Property Management Brainstorm

Property Management Brainstorm Podcast

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Episode 39: Say Goodbye to Security Deposits, Featuring Casey Winter of Obligo

Bob Preston - Friday, May 29, 2020

As a landlord or property manager, have you ever wondered what it would be like to rid yourself of the need for security deposits? For most landlords, security deposits are one of the most challenging aspects of managing a rental property. It can be conflict laden at the end of a lease and in most states there are rigid regulations and laws which must be followed on when and how the deposit needs to be returned to the tenant. On this episode, Bob's guest is Casey Winter, Vice President of Partnerships at Obligo, a company which provides a way for people like us, landlords and property managers, to rid ourselves from the burden of security deposits.

A full time-stamped transcript of the episode is below. 

Topics Covered

[2:35] Casey tells us about himself and what Obligo is all about.

[4:45] Bob and Casey discuss the pros and cons of insurance solutions and surety bond products for replacing security deposits.

[9:15] Open banking technology and how it helps Obligo provide their "deposit free" leasing solution.

[13:00] What are the costs, who pays, and are there processing fees?

[15:45] Casey explains why most tenants are eager to participate in their deposit free program.

[17:50] Bob asks Casey to take listeners through a start-to-finish scenario of how Obligo works and the associated workflow for tenants and landlords.

[21:15] How Obligo qualifies a tenant for participation in the deposit fee program.

[23:45] Why Obligo reduces the burden of move-in costs for a tenant.

[29:15] Where is Obligo offered and in which states is it available?

[36:15] Casey shares his thought on weathering the storm during the COVID-19 pandemic and emerging stronger when we come out on the other end.

Connect with Casey

Obligo website

Connect with Bob 

North County Property Group


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Bob Preston:                     01:12                    Welcome Brainstormers to the Property Management Brainstorm show. I'm Bob Preston, your host broadcasting from our studio at North County Property Group in Del Mar California. If you're new here, please subscribe so you have ongoing access to all of our great episodes. And if you like what you hear, please pay it forward with a positive review as a landlord or property manager. Have you ever wondered what it would be like to rid yourself of the need for security deposits? For most landlords, security deposits are one of the most challenging aspects of managing a rental property. It can be conflict laden at times, especially at the end of the least. And in most states, there are rigid regulations and laws which must be followed on when and how the deposit needs to be returned to the tenant. My guest on the show today is Casey Winter. He's the Vice President of Partnerships at Obligo, a company which provides people like us, landlords and property managers, a way to rid ourselves from the burden of security deposits. Hey Casey, I'm really glad you're here today. Welcome to Property Management Brainstorm.

Casey Winter:                   02:16                    Thanks Bob. Happy to be here. Appreciate you inviting me on your show.

Bob Preston:                     02:21                    Absolutely. I had a chance to check out your bio on LinkedIn and I can see you've been involved in streamlining processes I think primarily financial processes for landlords for many years. How about you? Tell us about yourself and what Obligo.

Casey Winter:                   02:34                    Yeah, absolutely. So, my background is in tech. I went to school in San Francisco, naturally got into the tech market there and somehow fell into electronic payments. And back then online rent payments didn't exist. So that was the first 10 years of my career is helping landlords improve their process, collect rent online, get out of the paper check business. Um, and now I'm fortunate enough to find a company that's trying to solve this security deposit problem, um, which nobody's really been able to tackle yet. And we hope that we're going to be the new standard.

Bob Preston:                     03:06                    So you made the venture from San Francisco, California guy all the way out to New York, right. Is that where you are now? How did, how did that go down? How did that happen?

Casey Winter:                   03:15                    My family is actually from New York. So, when I was, that was me exploring the rest of the country. And now I'm back in more familiar grounds.

Bob Preston:                     03:23                    Yeah. So where did the idea for Obligo come from?

Casey Winter:                   03:25                    Yeah, so, you know, one of the inspirations for Obligo was, uh, the hotel industry. I think you and I might be too young to know this, but prior to credit cards, when you checked into a hotel, you would pay a cash deposit at check-in and that would go into a box and you would get that back when you checked out, as long as you didn't do damage or anything. So, you know, we looked at that and we said, you know, that's, that's really simple process. You know, now, now you can go to a hotel and just give a credit card. They swipe your card. You pre-authorize them to bill you. If you do a room charge, if you hit the minibar, if you cause damage. So why can't we do that with multifamily rentals? Obviously, we had to tweak that model a little bit. Um, that's, that's part of the inspiration for this product. You know, let's build tenants, let's keep them accountable, but only if they actually do something, we don't need to tie up their funds in escrow.

Bob Preston:                     04:24                    Yeah, sure. And so, I mean, I guess the cash deposit is one way. We typically don't take like a wad of bills anymore, but we do take a cash deposit. And I think there've been some other ideas in the past think primarily in the form of insurance, in addition to long-term rental properties, we also have short term rental properties. And there's this concept. I don't know if you're familiar with that known as damaged protection insurance. So, they come in and they stay for the weekend. They are required to buy this insurance, which covers any breakage that happens to go down at the property during their stay. One of the problems with that though. And I'd love to hear you talk about the other concept kind of surety bonds, which is primarily oriented towards, I think a long-term rental is that when there is damage that occurs, somebody's got to pay cash out of pocket to repair that damage while the insurance has been settled. So that can sometimes be weeks, right? So, it's not necessarily an efficient process to cover a security deposit.

Casey Winter:                   05:15                    That's a really good point. You know, insurance is great. Insurance makes sense for a lot of things, but to your point for the deposit, when you need the money quickly, because of the nature of insurance and the claims process and the approval process for a claim, there can be a delay in getting the money out. In which case, you know, you're going to have to pay out of pocket to cover that cost, to turn over that vacation rental or what have you. So that, you know, that's one aspect of insurance where it doesn't really make sense when it comes to the deposits.

Bob Preston:                     05:44                    Okay. And how about the concept of surety bonds? Is that still floating around? Are people using them anymore? 

Casey Winter:                   05:48                    Yeah, very much so. I mean the security puzzle alternative space, um, has had a surety bond solution, you know, for 30 years, there's many companies that do this. Um, and these are great products, but typically they're great products for tenants that are struggling, tenants who cannot afford to pay the deposit. And they're willing to pay a premium for a bond. You know, some of the downsides to the bonds, depending on your opinion, is that unless you've been arrested and dealt with a bail bails bondsman before you don't really know how a surety bond works and your assumption when you buy one is that you have traditional consumer insurance and you're off the hook. The insurance ferry is going to come pay for everything and you're covered, which is not the case.

Bob Preston:                     06:35                    Yeah. Not so fast, right? I mean, that's not really how it works. 

Casey Winter:                   06:37                    The landlord, if the claim is approved, they'll get paid out. But as a tenant, you can expect the collection agency will be knocking on your door for those spots. So that's how surety bonds work. Again. You know, some tenants need that. That's not the problem that we're trying to solve. We're trying to solve the problem for them. 95% of renters who can't afford the deposit, they would rather just not have their funds tied up in escrow. And from your perspective, as an operator, you'd rather not have to manage the cash. There's alive. A lot of liability involved with taking cash deposits. These days it's heavily regulated. You have to put it in escrow. Usually you have to pay out interest annually and then you have a time crunch to return the deposit at the end of the lease, um, minus any deductions, which means you might do a rush job on the move out evaluation and not get it right.

Bob Preston:                     07:27                    Yeah. And it, it can oftentimes be kind of an acrimonious thing. Like anytime you take somebody's money, it can, it can cause some conflict, right? So it's something that, as a landlord, we're always looking for better ways to do it, but deposit free lease, let's call it that or deposit, you know, free and no security deposit kind of arrangement, not for every tenant. Right. Um, they still would need to qualify for your program. I understand. So maybe you can tell us about that. What's required to qualify as a resident?

Casey Winter:                   07:52                    Yeah, absolutely. You know, Obligo is not a vehicle to help tenants that, you know, you normally wouldn't want to approve maybe cause their financial condition to kind of sneak into the property. With Obligo, you do have to qualify the way we qualify. Tenants is with new open banking technology. It allows us to check their financials, check their liquidity in real time to approve or deny them simply put, we are just making sure that the tenant could afford to pay a normal deposit if they needed to, if they can prove that to us, then we will assume the risk for their security amounts. We will protect the landlord with a line of credit equal to that security amounts. So, when the landlord needs the money, because that tenant did something wrong, we pay the landlord immediately from that credit line. And then we handle the collection separately with the tenants. The tenant knows going into it that's they are still 100% accountable for any damage and at least violations. And that this is a privilege to keep their cash deposits, not a right they're off the hook. They still very much have skin in the game.

Bob Preston:                     08:58                    So you mentioned open banking. What exactly is that? And um, I know like, like even if you go, if you're on vacation and you, uh, I don’t know let's say in Hawaii, Lisa, you, you rent a kayak for the day. You sort of plunked down your card and they, they take an authorization. I mean, is that, is that the way this works in some ways with the open banking and authorization?

Casey Winter:                   09:17                    It's a combination of a billing authorization. So, we're getting a pay-off from the tenant to bill two payment methods that they provide up front. That's a kind of a last case scenario for us. We always engage the tenants in a very consumer friendly way when they need to repay us. But at the end of the day, if they're being difficult, they're trying not to pay us back. Then we do have a pre-auth to take the money out of their accounts as far as how open banking works. So open banking is a really cool new technology. You're going to start seeing it and all the leasing products, but as a result of some legislation that was passed last decade, the financial reform acts often referred to as Dodd Frank. Part of that legislation was to encourage the banks, essentially force the banks to modernize and make it easier for their customers to share their financial information so they can qualify for products and services like Obligo. So, what open banking does, it allows tenants to connect their bank accounts, prove their financials, prove what their balances show that they have employments deposits. So, proving income. Um, so you can retrieve all that data within a second, if that's consumer approves it. So, once they connect, they're making out, that's how we can approve them in real time, because all that data can be calculated and figured out since we can see if they pass our muster.

Bob Preston:                     10:44                    So you can see more than just their credit score, you can see how much money they might have in the bank. Uh, maybe the amount of credit that they have available on their card, things like that. And, and are those factors in making a decision for a tenant?

Casey Winter:                   10:55                    Yeah. I mean, there's some magic going on behind the scenes. You know, when we show this product to, you know, a lot of the big multifamily operators that we work with, they get really excited and they start asking us to do leasing for them because they recognize that this is a much more efficient way to check income, then requiring people to bring in paper, pay stubs and bank statements.

Bob Preston:                     11:17                    So how much does it cost and who pays the fee? I mean, I gotta, I gotta believe that somebody pays for the service. How does that work?

Casey Winter:                   11:23                    So, 99% of the time the tenant is paying the fee as we are qualifying tenants, because we are getting a pre-authorization to build the accounts. These are all risk mitigation tools. So we're reducing our risks significantly by having these practices, which allows us to offer the service at a compelling price point where it's a better financial deal to take Obligo's deposit free service than it is to pay the traditional cash deposit. The cost is usually between 10 to 15 bucks a month is the cost of the tenants. And, you know, if anybody is paying high interest student debts, high interest credit card debt, the APR on that is going to far exceed the cost of our APR for the credit line to back up their deposits. So, it is a better financial deal to save your deposit and use our service and pay off that high interest debt.

Bob Preston:                     12:20                    Yeah, I mean, here in Southern California where our San Diego property management company is, I mean, the rents are pretty high, right? So, our average rent rates about $3,000. So if you're paying 12 times, what, 10, 15 bucks, you're talking about, you know, 120 to a, maybe $160 a month, much rather shell that out then have to, you know, put $3,000 into the broker trust account that just sits there basically for the year, until I, at some point in time, move out. And the lease is over that that's a much better way to go.

Casey Winter:                   12:49                    There's billions of dollars sitting in escrow in this country, just collecting dust, not working for anybody.

Bob Preston:                     12:54                    And at the end, is there, uh, or, you know, like if there are charges that go on the card, are there any processing fees, you know, sometimes with a bank or credit card, you'll end up paying a three, 3% fee or something like that?

Casey Winter:                   13:05                    So with, as far as the positive replacement service, you know, the credit card payments, you know, that we might charge them for at the end of the lease, there's no processing fees there. Um, there is another component to our product that has actually proved very powerful, but we don't only just handle the billing authorization as an alternative service. We also allow tenants to pay the conventional deposit. So, if they don't qualify for our core service, they don't want to use it. We're not going to tell them to go someplace else. We are going to allow them to pay that conventional deposit through the same workflow. We are going to wire the money to the property, this way, the property, the leasing staff, they don't have to pitch Obligo. They don't have the different flows for different tenants. Every time it goes through Obligo at our properties to take care of security, whether they qualify to be deposit free, or they want to pay a conventional deposit. If they pay a conventional deposit, we do it for free and we guarantee the funds. So, equivalent to a cashier's check or money order at our properties, there is no need for paper checks whatsoever for moving payments anymore, which fits nicely into today's environment of remote leasing and the quarantine nature of the CV health crisis.

Bob Preston:                     14:20                    Yeah, sure. So, if I'm a tenant and I get offered this option by my landlord, I, I come onto your side. I'm assuming I log in or create an account. And after reading about it or studying it, I either decide, I don't like the idea or don't want to do it, or maybe I don't qualify. I can still pay the security deposit right through you. And that in, in essence, then you turn, and you would pay our company that security deposit pretty quickly.

Casey Winter:                   14:45                    Yes, pretty quickly. So, typically one to two business days, but again, we certify the funds. So, they're coming no matter what, honestly, we lose money when that happens, because we're footing the cost of that. But for us, it's worth it just to make sure that everybody has good experience. Um, you know, we own our marketing and every tenant goes through our work workflow. And again, the staff don't have to pitch all they'll go and send them in different directions.

Bob Preston:                     15:09                    Yeah, no, that's a good benefit to the landlord too, because sometimes we have leases, we sign that are ready for moving just in a few days. And so, we take this check, or we take an online deposit, but that's not us to clear the bank. And if it's on a Friday and they're moving on Monday, it varies sometimes, you know, we're biting our nails if you will just waiting and to make sure that everything clears and we haven't moved somebody in that has basically already given us an NSF on, you know, on their security deposit.

Casey Winter:                   15:34                    You're also sending them away, right. You're setting them to get a cashier's check or money order and you might never see them again.

Bob Preston:                     15:39                    What's the reaction you get from tenants when they hear about the idea are most eager to participate?

Casey Winter:                   15:44                    Most are very eager to participate. Um, you know, we are, you know, all over the country. Now, every single partner we work with at least 50% of tenants opt in and qualify for the service, the average is closer to 70%. Um, you know, that being said, you know, there's, there's some portfolios, some buildings, some communities we’re not a good fit for. So, part of our discussions with the landlord is just kind of understanding their current process, how they handle some properties. I don't think the success in the single-family space, but some properties charge reduced deposits in which case our offers not as compelling. Um, some properties, there's a high charge rate where, you know, most of the time they're keeping the whole deposits and we're probably not a good fit there either. Um, so there are, you know, different variations of, uh, you know, operations that we come across and, you know, we help my Lord's determined that we're a good fit or make recommendations on what we think is a good fit.

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Bob Preston:                     17:50                    This is really interesting. I'm hoping you might be willing to kind of take us through a full scenario, right? A tenant. You know, if you want to use North County Property Group, as an example, or landlord X, whatever a tenant comes in and applies for one of our rental properties, what happens then we move them in. They stay for a year; they move out at the end of the lease. What happens then? Can you kind of describe the whole workflow process and how it works with?

Casey Winter:                   18:14                    Yeah. So, from starts to end, the beginning piece is after you have approved a tenant, your credit check, and it is now time to collect the deposits and the first month's rent, San Diego property management companies charged lease admin fees and additional fees upon moving. We facilitate all those payments. So, if we are not integrated with your property management or leasing software, then your leasing staff would spend about a minute or two punching in the contact information and the required dollar amounts for each category for that new tenants. What's the security requirements. What's the first one's rent, what's the lease admin fee and so on. Um, the tenant will then receive an email from Obligo. They will go through our workflow. They will have the option to go deposit free or pay a normal deposit. Once they are done, we email both parties. We notify property staff that the tenant has completed the process. You can now move forward with your next steps on getting that tenant moved in fast forward to the end of the lease. Tenant moves out, you do your move out of valuation. You figure out any deductions that you need to make you then log into Obligo and you're going to create a charge against their billing authorization. You can itemize the charges. You can attach your own PDF document that you might already have with photos and receipts. You're going to hit submit. That'll trigger a payment for the amount from Obligo to the property. We guarantee up to the pre-agreed cap that was decided upon moving. What's the security that we're guaranteeing. And then we're going to pay the property first and send an email to the tenants with the bill saying, here's the bill from XYZ property management. We paid the bill for you. How would you like to repay Obligo? You could pay us, pay us back over time. We don't even charge interest so they can customize their own repayment plan. This can be up to 12 months if they need it, but we approach the former tenant in a very consumer friendly way. That way everybody has a good experience. If there's any disputes, we are not an arbitrator. We're not here to take sides between you and your former tenant. We're just going to pay the landlord. If the tenant thinks it was unreasonable, then they need to call you and work that out. If they want to take you to court, they can try to do that. The point being is that at the end of the day, the landlords in the same position, they're holding the cash and the onus is on the tenant to make their case. And if they win their case, then the landlord should refund them.

Bob Preston:                     20:37                    Sure. So, you're just kind of a middleman so to speak, but the actual documentation of the charges would still obviously come from the property management company with the landlord, right?

Casey Winter:                   20:46                    Correct, the thing with our technology is that it's very easy for the landlord to get the money out because we're not insurance. We're not there to scrutinize you.

Bob Preston:                     20:48                    Okay. So, let me see if I got this. So beginning of the lease, uh, somebody applies for one of our properties, say, uh, we screen them, they look good as a tenant, good credit score appear to have good jobs if we choose to do so. We give them the option of the security deposit, free option they log in to Obligo. What do you guys look for in that tenant before you would consider approving them for participation?

Casey Winter:                   21:17                    Yeah. So, we're going to look at two payment accounts. We want to see at least one bank account and either a second bank account or a credit card. We're then going to check how much liquidity is on these payment types. Right? So, we want to see that they have at least a percentage of the required cash security deposit available in either open credits or cash in their bank account. Um, that's our main determining factor. We also might look at credit score now just because credit score can provide some insight into previous behavior. But for the most part, liquidity is the most important thing to us. We often think that, you know, the credit score doesn't tell the whole story. Somebody could have a bad credit score because of something they did a long time ago, but now they've got thousands of dollars in their bank accounts. You know that person is somebody we want to do business with because we can see that they have good liquidity.

Bob Preston:                     22:11                    Yeah. I mean, we saw that after 2007, 2008, after that housing crisis, the mortgage crisis, you know, a lot of good people got stuck short-selling or being foreclosed on. It wasn't really anything that they did. They just got caught up in the wrong loan and ended up losing their, their home when the market tumbled. So I think we're going to see some of that again here, when we come out of this current ride, you and I are talking during the midst of the COVID-19 pandemic, and we're going to see some of that, you know, some people who were harmed and maybe their score was harmed when they come out, when we all come out of this pandemic. So, okay. So fast forward, like you did, um, tenant gets approved by us. Tenant gets approved by Obligo. We get to the end of the lease. We open a claim. Do we upload our report to Obligo? And do you communicate that report, or do we do the reporting and the documentation directly with them?

Casey Winter:                   22:57                    I mean, it's up to you, but the way that our platform is built is that you could use us as your delivery package. You can, and we prefer you to do this actually. We prefer you just upload your, move out, forms your photos, your images, any kind of media. And we will package that nicely and send a text message and an email to the tenants. So, they understand why their Obligo membership is being charged. Um, and again, we're just going to pay the landlord first, and then we're going to collect from the tenants. The tenant has a problem with what you charged them for, and they can contact you to work something out.

Bob Preston:                     23:29                    Got it. So, they could still challenge it if that's, uh, that's what they wanted to do. So, we already mentioned we're in the middle of this COVID-19 pandemic. It seems like this solution could be a really great way to lessen the burden. If you will, of financial hardship on a tenant, who's moving into a new property, right? 

Casey Winter:                   23:46                    Yeah, absolutely. Yeah.

Bob Preston:                     23:47                    Typically there's a one month's rent too, sometimes first and last plus a security deposit. That's a lot of cash to put down. And in this time that could be a lot easier to do to move in. If you don't have to put up the security deposit.

Casey Winter:                   23:58                    Yeah. You know, it's interesting, you said that obviously at the time of move is quite expensive with all the different expenses involved. Um, I was just reading today, uh, some new stats, at least the multifamily space that concessions are up by 53%. So, there's a lot of properties, you know, offering a month's free rent, two months free rent, this kind of thing. And, you know, I think our solution fits nicely into that. And it benefits the landlord in a more financially friendly way because when you give away free rent, that's coming off your bottom line. Deposit free service, essentially accomplishing the same thing. You're reducing the cost of moving in by typically 50%. And it's not coming off of your bottom line and you're not sacrificing any protection by not taking the cash deposit. If the resident signs up for a service like Obligo, that, that covers the deposit amount.

Bob Preston:                     24:50                    And let's talk about lease renewals too. I mean, at the end of the lease, if cash flow is tight, especially during the current time tenant might be thinking gosh I don't know if I can afford this place anymore. I don't have as many hours. Um, my, my ability to work has been highly impacted. I've got maybe in some cases there are medical bills to pay. I've got childcare to pay. Uh, maybe I should look for a different place. If the landlord is holding that security deposit and can convert that tenant over to Obligo. I'm assuming that money would just go back in the pocket of the tenant at that point in time, landlord is still covered, right? Because they've got the program through Obligo, that would be a great incentive for getting tenants renewed on, on the next year's lease.

Casey Winter:                   25:30                    Yeah, it certainly is. Um, you know, we're based in New York. In New York, they've actually passed executive orders that are forcing landlords to return deposits, um, to tenant’s mid lease. So certainly, you know, we make a lot of sense of renewal, you know, freeing up that cash, whether you're going to cut a check and return the deposit for tenants that sign up prob ago, or you're going to just apply it as a rent credits, um, so that they don't have to pay the next month out of pocket is another option. But yeah, I think you're going to start to see, you know, at least a regional effect with executive orders and forcing deposit returns. You know, we've been working with San Diego property managers, specifically on returning deposits to existing tenants to, to free up that cash flow. It makes a lot of sense, but you know, the landlord also has a perspective that they want to stay protected so we can at least offer them some comfort. Um, when returning a deposit that we can get attendance onto our platform to engage in a repayment plan before actually taking that cash deposit and releasing it as a rent credit.

Bob Preston:                     26:34                    Yeah, I think tenant landlord law is going to change forever. There's a lot of assembly bills that are on the slate right now. My last podcast, I interviewed Assembly Member, Todd Gloria from state of California. You know, we talked about a lot that's going on and what the governor here is doing to help protect tenants, but also make sure that landlords can get paid because if rent isn't paid or there's a hardship, I mean, it cascades down through a number of different services. It's not just all about the tenants, all about all the other services that cascade down through. Really, really interesting to talk about this kind of stuff. And this might be something that is a great, innovative solution that helps at least some of the cash burden for many, many tenants. I don't know how much you know about our property management business and what we do here, but we maybe you've heard this before. We have several tiers of programs, if you will, that we offer to the homeowners and the percentage of our property management fees will fluctuate based on the number of services we offer. And so, there's, if you will, there's, you know, your standard, there's also premium. We also do something called lease only. And I've heard kind of one of the things now that starting to pop up are tenant programs. Similarly, where tenants are offered kind of a premium service for being a tenant. Maybe it's faster turnaround on their work orders when they have a maintenance issue, maybe it's no security deposit. So, I'm just kind of curious if you've heard of property management companies or landlords that are offering now tenant programs where your services perhaps.

Casey Winter:                   27:59                    Yeah, no, we've, uh, you know, we've certainly had conversations about that. We've certainly experimented with that. Um, and, and it makes sense, you know, it is a, a premium service from our perspective. It's a little complicated to offer Obligo to one tenant, but not to offer it to another. We think that's counterproductive. Um, and they shouldn't have to, you know, buy into a premium tenant package just to get an invite to Obligo because it also.

Bob Preston:                     28:27                    I get it sure.

Casey Winter:                   28:28                    And landlords, you know, job easier. However, you know, when we partner with third party managers, we are very open to having discussions on revenue sharing and things like that, because this is a mutually beneficial service. Obviously, you know, we make revenue, the more tenants that sign up, uh, these tenants are your tenants. And, you know, ultimately, it's up to you or not. If you're going to promote the program, you know, our program is going to live and die by your engagement. So, we'd like to share in our success, the way the model is built is that's, you know, we have space to share in that success. So, we do offer packages like that when we work with, they're part of managers.

Bob Preston:                     29:07                    So I've been talking to you guys for about a year now, I think, and I know initially, uh, I'm in California. I know initially you weren't operating yet in California. Um, I'm assuming there was some degree of regulation that you're subject to where, where today are you, which States and when do you plan on kind of expanding further?

Casey Winter:                   29:24                    Yeah, thanks for asking that. So, you're absolutely right. Um, when we first started, we, we are a consumer credit product. So unlike insurance, we have to comply with consumer credit regulations. We have to have a separate license for each state. So, we focused all our energy on New York we waited for those licenses to come through. This is our beta ground. That made a lot of sense. There's a lot of high rents in New York. There's a lot of rentals.

Bob Preston:                     29:50                    A lot of people in New York, too. 

Casey Winter:                   29:56                    Absolutely. Whether it'd be successful other places. So, you know, we did really well in New York. We worked with the biggest landlords here. Um, we really kind of changed the process, uh, you know, for a lot of renters that are struggling with those moving costs. And then we were fortunate, um, you know, through a partnership with the bank at the end of last year to acquire all 50 licenses. So, 2020, um, was really our kind of coming out party. We expanded very quickly just because we've had conversations with companies like yourself, you know, previously and kind of just left it open and said, Hey, let's talk again when you can work in our area. So, we, we had a lot of quick onboarding just from that, that interest that we got before we could actually expand. But I would estimate we are live, and I don't know, 24, 25 States at this point. Um, and you know, we, we looked to expand further. So, it really is a high growth time for us. Obviously, I think we're all being affected by, you know, what's going on with the financial implications of the health crisis, right? What we've seen actually is, you know, with a lot of the insurance companies in this space, they've actually either stopped operating their reinsures pulled out on them because let's face it. You don't sell flood insurance during a flood. If they are still operating, their premiums have gone up by 2 to 300% to the tenants because they're heavily exposed. It's just a different model since, you know, they're taking on risky renters and they don't really collect the money back most of the time. So, you know, it's a, it's a high write off business with us. We've made adjustments ourselves. We've certainly taken a small hit, but we can tighten up on our requirements and still offer the service to the majority of tenants and make sure that we have a pretty good a collections tool to keep us, you know, in good standing. And we can still service our customers, you know, through this, through this hard time. 

Bob Preston:                     31:47                    Okay. So, you guys are operating in California now, right. And whether it's, you know, nationwide New York, California, who, who is your target market? Are you targeting the big, you mentioned like the big high rises in New York that are probably corporate owned, you know, large apartment buildings, or are you targeting individual landlords? You know, the, the do it yourself, kind of guys, people like me, we have hundreds, you know, hundreds of properties, but mostly a single-family residence. What's your market? 

Casey Winter:                   32:12                    Yeah. So, you know, we don't like to limit our market, obviously we're just in residential, we don't do anything commercial. One thing that's, you know, a challenge for us, something that we're working to overcome is that because of the kind of nature of our financial product, the information involved in getting new landlords set up, it's it does require quite a few resources when we onboard new landlords. So, you know, at the moment it's our onboarding pipelines, you know, quite backed up. We, a lot of interest, we've got a lot of companies calling that maybe were using insurance before, and that's been cut off or it's too expensive now. So, we're just trying to deal with this interest. But at the same time, you know, we've had to tell, you know, maybe smaller landlords with under a hundred doors or, you know, under 200 doors that, Hey, can I call you, you know, down the line, we just can't take on any more things at the moment.

Bob Preston:                     33:02                    Yeah, no, that makes perfect sense. Right? Kind of get the, get the, the big players, the high rollers sort of onboarded first, because you would have the volume in that case.

Casey Winter:                   33:10                    The thing you love about single family is, you know, usually it is a smaller operation and to us that's a benefit because you've got the decision maker right there. You don't need to go through 10 meetings with different decision makers to get buy in on implementing new things. And you're motivated to set up the property. So, we've got a lot of great, you know, single family, home partners, and you guys always charge at least one-month deposit. Right? You don't see any of this nonsense with, Oh, it's only a $200 deposit and things like that that you might see in certain multifamily markets around the country.

Bob Preston:                     33:43                    Yeah. It's funny you say that. I, you know, I go to a lot of conferences and whatnot. I made a lot of property managers from around the country. And the very first question I get is, well, how many doors do you have? And I respond well. Uh, why does that matter? You know, let's talk about the average property management fee on each door. Cause in Southern California, we're usually two to somewhere between two to four times, sometimes five times what the average door value might be in other States. So that's kind of how we like to, uh, how we like to measure things. And one of the other things we did in our side is when we came into 2020 big plans for growth, the pandemic hit, and we kind of went on, I'm not going to say lockdown, but we want to kind of clamp down. Right? We just wanted to make; we had no idea what was going to happen. How many tenants were going to be paying their rent, how many we're going to request forbearance, whether I was going to be able to keep the team. And there are all kinds of questions that popped up. So, we clamped down, we didn't look at any form of new service. It was kind of outside the box or would take us in a different direction. Now things are starting to open up. We, I think, know what to expect. Things are going to come back slowly that we may be dealing with this for months and months and months. But I know San Diego property management companies like, like us, we're starting to again, look at okay, if this is going to be around for a while, how can we make this more efficient? So, I'm wondering if you're going to have this sort of surge of pent up demand, you know, as we go into the summer?

Casey Winter:                   34:55                    Um, yeah. You know, the way things are going now, I would say yes. It’s kind of a weird period because that's usually heavy leasing season. A lot of companies are just swamped with, you know, new people, moving in, people moving out, um, that they don't have the time or resources to implement new technologies that require training and things like that. Um, but it it'll be interesting because the whole deposit return thing, um, there's a lot of States passing legislation requiring some kind of deposit alternative being offered to all the tenants in that municipality. So those things are not going to stop. And, you know, you said it before, it's a, it's a different world now, you know, people don't have, you know, even if you're not as effected by CV-19, um, I think everybody's going to have a little bit of, you know, especially renters are going to be not as you know, it is, you know, there maybe were before and, you know, having these kind of concessions and moving amenities to reduce that cost without sacrificing any security on the side of the landlord. I think that's going to be very popular.

Bob Preston:                     35:58                    Yeah, no question, Hey, I, uh, I didn't talk to you about this, but I hope so. I hope I'm not springing this on you, but I like to ask my guests on the show, if they're willing to share some kind of a story maybe about your background or your life or business career, that's helped shaped you as a person. Do you have anything you'd be willing to share with us?

Casey Winter:                   36:17                    Yeah. You know what I've been thinking about recently, you know, with everything that's going on is, you know, what other times in my life could I kind of relate to, to the climate that we're in, where, you know, the whole country has been affected or the part of the country bands, you know, I'd say probably in my adult life, this is the second time. Um, I think for everybody in 07-08, the financial crisis that, uh, you know, the mortgage crisis kind of hit a stall. Um, and you know, I remember then that, uh, you know, I was fortunate to have a job and I didn't lose my job. I don't think my income was affected that much previous to that. Um, when I first started off in tech in San Francisco and this might've just been regional, but there was a big bubble there with companies investing millions and billions of dollars in these, you know, uh, power point companies, you would call them that just basically out of PowerPoint, but not a product.

Bob Preston:                     37:14                    The dot com era. Yeah, for sure.

Casey Winter:                   37:15                    You worked for one of these companies that was just entry level, but enormous amount of money. And, you know, there really wasn't much revenue that, that company folded when that bubble burst. Um, and I just remember feeling a little hopeless at that time, you know, uh, that I didn't have a job that nobody was hiring. Obviously, everything worked out eventually. Um, and I was young there and it was an experience, so I didn't really know how to cope with it, but you know, for what it's worth. Um, and you know, I'm not too badly effected this time around. And I sympathize with those that are, but, you know, I love seeing the country come together and, you know, I can't promise anything, but I really think, well, we'll get through this and everyone's going to adjust. And, you know, the, the nature of this country is we're going to make sure that, you know, everyone's going to get taken care of a little bit of insight that I've been thinking about based on my history.

Bob Preston:                     38:05                    Yeah. I've noticed changes just being out and about. I I'm obviously not out and about as much as I normally was previously, but people just seem to, even though we've got this crazy thing going on around us, people seem to have a calmer presence and are typically nicer right now. Don't find any mean people out there in the world these days, because everybody knows everybody's struggling. Oh yeah. Well, that's true. Yeah. So, Hey, I can't thank you enough for coming on the show today. I'd love to continue. This is a really fascinating, but I've got to wrap things up for the episode. Any last words or thoughts for our audience or things you'd like to share before we conclude? 

Casey Winter:                   38:41                    Yeah. Bob, just thanks for having me on and sorry for that New York subway rolling by my window.

Bob Preston:                     38:46                    Oh, no problem.

Casey Winter:                   38:48                    But yeah, just some thoughts to share, I guess, in the industry, you know, we're all kind of feeling things out, seeing how things are going to go. Um, I don't think it's been quite as bad if I have my sales hat on. If you think that Obligo deposit replacement is something you'd be interested, be interested in learning more, please feel free to go to our website, fill out a form, we'll get the right rep on the phone with you. And, you know, I mentioned it earlier in the show, we're just going to have an honest conversation and we'll make suggestions on what we think is a good plan for you when it comes to the posits moving forward. And we may not be that plan. Um, but you know, we refer to other companies which, you know, kind of do the same thing that we do. But again, we don't really think we have any competitors because, um, you know, we're not an insurance product. We are a financial product and you're, you know, geared to optimize certain types of portfolios and, you know, that's what will help determine for you.

Bob Preston:                     39:45                    Okay. Terrific. And the website is?

Casey Winter:                   39:48          

Bob Preston:                     39:48                    Okay. So I'll also put a link in the episode notes. So those who are listening can just refer there, click, find out, find out a lot about Obligo and we'll go from there. Hey, thank you, Casey. This is a great episode, has been fun catching up. Like, like I said earlier, we've been kind of chatting back and forth, waiting for you to sort of open up and expand in our part of the country for about a year. Now it's fun learning about your product. Hopefully at some point in time, we'll be able to get in that queue and become a customer because I think it would be a good fit for you. As we wrap up today, I'd like to make another quick plug to our listeners to click on subscribe and give us a like also please pay it forward with a positive review to help encourage more great guests like Casey, to come on our show. That concludes today's episode. Thank you for joining the property management brainstorm show until next time we'll be in the field, working hard for our clients to keep their properties managed well and maintain top tenant relations. And we will catch you next time.

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