Trade Talk | Rent-to-Own HVAC: Win-Win for Contractors and Customers

On this episode of Trade Talk, Chad Martin from Atwood Rentals HVAC shares his insight on why more and more customers and contractors are looking to them for help when purchasing a new AC system. He digs into the rent-to-own side of HVAC and how it's becoming more popular with contractors and customers.

Here’s a breakdown of what you’ll learn:

• Importance of the partnership with JB Warranties.
• How to help customers get a new AC system without having a great credit score.
• What’s needed from a homeowner to rent an AC system?
• Why each system comes with a 5-year warranty - How long are the rental terms? And does the homeowner get to choose their terms?
• How their model is built for success - win for the contractor and the customer.
• 2020 vs 2021 vs 2022 - How has business been and what does the future look like?
• How does a dealer get involved with Atwood Rentals?

Connect with Tommy, Will and Chad:

Hosts:

Tommy Cue and Will Basko, JB Warranties

Guest:

Chad Martin, Atwood Rentals HVAC

Read the transcript:

Tommy Cue: Good afternoon, Tommy Cue with JB Warranties, here for another edition of JB Warranties Trade Talk, I'm joined with Will Basko, our JBA southeastern regional manager. Chad, with Atwood Rentals. Chad, welcome sir.

Chad Martin: How are you guys doing today?

Tommy Cue: Man, we're doing good. I want to thank you for your partnership over the years. You guys are in a unique space in the HVAC industry, and we've been partnering now, we're what, three years with them?

Will Basko: Yeah, almost three years, yeah.

Tommy Cue: Let me tell you, truly it's been a great partnership. We've learned a lot, we've added a lot of customers mutually, and what we want to do is we want to show your platform around the country to contractors that might have a need for what Atwood Rentals actually does in this space. So with that being said, I just want to turn it over to you and let you talk a little bit about Atwood and the plans for 2020, 2021, and maybe even looking forward to 2022.

Chad Martin: Yeah, of course. Well, first of all, thanks for the opportunity to allow us to come on board with you guys and do this. It's a great opportunity. I tell you what, Will you've heard me say this multiple times to my dealers. The number one thing that I tell my dealers that I personally deal with, is the partnership that you all and us have. It's a big, big deal for us. In my opinion, we wouldn't have got where we're at now without you guys.

Will Basko: Thank you, it's been a win-win for both of us.

Chad Martin: Yeah, it is, it is. We work real well together. You guys have a great team, great leadership. We reach out to you guys all the time. You guys are very helpful, especially when we have so many homeowners that contact us that need help. These homeowners are going through hard times. Life has hit them, so they're reaching out to us to help. So, when we need an HVAC dealer in a certain area, you guys are our first call because you guys got such a great staff and team out there, that has good relationships with these dealers. So, you're our way in to these dealers because you guys got this relationship and all in all, every unit gets a five-year labor warranty. So it's helping both of us, so you're able to pick up some business too, because some of those dealers might use some of your other services as well, too. So it's been a great partnership and every webinar I do, or any sales training I do, I specifically stop at the labor warranty part of our push. I'll make everybody stop and realize what is happening, because as you all well know, we put a five-year labor warranty on every unit, it's automatic.

Chad Martin: We purchase that, the dealer doesn't have to buy that, it comes with our services. I really slow down and let the dealers know how much of a benefit that is, because I think that homeowner, once again, is going through hard times, life has hit them. What if something happens to that unit within that timeframe? They might be going through life again and can't afford to get that unit fixed. Well, guess what? They're covered because they're getting that parts warranty from the manufacturer and that five-year labor warranty from you guys. So, everybody is taken care of in that situation.

Tommy Cue: So, on the Atwood platform, you're nationwide, I think, is that a fair statement?

Chad Martin: Well, yeah, we're pretty much. We've got a few states that we can't do business in due to the state laws, but yeah, we're in about 46, 47 states.

Tommy Cue: And so, bottom line for the contractors out there, most contractors today offer financing, but with today's world, and today's economy, and today's society, a lot of people may not have an 800 credit score. So, people are looking for ways to get air conditioning systems, whether it's a credit score worthy or not. That's what you all do. Is that a fair statement?

Chad Martin: That's right, yeah. So the thing about us is that by the time they get to us, we know that that homeowner's credit is no good. They've gone through a first look or a second look, maybe sometimes a third look. We don't want to waste anybody's time. We know by all those looks, from the financing companies that those dealers use, that the credit's just not going to work. So, we just take it out of the equation. So, they can have whatever credit score they want, it doesn't matter. We really just focus on three documents.

Tommy Cue: And give me an idea, because sometimes I'm forgetful, what do you need from a homeowner to get approval to get a rent to own HVAC system?

Chad Martin: Yeah, so since we don't check credit, or we don't do a soft pull or anything like that, the three documents that we look at for approval is first, it's going to be a photo ID. Then the next document's going to be a current paycheck stub or a current proof of income, it could be a paycheck stub, or it could be a W2 or W9, whatever it is, a bank statement, anything to show current income, and then a current mortgage statement. I'm stressing current because we can't have something that was a year old. We got to have it as current as possible. So, photo ID, current proof of income, and a current mortgage statement, or if they own their home, a deed a trust. If they've got those three things, we're going to approve them.

Tommy Cue: Okay. So, help me wrap my mind around that. They've been out, they couldn't get approval, so they come to Atwood. They provide these three documents. What's the timeframe from when me as a consumer calls Atwood, to when I get a system put in, typically?

Chad Martin: So, after we get the documents from the homeowner, you got to think these dealers have been there, two and two and a half hours. They've been at the homeowner's house, they've done their calculations. They've done their measurements. They know what system needs to go in there and everything that needs to go around that system. They get denied, homeowner gets denied.

Chad Martin: So, they look their first look, second look, the homeowner doesn't have cash. Doesn't have family members to help out. Where do these dealers go? They've been walking away from the job until they met us. So, now we're able to capture that job for them. So that two, two and half hours that they've been sitting there, they've already lost money, the dealer has, because they have nowhere to go.

Chad Martin: So, now we're able to recoup that money and capture that job. The dealer is able to roll right into our program and they can say to the homeowner, "Look, you've got denied. You don't have cash, but thank God we've got another program that doesn't pull credit and we think that we'll be able to get you funded." So they roll into our easy program. They upload those documents, or they get those documents from a homeowner. That's one thing I also bring in the dealers about the five-year labor warranty because, at that time, to that dealer that is an awkward situation to be in. You can only imagine, for that homeowner to get denied. So the good thing about that is when our program's presented the dealer always says, "By the way, this comes with a five-year labor warranty too." From my experience, the dealers have told me that puts a pretty good smile on that homeowner's face, because they know they're covered for a long time.

Chad Martin: So, back to the question there, is once they upload those documents and they sign a contract, it takes our underwriting team about 15 or 20 minutes to review those documents. If they're all good, then the homeowner gets a call from us and so does the dealer, to go ahead with that install.

Tommy Cue: Is the dealer getting all this documentation to you, or is the homeowner?

Chad Martin: That's up to the dealer. We have some dealers that love to do it themselves and we do train them on how to use their portal. Once they become one of our dealers, we do train them on how to use it, how to navigate through it and how to add contracts, how to upload documents if they want to.

Chad Martin: That's perfectly up to them if they want to, but we've got a great team here. We've got a great inside sales team. We've got a great dealer team that if that dealer, we understand that they've been there that two, two and a half hours. They need to go to another job. So we do have some dealers that call us and say, "Hey Chad, I've got a customer that's been denied. I got to get to another job. Do you mind reaching out to them and helping them fill out their application and upload their documents?" That's when our team takes over. The dealer at this point just says, "Hey, just call me when they're approved," because they're used to us approving contracts.

Tommy Cue: So, basically what you're doing is you're getting a consumer that might have a less than average credit score, a brand new system HVC system. For how long is it typically rented or mortgaged for, if you will, Chad?

Chad Martin: We offer four different terms. We offer 36, 48, 60 and 72 month terms. I believe we're probably one of the only funding companies out there that go that far out, on 72 months. So, the homeowner gets to pick those terms, by the way, we don't pick it for them. So once the system is selected in our software and where the address of where the unit's going to be installed at, our software automatically calculates those payments. So the dealer doesn't have to, so our system is pretty automated. So, when the dealer shows the homeowner those different terms, the homeowner gets to pick whatever term fits their budget, where they feel more comfortable with, and then they move on from there.

Tommy Cue: Gotcha. I don't know that this would be the situation, but if somebody wanted to upgrade this system and say an entry level product now is like a 14 SEER efficient product, is there an opportunity for the consumer to say, "I can afford a little bit more, can I get a 15 or 16 SEER product?"

Chad Martin: That's no doubt, yeah. I mean, our program once again is built for a basic 14 SEER system, basic install because it goes from a want to a need. These homeowners want a 16, 18, 20 SEER unit, a nice unit, but they got denied. So we need to back it down to basics to a 14 SEER system. But we do have some homeowners that have a good income. They have good money coming in, but their credit's just not any good. So the income really drives the whole program. So, if they've got good income in and they want to go to an upgrade to a 15, 16 SEER, then their income is going to tell us if they can or not. If they, can then let's do it, the more the merrier.

Tommy Cue: Gotcha. So bottom line, you're filling a need for a consumer that has to have an HVAC system. You're filling a need for a contractor that's going to get a revenue stream, where in years past he would've had to not get, right?

Chad Martin: That's right.

Tommy Cue: He didn't have the ability to sell that job.

Chad Martin: That's right.

Tommy Cue: So it's a win for the contractor. Then it's a win for the consumer that's got a new HVAC system, got a labor warranty, got a contractor to service it. Man, it seems like it's a model built for success.

Chad Martin: Well, it moves boxes. I mean, you look at the beater side and the distributor side, and let's look at the warranty side, it moves everything. These are warranties that you guys might not have ever had. So it helps you guys out, it helps the distributor move those boxes and grow their bottom number. Then also on the dealer side of things, you're right, it's going to move boxes that they weren't counting on. So yeah, it's a win-win for everybody and we're able to help out the homeowner. That's the most important thing, you know what I mean? They can't go anywhere else.

Will Basko: Yeah and you're talking about the distributor, are you brand specific can the homeowner pick and choose the brand they want to put in their home?

Chad Martin: Well, we've got a lot of strategic partners out there, like you guys. The dealers that you guys bring in are from you guys, so they're able to use wherever they want. No, we're not brand specific, but also we've got partners out there that throughout the country in almost every state that those distributors bring us a ton of dealers. Out of respect, these distributors have taken the time to introduce us to their dealers. So, when we talk to those dealers, we highly recommend that they buy those units from those distributors, because it's out of respect. They're the ones that told them about us.

Will Basko: The old adage of dance with the one that brought you, I understand.

Chad Martin:  I was going to put a different way but [inaudible]. But yeah, you're right. I mean, it's out of respect and the dealers are totally fine with that. It might be different brands within one distributors, we don't care what brand it is just so long as it comes out of their barn is all matters.

Tommy Cue: So give me the last two or three years worth of history, if you will. Pre-COVID, during COVID and moving forward with whatever we're faced with today. How's business held up? What's 2022 look like?

Chad Martin: Yeah, no it's been a fun ride. I've enjoyed it. It's a unique business. When I was first introduced this business, of course I had no clue. I came from a different background, I raised cattle and farmed. So I mean, this is new to me but when I was introduced to this program, it's nothing but increased every year, every month, every day.

Chad Martin: The program has totally evolved. We've made a lot of changes, but it's to make the good changes to what the economy's like, and then just new technology. From the very beginning when I started, it was just me and a couple of other people, in a little small office downtown. Well, you guys have been out here. All right, Will, I know you've been out here, we're in a little different building now, right?

Chad Martin: It's a huge complex. It's fun to come home to when you're on the road, to come to this. So it's very exciting, but we were out on the road. We were out there quite a bit, Will, as you know, when I first started just going out and meeting dealers and with you guys, your team, and other distributors, and we really, we fit a need and we fit a solution. So, it's nothing but increased.

Chad Martin: Now, when COVID hit, the only thing I didn't like about that, is that I wasn't able to get on the road and hug necks and shake hands. So, we had to be home for a while, but that actually catapulted our program, it increased tremendously, because you got to think about these people were going through hard times. They lost their jobs. They were at home, their income had changed a little bit, so they got behind on bills.

Chad Martin: So what happens when you get behind bills, your credit score goes down. That's where we came in at. We helped a ton of people during COVID and we still are. Our program is still improving and increasing every day.

Will Basko: That's awesome. So you know that this Trade Talk's going to be ... We're going to throw this out to our masses, of our 80,000 dealers that are across the country.

Chad Martin: Yeah, hi everybody.

Will Basko: So what we want to do is explain to us, a dealer that's listening to you guys for the first time, how do they get involved with you? How do they sign up today?

Chad Martin: Well the best thing to do is, and you guys have heard us say this, we're real people. We like to be involved. best thing to do is to make a phone call to us or get with you guys, and one of your guys to tell us about it. When we have a new dealer that's interested, we're all taught to stop what we're doing and make that call back or answer the phone. So, the best thing in my opinion is I want to actually talk to that person, or if I'm able to go see him, I'm going to walk in their door. So, we're very hands-on.

Chad Martin: Best thing to do is to call me, I want to answer every question that they had, to make sure that they're comfortable with moving forward with our program. If they're not, then we move on. I haven't came across that too much because we're answering a solution that they don't have a solution for. But they can always go to our website and if they're interested, take a look at our information, that's at atwoodrentalshvac.com. There's a Become A Dealer link on our website that they're able to put their information in and get over to us. If it comes over to us on a website, we do the same thing, we stop what we do, and we call right away.

Will Basko: Are there any restrictions to a dealer, like if they're brand new dealer, do they have to be in business for a certain amount of time? Or are you guys open to just about any dealer?

Chad Martin: No, that's the good thing about us. We don't care how long they've been in business, how much money they make, how many trucks they have, or nothing like that. So, it doesn't cost anything to use our program, it's free. They might not use this every day, so why would we send them an invoice or a bill to use our services? So, we need basic information. We need information on how to pay them, because we do pay within 24 hours after the install. We have a basic contract and we need a W9, so it's not a lot of information though. But no, there's no restrictions on that. If there's any dealer out there that is having a hard time with denied finance customers, then they need to call us cause we're here to help out.

Tommy Cue: Nice. And again, you guys have been a fantastic partner, the business model is continuing to grow. It's a revenue stream that a dealer would not normally have. It's got a warranty on it, which is why we tend to like it a whole lot and I'm just happy for the success you guys have had. We look forward to working with you in the future and continuing to grow together.

Chad Martin: Well, there's no doubt we will, for sure. You guys have been a great partner. Been fun to be around. I've been with numerous of your team and every one of them is highly respected. When they walk into a room, everybody knows who they are. So, we appreciate you all.

Tommy Cue: Thank you very much, it's been a pleasure. We'll do this again and hope to see you at our annual meeting coming up in December.

Chad Martin: I'd love to, just let me know when, I'm there.