From Zero Doors to 1,200 Units: A Blueprint for Scaling In-House Maintenance | Greg and Steve Shannon

A Podcast | Greg and Steve Shannon

Pete Neubig: Welcome, everybody, to the NARPM Radio podcast. I'm your host, Pete Neubig, and I got a two-for-one today. I have brothers Greg and Steve Shannon, co-founders and co-owners of Shannon Property Management here in my hometown, Houston, Texas. Check this out. They started in 2019 and are already at over 1,200 units. These guys are the real deal, and I've got to know them through the years. Guys, thank you for being here, and I appreciate you giving us some time on the pod.

Greg Shannon: Thanks for having us.

Steven Shannon: Yeah. Definitely. Thank you. We're excited. Looking forward to it.

Pete Neubig: All right. First of all, since guys are brothers, and just that alone, it throws a whole dynamic on owning a company together, but talk to us about how you guys started in property management.

Steven Shannon: Yeah. I mean, we've been kicking around. We were kicking around business ideas for a long time before that. We had a whole Excel sheet going with, oh, we should do this, just a list of business ideas, and we'd explore one or the other, but basically, well, I guess our backgrounds kind of aligned with this, so it kind of made sense. My background, our father had a construction company, so I grew up kind of around that. We both did, but I really worked in it and did a lot of construction, and Greg can speak to his background.

Greg Shannon: Yeah. Yeah. We both studied business at UT and knew we wanted to work for ourselves eventually after working in corporate America for a while, but I got an accounting degree, and that definitely comes into play here with managing individual assets for homeowners, and then ...

Steven Shannon: Yeah. He had the accounting background and worked at KPMG and whatnot, and then I had a construction background, and basically, one of my good buddies opened up a shop in Oklahoma, and he's been highly successful, and he was two or three years ahead of us, and kind of two or three years in, and was like, man, this is a great business model. It's a grind, but y'all could probably pull this off, and so he kind of kick-started the whole thing, the idea, and helped us kind of get off our feet and launch, shout out to Matt Salk in Tulsa, Oklahoma, he ran it, and he really helped us a lot as far as just bouncing ideas off and getting off the ground, and so that's how we started. Basically, we turned on the lights of our website, 4th of July, 2019.

Pete Neubig: Were you ever considering buying a ... doing a franchise or buying a property management firm? Because starting out from scratch, it's pretty scary, right?

Steven Shannon: Yeah. We considered it. We did some research on a few different things. We figured we had each other, so we could kind of ... at least we had some ... it wasn't completely solo, and we did consider it, but we ended up missing it.

Greg Shannon: And then we decided not going the franchise route, but instead putting our last name on our business, which is Shannon Property Management, so we just knew we had to do a great job at it, so I think that helped motivate us.

Steven Shannon: It's like getting a face tattoo. It's like you're all in. It's like, you know, you're not going to get a job, it's just like, you got to do it right.

Pete Neubig: Did you guys burn the boats and both quit your jobs and then turn this thing on, or did you kind of do what I did where I was working full time and then kind of doing this on the side, nights, weekends, lunch hours, things of that nature?

Greg Shannon: We launched and went live with our marketing and our website on July 4th, 2019, and I would say starting in January 2019, we both were working ... we were still working our other jobs, but creating the website and getting the LLC created, and we were doing a lot of the homework and set up before we really went live.

Pete Neubig: Did you guys have zero doors when you both quit your jobs?

Steven Shannon: Pretty much. I mean, I think essentially, yeah, we kind of did, which is how we were able to ... we kind of went in, took a deep breath, meaning packed in a little bit of savings, and we didn't take a draw for 12 to 16 months or something like that at all. Obviously, there was just nothing to draw from, so we kind of just ... I know some buddies might have done commission sales roles where it's like that, so you got to be ready to go a year with no pay.

Pete Neubig: How'd you guys bankroll it for your lifestyle? You still have to eat. You still got to pay mortgages and rent and all that stuff. Did you have money saved up?

Greg Shannon: Yeah. I think we each had a little bit of savings from just our previous jobs. And then starting a property management business, you don't really need to buy too many assets. We started the company with maybe only putting in $5,000 to $7,000 each of our own funds into the business. I mean, you don't need to buy vans or equipment or anything like that.

Pete Neubig: It's not very capital intensive. But you're still trading your time for money, right? You were making ... I know I was making $110,000, and I went from that to I think I made zero the first year, right?

Steven Shannon: Yeah. I mean, that's what we essentially knew we were going to do that, but yeah, I guess-

Pete Neubig: Were either of you married at the time in 2019?

Steven Shannon: So yeah, by the way, I did have that shout out to my lovely wife, Emily, who was supporting me. So yes.

Pete Neubig: That makes a big difference. So she supported you financially.

Greg Shannon: And I had three guy roommates and just agreed to take the tiny bedroom in a shared house. So that's how I did it.

Pete Neubig: I love it. Completely two different perspectives. So Steve, how was that conversation with your wife? And you're like, hey, I want to quit my job with all this money coming in and benefits, and I want to go start something that may or may not work.

Steven Shannon: Well, it was a bit of a tumultuous time period in general. We had just moved from San Francisco where we had met in Houston post Hurricane Harvey. And so there was just like a lot of life change going on. So it was kind of like all wrapped up in this kind of wild period. I mean, Hurricane Harvey, if you're not familiar, in Houston was like historic, 500-year type thing. I know you're familiar.

Pete Neubig: At least you were managing 800 properties in Houston at the time of Hurricane Harvey, like some of us. But yeah. I mean, if you're listening to this, you don't know about Hurricane Harvey. It was a massive flood throughout the whole city of Houston. I personally lost 16 units, 16 houses to the flood that we used to manage that didn't exist anymore.

Steven Shannon: Yeah. Our parents had to knock down their home, or my mom's sister had to knock down their home. My dad's brother had to knock down their home.

Pete Neubig: Oh, wow.

Steven Shannon: My grandmother lost her home. I mean, we lost four in our, essentially.

Pete Neubig: In your family?

Steven Shannon: It was like just crazy. Primary residence. Yeah.

Pete Neubig: Yeah. So you come back. It's after Hurricane Harvey. You left Northern California and now you're like, okay, I want to quit my job. What'd your wife, how'd that conversation go?

Steven Shannon: I mean, she was supportive, honestly. Yeah. So I had a transition period where I was doing management consulting in California, and then we both actually were, me and my wife, and then we moved to Houston, and then I had worked previously with my dad doing, with his construction company. He had, it was kind of perfect, and he had a job that was launching, so that literally they were in searching for a project manager, so it was in a chemical plant. So I spent the, I got the transition, but I took that role. Which was a tough role. I mean, I had to manage a construction project in the chemical plant. I was there at six in the morning every day for, it was about basically a year while I was in Houston. And so that was the transition step for me that let me move to Houston and kind of transition to start this.

Pete Neubig: There's, you know, I just, it's amazing when I talk to people and then they're like, you know, especially like these real estate investors, they're like, yeah man, I'm buying these houses. And I'm like, but where's your wife? Oh, she's not into this, or she doesn't believe in this, or she doesn't. And I'm like, how are you going to be successful if your significant other does not have your back, you know, financially, emotionally, you know, and so, you know, you had that. Great.

Steven Shannon: I mean, yeah. So I do want to just make that clear. Yeah, she really was very supportive. I mean, like incredibly so. I mean, we, basically we got married in May and I had to just, In July, you're like, I'm like outta here.

Pete Neubig: Before we started the company in July.

Steven Shannon: Yeah. Like literally I was like, okay, we're getting married. I'm quitting and starting a company from literally zero. I mean, zero.

Pete Neubig: Thanks, sugar mama.

Steven Shannon: It was crazy. It was crazy. Like kudos to her for doing that. Like she was super, she was like, you better make this work, you know, but not even in those terms. She was like, let's see how it goes. And I, you know.

Pete Neubig: Yeah. So now, all right. Now take, take me through. So July of 2019, you know, it's kind of blissful though. The world hasn't changed yet. And now take me to February of 2020, COVID hits, right? Like COVID becomes a thing. Where are you guys in your business and how did that affect your business? Was it a positive thing, a negative thing, or not a thing at all for you guys?

Greg Shannon: I mean, interest rates were, we think we came into the business at a great time despite COVID. I don't, I don't think COVID was really a detriment to us at all or really affected us. I mean, we've always done self-access showings. Interest rates were low at that time. So we had a lot of out-of-town investors, California, a lot of California investors that we don't see today due to high interest rates. So we were, we were growing quite a bit. We also had the time because we quit our jobs. And so we would, you know, we get a sales call, we're the first ones to answer, which is super important. And then we would agree to go visit the properties. I can't say that we do that today, but we just had the time to, to really work on our sales and, and just focus on growing the business.

Steven Shannon: And we were fully remote. I mean, like anyway, we just didn't have an office. We worked out of it.

Pete Neubig: I mean, when we first started. So from the very beginning, you guys, you guys had a remote office?

Greg Shannon: Bedrooms. And then our first two or three employees were remote employees as well. So we just, we don't, we even talk about not needing an office today, but I think at this point we, we still need an office, but yeah.

Pete Neubig: Okay. So one of the things that, that has been really successful with you guys is your maintenance department. So when, when we were in the green room talking, I'm like, man, I can talk to you guys about your growth. I can talk to you about the partnership. I can talk to you about, about all these things. But really, really, really want to talk about is this this concept of bringing maintenance in-house. So because a lot of people say they do it and then you talk to them a few years later and then they don't do it anymore. My good buddy, Brian Birdy was, was a big, big, like he had an internal maintenance next thing you know, he wasn't doing it anymore. And so it's, it's great. It's sexy. Everybody says it works. And then when you get down to it, no one has made it really work very successfully that over long term. You guys have. So let's talk a little bit about that. How many units were you at when you decided that you could bring in maintenance and what was kind of the decision factor? And just take us through that, through, through that, you know, the building of the maintenance division.

Greg Shannon: Yeah. I mean, let's see, I never really thought about not doing it. I mean, it's similar to COVID. We were just powered through and just like, we never really thought about the option of not doing it in house.

Pete Neubig: So did you start, you started doing in-house maintenance from day zero?

Steven Shannon: Well, we didn't have a full time, you know, we couldn't fill someone's schedule. So, but, but I, like I had worked in construction and kind of actually it was the brother of a guy I had worked really closely with was a handyman and he was somewhat, I guess it all was pretty disfortuitous how it was working out. He was kind of starting a handyman, you know, one man show and we were starting and it was the brother of a guy I was working really closely with previously. And so he, so we were kind of teamed up with him and he was giving us just good, flat rate pricing and would be, he was really responsive. So we were, you know, we had just very few doors, sub 50 doors and he was our handyman, was able to do a lot. He also had connections in the trade. So he was introducing us to, you know, when we needed licensed folks, you know, this guy or this company is really good. So he, he kind of helped us, we helped each other really. I mean, we support him now. He's got a big business and we don't really, you know, we do it in house. So we kind of parted ways. But I think that happened, you know, that was probably from, you know, somewhere in the few dozen houses up to about 150, I think we hired and it might be even early for some people that, but we just knew we wanted to get to have a full time guy. So we hired someone, you know, as early as we could think that we could fill 40 hours.

Pete Neubig: Got it. Okay. So when you hired the first guy, was he under Shannon Property Management or did you have Shannon Property Maintenance? Did you guys, did you keep the, everything under one umbrella?

Steven Shannon: Yeah, we kept it under one umbrella. And part of that is because in Texas, at least there's some rules about what you can and cannot do on a house and being employed by a property management company allows you to do more things, like even just like change a kitchen, you know, garbage disposal and stuff like that. I mean, you're like, you're technically, if you're not a property manager, you're not supposed to do some of that stuff that's supposed to be licensed by a plumber or HVAC. So anyway, everyone's always been W-2 Shannon.

Pete Neubig: So some of the challenges I had when I tried this, because I've took a swing and missed. The challenge I had was when I had my W-2 guys, they didn't get things done very quickly. Like, and that could just been the way I managed and the way, you know, the people I hired. But I do hear this, like, you know, when these guys are on their own, they'll knock out six, seven tickets in a night or they'll knock out a turnover in two days. And it would take me like a week or two to get a turnover done. How do you solve that with the W-2?

Greg Shannon: So we, I guess let's back up a little bit because we divide our maintenance team into three different categories. So we have the W-2 technicians that we've been talking about previously that are day to day work order techs. And scale goes a long way with those guys because Houston, like other metro cities, is just a huge geographic area.

Pete Neubig: A lot of windshield time in Houston.

Greg Shannon: Yeah. Yeah. So the bigger we get, the more technicians we can have and kind of geographically organize them on a daily basis and map their routes out. We try to get those guys to do about four calls a day, four to six. I mean, six would be high.

Pete Neubig: Four means that you guys are breaking even on that or are you making money on them?

Greg Shannon: Should be profitable.

Pete Neubig: Should be profitable on four tickets.

Greg Shannon: Yeah. We bill about an hour and a half minimum per work order just to account for that drive time. But then we have the 1099 make ready technicians and we have a remote make ready coordinator who helps organize and schedule those jobs with those 1099 guys. But those guys usually work in teams of two and they agree to the project, the unit turn project. And we have just a calendar. We and then we. OK. The third category is the assessors who build the estimate and do the property assessment and they estimate how long a job will take. And then once that gets approved by the owners, we put that job on the calendar and the 1099 make ready guys have that set amount of time to complete those projects.

Pete Neubig: Interesting. So the assessor, is he a 1099 or is he a W-2?

Steven Shannon: 1099. And that's just kind of a choice. But yeah, we consider bringing them as W-2. I mean, they just do project by project, they just do assessment by assessment.

Pete Neubig: I made a mistake early on where my assessor was also the make ready guy and he was spending all his time doing the estimates.

Steven Shannon: Yeah.

Pete Neubig: Couldn't have time to do actually any of the work. So I wish I would have solved that like you guys did. So basically this estimator goes in and he says, hey, this is going to be this is what needs to be done. And we think it could be done in three days. Yeah. Then you then say, this is how much we're going to pay for this job. Is that kind of.

Greg Shannon: Yeah. Yeah. So three. So if we think three days, we think it teams of two. So three, three days of two guys, 10 hour days. So that'd be 60.

Steven Shannon: Yeah. Two and a half days.

Pete Neubig: Got it. But the main thing is what I'm getting at is you guys are sending the make ready team, not just, hey, this is what needs to be done. But this is how much this this works. This is going to this is the the job we're going to pay. And then is there typically a lot of negotiation between that or like they're like, yeah, you guys feed me. You send me all this business. So we're not.

Steven Shannon: But yeah, because it's just like we it's so they know like we're treating them well, like we don't let them lose really. I mean, they're going to.

Pete Neubig: How does the estimator get paid? Is he a paid per estimate?

Steven Shannon: It's hourly.

Pete Neubig: Yeah, it's hourly.

Steven Shannon: Yeah.

Pete Neubig: So is he kind of an older guy? It's like I don't want to I don't want to do the hammer thing anymore. But I can use all my expertise.

Steven Shannon: He's not. We actually have two now and they're both not older, but they both were make ready guys who are just like a little bit more tech savvy and and stuff. And so they just kind of got it.

Pete Neubig: And you build his time into the make ready quote for the.

Steven Shannon: Yeah, we kind of when we calculate profitability, we calculate that three or four hours for this. Yeah.

Greg Shannon: Yeah. We add in and then those guys live on the Home Depot app because they're looking at the material cost, not just the time frame that it's going to take.

Pete Neubig: So how do they pay for the material or do they have your Home Depot card or you have an account there? Like, how does that work?

Steven Shannon: We have they have our they essentially use our we pay for the material. They select it.

Pete Neubig: But we got it. And then how many Gatorades do you pay for every week?

Steven Shannon: So, yeah, that's a true.

Pete Neubig: For sure.

Steven Shannon: Well, the problem actually is, yeah, there's been some gas issues that the gas keeps going up. Generally, though, that the relationship has worked out really well. We have I think like it's it's somewhat has fluctuated during the years and seasons. But I think right now we have like five teams or two essentially.

Pete Neubig: Like, you know, they work for other they work for other companies like they have other business or they can.

Steven Shannon: I mean, they're technically free to do that. We make you know, they all have workers comp. They all have their own general liability insurance and, you know, they're 1099 contractors. They can do what they want, but we keep them pretty busy so they don't necessarily need to.

Pete Neubig: Do you use them for anything else other than make readies from time to time or is it always just make grades like is there an overflow if your W2s can't handle all the meetings?

Greg Shannon: Well, they'll do all just like, yeah, I mean, we had a windstorm. So like fence repairs or sheetrock projects like that, like larger projects at a house.

Pete Neubig: I like that out. So what I'm hearing is the secret sauce is have an estimator outside of your make ready team. You he doesn't get paid on the job. He's getting paid per hour. So he has no skin in the game. Let's try to try to make the estimate higher. He knows pricing so you don't have to worry about your property managers knowing pricing. And then you're basically saying, here's the job. Here's how much we're going to pay. Do you want or not?

Greg Shannon: Yeah. Yeah. And we want our profitability to be around 10 to 15 percent. I mean, we're in the long term game with these owners and ensure that they're profitable. So we're not trying to make a bunch of money. I mean, sometimes I think if someone's going to sell their house and knows they need a lot of work, they should just hire us for a month and we give them a pretty good deal on a make ready unit turn. I'd like to just say also one thing is vacancy is definitely the death of profitability for our owners. And so right now, once the estimate is created, we're reaching out to our owners to obtain approval. And sometimes that could take a long time and take some time to get a little bit of negotiation. We're considering if we should add to our management agreement addendum something that says we're automatically approved up to one month's rent for the make ready plus the beyond normal wear and tear deposit of the previous resident. That way, we think we could close the gap on how many days the property is vacant and really be a benefit for our owners. But it's something we're just kind of.

Pete Neubig: Yeah, I think I toyed with that same idea. So when somebody did move out, we didn't pay the last month's rent. Yeah. The challenge with that is that sounds great, but it doesn't even come to make ready, especially in Houston in July. Right. Like somebody moves out. That's a $4 electric bill regardless. So, yeah. So you're saying like the other option is going the other way, right? Where you do your not to exceed equal one month's rent, right?

Steven Shannon: Yeah. Just straight up on the reserve. Yeah, that would be a lot. But yeah, possibly.

Pete Neubig: You might get pushback on that one. Right. So you do the not to exceed to be a few hundred bucks and then you do the not to exceed on the make ready. Just add it as one month's rent. And then, of course, you have the security deposit. And in theory, when somebody moves out, they don't do a lot of damage or whatever damage they do. It's covered by the security deposit. And then you have a little bit of wear and tear.

Steven Shannon: Wear and tear.

Pete Neubig: Yeah. Yeah.

Steven Shannon: So that, yeah, I think Greg made those distinctions. That was a big realization for us, just like how distinct those three roles are. And I mean, the estimator almost, yeah, that is a standalone role kind of makes sense. But like the like just the fact that make ready and maintenance ticket running is like completely different, completely different skill set, completely different type of person took us a little bit. We had that we kind of had that role kind of mashed together. And then it was like not working. And so that it's a very sharp distinction. I mean, those groups are completely distinct. I mean, it's W2 versus 1099. It's it's mechanical HVAC plumbing skill set versus sheetrock painting, carpentry skill set. I mean, it's, you know, customer service versus working in empty homes. It's just a different thing. And we run them very different.

Pete Neubig: Very smart. Let me ask you this, because sometimes when you do a make ready, there are things that need to be done in the house that are not your quote unquote make ready. Right. So what happens when you go through a make ready and the dishwasher is not working or a fence needs to be replaced or AC is not working? Do you guys do you guys then have the estimator tell your team and they create tickets for your W2 on that? Or does it all fall under? Because I think some of the challenges that we had is like everything like when a house is vacant, it all went under make ready originally. And man, what a that was a mess. You know what I mean? Like it really ballooned up to make ready. When in theory, the carpet paint and cleaning was only a very fraction of it. But the fence, the roof, the this, the that. So how do you guys break that out or do you?

Greg Shannon: Yes, we use slack internally and our estimators know all the property managers and the make ready guys. And so we'll use tags and slack. And then, you know, for fencing, they would just build that into the estimate because the make ready team would address that. If it's the HVAC is completely broken, we'll either assign our W2 or a third party HVAC company to assess that and just tag the property manager with the bullet points and tag the maintenance coordinator. And we'll assign those work orders separately if they if they can't be in the estimate.

Steven Shannon: And if it's not in there, we'll send the estimate without it and be like ATRAC systems out. We're working on that. But here's the twenty four hundred dollar estimate for the besides that for the owner.

Pete Neubig: Yeah.

Steven Shannon: I mean, if it's something that we're going to need to get a vendor out there for it, that's going to take a few days. We try to just note that in the estimate and say, you know.

Pete Neubig: Yeah. So you'll the owner might work with two different teams, right? He might work with your internal team for the AC and then he'll work with your turn coordinator for lack of a better word for it, for the make ready. Yeah.

Steven Shannon: Yeah, yeah.

Pete Neubig: I know it gets great for the PM.

Greg Shannon: It should get funneled through the main, the maintenance coordinator and the PM should be the two points of contact. But yeah, yeah, yeah.

Pete Neubig: Now, you guys use third parties for for some higher level, like plumbing and some roofing and stuff like that. Your W-2s, they they just run tickets for the most part on the W-2s. Does your maintenance do anything for anybody else other than your other than Shannon Property Management?

Steven Shannon: Your W-2s and stuff like that? Not at the moment. No, purely Shannon Property Management and I mean, we can get into that because I think I don't know we are about to start doing that so we can transition into that conversation. Or I just would I would say just, you know, as far as the original question about profitability and they're not running as many tickets and stuff. I mean, we we have a weekly level 10 with both groups. Actually, it's biweekly to be fair. We have like 8 a.m. on Tuesday. Either the make ready team comes in or the maintenance team comes in. The assessors come in, estimators come in with the make ready team. But we have level 10s with both teams and track metrics really closely and we bonus off metrics and stuff. So, you know, for the maintenance guys, the W-2 ticket runners, the main thing we track is we track several things. But utilization is, you know, huge. And we try to I think we got this from Matthew Whitaker, but we say work 40, bill 38. That's a high bar. I will say that's like, you know, 94 percent or something like that. But we definitely want to get it. Definitely want to get 80 plus percent, 85 percent utilization. So we're always talking about, OK, how many hours have you worked and how many of those were billable? And, you know.

Pete Neubig: And how are you tracking them? You guys using a specific software, using, you know, your, I guess, are you guys using like Meld or are you guys using like a software built for, you know, this type of service industry?

Steven Shannon: Meld.

Greg Shannon: And then the HR clock in software is called Connecting.

Pete Neubig: Also, they actually can clock in, clock out when they're on the road and stuff like that.

Greg Shannon: Yeah, they clock in when they leave in their garage or in their driveway when they're leaving for their first house. And then they clock out when they when they're done with their last work order at that property.

Pete Neubig: Are you guys providing trucks and easy tags and gas cards and all that good stuff?

Steven Shannon: Not the trucks yet, but that's coming up, we think. Yeah, gas, easy, easy card, easy tag or whatever. Yeah.

Pete Neubig: And then you do like oil changes for and rotate tires and stuff.

Steven Shannon: We do like a truck allowance, actually.

Pete Neubig: Yeah, that was the challenge that I saw was, you know, we did the trucks. We had a couple of trucks on the road, easy tag, fuel. And then, you know, you're trying to stock the trucks, right? So keeping inventory is painful, you know. And then, of course, you have the Home Depot cards and you have a store like we had a storage unit because we didn't we had like a class A apartment, a class A building that we were, you know, running our property management firm out of. And then it's like we need, you know, stuff for ACs and things of that nature. So we had a storage unit. It got it got pretty costly, right? Workers comp goes up when they find out that you have maintenance guys like that. Right. Insurance goes up. So I can see, you know, I can see it can be it can be very costly. So you need to know if you're listening to this and you want to do this, you need to know your economics, right? Like you need to know. So how did you guys come up with like four tickets a day? Like how did you just, you know, you just did the math, I'm guessing, like this is how much we charge per ticket, this is how much we charge the guys.

Steven Shannon: Yeah. And that I think it's I mean, that that is something depends how big the tickets are. And it's really more about the hours. I mean, four tickets is great. And we do try to shoot for that two times, two hours each if you're not going to put tickets in. Like Rick said, we do an hour and a half minimum. The thought there is like, OK, it's going to be at least 30 minutes driving. And he said it's probably 30 minutes to an hour driving. And then-

Greg Shannon: Plus getting the parts.

Steven Shannon: Getting the parts. Yeah, right. So basically like to show up somewhere and walk inside the threshold between an hour and an hour and a half, and then that gets you like an hour of labor, though, basically what we say is it's like 30 minutes of driving and an hour of labor minimum. And then so you actually can work there. If you work for under an hour, it's still an hour. You charge an hour and a half. And if you work for over an hour, then it starts getting on the clock.

Pete Neubig: And then you charge back the parts or do you just kind of.

Steven Shannon: Yeah, at cost. We just enter in the receipts and they're just like at cost. I don't need that. Got it. But yeah.

Pete Neubig: All right. So now that you kind of have this humming, right, you got you got your you guys are running this for quite a while now and profitably. Now you're thinking about doing this and spinning off a maintenance company or an AC company. So talk to me about what you know, what made you decide to do that? And then how do you go about doing that? Because I think a lot of people own property management firms, see it as a hub. And this becomes a spoke right now. I got an AC company. I got a real estate division, things of that nature. And and tell us what the vision of the AC company is.

Greg Shannon: Part of the motivation is we're in Houston and it's breaking all the time. Another thing is we've just played around with our deals and pulled reports. You know, I think roofing is our biggest expenditure, like over a half a million dollars for the last 12 months. So how much we're, you know, just based on replacing roofs and all that. But the second highest one was HVAC. And we just see all we have great relationships with third party vendors and about three to five HVAC companies that we work closely with. And we will continue to work with them because our new company we're starting isn't going to have the geographic region that our property management company has. But yeah, just seeing that spin, we realized.

Pete Neubig: The markup seems pretty high too on AC companies.

Steven Shannon: If we do it right. Yeah. I mean, ideally. And ideally, we're efficient and can be price competitive and still have healthy margins. I mean, yeah. Greg said earlier, we legitimately do try to keep our margins very reasonable for our property management folks because we're like, it's a long term thing. It's just not transactional. We don't think of it as transactional. We think of it as a relationship. And that's just like truly how we think of it. It's like we're not trying to make money on this little AC replacement or this or that thing. It's just so we like if we when we basically and we're good timing. We're set to go operational next week. The truck is getting finalized in the shop and we got it. So breaking news. Here we go. Also good timing. It's actually today. Can I say when we're recording this or does it matter?

Pete Neubig: You can. Yeah. We're recording this in September. It'll come out in a few weeks. It'll be out early October.

Steven Shannon: I think this past weekend, ChatGPT launched their new Frontier model and all their models are kind of space themed. And we're in Houston, Space City. So we're in their new Frontier model that they launched this last weekend is called Astra. Let the record state that we beat them to that name. That's going to be our company is called Astra Air and Repair. So I know you did not intend this to be a commercial and it's not No, that's quite right. That is what we're launching. So we're launching Astra Air and Repair. And I don't know what was the question.

Greg Shannon: We're going to have two price books. One for the property management company. And we've reached out to all of our owners already letting them know that we're starting this business and that we may make a little bit of a profit with this business but it will service our houses. But we're going to have a price book that is heavily discounted for Shannon Property Management Properties. And then eventually we're going to start marketing it out to anyone who owns a house in Central Houston.

Pete Neubig: Yeah. Got it. Is this company, Astra is a separate LLC? Yep. A couple of books and all that good stuff. People that work for Shannon, are they going to support Astra until Astra can get their own full-time people or are you guys hiring for Astra right away?

Steven Shannon: We have a license holder and we're going to hire right away for Astra basically because right away we're going to have properties to service, which is our own share.

Pete Neubig: Right. So when you say hire right away, you're talking about the AC techs, but what about bookkeepers, coordinators, things of that nature, dispatchers like that, you can all just leverage Shannon I would think for a long time.

Greg Shannon: We're going to hire a dispatcher strictly for Astra. But our HR manager and our accounting manager are going to work for both companies essentially. So I think we need to write some type of agreement and ensure that we're- Yeah.

Pete Neubig: And then you got that marketing, right? You're going to have to market to the general public, I call it, versus property management. And because it's Astra, you can literally go ahead and market that to other property management firms. It's not Shannon Property Management rolling up to my property from Empire to do the AC work.

Steven Shannon: Yeah. We've considered that. We're going step by step, but we potentially may do that. And like Greg was saying, also the service territory, we're trying to keep it tighter. So property management, you kind of get what you can get and go stretch yourself as far as you can. But yeah, with this peer service, home service, it's like, man, you really want to really minimize that windshield time. So we're trying to, if we go say an hour radius from downtown for SPM, we're going to go like 20 minute radius kind of for this and just try to be pretty strict with that and just stay in central Houston for the time being.

Pete Neubig: Well, I will say this, that when you run a property management firm, if you're in complete chaos, you can't really take advantage of opportunities and create those spokes off the hub, is what I call it. If you're probably managing in chaos, you can't create the brokerage, you can't create the AC company, you can't create tile company. So kudos to you guys from 2019 to today, you're zero to 1200 units, a lot of happy customers. You've got a lot of team that's been with you for quite some time and now you're able to spin, you've created your internal maintenance division. Now you're able to spin this off. So just really nice work, gents, and you should be very proud of yourselves of what you've accomplished. It's really pretty amazing. I appreciate it. Thank you. If someone... The best part is it's so easy to do. He almost said that with a straight face.

Steven Shannon: Oh my God. No, but thank you for the kind words. We appreciate it. I mean, it's been a grind, obviously.

Greg Shannon: And we see it as just a win-win for our owners and residents. I mean, right now we have multiple units in the summertime breaking on the weekend and I wish we could handle them all and we try our best using third-party companies. But now if we're able to grow this, we'll make sure that we're handling it the right way.

Pete Neubig: I know the number one reason why people bring maintenance in-house is control.

Greg Shannon: Yes.

Pete Neubig: And you've been able to do that with your general maintenance tickets, you can do that with your AC now, and you did it with leveraging partnerships with your make readies. And I loved... I think if anybody gets anything out of this, having that estimator outside of the make ready team and having somebody who's in the business that they can then say, this is how much... You are dictating to your make ready team, this is how much we're going to pay for this job, I think is brilliant. And I'm sure you guys didn't create it, but you've kind of perfected that model. And so I'm sure that people are going to want to reach out to you guys and kind of pick your brain. Are you guys going to be at NARPM National at all in Vegas?

Steven Shannon: Don't think national or... Yeah, no, I don't believe...

Pete Neubig: I know you guys were a broker owner and I know that's the ones you tend to go to. But if somebody wanted to reach out to you guys and pick your brain, what's the best way they get in touch with you?

Steven Shannon: Yeah, you reach out direct to our email is fine. Mine is steven@shannonmgt.com, Steven with a V .com.

Greg Shannon: Greg, greg@shannonmgt.com. And one other tip is that our estimators are also our rekey specialists. They're also the locksmith.

Pete Neubig: Brilliant. I love it, man. Well, gents, I appreciate you making the time. Thanks so much. If you're listening to this, you're not a NARPM member, shame on you. Go to NARPM.org or give them a call at 800-782-3452. And if you want to be lean, mean, fighting machine like Shannon Property Management, notice that they use remote team members. If you do not have remote team members, interested in learning more, shoot me an email at pete@vpmsolutions.com. See you, everybody. Thanks, guys.

Steven Shannon: Take care, Pete.

Greg Shannon: Always a pleasure, man.

Steven Shannon: All right. See you at Houston NARPM.