Expected Air Date: 03/5/18
Hello everyone. I am Roger Blankenship and I teach people how to make money in Real Estate. We bring you news, trends, markets, and we feature people who are getting it done in this industry. Today we are starting a series I plan to continue over the next week or two as we think about Buy and Hold Strategies. Property Management is a key skill you need to either have or hire.
Most of the people who want to invest in real estate want to own rental properties. There are certainly some benefits to this, including tax advantages and wealth building through equity, not to mention the possibility of extra cash. I say possibility because there isn’t as much direct cash in owning rental houses as you might think. In fact, I’ll go so far as to say that anyone who tells you you can borrow money, buy ten rental houses and then quit your job and live off that income is probably trying to sell you something. It just doesn’t work out that way in real life.
Property Management is KEY.
If you want to own a rental property or 20, you need to think about how you are going to manage those properties. If you own less than five properties in your own community, don’t mind putting in a few hours a week, are fairly well organized and detail oriented, and are willing to educate yourself about your state’s tenant laws and local regulations, you might want to manage your properties yourself.
But you need to say yes to ALL of those things I just mentioned so I’ll say them again: you own less than five properties in your own community, don’t mind putting in a few hours a week, are fairly well organized and detail oriented, and are willing to educate yourself about your state’s tenant laws and local regulations. If you say no or have any doubt about your ability to seriously follow through, you need a property manager.
I’m a real estate professional but I don’t manage my own rental properties, except for the one industrial building I own. Why? First of all, I don’t have the time. Secondly, although I have managed them in the past, have done my own evictions and court cases and know HOW to do it, I don’t WANT to. It’s not the best use of my time. So I use property managers. I’ve had good ones and I’ve had not-so-good ones. The quality runs the gamut just like any other product or service.
In a few moments we are going to speak with Katie Griffin, an Atlanta based property manager with Excalibur Properties. I’m going to throw a lot of questions at her just to see how she responds. Many of them are YOUR questions.
After the interview I’m going to provide a few things to look for if you are thinking about hiring property management:
Over the next week or so I’m going to introduce you to people who are buying apartments, creating turn-key rental properties, and providing other services for you as a buy and hold investor. So today our focus is on cash-flow. We will continue to answer any questions you have and help you in any way we can, but this is the theme. Remember we answer 100% of the questions you send in, some of them on the show. So keep them coming.
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- Special Guest, Katie Griffin, Excalibur Homes, Atlanta GA
Questions@flippingamericaradio.com Tell us where you’re from!
- Sasan, Boulder, CO, “I have a tenant who wants to make a partial payment on the 1st and another on the 15th. How do I document this?”
- Ken, Murfreesboro, TN, “My tenant shorted the rent this month, claiming they had to fix a water leak under the sink. Said he did it himself, but that saved me about $200, so he took $200 out of the rent. I think he can’t do this, but what do I do?”
- Alexandra, Fresno, CA “It’s often a challenge to remove a tenant here in California. Where are some places that are more landlord friendly? Do Property management companies have it easier?”
- Eric, Portland, OR “Hey I just caught your show on iHeart radio and watched some of your videos on YouTube. Thanks for all the information. I’m about to buy my first place and I’m thinking I might buy a duplex, live in one side and rent out the other. Do you think this will work?”
- Robert, Tampa, FL “In your opinion what is the most reliable way to establish the fair market rent of a property? I’m not a realtor, don’t have access to the MLS, and hate to bug my realtor friends about it all the time.”
Larue, Lancaster, PA, “How do you recommend screening your tenants?” Kenton, Pittsburgh, PA, “Is there a way I can do a credit check on a potential tenant? What I really want to know is whether they have been evicted.” Sherry, Las Vegas, NV “I think I heard you talking with someone on a prior show about making raw land cash flow. Can you review what you all discussed?”
- Questions for Property Management company:
- How many properties does your firm manage?
- How long have you been doing it?
- Can you provide contact information with two or three of your landlords as a reference?
- What are your fees? Both for placement and for management? (8% is normal)
- What happens if a tenant you place leaves or is evicted before the lease is up?
- Do you have your own repair company or do you have relationships with contractors? (You don’t want them to have their own repair company – there is no price control on repairs).
- What is your procedure for handling repairs, both minor and major?
- May I see a copy of your contract?
- You want to be able to cancel the agreement at any time with 30 or 60 day notice.
- You probably don’t want to have to pay them a commission if you decide to sell the house later. If you sell to a tenant they place, paying a real estate commission is reasonable, but they should offer something less than 6%. They have already been paid the placement fee, which covered their marketing costs.
- There is so much more to this process that you will learn WHEN you get started. You can’t learn everything you need to know before you begin. Know the big stuff that could really hurt you and then begin. What are the big things?
- What to pay for it?
- Know what your initial fix-up costs are.
- Know your remaining life on major items: roof, hvac primarily.
- Have a plan for management.
- Consider all the costs in your analysis – taxes, insurance, management, vacancies, expected repairs, and unexpected possibilities. Think 30% of revenue.
Questions@flippingamericaradio.com Tell us where you’re from!