Nurturing Excellence in Multifamily Maintenance

(0:04 - 0:26) Welcome to Multifamily X podcast series, Masters of Multifamily Maintenance Conversations. Ready to engage in essential dialogues, exploring the multifamily universe alongside top industry leaders? Join us as we explore fundamental conversations for the multifamily space. Let's dive in.

(0:27 - 0:37) Hello, everybody, and welcome to the show. This is another episode of Multifamily X podcast, the maintenance series. Today we have in the studio with us Jim Mitchell.

(0:37 - 0:54) Jim is the vice president of facilities for Centerspace. Welcome to the show, Jim. Hi, Adrian.

Happy to be here. Jim, to begin with, I'd like to ask you to share a little bit about your journey with the audience right here. Tell us a little bit about your journey in general and specifically your multifamily journey.

(0:54 - 1:14) I originally started my career in the construction industry, and I kind of fell into multifamily property management. Now, that's a line that we've all heard lots of times, hundreds of times maybe from our colleagues, right? Lots and lots of us in our industry just kind of happened to do it. I didn't really even know this existed as an industry or as a career or any of that kind of stuff.

(1:14 - 1:24) Once I learned of it, it made sense. I'm like, well, of course people do this. Of course you'll manage departments, and then some companies might manage a lot of departments, right? I started in multifamily in 2005.

(1:25 - 1:39) I was a construction owner's rep for a company that had a substantial rehab project. They wanted to remodel about 1,000 apartments, occupy it all within a year's time, all senior housing. So, there's key challenges right there that have to be met.

(1:40 - 1:45) I didn't know. I was a construction guy. I didn't know if I was going to do that job and then move on.

(1:45 - 1:57) We talked and agreed that this might be a really good fit for both of us. I just said, hey, as long as we're kind of talking about the nine-month part, they had a hard deadline when it had to get done. There was a funding push, right? There was no, like, let's see how it goes.

(1:57 - 2:05) They had to get done. I just said, hey, as long as we're talking about the nine-month part, about where we're headed and that kind of stuff, I'm in. I'll do this.

(2:06 - 2:17) I was a construction. I was kind of a jobber. It was about six months into that job that they had had some trouble doing some larger scale projects on some of their high-rises, things like some roofs and water.

(2:17 - 2:34) They just didn't have anybody that could formalize the process, right? They had to go to HUD for approval. They really needed to have, you know, also pre-bid and organized and a good process that had a lot of transparency to it. I was able to help them out with some of that stuff.

(2:35 - 2:47) Then at that point in time, I think it was six or seven months into the job, something like that, they asked if I would stay and head up their maintenance and their construction going forward even after I finished that project. I thought, man, this is great. I found this business.

(2:48 - 2:56) Here's something that I can do with my skill set. Unlike construction, it doesn't seem like there's a whole lot of layoffs. I didn't see seasonal layoffs happening here.

(2:56 - 3:25) I didn't see the workload changing. Our workload in our business was pretty flat, right? Construction, as everybody knows, we all know, can be very volatile, right? One thing happens in the market, whether it's a session or interest rates or whatever, one of the leading indicators, as we all know, one of the first things to help out is construction. We can look at right now this year, with interest rates being where they are, starts are down 50% compared to where they've been, right? A lot fewer projects getting started this year than what we've experienced in the last few years.

(3:26 - 3:42) That demonstrates and really shows in today's terms exactly how that industry goes. The rest of us, most of us in multifamily are here and saying, yeah, well, interest rates, you know, landscape is difficult. We can't transact like we normally would transact.

(3:42 - 3:53) We can't buy stuff and sell stuff like we normally could, but nobody's comfortable with knowing what cap rates should be or therefore what value should actually be. But we're still running the market. For multifamily, we're still okay.

(3:53 - 4:04) We're able to kind of weather some of these volatility that happens in the economy and some of these ups and downs. It impacts us, no question about it. It impacts us always, right? Coming off a couple of years, we're probably the best industry I've ever seen.

(4:05 - 4:15) You know, I'm heading into a little bit of both, you know, phasing some headwinds now. Certainly heading into 2024 and 2025. Before going to the second question, I need to remember to acknowledge our partners from AppWork.

(4:15 - 4:52) This podcast is possible thanks to our partnership and their power in our podcast today. Second question for you, Jim, is when it comes to developing maintenance leaders in a multifamily, what would you say is the single most important skill that organizations should be focusing on? Most often, the way that somebody is going to move into a maintenance leadership role is they were out in the tech industry, right? They really knew how to fix things and do repairs and provide high-level customer service and all those sorts of things. And transitioning into leadership requires the addition of some more skills.

(4:53 - 5:16) And I think key and chief among them is resource management. So resource management includes things like, you know, how do I manage the calendar? And now all of a sudden I have a team of some number of techs, right? So how do I manage the calendar most effectively so I can achieve all the objectives that our business has, right? Traditionally, in most states, people are moving in and out around the first of the month. And so that person, last week of the month, would be extremely busy.

(5:16 - 5:39) Middle two weeks of the month might be a little bit slower. Getting a new leader to understand that that's the time when we can do preventive maintenance and do some other catch-up things and some of those sorts of things, the routine stuff, right, to leverage those two weeks. So time management, how to manage a team and how to best use those resources, whether that's, you know, and some of this will be, you know, your given property.

(5:39 - 5:51) You might say that, you know, I have four techs and four buildings, so everybody takes a building. And that's a model, right? And you can drive some accountability around that. You might say I have four techs, I got a great carpenter, electrician, a great plumber, and a great HVAC.

(5:51 - 6:22) So I'm going to divide up the work based on their skill sets and stuff like that, right? Those are different approaches to kind of solving for the same thing, right? How do I best leverage the team resource that I have? And that's a different way of thinking than how do I go do more work harder today, or how do I do work harder Saturday, or, you know, how do I improve my error rate, right, and not have all that, some of those kind of things. So this whole resource management thing is different. There's also the financial resources, because now you're probably going to have some purchase accountability, which might also be new.

(6:22 - 6:53) Although I think if we all think about our home lives, it's not very new, right? We all do that as a practical matter every day at home. But even things like, you know, managing inventory levels, right? So, you know, I see sometimes teams that lose efficiency because they just don't have the appropriate inventory on hand at all times, right? Anticipating, so here at CenterSpace, we say that we have 65 days to turn a product, okay, not five days. So five days is kind of an issue, right? We push to get 95% of our turn done within five CenterSpaces so that they've got to move on.

(6:53 - 7:11) However, if our residents tell us 60 days before they're going to leave that they're leaving, or they give us that notice of vacay at the 60-day mark, that's when we expect to move out. And that's when we're asking our team over that next, you know, call it T minus 53 at that point, right? So seven days is expected. We've got 53 days left before the move out.

(7:11 - 7:42) Order along, we, you know, schedule, you know, schedule with vendors as appropriately as you can. So when you work, you know, there's a broken towel bar, there's light bulbs, there's ceiling fans, whatever the case is, you know, any of those turn activities that we can get done, again, kind of leveraging that middle two weeks of the month or whenever, you know, whenever it's slow for you, within your workflow, your property, your company, it's all a little bit different. But being able to have things like that sitting like on a list.

(7:42 - 7:53) So when you know, hey, man, the third week of the month, we have more capacity than any other week. Let's go attack this business during that time. So managing resources, I think, is the key.

(7:53 - 8:19) It's probably the single most important skill for leadership. So, Jim, I wanted to go back a little bit to your current role and ask you to share a little bit about, you know, what are some great things that you do at Centerspace? I'd like to, you know, tell us a little bit about the company, you know, company size, what type of profile assets are you overseeing, you know, managing? Is it own and manage? Do you do third party? Also, just tell us a little bit about your company. Sure, sure.

(8:19 - 8:32) So we are a publicly traded group. We started in business in 1970 and began to be publicly traded in the late 90s. We currently sit at about 13,000 apartments all owned and managed.

(8:32 - 8:39) We don't do any key management. We only manage what we own. We were as high as 15,000 units, you know, a year or so ago.

(8:39 - 8:48) We have had some acquisitions. So it's about 13 up until 2010. So from 1970 to 2010, so for 40 years, we didn't manage anything.

(8:48 - 8:58) We were really a company executive. Everything, all of our whole multifamily residential portfolio was third party to manage. And then we had a bunch of commercial and industrial and retail.

(8:58 - 9:18) And then we brought management of the multifamily in-house. And then in 2017, so not that long ago, six years ago, began transitioning from a multi-asset type lead to a pure multifamily player. And so it was at that time that a few people were brought in, like myself, and we had a whole new leadership team here.

(9:19 - 9:42) Because as we disposed of, like we had a lot of medical stuff, malls, like I said, you name it, warehouses, whatever. And so as we took and redeployed that cash and moved it into multifamily resources, a few of us who have a lot of multifamily experience were brought in to kind of help transform the company into what we are today, which is we are currently multifamily. We do have some mixed use assets.

(9:42 - 9:49) You know, we've got the retail on the first floor or even retail and a couple of outbuildings, some of those kind of things. But that's not really our bread and butter. That's not our core.

(9:50 - 9:59) Our core business is apartments. And we do manage and don't, like I said, don't do any third-party stuff. My next question, Jim, is about recruiting.

(9:59 - 10:20) And I want to ask you, how can organizations effectively recruit the right talent for their maintenance teams? And then go very specific. What does your company do to recruit the best talent out there? This is tough. I mean, we all know this is like, I don't know, gosh, I'm not going to say rank things, but is this the most difficult thing in maintenance? I don't know, maybe.

(10:20 - 10:23) It's tough. It's tough. And we're all experiencing this right now.

(10:23 - 10:40) And this is not, actually, this is not entirely new, right? Even, you know, five plus years ago, we were all talking at a national level that we were probably down about 25 percent, you know, with the beach job. So it is tough to recruit. You know, I think that, you know, one, having a company that has a strong name, I think that's very helpful.

(10:40 - 11:04) Right? So a company that's involved in apartment associations and has some success within those and some of their programs that they have, that's great. You know, involved not just being a member, but having some team members in the firm participate on those committees. You know, so getting our name out there in the multifamily community through some of the apartment trade associations and that kind of stuff, I think would be very beneficial.

(11:05 - 11:17) That's not going to help us get somebody who's not in our industry, right? That's going to primarily help with, you know, recruiting some competitors. You know, we are, you know, trying job fairs. You know, we're participating in a program in one of our markets, actually.

(11:17 - 11:26) That's pretty interesting. You know, it's early, but we're optimistic about it. So the Denver Apartment Association actually has an apprenticeship program.

(11:27 - 11:42) We have one of the apprentices, so we're participating in that program. These techs work four hours a day, and then they go to school on Fridays and work towards getting their PAM fees. And so by the time they finish this program, they'll come out and they'll have their national, you know, their NAA PAM fee designation.

(11:43 - 11:53) You know, we think that's pretty innovative and pretty new. We're not seeing a lot of that happening. You know, we're not typically a union-type business where there would be robust apprenticeship programs and that kind of stuff.

(11:53 - 12:08) That's not the most common, you know, multifamily operator out there. So it is challenging because we don't have that level of support, right? Being a part of a trade association of that nature. But leveraging the apartment associations and some of the things they're doing is a big one for us.

(12:08 - 12:20) And like I say, good reputation, and we do do job fairs and some of that kind of stuff. I can't speak to how effective that stuff is. My role is not HR, but it is challenging.

(12:20 - 12:35) You know, we don't get as many resumes as we did, and don't get as many, you know, a little different qualities than what we used to get in the past. Some of that, I think, is also due to the construction industry being so busy. And maybe those jobs will be viewed as being a more preferred job than our jobs.

(12:35 - 13:04) When it comes to skills development, what strategies would you recommend for cultivating mainers leaders within an organization? I think one of the things that I think is important here is to leverage our existing leaders, right? So here at Senate Space, we have something called the Council of Service Advisors. So this is 14, I think it's 14 members of our maintenance leadership team from across our portfolio, so from across all markets. So they're kind of in a regional, you know, regional maintenance position.

(13:04 - 13:13) But they're, you know, they're supervisors on a property. It's not a formal title of like a regional maintenance manager. But they provide a lot of mentorship and a lot of training to some of our newer guys.

(13:13 - 13:35) We've got a couple of properties that are bigger, where we kind of, you know, what we want is a flagship here, not in the south of Indianapolis. You know, those bigger properties, great training ground, where the new tech can get lots of support from some more seasoned veterans. And we can kind of use that almost as like a launch pad, you know, to train folks to go maybe to other areas of our portfolio.

(13:35 - 14:13) So they can be a larger asset, right? Because if you have a two, let's say you have a two-person operation that, you know, back and forth with maintenance, and you're down one task for three months, let's just say, pretty confident, right? Well, the new one starts, you know, then every, you know, that's a brand new person who really doesn't know very much at all. The seasoned person who's still there for every task that they might teach the new person, that now takes them two to three times as long as they wouldn't do it, and they get frustrated. You know, so it's challenging when you have a very small team on a site to be able to provide effective enough training, because, again, it can become a little bit burdensome for lack of a better term.

(14:13 - 14:32) With a larger team, an asset with a larger team, there's a lot more opportunities for training, and there's a much stronger level of support to the new tech. As far as the leaders, I think this, the service advisory council that I talked about is a big deal. Those folks participate in stretch assignments.

(14:33 - 14:56) So one example is regionally here in St. Cloud, Minnesota, which is, you know, not Minneapolis. It's a different part of the state, but we have one of our service advisors there who took on the bidding of all the snow removal contracts for that region, plus some other portions of the Minneapolis region, and kind of centralized it, and then was able to negotiate with one or two haulers, improve on pricing. He did a great job.

(14:56 - 15:38) More importantly, he did it, and he hadn't done it before, right? So with some guidance and some assistance from some senior leadership here at CenterSpace, Kurt, who's his name, you know, went through this process with this, I don't know, cost of intercall properties or something like that, so a pretty significant piece of business if you think about how much it actually costs to plow snow in Minnesota, where we get about five feet a year, right? And it's a stretch assignment, you know, which is one of the things that I often look for. And then Kurt, along with another one of the service advisors, tomorrow we'll do a facility call in for all of our onsite teams, all our regional teams, we do this quarterly. And so two of the service advisors actually are presenting slides in our desk tomorrow to the whole company.

(15:39 - 16:05) Any opportunity like that, you know, stretch assignments, opportunities for somebody to, you know, get outside of themselves, do something more than they maybe have done before, Kurt sitting on that snow stuff, he did outwork, right? All of these people have did stuff out one at a time and just, you know, maybe haven't had the visibility, the opportunity to do something at a larger scale. He's excelling at it. And I'm watching him and I'm so proud and so gratified to be a part of a team where I can watch them do it.

(16:05 - 16:11) Kurt's role is to be throwing two opportunities that we're able to provide like this. Elevate your people. I love the story.

(16:11 - 16:20) That's what you got to do. Yeah, and it's good things. It's just really extremely gratifying to be able to help somebody grow and be part of that growth.

(16:20 - 16:45) Jim, next I want to talk about career paths. And I wanted to ask you what's your take on career path in our industry? How can organizations define and nurture career progression for their teams? So some of this investment, you're going to have to take another step on the ladder or not going to have another step on the ladder. You know, a little bit interesting because often, you know, we talk about the importance of service and how critical that is for our customers.

(16:46 - 17:10) Yet, oftentimes, a lot of those who've been around for a little bit, they're trying to see that this is an area where maybe it's not as invested as heavily as the way that we talk about it. But even without a formal position, the things that I just talked about with Kurt and others on our team here, where they are being elevated, you know, so we've got to jacket these things. You know what I mean? You know, not because they're important, but because they are important.

(17:10 - 17:29) So acknowledge their importance and put them into a position where they do have an opportunity to do more and grow into something more. Sometimes you're constrained by the size of your company as well, in terms of how many positions or how many rungs on the ladder you're able to develop. So these are all challenges, right? It's not like, you know, somebody's great.

(17:29 - 17:51) We're going to make a job for that person. We can't do that. But I think the stretch of time stops, you know, due diligence, you know, any of these opportunities, any of these special activities that have to happen, whether that is in-house, whether that's, you know, going to lock units at a new acquisition, to be part of that team and get additional exposure to folks from the support offices or corporate offices.

(17:51 - 18:25) One of the struggles that we have as an industry, and I've been around for 20 plus years, is how to switch from the reactive mode into the proactive mode. You know, we always seem to be out there, like, way too busy to put out fires, to do anything proactively. So how do we, what are some tips, what are some things that we could, we should do in the studio to kind of turn the tables on this reactive behavior, to become more proactive, to go from defense to offense, is what I call it.

(18:25 - 18:33) Yeah, yeah. Well, I think it's a couple of things. One, I think it's, you know, it's a balancing act that doesn't hit either extreme.

(18:33 - 18:54) I sat at a large national conference one time and saw a presentation on preventive maintenance, and the presenter actually said, like, it doesn't matter what else comes up, if you're doing your PM, it doesn't matter, you've got to keep doing that. Well, I think that if a customer calls and they have some significant problems, we might need to talk, you know, and address that. So common sense is that the benefit might need to be a balance.

(18:55 - 19:07) And the balance that I'm talking about is kind of predicated on cost benefit and out, right? And it's not dollar cost solely. That is, of course, the key metric in business. That's how we keep scores with the dollar, of course.

(19:07 - 19:31) But there are other factors to consider. So, you know, I'll give you an example where the, where there was more than, but lack of preventive maintenance was both had a significant salary impact, but also had a negative impact on customers and the fees. So vertical feedback, magic packs, that's a clean export for it, right? So magic packs are vulnerable if they're cooling coils that clog up with stuff.

(19:31 - 19:41) Some places there are cotton litches. I don't know if you have any in Georgia, Adrian, but here we have these cotton litches. We think we released this out of a cotton, right? In late June, early July.

(19:41 - 19:59) Clogs up AC connected coils, right? Magic packs are particularly vulnerable to this. If they're sitting in a box inside, you know, and they don't have as much service area, maybe as a cloud, not an AC connector. So COVID hit, surprise for all of us, right? Okay, what are we going to do? We don't know any, what the costs are going to be.

(19:59 - 20:18) So we're thinking, okay, what can we scale back to try and get some dry powder to be able to endure this pandemic? We've, nobody's ever done this before, right? So we scaled back the cleaning of magic packs, a couple of thousands and the total probably between those two 600 units, something like that. I'm close enough. I'm close enough.

(20:18 - 20:32) In that year that we scaled it back, we had $40,000 in HVAC service calls and an average cost of $350. When I think about what that, what happens when somebody's without their AC, first thing I think about is, okay, they put their work order in. They wait for someone to come look at it.

(20:33 - 20:45) Then they might have to wait for someone to come take their delivery. They might be without AC for a day or two days or three days, whatever it is. You know, the team gets that call, whether it's through a portal or however it comes in, right? It's like, oh, shoot, Adrian, AC is out, okay.

(20:45 - 20:56) Hey, Jim, go look at it, right? So now the maintenance team might spend an hour or two hours or something like that. Just process a whole team. If you combine it, you're going to spend a whole bunch of time just processing this.

(20:56 - 21:11) Now, in this example, where I said it was about $40,000 in cost and with an average cost of about $350, you know, that's 85, 90 tickets or something like that. We cleaned them. You know, they look like two coats of sweaters, or you can tell seasonally or something.

(21:11 - 21:25) You can, it's like looking at rings of a tree trunk, right? You can tell how many years by looking at the color of the rim, right? So you can see that these things haven't been cleaned in two years. It was just plain and day. We cleaned them and there were no service calls at all.

(21:25 - 21:44) You know, I think we spent 50 or so. Now, the reactive approach was cheaper from a dollar per dollar perspective. If you don't care about how much time your team spends, and if you don't care about how much you talk about, or if you don't monetize your team's time spent differently and monetize customer dissatisfaction or customer satisfaction.

(21:44 - 22:09) And so that's like, this is like exhibit A of an example that I can hold on to real well and it just happened a couple of years ago. And this is the balancing act, right? So what's the overall impact of not doing something? What's the overall impact of doing something? You know, if a roof has an estimated useful life of 20 years, does that mean that at year 19 or year 20, we should proactively replace that roof? I don't necessarily think it does. I'm not a proponent of going and performing roofs in the dumps.

(22:09 - 22:34) I think that we need to be vigilant and we need to be looking at that and doing a critical assessment of that roof assembly, you know, at all points in time and certainly as it gets older. And, you know, you can have a roofer come out for about $1,500 a year and go over your flat roof and make sure that seamless and flashings and all that kind of stuff are, you know, in the net. There's one manufacturer I know who will actually send your warranty by five years.

(22:35 - 22:51) You can prove it's in default. You know, so the replacing of the roof based on an estimated useful life calculation, I don't see that, you know, make a whole lot of sense in our business. If that roof is still serviceable and you're doing things and you know that it's still serviceable, right? That's the place where I'm going to be reactive because there's nothing that happens.

(22:51 - 23:20) Most often with roofs, and I'm not, you know, I don't feel entirely what I'm saying, but most often when a roof leaks the first time, you can do something to get it to the next year and you can buy it for it, you know? And so that's reactive, but it's not like me, you know, making a battlefield decision, right? Where, oh my God, I got to replace this roof right now. So I hope those two examples kind of serve to illustrate the difference that I'm drawing there. The next topic, Jim, that I want to talk about is employee retention.

(23:20 - 23:29) Of course, specific maintenance. Yeah. It's a critical aspect for maintaining strong assets, well-performing assets.

(23:29 - 23:39) What strategies do you believe are essential for keeping top talent engaged and motivated? Sure. This is a great question. This is a great question.

(23:39 - 23:58) And this is largely what our consult service is about. It is about helping them grow, but it's also about retaining them and also getting our other team members something to aspire to. You know, I'm not going to say something like that because it's going to give us a competitive edge because in order for it to be a competitive edge, kind of everybody would have to know about it.

(23:58 - 24:38) You know what I mean? What we pay or don't pay might or might not be a competitive edge, right? That's part of it, too. You know, one thing that I think a lot of us have seen happen is that, man, the market sure moved a lot faster than we did when some employees started that couple of years, right? And we actually have done a couple of mid-year adjustments here in our shop because we realized that, you know, these jobs are in such, these people are in such high demand, you know? And, you know, at a lower level of pay, you know, moving for a couple of bucks an hour can be super meaningful to somebody. You know, it could be a decision, a significant decision maker for them, more so than that might be meaningful.

(24:38 - 24:58) I know it's crazy, but it's true. It does happen. But I think transparency with that, that, you know, hey, you know, Adrian, we realized that the market has moved faster than we have, so here's what we're thinking we'd like to do, you know what I mean? And trying to get, trying to get, I'm not going to say ahead of it because we've done this kind of from a reactionary position.

(24:58 - 25:07) Like I think everybody has, you know, you don't know, you don't know how fast the market's moving. It's kind of like, you don't know the price that you can get for a farm and see it here and now. So it's just like, that's how it is with this.

(25:08 - 25:31) We don't know how much weight is it moving until we get that feedback from candidates, right? That, you know, we're not in set with the market, right? And then it does become a matter of like, okay, well, let's make sure that all of our team members are in set with where the market is at, right? So we're not putting ourselves at a significant and we put that at a significant loss. I think that, again, it needs opportunities for growth, stress assignments, that kind of stuff. That stuff is all very meaningful to people.

(25:32 - 25:56) It's because it's recognition with action, right? Like I recognize that you're talented. In fact, I recognize it so much that I'd like you to join us on a trip to wherever, come with us if you have, if that was my time, because I value your observations and your opinions, right? So that kind of value I think is important. And then ongoing training, you know, you know, like, so in Minnesota, we have something called a boiler lesson.

(25:56 - 26:20) You have to have a special class in boiler lessons to operate, not only to have boilers in it, most other states don't apply that. We also have that in North Dakota, where we have boilers. They don't require boiler lessons, but we're getting, we're working to get our guys in North Dakota the same boiler lessons, right? Because people like to have credentials and we like them to have credentials because that all is a very thrilling demonstration of growth, like here, I got a license, do you know what I mean? That's meaningful.

(26:20 - 26:36) That's meaningful. That level of investment in our teams, I think is very meaningful. And we're currently investing in a new, new to us training program that I think is going to be very powerful for our teams and could help, help them grow.

(26:37 - 26:59) So it's a virtual reality based training program being used extensively right now by a number of large, larger management operators. And then also the Modified Apprenticeship Program, primarily throughout some of the right to work states. Manufacturers like Carrier and we are using this to train their dealers and our dealer technicians on their equipment.

(27:00 - 27:22) So yeah, you put the goggles on and to work on an AC convention, you gotta take a knee. You know, and you gotta, because, you know, two objections that I've always heard from training, from maintenance techs are, I want one-on-one training and then more important, the more common one is hands-on. Can I get hands-on training? And it's like, well, we're gonna teach 30 people how to fix a refrigerator.

(27:23 - 27:29) You can't put 60 hands on the fridge. We're not gonna break that same fridge 30 times over and over again. The only one fault is 29 watts and then rotate through it at night.

(27:29 - 27:46) So how do you do that? And so this virtual reality program that we're deploying right now seems to check all of those boxes. So I think whether we're talking about, you know, retaining techs and things, tech, whatever, that sounds great. Or joining them in the leaders or retaining leaders.

(27:46 - 28:01) I think the training demonstrates a lack of commitment on the part of the company. Again, it's like a skill, like the boiler thing. Those guys actually don't need that, right? They want it though, right? So I'm like, okay, well, I got a way to give it to you.

(28:01 - 28:14) You know, provide that to you. So I want you to have it, right? So this thing, you could even get a national HVAC certification, right? And some people might say, well, geez, they need to go certified. Aren't they gonna leave? And I'm like, oh, I don't think they are.

(28:14 - 28:20) You know, I mean, they probably do. I mean, I guess they do. I'm more scared of them not having the training.

(28:21 - 28:49) We see the cost goes up and up and up with, as I talked about before, with, you know, maybe the level of experience and expertise that we see, you know, entering our teams in these areas, right? It's just diminishing, not becoming better and better. So with that, we've also seen more and more work move over to vendors that, you know, 10 years ago, we would have done, like, what do you need to call a vendor for that? We do that ourselves. We do that in-house, right? And I'm not a person that would do everything in-house.

(28:50 - 29:13) There's a balance, and that's what that's just like. There's a preventative versus reactive maintenance and replacement, right? But we ought to be able to troubleshoot stuff in-house and know where we draw the line for ourselves so we can stay within that. We should be able to say, okay, I can go through some basic steps and figure out if I should actually work on this air handler or if I should call, you know, any of that back wall.

(29:13 - 29:24) And now a word from Sean Landsberg, co-founder, Appwork. What you can measure, you can improve. You did mention an average completion time or tracking completion time for maintenance technicians.

(29:24 - 29:40) What other very important KPIs is Appwork capable of tracking? All the data can also be broken down. All those KPIs can be broken down, like we said, on a property level, technician level, or back up to a portfolio level. But even within a technician, you could break that down based off of the categories.

(29:40 - 29:52) You can see, you know, how is this technician doing with HVAC partners, with plumbing partners. We also took the concept of KPIs. A lot of companies use a KPI to say, you know, well, how is somebody doing? Let's look at his KPIs.

(29:52 - 30:23) But another thing that we actually did is we took that a step further where we actually translated those KPIs into sentence-based comment. You know, the system would actually automatically spit out, you know, an actual actionable sentence, whether it's positive or negative, based on the technician's performance. Jim, do you think that we as an industry were heading towards contracting more work and doing less in-house, kind of like the commercial maintenance, commercial building maintenance? This is a model that's been around for decades in commercial.

(30:24 - 30:35) That's something new. But I'm thinking, in my opinion, right, the trend for multifamily is kind of the same as follows. Do you disagree with that? I don't disagree with that.

(30:35 - 30:38) I don't disagree with that. I mean, I'm watching it happen right now. I'm watching it happen.

(30:38 - 30:47) I mean, something's got to give. You know, seven, eight years ago, we had a deficit of 25% talent to job. I don't know what that deficit is today.

(30:47 - 30:53) I'm sure there's people that are smart to do. No, I'm not one of them. Let's just say 30%.

(30:53 - 31:11) Do any of us think that's going to improve and get better? Have these jobs become more attractive today than they were 10 or 20 years ago? I don't think they have. You know, the trend has been, I mean, everybody's talking about this all the time, the trend of folks not entering the trades as much as they did in the past. I don't know.

(31:11 - 31:17) I don't know what drives it. I don't know if it's like a parent is a college graduate. They want their kid to go to college too or something.

(31:18 - 31:29) I don't know, but we all know this is what's happening. So I don't think things are going to just get better for us. I don't think all of a sudden we're going to find that there's some magic wand that just waves and all of a sudden there's an effect.

(31:29 - 31:50) And in fact, they're so plentiful that we can kind of start having our pick. So no, something's got to give. So I think when I think about this stuff, and this is one of the things I do talk about a lot, it's like, okay, what can you pay someone else to do? What you can't pay someone else to do is provide that connection between cyberspace and the customer.

(31:50 - 31:59) That farmer, that electrician, they can't do that. Our team leads, our supervisors, that's exactly what they do. Our product isn't buildings.

(31:59 - 32:03) Our product isn't amenities. Our product is not products. Our product is everyone.

(32:03 - 32:23) We all know, those of us who attended, we all know that customers will stay in an older asset that's less amenitized, clean, well-kept, and that the service is great. So that's really how we differentiate ourselves. And I know all the new products coming on the line, there's like more amenities than have been in the last five years, probably in the hundred years or so before that.

(32:24 - 32:37) And the amenities are cool. I mean, there's lots of demand for those. There's a segment of our customer population that jumps around, right, and chases around new deals and keeps going to concessions and more and more amenities and that kind of stuff.

(32:37 - 32:51) But I don't think that's the mainstay of our customer base. I think the mainstay of our customer base recognizes the value that there is in service. And so when we're talking about outsourcing, yeah, we can pay somebody to come fix the furnace.

(32:52 - 33:10) Do I want to pay someone to come like, you know, this is going to be a girl's hour statement. Do I want to pay someone to come and fix the power line? Right? No. And do I think for a minute that I can delegate or offload that customer connection that only a center-based team member can make? No.

(33:10 - 33:27) So that's, you know, we all have good judgments in general, I think. And so exercising judgment along that as being one of the decision factors, I think is helpful. Yeah, I sit in here and look at spreadsheets and I'm like, dang it, how do we set them up? Everybody that sits in my job around the country does.

(33:28 - 33:32) But really, and that's important. I'm not trying to say that's not important. That is important.

(33:33 - 33:54) But more important to me is like, you know, that connection with a customer. And that's really what I want our team to focus on. What you just described by describing your connection with a customer is culture, right? And I have the saying, you have to build the culture yourself.

(33:54 - 33:59) You can't delegate or outsource culture. Yeah, I think that's true. I'm sure that's true.

(34:00 - 34:17) Yeah, and it needs to be thought of. It needs to be consistent throughout an organization. Now, a topic that's kind of tied into my previous question, the one where I was asking, are we heading towards more outsourcing is centralization.

(34:18 - 34:39) Centralization in maintenance. Let's talk about this. And I want to ask you first, is centralization maintenance, multifamily maintenance, a buzzword? Is this something that's real? Is it tangible? How tangible is it? How doable is it? What level of centralization we can do with what we know today in 2023.

(34:39 - 34:50) I'm sure that this conversation is going to be different five years from now. Yeah. I'm certainly not hearing as much talk about centralizing maintenance around leasing and assistant managers and that kind of stuff.

(34:50 - 35:09) And that happens full swing right now, right? I did centralize a company's maintenance years ago, but that was a company that had a lot of small assets and they were just super, super inefficient. She's already mean. And so there we were able to increase the unit count that guys had by about 20% or something like that.

(35:09 - 35:36) That was, you know, the significance of a 20% reduction, right? And that was basically what everybody kind of became, not really a rover, but you know, you might have three 40 minute problems or something like that and those sorts of things. I think that, you know, a central call center, this is getting popular, I think. But another one of the big complaints you hear from tax is kind of a garbage problem, you know, of residents type stuff into that portal.

(35:36 - 36:45) That's just doesn't make any sense, you know, and everybody puts this is, you know, emergency priority, emergency status because it's because of me, you know, I kind of want it done fast. But I do think, I do think there's, there's maybe there's probably some opportunity for a better triage through centralization. I think that there's a lot of technology emerging right now that probably helps with that.

Honestly, I don't know that it's actually a person sitting somewhere necessarily. I think that's one area that grew as I, as I think about, you know, with your comments around commercial, this is something I haven't thought of before you mentioned anything. I could definitely see a day, you know, where you could have, you know, I'm going to make this up.

You could have one maintenance person, you know, or three experts would probably do now. If we all say the average of 120 or 130 or 110, whatever, who cares? But, you know what I mean? You know, could one person do 400 units and then you better for everything that they couldn't, like everything that's not a lot, I know that's a silly example, but this is not something I don't do that I've always thought about. But as I think about, you know, commercial and how commercial works, that's exactly what they're doing.

(36:45 - 36:54) I don't know how many square feet, you know, that commercial hand manages, but they're not doing a lot of work themselves. You're right. They're calling the plumber, they're calling each of that company.

(36:54 - 37:04) And that's also who's managing their preventive maintenance for them. You know, so I could see that happening. Now, I don't think there's more people becoming plumbers.

(37:04 - 37:37) I think they're running into the same problem we are, right? You know, people don't want to be, in fact, they don't want to be plumbers either. So, you know, I think there's a finite supply currently of talent, you know, kind of within the trade that might still limit that. But yeah, the only way I can see that it gets specialized is there would have to, you know, we would have to figure out a balance, a financial balancing act between, you know, what is the cost balance versus doing it ourselves, you know, understanding that when you do it yourself, you kind of do that so many efficiencies.

(37:37 - 37:54) So if they want that team, even though they may be a little cost per hour, but I'm sure there's a balance in point with that. Yeah. I don't know.

We'll see. We'll see if it goes along with centralization. You know, we, our portfolio being in the upper Midwest, you know, that might be a little more challenging for us because we're in some markets that are pretty small.

(37:54 - 38:15) And the thing about small markets is we might all think those small towns, whatever, man, the resources are, you know, it might be in a place like North Dakota and you have like four viable farmers to choose from. In Atlanta, you have 400 to 4,000. In Minneapolis, you know what I mean? Bigger markets are much easier.

(38:15 - 38:30) So when we're talking about centralization, I can see it, you know, we're not coastal, like most of the reasons are right. But we are, we're in some less populated areas, particularly when we're in like Montana, North and South Dakota. But I don't think about our portfolio, Minneapolis, Denver.

(38:31 - 38:43) Yeah, we'll probably do it. So we have the market for it in New York. You mentioned technology being a tool that's going to help probably driving the centralization.

(38:43 - 39:04) So you want to stick to technology and get your thoughts on prop tech products currently available for maintenance. Yeah. And tell us if there's a product that stands out to you and are there any features that are yet to be developed in your opinion that you're not aware of being developed currently? Yeah, it's a great question.

(39:04 - 39:25) This is a super fun area to be a part of right now as things are just, you know, growing exponentially every week, if you would like to know. We are currently, we have begun deploying IoT technology across our entire portfolio. That includes smart locks, leak sensors, and Wi-Fi thermostats.

(39:26 - 39:36) Smart locks, you know, if you think about when something moves out, we change to a vendor lock. Well, if we're doing value add, we might change to a construction lock. Then those guys, they're done.

(39:36 - 39:40) We all agree you're done. Then we're going to change it to a leaking lock or something like that. Then change this when something moves in.

(39:41 - 39:58) Hand cutting keys. Some of our systems out there require somebody to carry the PVA around to the actual door and then punch something in and offer some horror stories about how long those things can take. And the smart locks that we put in, we move you in and move you out of our management systems, lock things like that.

(39:58 - 40:15) Maintenance that doesn't have to do with anything. I'd have to look at the numbers, but just through a little over 15 minutes, I think our last analysis showed some results to about 10, but let's just say it's 10 boxes. It's just a foundation, okay? And our leak sensors have caught a couple hundred leaks.

(40:16 - 40:29) Now, some of them, you know, where somebody repeatedly stole some of that or their things, okay? That's not what we're worried about. We're worried about that closet with the PTAC, with the magic pocket. That's the $35,000 loss.

(40:29 - 40:46) And if you live in a self-insured world, like many of us of our size do, where you've got $100,000 deductibles and higher, we're paying that $35,000 loss. And we've caught a couple hundred or 150 leaks so far. Our average cost of an insurance loss is $3,500.

(40:46 - 41:01) We have a thousand units. So it's a death by paper cut world. And as I kind of described the disruption that happened to the customer and to the team earlier in my example of the magic pack that didn't get PN, and so it goes with this.

(41:01 - 41:26) By the time that somebody realizes, let's say that the privacy of their magic pack has overflowed, it might not be able to water it. It creeps out three or four feet into their car or their bedroom. Super common scenario, right? And if they're on the third floor or the fourth floor, by the time that happens, guess what? It's 30 to 40 grand because it's gone down, right? So that technology is exciting to me.

(41:26 - 41:41) We're deploying that right now today. The other one that we look at a little bit is there are some IoT centers out there that listen to systems. So they could listen to, like, let's say the sound of an air handler and know based on its sound.

(41:42 - 42:00) And I know I'm butchering this and oversimplifying it because I don't know really what I'm talking about with this, but I understand the concept. It knows when there's something wrong. And what might be wrong is it just needs to filter change, right? So we can hear the airflow has changed significantly and this stuff is still learning, right? This is AI and IoT kind of like, you know, getting married, I think.

(42:01 - 42:11) But there are some of these systems that are available right now that are, you know, they're pretty new. They're a little too new for us to want to adopt. But that intrigues me. I think a lot of us have heard about some of these IoT devices that you can, like, put on a motor, you know, and it senses when one of the motor parameters, you know, is getting to a point where you know failure is imminent, right? So now you can do this just-in-time replacement. So that's, like, it's planned but it's also reactive at the same time, which is kind of like the peacock, right? It's like the roof I talked about.

(42:30 - 42:50) I don't want to throw a roof away that, you know, it's got three years left in it. Now if there's some device that can tell me when that thing has 18 months left, that would be cool. So these things, the whole IoT world, I think, is, you know, emerging super rapidly and I think that as AI also continues to progress, it's just entirely breaking pace.

(42:51 - 43:10) I think we're going to see more and more of this stuff. I think that, you know, these technologies also help answer some of that capacity question, like when I talk about changing locks, you know, I talk about even simple mundane things like, you know, we've got, I don't know, 75 pools or something like that. We've got robots for all of them because it saves two hours a day.

(43:10 - 43:25) And we want the two hours a day for our teams because we really care about their efficiency now. Ten years ago, the conversations a lot of times that I would hear is, I don't care because Jim's on site 40 hours a week anyway. So why do I care if Jim's efficient today? We care a lot.

(43:25 - 43:42) We care a lot because while Jim's out vacuuming the pool, you know, one of our customers has a dishwasher that's not getting fixed. If there was a robot that could vacuum that pool, Jim would go fix that dishwasher. So there's that, there's the similar technologies, and there's this IoT thing, which I would say for us, we are deploying it now.

(43:43 - 43:57) And so far the results are, my initial reaction when I saw the data, our asset management team is doing this for us, when I saw their first round of data, I was at that point for about six months. I was like, we can't go fast enough. We can't go fast enough.

(43:57 - 44:16) Every one of those $3,500 losses, the hours that it takes, we should dive in at some time because we're working here, our team's on site, the project manager, and all these people involved, you know what I mean? Not that a project manager comes in and like, we're out of the $3,500 project. We can't do it to our time to do that. But they review them all.

(44:17 - 44:30) And we sit in monthly meetings with all of our community leaders and talk about all the stuff they got going on at the property, you know, on a regional basis. So yeah, so this stuff means a lot. You know, these low $3,500, all these paper cuts.

(44:32 - 44:55) This is where technology can help us with the real mundane, you know, kind of repetitive stuff, where it really does have a significant impact on our efficiency. Jim, I'm super curious here, how far are you into those projects? Have you had some that are already completed and you're harvesting data? Well, yeah. We got about 15 that are done.

(44:55 - 45:10) We got one kicking off every Tuesday from now through 25. Okay. So we'll be done.

We'll be through our entire portfolio. I think we'll be through our entire portfolio in at least the mid-25. And we would go faster if our partners would go faster.

(45:11 - 45:48) So on the locks, are you quantifying? Do you have enough data points to share here with us, with the audience? Do you have enough data points to show how much time does it save your maintenance teams? Not having to pick up a key from the box, go return the key, like this back and forth. And how much does that help leasing office, like not having the clutter of vendors waiting for a key or waiting to get their ID back from returning a key? Do you have that kind of thing? We do have an efficiency gain. Yeah, we do have an efficiency gain that was part of our underwriting for this.

(45:49 - 46:03) As we're talking here, I'm trying to see if I can pull it up because I don't remember it off the top of my head. But it's significant. And then you think about vendor management during the turn process, right? And the cleaner and the carpet guy and painter and whoever's got to come.

(46:04 - 46:11) And it's like, I can just – not in advertising, we use Yari for our management system. Most people do. It's kind of one of the rules.

(46:11 - 46:24) But I can send you a credential out of Yari that says, hey, on Tuesday, November 14th, you're good from 9 to 5 to get access to these four apartments. And then it gets turned off. You don't have to come into the office.

(46:24 - 46:35) I don't have to take your license from you, hand you a key, then you forget to come back. You're also happy with the two at the back, right? You're getting a better experience as well. Because now I'm not taking your license and you're not taking a pocketful of keys home.

(46:35 - 46:40) I'm getting halfway home. You're like, oh, shoot, I forgot to give them back their keys. Oh, now they're closed.

(46:40 - 46:48) You know what I mean? That sounds a little silly, a little crazy, but that's time. That's what happens. So, yeah, we keep talking.

(46:48 - 46:55) I'll keep – I'll keep you up. I'm happy to share the numbers with you. It's just a matter of finding it.

(46:55 - 47:12) Yeah. One of the reasons I get excited to bring Mainoz leaders like you here on our show is that we share the same passion. And it makes so much sense that this type of solution brings so much value that how could you turn something like that down? Right.

(47:13 - 47:25) You can't. Well, I don't know what – I can't speak for other companies. I know that other places that work, they might think differently today than today's labor environment.

(47:26 - 47:43) But it's not typical for me to see projects underwritten with team efficiency. And, again, I can't speak for other companies that are doing it. I just don't – my experience when I work for other ones, we always consider that part of the payback analysis, right? We didn't underwrite it saying that, you know, we're going to save 45 minutes for a lot change and then monetize that.

(47:43 - 47:53) You know, our average cost of a guy is – you know what I mean? We do that. But we do actually underwrite it. We do monetize the – any team member gains that we can get.

(47:54 - 48:15) And because we do think that's meaningful, we do think it's real. So, yeah, so we'll use that time savings as part of our cost-benefit analysis. When it comes to key performance indicators, Jim, for maintenance team members, which metrics do you consider the most important for measuring success? Time to turn apartments, I think, is really critical.

(48:16 - 48:37) It's hard to sell inventory that you don't have on the shelf, right? And showing somebody selling out of a model or those kind of things, I want to see the apartment that I'm going to own, right? So that's a big one, time to turn. Time to address a workload. Now, I want to clarify this a little bit because everyone talks about close work hours is 24 hours or 48 hours, depending on the company, whatever.

(48:37 - 48:55) Is it really critical that I come fix every single thing within 24 hours? And I'm not – I want to provide as high a level of customer service as you could experience that. I'm very good at that, right? But if I call you, what, do you put a ticket in for, let's say, not saying ice makers aren't important. They're important.

(48:56 - 49:10) But if I call you and I say, hey, Joe, I'm sorry to hear your ice maker is on the fridge, can we get you on the schedule for a week from Tuesday? And you're like, oh, my God, I don't know. I'm like, well, how about, you know, get a bag of ice cream or something. I mean, we might have to negotiate this out.

(49:10 - 49:48) One of the things that I see happen sometimes is, like, people with this notion that they've got to stop what they're doing and go, like, take care of this thing because it just came up, right? So if I call you and we negotiate together and we decide together on what's going to be achievable and acceptable for you, I think that's a great level of service. So I don't think – I don't – I'm just saying that because I don't – I think time to complete and close work is important, but I'm much more – right now I'm much more drawn to did we react and contact the customer within 24 hours? And I think that's what's more important. And it would be better to pull the different things, what they include, what they exclude.

(49:48 - 50:09) We have a way that we do it, right? It's not interesting or important how we do it and what widgets we include and don't include. I think this is a trend indicator, and we actually do it on a per-square-foot basis. I mean, we have a system that tells us – we know when a part moves out, we know how big it is, right? So we can – it's not necessarily perfect.

(50:09 - 50:21) Like, we're not going to – we don't measure, like, how much it costs to turn unit 103, and unit 103 is taller and 32 square feet. We will let 103 move out if it's taller and 32 square feet. Here's the gross cost of what that property spends on the turn.

(50:21 - 50:35) Here's how many square feet. So it's more of an aggregated calculation when we do it on a square-foot basis, not unit by unit by unit. And what's interesting to me with that is, you know, that the square-footage methodology gets rid of the size of the unit, right? Townhouse, whatever, it doesn't matter.

(50:36 - 50:47) I mean, sort of townhouses upstairs, that's a little bit of an anomaly. But it gives us something to measure ourselves against. You know, it gives us a way to benchmark things internally and to drive improvement.

(50:48 - 51:02) You know, at CenterState, we say better every year, right? That's our mantra. That's part of our culture, right? So we're interested in having a culture of continuous improvement. You know, mistakes are how we learn, mistakes are how we find them.

(51:02 - 51:20) You know, better every day is continuous improvement. And so looking at our cost per turn and then starting to focus on certain areas, now once we started doing this, we saw that, you know, sometimes you might see something like, sometimes people decide they're going to do something in the capitals because it's a lower line instead of a higher line. I'm sure we've all, I'm sure no one's ever seen this.

(51:20 - 51:37) No one knows what the heck I'm talking about, right? Anyway, this makes some of those things plain. It makes some of those decisions plain, like, oh, I'm not going to clean a carpet, I'm going to replace the carpet instead. Or one of the things we saw, and I don't know what all the causes were, like the pandemic was a part of it, you know, the pent-up evictions and stuff like that, I think were probably a part of this.

(51:37 - 52:14) But also I think that the, you know, kind of unprecedented year-over-year increases were also a part of, you know, what we saw was like the most amount of foreign inflation happening in our charts. Like, off the charts, right? And because we were measuring things in this way, we were able to see that, you know? And because we look at it every single month, because we're measuring ourselves against ourselves, then we're able to say, okay, this seems to be, you know, an area of opportunity for us, and then we can focus on it. So I don't look at national averages or things like cost-effectiveness, because again, what are you putting in there? What don't you have in there? And it's market by market.

(52:15 - 52:27) You almost got to use, like, a high-risk means cost-adjustment mechanism to get your market analysis right. It's not fair to compare Atlanta to Minneapolis to see if somebody might be right. I mean, it's not that interesting myself.

(52:27 - 52:46) I mean, if we look at ourselves and benchmark against ourselves and we're making improvements all along the way, that's the primary use of the F&F software. Jim, it was great having you today. Thank you so much for taking time out of your busy day to be here with us, to share your wisdom with me and the audience.

(52:47 - 52:59) In closing, what are some closing thoughts for our audience? The technology stuff, concept, all this kind of stuff that we talk about is really great. I think that from my perspective, you know, this is about the team. This is about the people.

(53:00 - 53:14) I mentioned that our teams are really our product, not our swimming pools and our tennis courts that we've now converted to pickleball courts. You know, that stuff, you know, that's not where the rubber hits the road. And corporate is certainly not where the rubber hits the road.

(53:14 - 53:20) I said this is not our business. I'm overhead. And corporate is a centerpiece we call our self-support.

(53:21 - 53:35) So investing in our team, you know, not just financial. Financial is important, making sure that we're in the right ways and stuff like that, but having training programs and having growth opportunities for our people. Because as they're growing, they're more satisfied.

(53:35 - 53:59) That resonates and that comes through with the customers and that helps us drive a higher level of service. Jim, if someone in the audience wants to get a hold of you, wants to reach out to you, what are some best ways to get in contact with you? Sure. You could email me at jrmitchell, M-I-T-C-H-T-E-L-L, at centerphasehomes.com. You can find me on LinkedIn under my name, Jim Mitchell.

(53:59 - 54:17) And I'm based here in Minneapolis and work for CenterPhase for some additional filters on your LinkedIn search. Thank you again, Jim. Amazing conversation.

I really enjoy it. I hope to get you back here soon because there's a lot more that I wanted to talk about. Yeah, no, we could definitely spend some more time talking about all of these things and plenty more.

(54:17 - 54:28) There's definitely, definitely, we're not at a deficit that we need to talk about when it comes to our business. I hope to see you back here soon. This is Mookie Family X podcast, the main on series.

(54:29 - 54:37) We hope to see you back here soon. I'm your host, Adrian Danila, and this is a podcast powered by our friends from AppWork. Have a great day.