29 Oct 2020

Trade Talk | Fit Your Customer's Budget: Rent-to-Own HVAC

Trade Talk - Atwood Rentals HVAC

In this episode of Trade Talk, Tommy Cue talks with Jeff Scott from Atwood Rentals HVAC. They spend time talking about how Jeff went from being in the military to the VP of Sales at Atwood Rentals HVAC. They also get into how the rent-to-own HVAC space fills the gap for many HVAC contractors whose customers may not have the financial means for a new system.

Host: Tommy Cue, JB Warranties

Guest: Jeff Scott, Atwood Rentals HVAC

Contact Jeff

Phone: 833-RTO-HVAC
Email Jeff


HubSpot Video


Read the Transcript:

Tommy Cue: All right, good afternoon. Tommy Cue, JB Warranties, vice president of sales. I have the guest speaker today as Jeff Scott with Atwood Rentals. Jeff, thanks for joining us, sir.

Jeff Scott: Yeah, no problem. Thanks for having us.

Tommy Cue: So, give me kind of a brief history of the Jeff Scott career. I know you've got some little military background. You've got a lot of HVAC background, and then we'll of course lead into what we're both talking about today, which is really the Atwood Rentals focus for HVAC. So, if you don't mind, start back a little bit with your military background, Jeff.

Jeff Scott: Yeah, absolutely. So, I'm from a small town in West Tennessee, [inaudible] Tennessee. We've got about 8,000 people. I was born into the HVAC industry. My father had a company in 1983, so there was only a couple in town, and he was one of them. So, like a lot of people in small towns, I wanted to go out and see the world, so I thought it would be a good idea to enlist in the United States Marine Corps, serve my country, do the things there. I learned a lot about how to be squared away, how to be organized, and how to work as a team, which it was things that I needed, and it followed me into my career.

Jeff Scott: I came back home, became the operations manager for my father, and then soon bought the properties and the building from him. We built it up to a decent size company for a small town, and when we sold the company to a larger company in Tennessee, we sold it to Hiller Plumbing, Heating, Cooling & Electrical there in Nashville, Tennessee, and I went to work for Jimmy for a couple years as a senior project manager for him, and saw the need for this in the industry, need for this being rent-to-own financing for HVAC.

Tommy Cue: When he had his air conditioning company back starting in '83, you said, was it a service and repair company, or was it commercial? Did you-

Jeff Scott: It was just service and repair. Really and truly, it was a lot of installation because in the '80s people were still taking out the window shakers and putting all new duct and going through us, Tennessee Valley Authority, going through TDA systems to the utility department. That was the only source of financing in the '80s, so that was real big for him.

Tommy Cue: Then I actually had Mr. Hiller on an interview last week. He's probably one of our largest contractors in the United States. I didn't realize you sold Scott to Hiller. He's got eight or 10 locations. Has he typically bought smaller companies, and that's how he's grown his business?

Jeff Scott: He really hasn't. We were one of the smaller companies that he purchased. Usually, they purchase a larger size company, a five-to-eight-million-dollar company, and we were only three, so probably a smaller company for him.

Tommy Cue: Then when you worked for Hiller, were you in Nashville, or you were still out in the rural area?

Jeff Scott: So, I was still in the rural area, but we opened the Jackson, Tennessee market with my customer base for Jimmy, and again, I stayed on to kind of help with the liaison piece there between Hiller and the old Scott Heating & Cooling.

Tommy Cue: Then for the folks listening on this podcast, if you will, we partnered with Atwood a couple years ago as JB Warranties, and we saw an opportunity to go into a market that we didn't really understand. We didn't know the space really even existed. But what I've learned in this crisis year of the COVID-19 is it's become more and more of a need. So, Atwood Rentals has positioned itself to be a rent-to-own HVAC company, if you will?

Jeff Scott: Correct. We've positioned ourself to be, I guess, the third look, if you're talking about a waterfall system.

Tommy Cue: Okay. For that being said, how does it work, Jeff? Does a contractor come to you, or does the consumer come to you, or is it a mixture of both?

Jeff Scott: It's actually a mixture of both, Tommy. So, we have an online presence where homeowners come directly to us across the country, and then we link them with one of our participating contractors. If we don't have a participating contractor in that market, we lean on one of our vendor partners to send us one of their preferred dealers. But the majority of our contracts come directly from the contractor, in the home, have the denied credit application sitting with the homeowner, 95 degrees outside, needing air conditioning. That's where the majority of those-

Tommy Cue: You're finding these contractors across the country. Currently, give me a ballpark number. I don't want to get too nosy in your business, but you have contractors across the country, 100, 1,000?

Jeff Scott: Yeah. So, we've got a little under 1,000 contractors right now, and that's a real number, Tommy, because we went through here not too long ago and did what we called a clean out. I hate we had to do that two-and-a-half, three years in, but we did a clean out, and these are dealers that signed up and never used the program. We still didn't even have a certificate of insurance on them, so we went ahead and cleaned those out. So, these are truly participating dealers.

Tommy Cue: Okay. So, you've got a contractor base across the country that helps facilitate the install. Are you aligned with manufacturers or distributors? Is that something that you go down that road with as well?

Jeff Scott: Yes, it is. So, we're aligned with... Probably our first and our largest is Carrier, and they rolled us out with Carrier Enterprise, one of their distributors I believe you guys are partners with as well. In a smaller, more controlled market, we did a couple rollouts with Carrier Mid-South, and then we did Carrier South Texas. We rolled out in both of those areas. We were extremely successful in both, so they rolled us out, and we should at the end of 2020 be in every region that they have. I think we have Florida left, and somewhere else. I'm not really exactly sure what's left, but we have two left that we're not in for them. They've told us they're going to give us the ICP brand the middle of the fourth quarter as well. So, that's just one. We do have multiple. I went through the list earlier, and I think we've got a little... I thought we had about 10, but I think realistically we've got about 18 vendor partners, be it a factory or the vendor itself. So, we're doing pretty well with that as well.

Tommy Cue: So, bottom line, it's as simple as this, the way I understand it. Nothing's as simple as I think it is, but when a consumer needs, call it last chance or second chance financing, they go online to your portal, and they fill out a credit application.

Jeff Scott: Correct.

Tommy Cue: It's a 10-minute fill out. It's a homeowner name, address, phone number, and then you get an approval how quick, Jeff?

Jeff Scott: We have a guaranteed 15-minute approval, which is the fastest for rent-to-own that there is. Because we have to have true underwriting, a physical person looking at the documents to make sure they're real, we don't believe there'll ever be a way that it will be a six-to-10-second, like a true traditional finance.

Tommy Cue: Then when a consumer's looking at rent-to-own, you have different lengths of financing that you offer them to help them fit it into their budget, if you will?

Jeff Scott: Mm-hmm (affirmative). Yeah. So, we have 36 through 72 months, and we also... Something that we've implemented here recently is what we call our grace contracts. If we have a homeowner that has lost their job or is furloughed or needs assistance, we will give them what's called a grace contract. We'll change their payment structure, and we'll look at their history and make sure that they've been current, but we'll give them a grace contract to allow them to go out even further, or lower the payment, or whatever they need to do, because the last thing we want is them to not have heating and air.

Tommy Cue: When I say a referral partner, because we treat you as a referral partner as well, one of the luxuries of the JB Warranty benefit is on all of your system installs, you provide the consumer five years peace of mind with a warranty. Is that correct?

Jeff Scott: Yes, that's correct. We partnered with a company I can't mention yet, but we're doing an integration with them. They're a finance company, and one of our lowest-hanging fruits... They said, "What's the difference in you and company X?" and my favorite one to go to is that we provide five-year labor warranties through JB Warranties, and we do that so the homeowner doesn't have to worry three-and-a-half years from now, "Oh, my. It's broke. Do I pay the repair deal, or do I pay Atwood my monthly payment?" So, we took that whole worry out of the equation.

Tommy Cue: On the warranty, to keep that active, does the contractor need to provide annual maintenance [crosstalk] system?

Jeff Scott: Absolutely, yes. Yep, yep. Yeah. We require... It's in our contract with them that they will continue to maintain the property, or maintain the system, rather, just like they would for their usual customer.

Tommy Cue: I think every manufacturer is now requiring at least annual maintenance, and some of them semiannual, twice a year.

Jeff Scott: Yeah, yeah. I think it'll get even more and more, as times go along, with these longer warranties from the manufacturers, when they went to 10-year, it became more imperative that they maintain the system.

Tommy Cue: So, bottom line, rent-to-own air conditioning, which is a fast-growing segment in our industry, if a contractor listens to this on a podcast or on a webinar and they want to participate in your program, what should they do, Jeff?

Jeff Scott: They need to call the office and talk to Chad Martin, our national sales manager, and he would love to talk to any of them. We have an easy phone number to remember. Everybody tries to come up with easy numbers, but it's 833-RTO-HVAC. So, hopefully that rings in their head where they can call and get set up. Setup process, we also don't take the usual two to five weeks like a lot of [inaudible] companies do. We can have you set up same day, get you on a... We have two, I think... I'm embarrassed. I don't know all the inner workings anymore, but either two or three times a week the team does a training with onboarding dealers, and they'll be able to get them on one of those trainings, get them set up, and start running contracts.

Tommy Cue: Is there also a website that you'd refer them to if they wanted to learn some more information?

Jeff Scott: Yeah, sure. They can go to atwoodrentalshvac.com, and simply click the button to become a dealer.

Tommy Cue: Perfect. I think it's a unique program. I think it's got a lot of legs, especially this year, to grow. Business is up for you, I would assume substantially this year, Jeff.

Jeff Scott: Over 50%, yes.

Tommy Cue: Nice. Nice.

Jeff Scott: Yeah. It's been a-

Tommy Cue: Well, let me tell you, we've had... I don't know the exact number, but hundreds of our contractors use your program and install systems on your program, and it's had great success. It fills a void that they didn't have. We call it first chance financing. So, congratulations on the success. You've been a great partner for us, and we'll keep referring you to your contractors across the country.

Jeff Scott: Yeah, not just because I'm on your podcast, but you're definitely one of our favorite vendors, one of our partners, rather. I told Will [Basco], I believe yesterday. It's funny how you meet people, but I met Will before I was ever in the finance industry, and met him through a previous job, and just kept that relationship, and then I met you guys, and you've been awesome for us. Your dealers are like our dealers, and they tend to like us as well as they like you, so it's been great.

Tommy Cue: I will add that our team, our JB Warranty sales team, there's 25, 28 guys across the country. If you're listening, reach out to one of my JB guys or gals. They know the program fairly well, and they can get you in touch with Chad. Chad even, and Jeff, came down our sales meeting to roll out the program and introduce it to our team, so thanks for that. We'll have you again this year if the COVID crisis allows it. We'll have that again in December. With that being said, Jeff, thanks so much for the time. I appreciate it very much.

Jeff Scott: Yeah. No. I appreciate your time. I know you guys are busy [inaudible] to be on here.

Tommy Cue: All right, sir. Thank you very much.

Jeff Scott: Thank you.