and leaders from startup that are challenging the way we buy, sell, and invest in real estate. When you listen to Tech Nest, you'll get in-depth interviews and discussions each week, focused on uncovering trends in proptech and how startups are transforming the real estate landscape.
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Nate (00:01.294)
Ray, welcome to the show.
Ray Hespen (00:03.295)
Hey, thanks man. I'm super excited to be here. Great to catch up.
Nate (00:07.406)
This is the first time, this is a Tech Nest first in history that we've recorded both host and guest in the great state of South Dakota.
Ray Hespen (00:18.719)
I'm just a little irritated we're not in the same room, but I respect the fact that this is a first, all the same.
Nate (00:27.758)
If I yell loud enough, you're only like 15 miles away from me, I think. Well, I happen to have found the only other PropTech folk in the state of South Dakota. I think there's like 900 ,000 residents. And there's just a few of us on the west side of the state that are in this industry. I've got Ray Hespen, he's the CEO and co -founder of a company that I really think is becoming a...
Ray Hespen (00:30.847)
It's my building area, I don't know.
Nate (00:58.062)
It's really become into its own, if you will, is blowing up. I'm going to even say, uh, called property meld maintenance automation software company. Uh, and it goes deeper than that. And I wanted to keep the intro limited because we've had a chance to catch up. I've moderated one of the panels that we were on together, uh, at imn last year of us will see you speak other than that. And I've heard you go deeper.
on, it's not just about maintenance. This isn't just about fixing broken lights and, you know, a door knob that falls off for property management companies. So I want to open it up there. Like, why is this, uh, what you're doing at property mills and the vision bigger than just managing maintenance.
Ray Hespen (01:40.063)
So Nate, this is great because I think I've probably, you know, over the last, it'll be nine years doing this, I think I've probably given the elevator pitch so many times, I probably know better than some of my kids' names at a certain point. So I think this is a great way to talk about it. And I think one of the things that I think is really important is kind of two -fold, like why did we get started? And so like, what is kind of the Genesis story? But I think...
As we've went further and we understand this industry better and we, I think, have a decent grasp on where the free market is going, how imperative it is that this continues to evolve. And so I think there's why we started probably isn't why we're doing what we're doing now, but I'll kind of start there. It was, I think, 2014. We got the email hanging up in our HQ here of the maintenance experience my co -founder had when he was living at a rental.
at an undisclosed location. And he called me one day, I was in Baltimore before I got into property management. I was managing operations. I was a plant manager of a cementitious materials plant. Won't go into that too much, but he called me and he's like, man, like I've had like four maintenance requests of this one rental property. You've moved around a lot. Like, has it always been this terrible? And he was kind of explaining what he had to go through and he's trying to find out what's going on. He's trying to get a hold of people. People are trying to get, this is a mess.
And so we're like, man, this really stinks and it's bad for the renter. And yeah, but nobody buys stuff if there's not like money attached. So we spent time with about 25 different property managers and like they hated it too. So nobody liked it. Maintenance is hard. Trying to get it done is hard. It's a high turnover job. It's a high stress job. So we're like, perfect. We're going to go solve how somebody gets a light bulb fixed. I think that was the analogy you used there.
But I think, so we started in 2014, 2015, 2015, efficiently. And, but I think as we've gotten further into it, we've started to understand how big of a role maintenance is going to play ultimately in the healthcare of a home. And so we know the number one problem. Like if you were to ask somebody, like, what's the number one pain point of owning a home? It's like,
Ray Hespen (04:03.007)
It's fixing the stuff. This is it. This is the number one. It is the number one problem of real estate. And it's also, if you look at it from any other asset class that has went under transformation and maturation in the years, we always try to find the things that are explosive in costs and feel uncontrollable. We find a way to control the cost and make them controllable. And so I think there's a huge opportunity in our industry to make what it seems like the most chaos.
and turn it into great order at the great benefits of people that live in there and people that manage them. And there's a lot of dollars attached to it as well.
Nate (04:41.806)
I love it. And yeah, I, it's funny that you would, you would say like, you know, managing the, the healthcare of the home. I literally had a washer getting delivered to a rental today and a $300 billion market cap company was unable to adjust the delivery schedule. So now we're in a rescheduling cycle to get that washer delivered.
because the tenant wasn't there to receive the washer to let them in. So it's just like, this is the kind of stuff, it seems so little, but you add all this up and then you think about what is being put on the shoulders of a property manager to be able to keep all of this straight. And that's not even keeping the fact that they're communicating between the vendor and the renter and the owner to get all that in a line to move forward. So even if we get all that,
Ray Hespen (05:15.391)
Ahem.
Ray Hespen (05:29.383)
Yeah.
Nate (05:40.686)
done, why does it matter to rent it? Is it just to, or to manage all that better? Is it just because you want to say you giving renters a better experience? Is it just because you want to save money? Like, where does that lead to?
Ray Hespen (05:43.423)
Hmm.
Ray Hespen (05:53.279)
So I'll start at the high level one. By the way, anytime I'm introducing anybody that's not in our industry to PropertyMelt, I sit there and go, have you ever rented before? And nearly everyone says yes. Have you ever had drive maintenance done in your property? Yeah, that's why we exist. Like it's the shortest like problem solved. Like they go, yeah, that's terrible. That's what your software company does. Perfect. But I think there's one thing. So if we look at the cost to maintain a...
It makes up about 12 .7 % of the rent. It's huge chunk of money. It's the second largest cost bucket right underside property taxes. It's number one outside of that. And it's probably even higher than that. That's courtesy of Marker. They did a really cool study on that recently. And so if you take that and say, there's a lot of money in there and we can all agree it's not controlled and we can all agree it's a lot and we can all agree we want it to be better and bad experiences coming from it and everything else. Now take a parable industry.
that has went through like a heavy maturation cycle. Let's take auto repair, auto care. If you were to sit there and go like in the 70s and you were to pull up a pickup truck and you had a Chevy, what's really cool is they used to sell features that you could open the hood of the underside of your Chevy. And by the way, they had a mechanics light built into the truck right there for you. So you could work on your truck. What did that tell you about the reliability of vehicles? Like all of us had to learn how to change a tire.
Nate (07:12.108)
Mm -hmm.
Ray Hespen (07:18.525)
All of us had to learn how to work on vehicles, everything else like that, right? That was the 70s. I wasn't there. That's what I hear. I heard about it. But now I ask the question, who has honestly had a vehicle die on the road? It is rare. It just doesn't happen that often. As a matter of fact, there's about 19 things that tell you that before it happens, and you can get it to a mechanic shop, and before catastrophic failure happens, it's super expensive.
Nate (07:24.878)
You heard about it.
Ray Hespen (07:48.287)
Right. And so if you think about that parable, it is almost existed in every other element as we learn more, as we learn that something's expensive, as we learn that's uncomfortable, we sit there and go, how can we get ahead of it? And if you want a great use case, an example, both on how preventative works as well as how do we manufacture, how do we do everything you follow Subaru's cost to maintain over the years, you can just watch it go down and down and down and down.
Nate (07:54.766)
Mmm.
Ray Hespen (08:17.917)
And they're doing that because as you learn more, you can figure out to control the cost. Now, take that back to that 12 .7 % bucket that everyone hates. And it is not optimized and it is nearly always reactive. It is the equivalent of the car breaking down on the side of the road. And you go, can it get to that version of the car where I know 19 times ahead of a low cost repair that I can do now that does not cause a lot of issues and
and my cost and opponent are thing. And so the more data we've dug into and the more we've learned at PropertyMold, we sit there and go, this is probably closer than we realize, which is going to change the entire dynamic of what it means to manage a rental property or manage a home.
Nate (09:05.646)
Let's dive into it tactically. When I, I'm property manager. Actually, I've spoken with one of your customers up in, is it North Forks, Grand Forks, Great Forks. What is it?
Ray Hespen (09:08.071)
Mmm.
Ray Hespen (09:20.991)
I don't know.
Nate (09:22.734)
I think it was up in North Dakota. It somewhere up in North Dakota. At least they mentioned you guys. So anyway, let's say I'm up in North Dakota and I've got a thousand homes on my scattered site portfolio. And I wanna wrangle in my maintenance problem here. I'm working off an array of spreadsheets. I've got a property management platform but it doesn't really handle requests very well. I don't have any vendor data. That's all on my Rolodex.
Talk to me tactically about where does PropertyMeld come in, fit into this picture, and solve some of those problems on a day to day.
Ray Hespen (09:56.671)
you
Ray Hespen (10:01.119)
Yeah, so I think I've probably been talking about what is the future and we're blowing the bubbles, right? And we're talking about it. But yeah, there's a very real world right now of how do we manage the cost to maintain a property and how do we deliver it in a way that keeps a resident in there? Because that's the game. If you have two things that you need to do as a property manager, it's find a way to deliver a good enough experience and good enough to get a renewal. And you got to do it at the lowest cost possible to do that.
That's the game. So when we think about executing maintenance, there's a lot of inputs that go into it. You've got your maintenance coordinators that are managing it. You've got your vendor network. You've got your internal technicians. And those are your resources to go tackle the problem. And then on top of it, you've got the service issue that needs to go through in the most cost efficient manner possible. That goes through all your triage. Who does it need to go to? Which resource? Which one can get it done in the right time?
and execute it and document it, all that so I can do the billing. So between the resources and actually the flow of it, executing maintenance is a complex animal. As a matter of fact, can I use a prop, Nate, on the podcast? Is that possible? Okay. This is great. So business plan and property model, by the way. This is the OG, this is the same alligator clip and everything. This is great.
Nate (11:12.014)
You can use props.
No one ever brings props, this is wonderful.
Nate (11:26.19)
2014.
Ray Hespen (11:27.935)
2014 and this page is getting wrinkly because it's probably
Nate (11:30.526)
Ray just held up a stack of papers that it looks like he printed off at the local Kinko's.
Ray Hespen (11:38.175)
Back then, I think it probably was. FedEx hadn't bought them yet.
Nate (11:40.44)
It probably wasn't Kinko's. And it has a date on it, 2014.
Ray Hespen (11:46.781)
Yeah, so it was the business plan. 95 % of this is garbage, by the way, but there's a couple of pages that are really good. And I'm going to show the page that articulates it incredibly well. So this was the flow we ended up coming up of all the if -then statements of the different things that can happen during a maintenance repair. It's a highly, highly variable process. Like if we think about leasing, and I'm not going to pick on leasing. That's not my intent. But it's like, it's a relatively linear path with drop -offs of zero.
Right, but if you take maintenance there are a lot of if thens that happen as you're going through it So triage canopy triage is something the resident can do yes. No, what do you need to do in that scenario? Do this do that? Okay, it's been done. You need to go to a vendor. Does it need an investor approval? Do we need do we know the information before does it need another trip to a store to collect parts? Is it multiple visits? Is it not is it all these things who should it go to based on cost?
There's so many if then statements and maintenance, it makes it incredibly complex. So property melt, I know I'm like super belabored in doing this, property melt really streamlines and automates a lot to maximize those resources and streamline that process. So it makes a great resident experience while driving the cost down to deliver that.
Nate (13:07.342)
Yeah. So if the resident writes in, they have an issue. The property manager isn't each time trying to determine where do I go for this? How do I handle this? Property Mel guides them, Hey, this is, this is the route you need to go to. You have information in there. You guys have like a network of vendors as well. They can go to as well, right? They don't have to like build their own network.
Ray Hespen (13:33.055)
Uh, not, not entirely. So, so Nate, one of the things we know is a lot of our customers or a lot of our clients have great vendor relationships and they want to keep using them. But the thing is, is, um, it's hard working for a property manager as a vendor. You know, you gotta try and get ahold of the residents scheduling. You got to keep the property manager up to speed. So what we do, um, we've successfully done, I think we've got around 60 ,000 active vendors across the nation and in Canada, um, that are using this platform, but.
Nate (14:00.108)
Wow.
Ray Hespen (14:02.553)
What we do is we help streamline their workflows at the same time. It's the only way that it works. But customers use their own, but obviously there's a lot of national providers now that are super keen and doing more work. And we see them a lot through a lot of customers. So.
Nate (14:22.062)
Very cool. So, all right, I'm going to shift a little bit and talk a little broadly about the rental industry, how it's been impacting both individual owners and property management businesses. We've had some shifts the last few years. We went through this, everything shut down to no deal's a bad deal, buy it if you can, to, oh crap, the numbers don't work.
Ray Hespen (14:28.509)
Hmm.
Ray Hespen (14:49.919)
Hahaha
Nate (14:52.258)
You know, depending on which markets you're in, it's been either okay, not that big a deal. Some markets it's been, especially if you're reliant on, you know, additional investors, like maybe you pulled together a fund to buy a portfolio. You maybe find yourself in doing a capital call or just calling it a loss. What are you seeing that's happening in the day -to -day rentals that's impacting property melt customers?
Ray Hespen (15:21.983)
Yeah, so it's a good one. And I will tell you, it's probably the number one thing, especially usually some good indicators are like really large. We've got some very large customers and they do really good job at kind of giving us some temperature checks of what they're seeing across the markets because they'll have exposure to 25, 30, 40 markets. And so what's the theme, right? What's the strategy? And I will tell you, it almost seems like everybody is focused on getting the residents to stay in the rentals.
Nate (15:42.316)
Mm -hmm.
Ray Hespen (15:51.539)
Huge 180 shift then from what it was even two years ago, where it was like, oh, you don't want the place? Perfect. That means I can rent it out for more. See you later. I don't care that I got to turn over costs. I'm going to be able to jack up rents 5%, 7%, 8%. This is going to be great. To being, please don't leave. And so I think the reason that that's happening, and John Burns, who is a great follow,
Nate (16:10.222)
Mm -hmm.
Ray Hespen (16:21.567)
They ended up releasing, oh, this is such a great, I geek out so hard on that stuff.
Nate (16:21.678)
Oh, I love following their research.
I learned today that there's something like 12 ,000 new 35 year olds every day.
Ray Hespen (16:32.543)
from John Burns. You know what? I gotta, this is great. I need to follow them there. That's such a great stat. But one of the things they came up with that really hit in my head, and I will, I'm actually a little sour on something, which I'll share in a second, but not with John Burns. They actually posted these like wreaths in what they're taking for.
Nate (16:33.998)
Yeah, it was just tweeted out on their research. Just...
Ray Hespen (16:57.403)
a blended anticipated rent. And it was basically a combination of renewal rates and what percentage of rent increases they were getting from renewals, insured leases, what percentage of lease or rent contraction they were expecting. And it was like this eye opening aha moment where you realize that actually renewing residence was a revenue protection play, not just
How do I not do a turnover cost? And so as we've seen that, and especially that dynamic in the market happening, you realize if the revenue's at stake, well then what's happening to the cost? Is the cost doing the same thing? And then it's like, no, it's not. As a matter of fact, we've continued to watch maintenance costs. I think our platform helped facilitate around 2 million service issues last year. And we've continued to watch.
costs continue to increase. They are flatlining a little bit, but they have far exceeded the pace of rent. So if you think about it,
Nate (17:59.854)
Is it, wait, is it, this is a labor issue? Is it a parts issue or everything issue that's making that happen?
Ray Hespen (18:04.415)
You know, I'm probably under qualified to answer this question, but here's what I'll tell you my opinion is. When we were looking at times of COVID, it was supply of parts. Like we just couldn't get parts and it was just supply chain. Labor wasn't expensive. It was just parts. But as we've kind of evolved into this new era, we see inflation and everything happening. The labor rates have driven up, which both have an impact on the billable rate.
but it also impacts parts on a secondary level. So at least early in COVID, it was mostly parts and supply. Now it's both. So that's been a huge part of it. And then again, we don't have an industry that is supercharging the trades anytime soon. And you guys know if you went to basic macroeconomics class, what happens to price versus supply? It's not good. So anyways, so.
Nate (19:01.838)
Mm -hmm, mm -hmm.
Ray Hespen (19:03.579)
rents compressing costs after alarm run of thing and and holding is kind of a scary time if you're a real estate investor and you've got to rely on returns and in the rental, you know, the cost of facility debt has went up as well. So that's where a lot of this is shifting. And so people are going resident protection, I need to get them to renew their lease. What do I need to do and
And honestly, that's a fun problem to solve in maintenance because it's one of the major drivers of lease churn. So.
Nate (19:39.726)
Yeah, there's a handful of things I've also heard, um, you know, from other founders that are in this industry, as well as I, I'm pretty regularly in touch with other real estate investors across different markets around the country. But I would say that it's been a general consensus of like, just keep people happy. Uh, and you know, have them renew and, but the common thing that I hear from owners and managers that they attribute to happy tenants.
It's communication. It's communication what's happening and when it's gonna happen. And then also like doing what you said. There's nothing more frustrating than the landlord who says like, and I have fallen guilty to this because I've just been too busy or I've forgotten something, but like, I'm gonna get that fixed. When are you gonna do it? Okay, we're gonna work on that next week. And then it doesn't happen. And as a renter who's ever been in that situation, which I've been in that situation, I once moved into an apartment that...
Ray Hespen (20:12.383)
Mm.
Ray Hespen (20:18.943)
Mm -hmm.
Ray Hespen (20:27.591)
Mm.
Ray Hespen (20:31.901)
Yeah.
Nate (20:39.214)
It was a shared kitchen downstairs. I was supposed to have my own kitchenette. I was like, well, I paid this rate with the kitchenette promised. And I went three months and I was like, there's no kitchenette, you know? And then I got a $50 discount on the next month. And I was like, well, I'm broke, so I'll take it. But you know, I mean, is, is this something that one, you, you would agree with how important communication is and two, where, you know, talk to me about maybe even how property mail plays a
Ray Hespen (20:45.757)
Yeah.
Ray Hespen (20:55.295)
Yeah. Right.
Nate (21:08.878)
part in that communications between the resident and the manager. Cause I think that there is something there.
Ray Hespen (21:15.455)
Yeah, so you're 1000 % right. I would say if you're in property management, the game I always talk about is how do you change the statistical odds? It's really hard to go from a behavior aspect, right? And if the thing we're trying to change is the renewal rate, what is the thing you can do and you know you can control? Communication is vague. Sometimes people suck at it. Sometimes they're good at it. Not everybody even agrees on the metric, on how to measure it.
One of the things that we found when we did a very large study against our customer base and what drove Resonance Sat is the best correlation to resident satisfaction was indeed not volume of communication. And I'm sure AI could go and tell us like the quality of communication probably can, who knows. But the best one is actually speed, which I know it sounds really stupid, but...
Nate (21:42.51)
Mm -hmm.
Nate (22:08.142)
Oh, interesting.
Ray Hespen (22:10.239)
We were able to even actually look at different types of repairs and give a statistical outcome against how fast you did certain things. That's how easy it was to like tell. So for example, and I'm trying to rattle the numbers off my head, but I'm pretty sure like if you exceeded three days for an HVAC issue, you had almost no chance of getting a positive rating, almost none, but you had four and a half for a plumbing issue and five for an electrical. And so that...
makes you sit there and go, all right, it's not your Gmail inbox first in, first out thing. And again, this is taking a resource and kind of optimizing the flow. But Resonance Sat was one of those. Now, that being said, communication is a huge component of it. And I will tell you where it's probably less measured, but very important is because when it breaks down, that's when your lawsuits come. That's when your team members take a brunt of an angry resident.
That's when some of the things, that's where the bad happens, not from a statistical, that could be a little bit more damaging outside the likelihood of a lease renewal. And so property meld, obviously, I think that we originally came out, it was all about visibility, oversight, communication, and we kind of took a real heavy hammer to that. But I think that we're seeing right now, I was just on a call earlier, is actually employee churn.
And if they have to keep dealing with negative experiences, like it is brutal. And then you lose the employee and then you lose some of the efficacy of your maintenance operation. So communication, yes, it is important for the resident, but it's also important for employee retention and enjoyment of work. And if they're taking the brunt of gaps in communication, it's just a brutal job.
Nate (23:58.83)
I don't think I've ever considered that. I mean, I'm also not a property manager, so probably not unreasonable that I haven't considered that, but, but I don't think I ever really considered to like, Hey, if the, you know, you just think about like the tool stack given to the property manager to help them get through the day. You know, it's a, it's a labor intensive and can be a very time intensive role. You have competing pulling forces for your time and attention throughout the day.
Ray Hespen (24:06.271)
I didn't either until I talked to people.
Nate (24:29.312)
And it's a people business and invariably when there's not enough preventative action taken, it's all reactionary and people can get upset and one thing's now and why isn't it done? And if you get that day in day out constantly without something helping you get the job, of course you're going to turn. Why would you stay?
Ray Hespen (24:31.775)
Yeah.
Ray Hespen (24:41.791)
Yeah.
Ray Hespen (24:48.511)
Yeah. I actually think about any job, like you have to have a certain amount of positive interactions to make you stomach the negative. And if you were to look like a maintenance coordinator, be like, Hey, what are the positive interactions you got today? It's kind of like being, I don't know, like a, like a 911 call operator. Like, uh, like, Hey, I just wanted to call and tell you you're doing a great job. I'm sorry. You don't get those phone calls.
Nate (24:57.804)
Mm.
Ray Hespen (25:14.641)
You're the one asking an investor to spend money that they weren't planning on. You're dealing with a resident who has a kitchenette that they were promised and they haven't had, right? Or somebody dropped the ball and now you're left picking up the pieces. The negative interactions far, far exceed the positive. And so it is brutal. I will also throw in one thing too. I think the consumer market is also increasing the table stakes of communication too that I don't want to dismiss on. Just...
Nate (25:20.046)
Mm -hmm.
Ray Hespen (25:44.445)
You know, you think about what communication everybody gets in their day in and day out on about every other interaction they have has went up significantly in the last 10 years. So I'm probably dismissing communication more than I should, Nate, because I think we've moved the bar there. I'm just saying like it shouldn't be the bar alone as a prime focus.
Nate (26:00.916)
I mean, you can dismiss whatever you want. I'm not shaping your views here, but I think I'm picking up what you're saying. It's not just what the communication is, but how fast it is, is a key part to it. And of course, thanks to my handy dandy notes prior to this interview here, thanks to your team sentence over, one of the stats your team sent over 8 ,467 ,099 maintenance phone calls eliminated in the year 2023.
because of proper, that is, that is, like, I can't even, I can't even get my head around that. It's absurd.
Ray Hespen (26:30.909)
Dang.
Ray Hespen (26:39.271)
I'll tell you, and it's hard to measure things that didn't happen because you did something right too. We can only measure what we know still was going to happen. So like a lot of the times, if you keep somebody up to speed on what's happening, the phone call never comes in, right? And so, yeah, it's a pretty mind -numbing. I will tell you the amount of things that we see in the platform. I mean, we've been around for nine years, like even 2 million service issues. I think when we were calculating it, it's almost a billion dollars in...
Nate (26:53.934)
That's amazing.
Ray Hespen (27:07.995)
repairs completed. I'm like, I feel like we just started this a couple of years ago. And it was like, you know, it's like, wow, you know, so it is it is a
Nate (27:16.174)
Now, if only you could fraction a lot or tokenize all those repairs and then you just get a fraction Dogecoin off those and then, and then wait another 20, I've just thrown that out there. If we want to really go meta full prop here, uh, prop tech.
Ray Hespen (27:22.783)
Ahem.
Bitcoin. My new Twitter profile is going to have red laser eyes. Some people are going to get that joke.
Nate (27:35.278)
All right, so I do want to talk about something because I want to see this succeed. And I think it's been successful already. I want to talk about the Property Meld user conference that you do. Because I think that this is something that more than just Property Meld customers can attend, right? You don't have to be a Property Meld customer, do you?
Ray Hespen (27:45.939)
Mm -hmm.
Ray Hespen (27:50.225)
Oh man.
Ray Hespen (27:58.463)
No, you don't. And as a matter of fact, we started as a user conference, but I think the thing is we're seeing all these conferences pop up and there's so much great content. But the thing that we continue to see and it's great, like we get invited to a lot to talk a lot because there's not a lot of people talking about the topic that's really hard. And, you know, it's just, it's an animal, maintenance is an animal. And so we did, as we made the decision, I think it two years ago, we're going to start really focusing on maintenance.
Nate (28:19.788)
Yeah.
Ray Hespen (28:27.327)
Not software, because I think we're all trying to figure out this game. It's hard and it's wrangling. So we actually call it the maintenance summit. And really, yes, of course, we get a lot of customers to come, but really this is an opportunity for all the brainiacs of maintenance ops to come together and we pull panels, information session, what's coming ahead, what are the things we're seeing, coming to release some of the data that's upcoming. And like, how do coordinators who historically have never had a place where I can go get better,
You can go Google, right? Like, how do I be a great maintenance coordinator? Good luck. There's no master classes that Chris Voss is putting on for you. And it's like, where can I send those team members to like go get better and deliver on one of the hardest things that are causing investor churn, resident churn, all that sort of stuff. So it's in September. It's in Rapid City, which it's a great destination to come visit at a great time of year. And this last year we had 200 attendees. And so.
Nate (29:00.398)
Mm -hmm.
Nate (29:22.764)
Mm -hmm.
Ray Hespen (29:26.129)
Um, are Mark.
Nate (29:26.35)
September 18th through 20th is what it says on the website.
Ray Hespen (29:29.951)
Is that what it says? That's good. I'm glad you know that, Nate. I'm obviously illfully unprepared.
Nate (29:33.934)
I mean, so basically, a lot of people, you can book your ticket to Blueprint, attend the first or second day of Blueprint and then hop a plane, come to the Black Hills and then join in on the maintenance. And full disclosure, Ray did not ask me to talk about this. I didn't even go over this in pre -show. I just think it's important. I know that other PropTech founders listening to the show, there's other investors listening to the show.
Ray Hespen (29:40.125)
Mmm.
Ray Hespen (29:49.373)
Yeah.
Nate (30:01.646)
for all the effort going into the property management space, this is focused in on some of the hardest parts of that hard business. And it's a collective of really what? 300, did you have two, 300 people last year?
Ray Hespen (30:11.487)
Mm.
Ray Hespen (30:17.503)
we had 200 people last year, we're anticipating around 400 this year. So it's, I mean, we gotta keep figuring it out. It's doubled every year. So, and.
Nate (30:23.414)
Yeah.
Nate (30:28.974)
And if you stick around an extra day, uh, I'm taking everyone on a 30 mile run through the black Hills. Uh,
Ray Hespen (30:34.975)
Oh, way to unsell them. Thanks Nate. This is great. Why don't you ask him to like do some help somebody move while you're at it. I'm kidding.
Nate (30:49.306)
Afterwards, we'll come over to my house and you can help me move across town with a single F -150.
Ray Hespen (30:52.639)
No, that's great. Actually, I love what you do.
Nate (30:59.31)
It's all good. Well, hey, well, you know, so that anyway, people should make that a plan for that this year. Before we shift into the bottom of the show, you know, I do wanna talk a little, which is bottom of show is predictions. And what we'll get into this prediction is questions, but I wanna talk about like what you've got on the horizon, what you're planning on the product roadmap on, hey, look, this is.
Ray Hespen (31:15.485)
Mm.
Ray Hespen (31:24.093)
Ahem.
Nate (31:24.718)
You've been in the weeds. You've started with one vision, obviously, and that's the story of most startups, right? You've been able to evolve that to really meet the market where it's at. What is Property Meld going to have to work on to be able to take things to the next level? This might actually steal away from the first question of where the future, but it's fine.
Ray Hespen (31:42.015)
So I'll say one of the things that we got really fortunate of, and I wish I would have had the forethought, is we realized that everybody wants to understand what's happening in the real world in their software system. And so how we built our platform that didn't involve people touching stuff ended up capturing probably the most comprehensive and clean data set that.
Nate (31:57.74)
Mm -hmm.
Ray Hespen (32:07.359)
that is in existence and around the whole life cycle of a rental property and all the maintenance that's in it. And so as we've kind of like really tried to understand where it goes and we try to know that like 12 .7 % cost is hard, how can we help customers that are not savants at every decision make those so easy and make them a statistical based outcome?
And so the things that we've launched, obviously like data and insights, we have probably the most comprehensive, visible view in the vendor networks, technician performance, benchmarking, coordinated performance. And so there's a great ways that people can learn how to better people. But what we know is next is like property management is hard. All properties are nuanced. Not everyone can know every piece of history about a property or a vendor and what they should do or which technician should go or anything like this.
And I want people to kind of imagine they hired a property manager or maintenance coordinator. And let's go under a very real assumption that they've maybe never owned their own home and they've never had to fix something. How do you make that person exceptional at running maintenance? Means that you equip them with tools that help them make a highly accurate decision every time. So we launched our new platform, Melt 2 .0. It takes a lot of what we've done, but it's actually geared up.
a lot for the future innovation that we have that starts making decisions where you can do left or right on something and says, you should go right, but you're a human being, you know better, you know your people, what are you doing? And here's why you should go right. And if you can start to do that, and keep moving that needle and making decisions, eventually people start making close to perfect decisions statistically. And when you have that happen, that's when you start taking that, that
process of that 12 .7 and you really start needling it down and then outside of executing the ability to actually start predicting repairs that are going to happen or what things should be done before they break is the obvious iteration that almost any industry who's had data and knows some of those things can start to predict ahead of time and people should start fixing air conditioners in February is our belief and so
Nate (34:17.23)
Mm -hmm.
Ray Hespen (34:27.735)
Those are the two major innovations. It just did. People should fix it. They're cheap. You know, Trane would love to sell your air conditioners in February. I'm just telling you, they'd love it at a low cost. And boy, does that not move 12 .7 % down.
Nate (34:28.654)
just went there and said it.
Nate (34:41.582)
Maybe I should do that. I should get my HVAC service now. I had my blower go out last July.
Ray Hespen (34:48.991)
It's about half the price right now, if you want to know.
Nate (34:52.046)
I do wanna know, that's good to know. Thanks for letting me know. All right, Ray, we're gonna move on to my favorite segment of the show. I like to call For the Future. For the Future is when I get to ask each guest who comes on the show to give their best predictions based on the following four questions. Are you ready to play?
Ray Hespen (34:53.279)
Okay. Yeah.
Ray Hespen (35:08.255)
I'm ready to play.
Nate (35:10.86)
All right. Question number one, what does property meld look like one year from now?
Ray Hespen (35:17.247)
Gosh, think where do you have to handle the hard ones? PropertyMill probably will be just the leader in information and data on how to execute maintenance well. So, easy.
Nate (35:31.404)
Easy peasy. Number two, do you think there'll be an expansion or consolidation of property management companies nationwide and why? And let's say over the next five years.
Ray Hespen (35:42.751)
Can I give you an, can I give you an F?
Nate (35:47.342)
I mean, I'm not in charge here.
Ray Hespen (35:49.327)
Yes, yeah, well, it's your question. So I want to play in your rules. So I will say yes, if, yes, if operators of the midsize only focus.
Nate (36:01.966)
Wait, they're going to expand or we're going to see a contraction here, consolidation. Okay, all right.
Ray Hespen (36:05.887)
There will be a huge consolidation if property management operators today continue to operate in the way that was 10 years ago, which tends to be let's take the headache and and I'll tell you why I believe this is Property management right now's whole goal has historically been let's take the head of what headache away from you But as the world and the tooling gets better for the landlord self -management
It's going to make that value prop less sticky all on its own. Now that will lean to consolidation, more piling of resources, all that. That's when people are going to have a hard time competing. It's much like the local hardware stores versus the major hardware stores, Lowe's, Home Depot. There's just different things you can do at scale. But I will say no if operators, especially in the midsize, can...
deploy intelligent things like intelligent technology to start moving the needle on, I why, or at least changing the statistical outcome and starting to that be the talk track, I very much think they are equally as competitive as national operators in being able to deliver that. And so I say yes, no, if, but I think that is a really underlying, that's a really underlying important thing.
Nate (37:29.198)
That's the best. I gave you an either or and you gave me a yes, no, if.
Ray Hespen (37:34.447)
Yes, no, if I wanted to lay it out clear So it's gonna be what happens and how does the industry choose? To attack the next five years and what is going to be their value prop is really important
Nate (37:47.374)
I actually genuinely appreciate that answer. I think it's a complicated or can be a complicated question. Probably convoluted, maybe is the right word. I don't know. It's Friday. I don't have time for vocabulary. All right. Number three here on for the future. What's one industry trend you think will continue, but you wish would go away.
Ray Hespen (37:57.469)
Mmm, just a good word.
Ray Hespen (38:11.567)
Interest rates I think the era of Zerp is over and I don't know if it'll ever come back and I think there's a ton of pressure on Real estate because of it and I think there's gonna be some very bad trickle -down effects just from five -year notes that are gonna have a really really hard time and I think it's gonna have a domino effect candidly and
Nate (38:32.716)
Yeah.
Ray Hespen (38:40.511)
Probably good for the Fed on inflation, but bad on the return stuff that we talked about. So this is going to be hard.
Nate (38:48.238)
I have a commercial loan that reaches its five -year balloon mark next December. So not this year, next December. I'm not happy about that. Yeah, you know what? I'll take this time actually now for those listening in, if you'd like a small slice of equity of a tertiary, tertiary market self -storage facility in Wisconsin, give me a call. I'm happy to.
Ray Hespen (38:54.399)
Yeah.
Do we need to start a GoFundMe now or later? What do you want to do? Lucrative.
Nate (39:15.566)
Ha ha!
Ray Hespen (39:16.543)
Gosh dang, we should have thought of this before. Yeah, good call.
Nate (39:18.766)
Dang it. Yeah. All right, last one here. What's one thing you believe will dramatically change or fade away in real estate as a result of tech advances?
Ray Hespen (39:28.191)
What thing that will change or fade away? Can I tell you one thing that won't? Gosh dang, sorry, I'm just breaking all your rules here. I will tell you, we gotta watch real estate transactions and we gotta watch a lot of people come in and try to really disrupt the real estate transaction buying and selling homes and we don't need real estate agents anymore. And Mike Delpre, who's a great follow as well.
Nate (39:33.938)
Sure.
I just ask the questions, I'm not really in charge.
Nate (39:56.588)
Mm -hmm.
Ray Hespen (39:56.747)
continues to do write -ups on this. And as a matter of fact, the amount of human assisted real estate transactions have went up. And I think that tells me how much real estate is a people business because it is a huge asset to anyone. And so I think in property management, I think you had mentioned it earlier before, property management is a people business and it's going to be...
Nate (40:18.828)
Mm -hmm.
Ray Hespen (40:20.691)
doing that really well, but it's just finding what areas it should be done, I think will be it. But I don't think that that's going to go away. I do not believe self -serve magic happens with human beings. And I think real estate actually painted that clearly for us over the last five years in something that seems like it could have been.
Nate (40:43.182)
Ray, this has been awesome. I'm glad we were finally able to make it happen. It's, you know, our schedules, we're just, we live so far away and you know, different time zones and all that jazz. But glad to have you on the show here. Before we close out for those who want to learn more about PropertyMelt and or connect with you, where do they go? How do they do that?
Ray Hespen (40:52.223)
I know what to do.
Ray Hespen (41:07.199)
Yeah. So, property meld .com. So property spelled like it sounds meld .com. And you can see a little bit about what we do, learn a little bit more. We've got some really cool things on the website. If you're interested in data, being able to download KPI sheets, metrics, and things that you should be watching. There's a lot of great stuff, even if you're not interested in engaging us, that you can check out, join the maintenance minute where we delve kind of the, some of the weekly things that we're finding and discovering in the industry. And then of course,
a link to that amazing maintenance summit that you're so kind to kick out there. So propertymel .com. There's a lot of cool stuff there outside just talking with us and checking out software.
Nate (41:48.558)
There it is. I'm sure I'll have to travel to another state to actually get to hang out with you. Or we could just get coffee on the calendar. We'll get something on the calendar to hang out soon, but until then, we'll catch you later.
Ray Hespen (41:54.687)
Yeah, that's when we only get a hang out. It's so great. Yeah.
Absolutely. All right. Thanks, Nate.