Real estate brokers and property managers receive what are known as “trust funds” in the normal course of doing business. These are typically deposits and payments received and held on behalf of others, thereby creating a fiduciary responsibility to the funds owners. In our business as property managers, we must handle and account for these funds according to established legal and accounting standards within the rules and regulatory requirements of our individual states. Not being in compliance could have significant financial and legal consequences for our property management businesses. On this episode of Property Management Brainstorm, Bob Preston discusses accounting and bookkeeping for property management trust accounts with Taylor Hou, Chief Happiness Officer at APM Help. Bob and Taylor discuss the importance of keeping the books clean, what auditors would see as red flags, and how to spot irregularities and discrepancies in your property management accounting reports.
A full transcript of this podcast episode is below.
Topics Covered
[2:20] Taylor tells us about his title, Chief Happiness Officer, and how APM Help works with its clients.
[3:45] Transitioning from legacy accounting software like QuickBooks to more current property management software such as Appfolio, Buildium, or Propertyware.
[5:20] The difference between corporate accounting and property accounting (also known as trust accounting).
[7:30] Taylor explains three-way reconciliation and why it is important.
[12:30] The Broker's fiduciary responsibility pertaining to trust funds.
[14:45] Red flags and discrepancies that might indicate embezzlement within a property management company.
[21:15] New tech coming in accounting using Artificial Intelligence to identify account irregularities.
[23:00] Setting up trust accounts for different types of properties (long-term rentals, vacation-rentals, commercial properties, HOA).
[25:25] What will state real estate regulators look for during an audit of financial records?
[29:30] Taylor shares the story of how he got into accounting and bookkeeping for property managers.
[34:20] How to get in touch with Taylor and APM Help.
Connect with Taylor
APM Help
taylor@apmhelp.com
Connect with Bob
North County Property Group
This episode is always available for listening, sharing, or download at Property Management Brainstorm. Subscribe to Property Management Brainstorm on Apple Podcasts, Google Podcasts, Stitcher, Spotify, TunedIn, iHeart Radio and YouTube.
Bob Preston: 00:59 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 real estate brokers and property managers receive what are known as trust funds and the normal course of doing their business. These are typically deposits and payments received and held on the path of others, thereby creating a fiduciary responsibility to the funds owners and our businesses, property managers. We must handle and account for these funds according to establish legal and accounting standards within the rules and regulatory requirements of our individual States, not being in compliance could have significant financial and legal consequences for each of our businesses here with me as a guest on the show today to discuss book keeping within property management is Taylor Hou who refers to himself as the Chief Happiness Officer at a company called APM Help, a company dedicated to helping his clients keep its accounting processes and book keeping clean. Hey Taylor, welcome to Property Management Brainstorm.
Taylor Hou: 02:12 Thanks for having me.
Bob Preston: 02:15 Absolutely. So we always like to start with our guests introducing themselves. You have an interesting title, Chief Happiness Officer. Maybe you can tell us a little bit about that, but also about yourself and APM Help?
Taylor Hou: 02:25 Yeah, sure. Thanks Bob. Uh, so my title Chief Happiness Officer is, is twofold. It's one, uh, you know, more outward facing for clients and, and, and then the other is actually more internally as well. I mean, you know, long story short, uh, as the title suggests, right, Chief Happiness Officer, uh, my role is to make sure everyone is happy, right. And happiness obviously is, is relative. Uh, but for our clients, right, it's making sure they're happy with our services, happy with our tech, happy with their entire experience while working with my firm and then internally as well. Right. Like I, uh, my, my, my ops people would probably tell me I'm not the best HR person, but, um, pretty much it's like when it comes to like, you know, someone needs a new laptop or, you know, like, uh, building comp structures for our team, right? Like anything that just enables our team to be happy and, and, and work with us in, in any which way that, again, ultimately results in a really happy relationship is under my purview.
Bob Preston: 03:27 That's challenging because you guys are all remote, right. I think you're remote organization. Yeah.
Taylor Hou: 03:32 Yes, but our bread and butter right now is definitely AppFolio, Buildium, and Propertyware.
Bob Preston: 03:37 I started my business. This goes back, you know, many, many years. I mean, I was using QuickBooks and was kind of using legacy means.
Taylor Hou: 03:45 You know, it was, it was like the, I was like a part of the first cohort of people they hired in Dallas or the Richardson office. Right. I was entry level kind of customer success. And so, you know, anytime you email support, like it was someone like me who is responding.
Bob Preston: 03:59 I may have, I may have been in touch with you because it was very confusing in the early days.
Taylor Hou: 04:04 Yeah. Um, and, and I guess too, for your question of like, you know, your statement about Appfolio’s accounting seemed very confusing back in the day. Um, you know, it's, it's definitely something where we have a lot of clients that are coming from spreadsheets or QuickBooks and, you know, with, with any kind of software change, like moving to something like AppFolio, it is different, right? Like any kind of change is hard. And the accounting is definitely different because, um, and I wouldn't say it's confusing. I think it's just different. Right? You have to change of reference. Um, all of the, all of this accounting software, again, Buildium, Propertyware, AppFolio, Rent Manager, what have you, all of them were built with a property management company in mind. Um, but you have to understand or change your frame of reference of when you're doing the accounting. You're actually doing the accounting for your clients, the owners and the properties, not your management company, which, you know, of course, QuickBooks and QuickBooks online is primarily, you know, really, really good ads, right? Like its primary purpose is to do the accounting for your entity or your company. But AppFolio, for example, is really intended for your doing the accounting for your clients.
Bob Preston: 05:16 That’s a really good point, because there is corporate accounting, which is paying your rent, paying your employees, making payroll, all that kind of stuff, keeping the lights on, and then there's property accounting, which is commonly known as trust accounting. Right? So for the most part, when we're talking about keeping squeaky clean books today, we're primarily talking about trust accounting, correct?
Taylor Hou: 05:34 That's correct. And then, and then the real reason for that is because the trust accounting or what AppFolio would call like property based accounting and, uh, Propertyware it's called portfolio based or entity based accounting that is what's regulated in most States, right? That is where the audit, the trust account audit you hear about that's where the Dre or department of licensing a real estate commission. That's what they have purview or jurisdiction over. No one cares Bob, what you do with your money when it hits your bank account, right? Like maybe, maybe your partner, right. Maybe the IRS, the IRS. Right. But, but, but from a regulatory, like state audit perspective of running a property management company, you know, once your management fees are collected, you quite frankly can do whatever you want with those fees. Right. But before it turns into income it's trust money, and that's where yes, for the purposes of today's conversation or podcasts would, were really primarily focused on the trust accounting side.
Bob Preston: 06:36 Right. And I gave a little introduction to trust accounting when we first, you know, in the introduction and I've had Alison Desarro on the podcast before to talk about it. But just as a summary here for our guests, trust accounting is you're talking about, you're managing other people's money. It's not yours. So there's a fiduciary responsibility that comes into following various regulations, ways of doing things. And that's why these property management softwares are so important. Right. I mean, that's kind of, that's correct. Now, are the regulations different from state to state or do you find, cause you work with people all over the country, do you find that they're pretty much the same across the 50 States?
Taylor Hou: 07:11 Yeah, so I would, I would say they're different, but there is a base or minimum kind of like standards that all of them want you to uphold. Now, there are some States that are the wild, wild West where they aren't audited or they're not regulated. Um, but the vast dry, we'd say like 46 States do have regulations around trust money. Okay. Um, and you know, the, the, the, the big thing that almost everyone will hear about is like this pivotal three way reconciliation. Okay. Um, and, and that is essentially the, I, I would, I don't want to say the definition here, but like, cause different people say different things, but essentially you need to be able to, or the requirement to have a three-way reconciled or three-way reconciliation is obviously your bank will provide a bank statement. Right. Um, some software needs to be able to provide a general ledger, a ledger of all the transactions that match your bank. And then the pivotal third ledger per se is the client's ledger. Right. So usually, you know, when, when you're managing money on behalf of your tenants and your owners, right. Each one of them should have their own either owner statement or property ledger or whatever it may be. But like, you should be able to say these transactions are all specifically for this property or this portfolio or this owner and having their ledger separately to also then tie into your general ledger, which then matches your bank statement is the pivotal three-way reconciliation. And that's is usually back in the old days. I don't know if you remember, but, um, and I shouldn't say old days, but back like a handful of years, that was really hard to maintain right. Or tie in together if you're using spreadsheets or even QuickBooks, for example. Um, and a lot of you guys, if you're still using QuickBooks, for example, like you're using like multiple classes, you know. Like each property is a class where each owner's in class and I'm trying to keep track of all that and make sure every transaction you enter is tied to a class. Right? Like all of that, you know, with the more modern-day software makes it relatively speaking easier. Um, and they're keeping track of it for you.
Bob Preston: 09:24 It is a lot easier, but I tell you when we converted, because we were, by the way, back in the old days, you're talking about 2009, 2010. So it really wasn't that long ago we were, we were still operating. Like we had consultant come in, who helped us create a QuickBooks structure for our trust accounting. Right. And we had multiple accounts and stuff like that. And so that's why when we went over to AppFolio was not, I don't want to use the word confusing, but it was sort of a, wow. It was a big aha moment where we had to learn a whole new way, a whole new way of doing things
Taylor Hou: 09:53 And Bob, to your point, and I'm, I'm, I'm kind of embarrassed to say this, but like my, my own dad, uh, he he's, he's a property manager and you know, he doesn't use any fancy software. He still just uses, you know, kind of like pen and paper effectively. Cause he manages for friends and you know, like it it's, he only has like 30 or 40 units total and it's just way easier for him to be like, look, the rent came in, right. Like I take my feet. There's not really any maintenance cause these, you know, the properties are actually a fine and here's your distribution, right? Like it's relatively speaking for him. Pretty easy. Now he does skirt some stuff in a sense that like he, he deposits rent directly into the client's bank accounts. So he doesn't actually have a trust account that he maintains. Um, but so, so, but still he still is providing like finances or financials to his clients. And it's just super easy for him to just, it's a template, email changes, some numbers based on what's actually been collected in the sense it's about right. And I'm not saying it doesn't work. Right. It works and he's doing plenty fine. But when you really start getting scale, right. Like, and there's just so many moving pieces, that's when you really start looking into some professional software.
Bob Preston: 11:07 Well, it's interesting. This year I had to renew my broker license in California. Right. And so, uh, one of the topics that was eligible for renewal for my, uh, CEs, my continuing education was trust accounting. And so, I took this course and I mean, I kind of know what I'm doing. Right. So it was a pretty easy course for me, but they talk still in an old school way about more traditional bookkeeping. And I have to record things in a column fashion. The point is I was, I was shocked that they're still kind of teaching it in this old school way. Yeah.
Taylor Hou: 11:40 No, and I think to that point, Bob, right, like, look that there's 185,000 property managers in America. Wow. Right. Like the, the big three AppFolio, Buildium and Propertyware, they only like 15,000 each. Yeah. So like, you know, out of 185,000, 45,000 of them are using professional software. That means there's still over a hundred, like 30,000 that are not right. And so it's like, what are they using?
Bob Preston: 12:08 I can't imagine doing it any other way. And you know, you hear these stories. There was one here in San Diego, a few years back where some property manager just kind of packed up and disappeared along with his trust accounts and that's yeah. I mean, for a property owner or a client, that's got to be worst fear realized is the, these monies just kind of disappear. Right.
Taylor Hou: 12:29 Yeah. And I think unfortunately in our industry, some of the challenges here is like that can happen. Right? Granted, most property managers aren't necessarily the funneling, the owner's money, the money that's still trust funds that a lot of PM's aren't necessarily as you know, trustworthy with, it's not the owner's money because the owner is obviously your main client or a lot of PM's will say, they're my they're actually the client, it's the tenant or consumer security deposit. Those are trust funds as well. And those are the ones where, yeah. Unfortunately the same thing, like we, we, we have an employee up in Eugene, Oregon, and in Eugene, there was a big scandal because same thing, there was a property manager, uh, owner that pretty much like had a monopoly there. Um, and you know, one day just walked up and left with them. I think it was a one and a half million in security deposits. Now the owners, right. Technically, you know, like it wasn't necessarily their money. Right. Um, it was the tenant's security deposit funds. Uh, and yes, it gets really murky when like upon move out, you know, who who's responsible for the deposit. Right. Basically the management company was cause they were management, health security deposits. The owner kind of has, you know, this, this thing of being able to say, well, I didn't hold it. Like it wasn't my responsibility. Right. So that, there's definitely some, some, some unfortunate kind of things that happened with security deposits.
Bob Preston: 13:59 Well, you know, as a broker, I mean, I have a fiduciary responsibility to be in legal and financial compliance. I take this really seriously. We run a really tight ship. Um, you guys have been helping us lately kind of keep our books clean aside from the broker, packing up and disappearing and going to Mexico or something. I mean, you know, there's also the possibility of unknown things happening with funds, you know, unbeknownst to the broker, uh, embezzlement. I mean, I doubt that it's frequent, but I'm guessing it does happen. I've heard it in law firms sometimes because they also are a trust accounting type business. What are the red flags for, you know, somebody embezzling out of trust funds?
Taylor Hou: 14:36 Yeah. Well, Bob, uh, you, you, you know, I, I teach a class that happens to be called how to embezzle from a property management company. Um, and obviously the point of it is not to teach people how to embezzle, but to, to, to bring awareness to, you know, situations that we've seen in the past from quite frankly, our clients. Right. Um, and you know, let's start with the, the highest level back of the napkin math that anyone should be able to do. Okay. Um, you know, it, and obviously this is relative to where you guys are located, um, from a rental market perspective, but let's just say for ease of math, um, the average rent is a thousand dollars a month. Okay. Usually security deposits tend to be one month's worth of rent. Right. So security deposits are a thousand dollars per unit, right. So if you manage a hundred units, right, how much money should you have in your security deposit? Trust account, Bob?
Bob Preston: 15:32 Oh, a hundred thousand dollars, sorry. Yeah.
Taylor Hou: 15:37 Super easy math. Right? Like you should have a hundred thousand dollars in your trust account right. Or at a bare minimum for the security deposits. Right. And, and honestly, if, if most brokers who hopefully listened to the podcast, like if you just do that high level amount of thinking and look at your bank statement, your trust account, and just be like, Hey, look, how many units do I have multiplied by the average amount of rent that we collect, that should be how much approximately plus or minus, let's say 10%. That's in my secure deposit trust account. Right. Right. It's very simple. Now we can talk about other things. So you see your question was, uh, you know, what are other warning signs, right. Um, you know, specifically I can get into detail here, but similarly with like your actual client trust or owner trust or what a lot, like AppFolio uses, we'll call your operating trust account. Um, you should still also see a bare minimum of around that same amount come in every month during when rent week. Right. And usually, and this is also something like a calculation we do when we're on consoles. Right. It's like, you know, if the books aren't clean, the bank recs haven't been done. Right. They're like, I don't know if my balances are right. Right. Some of the back of the napkin math we do is again, same thing. Right. It's like, well, what do you think your balances should be? Right? Do you, is your operation where you don't hold reserves. And so technically every month you should be clearing your trust account down to zero. Right. Um, and if they say yes, then we say, fantastic. So what's the balance in your bank account. And if they say zero, we will say you have a problem. Why? Because it's almost impossible. If you think about it, it's almost impossible for your bank account to truly ever be zero. And the reason for that is because of unclear checks, right. On cash checks, you know, your, your business, when you cut fenders checks, just law probabilities, like not all of them are to cash it immediately. So you should almost always have extra money in your bank account and you should always be more than obviously your reserves. Right. Um, and, and obviously typically less than you didn't know your first rent week. Right. So there's some like high level checks that we'll go through even without having to look at someone's database or account and their numbers. Like we just ask high-level questions and these are the same kinds of questions you guys can ask yourselves or ask your bookkeepers or accountants like, Hey, how much money do we have in our bank account? And, and just, just do, just do the high level, like numbers be like, yeah, that sounds about right. Yeah. This, this makes sense. Does this add up? Exactly. And, and obviously like in these unfortunate situations where embezzlement is happening, um, you know, we've seen two, two, two ways, right. Or two scenarios, it's either egregiously bad where, you know, you should ha you should have 500,000, but you only have 50,000. So that's apparently appallingly like, Hey, there's a problem. And then there's the unfortunate flip side where, you know, someone's really good at the embezzlement and it, you know, everything looks good on the surface, but it really takes someone like us to go in and look, and look for hidden properties with negative balances or, you know, weird situations of like unclear deposits or unclear checks. Right. Things like that, that then elucidate the remaining like 20,000. That's kind of in flux, let's say. Um, and so again, warning signs, at least from an accounting standpoint absolutely do the high level back of the napkin check. Right. Um, if, if, if it makes sense, great. You know, you're on the surface, I would say that that's, that's great. But you know, absolutely not saying every bookkeeper account is going to do this, but like absolutely try to have checks and balance in the place. Um, you know, whether it's with a firm like us or anyone else, quite frankly. Um, honestly I would even say Bob, you know, maybe NARPM should do like, uh, you know, this promote, like having multiple PMs work with each other, just to be like, Hey, like do my high level numbers look. Right. Right. And, and, and, you know, like just, it's not like you're sharing like super-secret data. Right. Like, don't share the actual ledgers, just be like, Hey, here's my bank rec. Right? Like, does this look good to you almost like a peer review, it's almost like peer review, right? Like, you know, there's lots of PMs in different stages of where you guys are at summer 50 units. Others are 200 others have thousands of units. Right. Like everyone can learn from each other. And unfortunately, like I said, you know, my, one of my more recent presentations, you know, like the embezzlement happens or these problems happen at every level. Right. Unfortunately the bigger you get, the more zeros you just tend to add to it.
Bob Preston: 20:18 Yeah. The one old school practice I still follow. And I do this just for my own control is that I review all of our, believe it or not every single owner counting statement at the end of the month. Right. Every single one. I, I, I have it on my desk. I'm the one who signs all the checks. Right. And it's just a way for me to do my control now. I don't have thousands of properties, but I do have hundreds. And yeah, I, it takes about three hours every month, but I just, I think I owe that to my clients, you know, and that that's even off the, that's not even looking at the books, that's just one kind of practice that would internally, I think, you know, make a lot of sense for a lot of companies. Some, some CEOs don't have the time to do that, and I totally understand it.
Taylor Hou: 20:56 And, you know, Bob, to your points, uh, like, you know, I don't review for example, our firm's client invoices every month, but we have a dedicated person that's actually responsible for doing so. And she knows, right. Like she knows like, Ooh, this, this one something's weird. Right? Like there's a big jump. Um, and to your point, Bob, what's really, really, really cool about some of the tech that's coming into the accounting industry in general. Uh, we actually use a firm ourselves. We don't even do our own corporate books. We outsource per se to a company called pilot.com. Okay. Now they they've specifically focused with like tech startups or tech companies. But, um, one of the really cool things they're doing now is they're actually leveraging AI and machine learning that like looks at your transactions and looks at like your high-level financials and actually tells you, Hey, Bob, did you know that last month? You know, you, you, you, you paid rent for a thousand dollars, but this month we don't see that red expense. What happened like it actually is looking at deviations on a month to month basis and alerting you to it. Now it may not be an issue. Right. But, but you know, like, um, what, when you see a drop or a dip in revenue, when, and it's like recurring revenue of management fees, that's something that these, you know, these really cool AI machine learning, these, this tech is able to now start doing. And that's, you know, we're, we're not officially launching this stuff yet, but like we're working on some of that kind of tech for our clients.
Bob Preston: 22:25 Look, there are different types of properties. I mean, I know we, we are a property management company that has both long-term rentals. We also have vacation rentals. We don't at the current time do HOAs, I know some companies do what's the best practice in terms of trust accounting and these different types of properties. Should they each have their own category, categorical trust account, or what's your recommendation for them?
Taylor Hou: 22:50 So, uh, I would say in short, best practice for residential, for commercial and for a vacation rentals, you tend to be able to use the same trust accounts. Um, so the one that is significantly different tends to be your HOA. Um, HOA is usually, uh, this depends on States and different areas, but usually the HOA require their own separate bank account slash trust account. Um, and a lot of times the management companies we work with, they're not actually using a trust account. It's actually the HOA’s bank account. Um, and they're hooking up for accounting software to that bank account. They just manage it on their behalf. Right. Um, and so really we've seen the biggest difference with the HOAs, uh, POAs, HOAs, COAs um, versus, you know, your long-term single family residential, and this is a great other thing as well. You know, we, we've seen a lot of PM set up their, their bank accounts in structures were like, you know, every owner or every portfolio has its own bank account or own set of bank accounts, don't get me wrong. I think that's a very good, hard way to co-mingle or, or mess up owner money. Okay. Uh, now a lot of PMs used to use that or do it that way. Unfortunately in this day and age, there are some repercussions to that, because that, that means there are that many more bank accounts you have to reconcile every single month. Um, now, you know, if you're not using sophisticated or more modern software, like the AppFolio, Buildium, Propertyware of the world, um, having that physical different bank account actually makes it a lot better, right? Or easier for you to just make sure this owner's money is not touching or withdrawing or doing something weird with some other owners, you know, money. Right. But when you, when you use the modern software, though, our recommendation is go with, you know, their standard default, which is typically two trust accounts, one for your owner money. Um, so obviously operating and then the other for tenant security deposit
Bob Preston: 24:55 In the state of California, we call it the DRE the Department of Real Estate. I'm not sure of the actual term in the other States because I'm a broker in California, but we are subject to audit by the California Dre, what are they going to come looking for if, uh, they were to call and I hope, hope it never happens, but it probably will someday, what are they, what are they looking at? And what do we need?
Taylor Hou: 25:17 And Bob, I should notate here a big astrix, you know, my, what we're experiencing, what my firm's experiencing is the trust account, the financial side of these audits. Um, yeah, don't get me wrong. Like they can come after you for not having the right signage. Right. Not having the right disclosures and your emails. Right? Like they can come out for you for other things that are non-financial. Uh, but I'll focus on the financial piece.
Bob Preston: 25:43 Exactly. No, that's what I, yeah, that's a good point. Good point of clarification. I'm talking about the financial stuff. If they, if they want to look at our trust accounting, what would they say?
Taylor Hou: 25:51 First thing they always ask for, show me your bank recs. Right. If you're not doing bank recs and you're not doing it monthly, uh, you've got a problem. Right. Um, so usually in a routine audit. So when I say routine, meaning this is a random audit, right? You just got, you know, you got the short straw or whatever it is, right. This is not an audit for cause. Right. And for cause audits or like, you know, you have some kind of multiple complaints filed for, you know, on, you know, on your license, your brokerage that's when they'll come for something else. But a routine audit, the first thing they are going to ask for is show me your bank recs.
Bob Preston: 26:30 And, and by recs you mean the reconciliations now?
Taylor Hou: 26:32 Um, yes, the one thing that a lot of PM companies don't understand is they'll say, Oh, easy. Here are my bank recs. Right. Uh, because we're doing that right. It's, it's great that you're doing them. Unfortunately you have to provide more than just the bank recs. Um, the bank recs is one thing, but then obviously it has to tie with your statement. Um, and then when you really start looking at these bank recs, right, and this is the same thing that we do with every new potential client of ours. Like we look at the most recent bank rec and we pick it apart because that is exactly what an auditor is going to do as well. And the first thing, and the most important thing outside of being able to provide that bank rec the report itself is, do you have any unclear deposits? Okay. Um, and this is something that a lot of PMs don't understand. Cause they're like, you know, they asked her accountant, are we reconciled? They say, yeah, we're reconciled. Right. Um, but you know, in almost all of these software, if you look your reconciliation reports, there's a section called uncleared, uh, you know, deposits or increases. And if you have anything in there outside of something, for example, because all of a sudden you're saying your statements hit at the end of the month. So if you're collecting prepayments right. So your deposits are hitting on the 30th, let's say, but they didn't clear your bank until, you know, the first or second of the following month, those are okay. Right. Because those are very normal, just kind of like are unclear checks. But if you have anything older than honestly like five, let's just call it to be safe. 10 calendar days, those are red flags. Right. Because that literally then means someone recorded receiving money. Right. That was going into your bank account, but it didn't actually.
Bob Preston: 28:22 And it's sitting in there. Yeah. Or it's sitting in a, the check is sitting on someone's desk or something like that
Taylor Hou: 28:28 Point. We've literally had examples of like, they, they were, you know, an employee who had left. Right. Or they were laid off and there was like $20,000 locked in a desk drawer. And no one knew about it for two years. Right. And of course, two years later, like these checks aren't going to clear. Right. And so like, it was something where, you know, of course there's tons of ripple effects with that. Right. Like that means they sent money to owners that did that. Didn't actually clear their trust accounts. Right. So they were actually shorting other owners, like there's all these ripple effects. So if you have unclear deposits, absolutely massive red flag and do not ignore. Okay. Unclear journal entries and unclear bank adjustments. Right. A lot of people kind of in their minds like, Oh, it's just a journal entry. Like we don't look, we don't worry about those. No, no everything that hits your bank rec right. Means it's, it's affecting cash and they are importance.
Bob Preston: 29:29 I always like to ask my guests to tell a story about themselves. I don't know if you're up for this, but something that's maybe shaped your personal perspectives on life. Maybe something that shaped your life? What can you share today with our listeners?
Taylor Hou: 29:42 Yeah. Well, uh, so why don't I give a, an interesting story of like how I got here, like yeah. And it's honestly how it's, it's kind of just like this weird, like this kind of makes sense story. Um, so, so by all means like, you know, when I was growing up, I had no intention, no dream of being, you know, the property manager real estate bookkeeping firm, right. Or an expert at accounting for, you know, trust accounts. Right. Like this was not my dream. I remember driving around to different homes that my dad was managing and collecting rent. Right. Like it was just something that I used to do. What's interesting is I also remember, like my mom was a CPA. Right. And she had me back in the day doing bookkeeping. Like I would be entering a bunch of like, I'm super-fast on a number of keypad. Right. Or number pad, because I used to look at statements and things and just like enter a minute. I realize now I was doing reconciliations back then. I just didn't know what I was doing. Like, my mom was just telling me, Hey, just look at every line item, just type it in, hit enter. My first stint out of college was at AppFolio. And it kind of reiterated this, like, you know, this industry is very interesting, you know, I went to AppFolio, not because of the industry, but because it was a, you know, tech, burgeoning tech company that raised funding as a SAS company is all the things that were trends back in the early two thousands. Right. And, um, you know, like I, I wanted to learn and, and so I went there and it just kind of reiterated like, Hey, property management is actually really big, massive industry and lots of moving parts.
Taylor Hou: 31:28 Um, but property management also like tends to yeah. Lots of moving parts and probably it tends to do great in, I don't want to say recessions per se, but to, you know, whether or not the real estate or economy is doing good or bad, like you need property managers. Right. And, and, and, you know, like after that, or after my stint at AppFolio, right. Like I did my own startup completely unrelated, but it was in tech. Right. I was building enterprise, video collaboration, you know, like my claim to fame kind of like, you know, short thing was like my company or my startup back then, um, if anyone recognizes tech crunch or tech crunch disrupt, or like we were finalists at tech crunch disrupts on the stage, you know, like, um, you know, we were actually invited by Silicon Valley, the HBO TV show, right. That maybe a lot of people watch. Um, you know, we were, uh, you know, we were in the first season finales background because, uh, you know, in that show, like they also had their show, start-up go to tech crunch disrupt right and present. And so like that show spent a ton of money recreating that disrupt experience, but actually inviting real startups to go, you know, be backgrounds in it. And so like, we have like little cameo appearances in Silicon Valley, the show. Right. And so I've, I've always kind of been in the industry. And then finally, you know, like, uh, was it mid 2017? My wife told me, Hey, you know, I'm pregnant, right. Like you need to actually bring home real money. Now you can't be off in Lala land and LA and SF, and like doing all these kinds of weird things that don't really bring home money. Um, and, and, and so, you know, I kind of turned to, you know what, what's, what's the most immediate thing that like, I know people need and I'd always been kind of as a side hustle. Right. The millennial hustle thing that a lot of people talked about these days, um, you know, like I'd always been consulting AppFolio property managers and finally got to the point where it's just like, you know, that this is unsustainable, right? Like I'm only one person. I only have so much time in a day or a week. Right. Like, how do I make this scale? You know, enough clients of mine were like Taylor “Why don't we just pay you to do our books?” And so, hence that was, you know, it was officially, May of 20, sorry, July of 2017. I signed my first book keeping clients. Right. And, and it was just me back then. And so, you know, a little over three years, and as of today, we have over 130 people fulltime.
Bob Preston: 34:00 Good for you, man. That's a cool story. I remember meeting you guys at NARPM or something. I think it was probably in the early days. And, um, yeah, you guys have come a long way for sure. That's a really cool story. Thanks for, thanks for sharing that. And what about if someone wanted to get ahold of you out there for APM Help? What's the best way to reach you guys connect and perhaps get a kind of an initial consultation?
Taylor Hou: 34:21 Yeah. Uh, so best way go to our website, you know, www.apmhelp.com. That's Apple Palm, Mary. Um, now if you want to just direct email, right. info@APMhelp.com. Now, um, I do like, this is a pet peeve of mine. I do want to let everyone know. Okay. When you submit an inquiry, right? Yes. You're probably going to get an automated response immediately, like conflict confirming that you get a response. Right. But, um, within business hours and within reason my staff or my account execs are required to respond within 10 minutes. Right. And to have an actual meaningful conversation. Um, if you want to email me directly or the chief happiness officer, uh, you're absolutely welcome. I hold the same rules for myself. So, my direct email is taylor@apmhelp.com. Okay. And look, don't hesitate now, please don't get offended if I get a bombardment of emails and I kind of forward them to other people to have them respond. I mean, keep in mind, I've got a massive team, right? Like I'm doing a ton of stuff all the time, but you know, if it, if it's something that I can address, I absolutely will.
Bob Preston: 35:32 Well, I'm going to fess up here that I kind of asked you at the last minute to join the podcast and I emailed you and you responded in about 30 seconds. I think. So if that's an indication of how in touch you are with your clients, that's a really great cause. Hey, Taylor, I'd love to keep talking about this. It's really important for property managers and even investors and other landlords out there, whether they're self-managing to understand the consequences of keeping your financial books, tidy and complete whatever state you're in. So thank you so much for joining. As we wrap up today, I'd like to make another quick plug to our listeners to please click on subscribe, give us a like also pay it forward with the positive review to help encourage more great guests like Taylor to come on our show. And that concludes today's episode of the Property Management Brainstorm show. Thank you for joining us until next time we will be in the field, working hard for our clients to maximize their rental income and maintain top tenant relations and we'll catch you next time.
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