Property Manager vs Software; future of landlording?

Question

Recently heard about NestEgg, which is basically a software that helps manage rental properties. The idea sounds great, I'm just not sure if it'll pan out in practice. I've also heard of apps like Rentfolio and Buildium, which seem similar but may be more geared toward the Property Manager rather than the landlord.

I'm looking for the (mostly) hands-off approach to rentals, so I didn't give the apps much consideration. But it seems, at least in the Chicago market, they have a link to most issues that would arise.

Brief synopsis of the app:

-They have a leasing company which lists the property, takes photos, etc.-Leasing company gets the tenant setup and runs through applications/vets them (fee of 1 month's rent; same as PMs)-No renewal fee (PMs 200-400)-Repair requests, tenant pays. This is how NestEgg makes their money where they negotiate the hourly of the contractors down then charge the landlord whatever the going rate is for that service per hour; supposedly the vendors are all vetted and have a 14-day money-back grnt which sounds unheard of. PMs all claim they have good deals with contractors and they get stuff done cheap, but all that I talk to say 50-80/hr for handyman work which seems similar)-Evictions, this is where it could get sticky. NestEgg auto calls and emails the tenant if the rent doesn't come in, then they leave it up to landlord to serve notice/contact evictions attorney who they refer. The PM is doing the same on their end, but would just be a middleman for coordinating things w the attorney. -Walkthroughs, NestEgg (in Chicago area, not sure nationally) can do walkthroughs on request ($100) which seems inline with what PMs would charge. -Regular maintenance with PMs is nice, but you're still paying for it. NestEgg sets it up where they give reminders on items that regularly need attention; cleaning furnace, mowing lawn, etc. and then they give suggested vendors to perform those tasks.

The leasing company can handle any of the questions regarding suggested rent, advice on areas, suggestion on things to fix prior to renting. I'm sure I'm missing some stuff, but with most PMs there are cancellation fees, admin fees, reserves needed.

Another feature that could be good or bad is there is a direct connection to the tenant through the NestEgg app. My thought is to list my name on the app as 'Property Manager' so they never know they are speaking with the owner. So, like Brandon suggests on the podcast, you always have that buffer -- or perceived buffer.

I'm going to try out my next rental with NestEgg and see how it goes firsthand, but it seems if you don't mind being 95% hands-off this will save the 7-10% that would otherwise go to the PM.

What am I missing? Is this the future of landlording?

Brie Schmidt · Answer

@Ian W. Part of my portfolio is professionally managed by a PM (out of state), I use Buildium for my own data and reporting, and I use NestEgg for the other part of the portfolio that I self-manage.  Nestegg is nothing like Buildium or Rentfolio - those softwares help you manage maintenance requests, but they do not schedule them with the tenants or contract out the work.

I have been using NestEgg for the maintenance portion since spring when I started maternity leave.  A tenant makes a repair request, it goes to me, I approve or decline it, and then they contact the tenant to schedule the work and bill my credit card. I think it is the future of landlording in A/B type areas with lots of individual landlords.  It is basically ala carte property management with no monthly cost.  I suggest it to all of my clients, even if it is just for a backup while on vacation.

Account Closed · Answer

@Ian W. This sounds like an interesting prospect for a tech-savvy property owner with diverse rentals within NestEgg's service area, and definitely worth a try given the personal experience shared by Brie Schmidt. While I understand the concern regarding pressure to perform contracted work, it's also important to remember that performing regular maintenance is typically a big money saver. And if you're investing in Chicago, you'll have to comply with the property maintenance rights afforded by the Chicago Residential Landlord Tenant Ordinance ("RLTO"). The RLTO includes a laundry list of specific examples of when a tenant's right to have his or her property maintained has been violated, and the law is clear that this list is not exhaustive. In generally, landlords may not allow their property to fall into disrepair or so-called "slumlike" condition. Tenants even have limited rights to deduct repair costs from their rent if their landlords do not perform timely maintenance.

Long story short, Chicago regulations require proper upkeep of buildings, so why not use an app that automates things like notifications and tenant communications? Seems like a convenient way to go about it - thoughts?

Rodney Harris · Answer

This is very interesting! I’m looking forward to seeing it refined and improved upon over the years!

Francis Rusnak · Answer

Use NestEgg and happy with them. What I love about them is the 3rd party companies to handle maintenance issues. No other company offers this afaik. Also, they have someone on staff that will be an intermediary and email as well as call to coordinate repairs and rent collections -- another thing I believe no one else offers -- most just have auto emails sent out when rent is late. Third thing is they will connect you with a leasing agent to get the property rented -- but that is standard 1-month's fee.

What I wish they had: If the landlord wants to lease themself, would be nice to have background check function and rental application, which most other similar services have. Also, some form of online marketing-made-simple to advertise your rentals.

Brie Schmidt · Answer

@Eachan Fletcher brings up a good point.  Just last week my tenant requested that a lightbulb be changed in a common area.  I live 15 minutes from the property and had an appointment down the street in a few days so I denied the request and went and changed it myself while in the area.  But that was the only time I didn't have nestegg do the job.

Having self managed for the previous 7 years the rates are basically what I would have paid coordinating it on my own and now I don't have to.  My time is better spent doing other things, aka taking a nap after being up all night with a newborn.

The reason I hired nestegg was because I was 6 months pregnant and my tenants came home at 9pm to some water on the floor of the mechanical room.  They knew I was pregnant and "didn't want to bother me" so they waited till morning to tell me.  By that point, the hot water heater that had rusted out the bottom and was leaking water all night, adding more water in the tank as it was coming out the bottom.  It had flooded a few inches of water into the hallway, kitchen, bedroom, bathroom.  I got an emergency call at 7 am that the apartment was flooded.  I had to run over, turn off the water and drain the unit while my husband ran to home depot to rent carpet blowers and dehumidifiers while I wet vacuum the water up.  6 months pregnant and waking up to that mess was awful.  I spent 9 hours at the property that day cleaning it up and getting a new hot water heater.  We had to replace the carpets and run the dehumidifiers for over a week.  It cost me $1200 for a new water heater and over $2k in the damages, all of that could have been avoided if I had nestegg

Billy Linn · Answer

@Ian W. I don’t like a model that incentivizes repair work to be done. 😬

Nothing wrong with repairing things that need it but if they make more money if more repairs are done or more expensive repairs are done, nope.

Baris Yuksel · Answer

@Ian W. I was just curious and wanted to follow-up to see if you tried nestegg and how did that work for you?

Max T. · Answer

Just clicked around the website. The chat robot tells me that they do service Philadelphia. I'm wondering how strong the network is there compared to say Chicago.

Property Manager vs Software; future of landlording?

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