Expected Air Date: 11/17/18
If you are going to own rental properties and acquire enough of them to achieve financial freedom, sooner or later you are probably going to want to stop managing them yourself and hire a property management company. I’ve hired a few management companies in my time and coming up I’m going to share with you some tips and techniques about managing properties yourself and then give you my guidelines for hiring property management.
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Topic: Hiring Property Management Tips from Roger Blankenship
Your Property Manager is a vital link to assure the long term viability of your property. This is your trusted steward, and a key component in your real estate business. Hire them with extreme care. Plan on researching and interviewing at least two and preferably three management companies in your area. Small towns may not have a lot to choose from, but perhaps there is a good candidate in a neighboring town who may be willing to travel a bit. If you cannot find good management and you’re not in a position to manage it yourself, your only options are to either not buy the property, flip it, or sell using an Installment Land Contract.
Do your own diligence before you even contact the companies. Here are some things you want to know.
- When was the company organized?
- Has the company ever operated under a different name or names? If so why the change?
- Have they been a property management company the entire time?
- Licenses and/or certifications. Look for these:
- Number of employees
- Do they dress and act professionally?
- How many properties do they manage?
- Are they local, regional, national?
- Do they manage Section 8?
- How far is their office from your property(ies)?
After you have selected a couple of companies to interview, here is a list of questions you will want to know the answer to. Remember that for every person you ever hire, the three most important factors are their character, their skills, and their capacity to do this job. Be ever vigilant in listening and observing any and all indicators of these three. Most of your evidence will not slap you in the face but will come from off-hand comments, unplanned remarks, and responses to situations. Pay attention! Because these indicators are as important as the answers to the questions. You will never win if you hire someone with poor character or skill sets, or someone who simply has too much going on to take care of you. So here are the questions you should ask:
- Types of properties they manage.
- Number of properties they manage.
- Licensed realtors?
- Let’s talk about your fees. (half the first month and 7-10% common) Watch out for:
- How do you set the rent amount?
- How do you collect rent? (bonus if they use ACH or direct deposit)
- How do you handle bounced checks?
- How often do you raise rents?
- Do you put rent escalators into the lease?
- How do you handle delinquencies?
- What percentage of your current properties are delinquent now?
- What is your process for handling evictions?
- How many did you do last year? (vs. how many properties are under management)
- Typically how long does your eviction process take?
- Do you provide eviction insurance or have a tenant replacement policy?
- What is your process for managing repairs? (looking for transparency here)
- Is your repair / maintenance company owned by you or do you hire outsiders?
- Is the maintenance crew (either owned or hired) insured, bonded, and have Workers Comp?
- Can you provide a list of your primary vendors? (review and research)
- How did you find and select these vendors? (we are looking for potential conflicts of interest, such as a spouse or other prior relationship)
- What surcharge do you add to repairs?
- How do you handle emergency or after hour repairs?
- Do you schedule routine maintenance at the properties? If so, what type?
- What are your rules for contractors entering occupied properties?
- Do you provide itemized statements that include detailed accounting of all work done?
- Do you allow tenants to make their own repairs? (that’s not a good thing for your property)
- Do you allow tenants to hire their own repairmen? (that’s also not a good thing)
- How do you handle lawn maintenance? (pros and cons here)
- Describe your turn-around process for re-renting.
- Describe your move-in inspection process. Do I get that report?
- How often do you inspect properties during the lease?
- Do you notify tenants prior to inspection?
- May I see a sample copy of an inspection report?
- How do you advertise the homes for rent? Expect MLS, classifieds, signage, but also craigslist, other online portals, flyers, social media.
- What is your current vacancy rate?
- How long does it normally take you to fill a vacancy? (more than a month is not good – pricing or property problem)
- What is your cost per lead? (be impressed if they know. Don’t be surprised if they don’t)
- Who fields inbound leads?
- How quickly do you respond to inbound leads?
- How do you prepare a home for showing?
- Do you show occupied houses (should only happen in well-maintained properties)
- Do you allow unattended showings with a lockbox?
- Describe your tenant retention program.
- Do you hold properties for prospective tenants before a lease is signed? (fee?)
- What steps have you taken to protect from rental scammers?
- Describe your tenant screening process?
- What tenant qualifications are most or more important than others?
- Do you have an application fee?
- Do you require all adults living in the property to complete an application?
- Do you require all adults in the property to be on the lease?
- Ask for a copy of their typical lease.
- Ask for a copy of a typical management contract. Pay close attention to the length of the agreement and the termination procedures for either side.
- Plan to have your attorney read the contract (a worthwhile expense) before you hire.
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Motivational Thoughts for the day
“I don’t make up jokes. I just watch the government and report the facts.” -Will Rogers
[0:16] America the show that teaches you how to make money in real estate wherever you are whatever your situation there is an opportunity for you flipping America is sponsored in part by American IRA
founded by investors for investors on the web at American Ira. Com,
and by Braswell Capital Solutions commercial lending made easy on the web at Braswell Capital solutions.com,
and now you’re sad flipping America guy Rodger Blankenship hello everyone.
If you’re going to own rental properties and you plan to acquire enough of them to Achieve Financial Freedom.
Sooner or later you’re probably going to want to stop managing them yourself and hire a property management company
I have managed properties myself I’ve had people on my staff manage my properties for me and then I’m going out and hired management company since so I’ve got a little bit of experience with all of it and the on Today Show this is rentals,
look for property management coming up in a few minutes.
[1:21] I’m going to share with you some tips and techniques that I use when hiring management companies and
I wish that I had learned all of these lessons before I started this but folks today maybe the most featured Laden show I’ve ever done information just.
Van packed I’ve got 10 things you need to look for in your management company and I’ve got 50 questions that you need to ask and I’m going to go over all of them on the show with a little bit of comment about each one
plus we’ve got the news and several other things coming up and some very interesting things happening and
I made a bold prediction just a few days ago in the show and I turned out to be half right I’ll tell you what that is,
just a couple of minutes but first of all how to reach us find us on the web at flipping America network.com find us on the face on Facebook by looking,
for flipping America media on social media Twitter and Instagram Google Plus and so forth just look for at flipping America.
[2:21] We have a YouTube channel where you can watch the videos we do interviews on the show from time to time and those interviews get the video recorded and put on YouTube and then we have a LinkedIn Channel we.
Put a lot of things on our social media that we never get to in the show some of its interesting,
some of it may not be for you but all of it was had some interest to me and maybe you can even get a little insight into the way my brain works by,
seen some of the things that I think we’re interesting enough to take at least it looked a little bit of look at and you will also see that we read dozens and dozens of Articles if every week
to prepare for the show said to try to stay on top of what’s going on in the world of real estate and we do this for you,
you can call our national comment line at 404-369-1018
press extension 1 to leave your comment your message your question you can ask questions about anything related to real estate and we will answer it we will probably answer in an email so please leave us an email address to write back.
[3:25] Or if you leave a phone number someone will eventually get around to calling you,
if you want to send your questions about real estate and real estate investing sending two questions at flipping America network.com questions.
Flipping America network.com we answer all of the questions that come in we answer some of them on the show don’t know if we’re going to have time for any of them on Today Show because we’ve got so much.
Coming up but first let’s do the news.
[4:00] All right the Bold prediction time I made a bold prediction the other day that Amazon was going to relocate their headquarters in.
Washington DC and I was only half right I know a lot of people have been asking me already how did I even get it half right folks it was just a wild guess but mainly it’s because the main man that Amazon has just recently built the house.
Or bought a house in Washington DC and you know I don’t know about him but for me I’d like to live close to where I work in,
so that was really my one and only in Decatur,
at the Washington DC was going to be selected I didn’t see New York coming and I don’t think anybody really pretty good that they would go to two locations simultaneously but
New York is a great choice because they’re already paying $15 an hour for their labor and they’re going to get up there and,
have some fun with the labor unions in New York and look this I’m not making political statement about unions,
it’s just an interesting environment I can’t wait to see what happens with Amazon going forward to be honest I’m kind of relieved that they’re not coming to Atlanta I’ve got my reasons for that most of which will remain personal but.
[5:12] I never was really super excited about having Amazon come to our city here in Atlanta and.
If you really want to know why how you’ll just have to ask me and I’ll tell you off the air but,
not on okay hey there is a little bit of news that you need real estate agents female real estate agents you need to pay attention this down hasn’t happened in the South butt in Massachusetts particularly Southern Massachusetts something is going on where
female real estate agents are receiving phone calls from an unattended unified man or men,
posing as sheriff’s deputies and looking for a meeting there even masking their number and saying that it’s the Sheriff’s Office calling but listen folks.
Agents everyone if you get a call from someone claiming to be law enforcement get their name,
if they have a badge number and a phone number and tell them you’ll have to call them right back.
[6:10] Then look up the number for the EDD that agency in your municipality and see if it’s them and if it’s not them then you know.
That it was a scam they they may or may not give you the correct number.
You can you want to be the one initiating the calls don’t know where that this was a financial scam or where there’s something a little bit more in the farias was intended but be careful folks keep your wits about you and if something seems a little fishy.
Especially these days with phone calls Just Go With It.
Alright we got a weird call into flipping America the other day from someone who said they wanted to set us up with government contracts that would last for 5 years don’t worry we didn’t even answer the phone call I mean we didn’t answer the message.
[6:58] You never can tell what somebody’s got an angle on and what what they’re about to do so really just ignore most of this okay.
Here’s some news that you can’t really use Monopoly the ultimate real estate board game.
As a new version of.
And it’s called Monopoly for Millennials And the tagline on the title says forget real estate you can’t afford it anyway.
[7:28] Any any Millennial knows the struggle of certain things like seriously trying to buy a property while sometimes juggling more than one job trying to pay off student loans,
all aspects of that particular generation have been turned into a limited edition of The Beloved but fight inducing a board game Monopoly,
the new spin-off even front a logo that speaks to the masses forget real estate you can’t afford afford it anyway the original games all about saving up fake money in owning houses and hotels
but this game is all about racking up experiences something that Millennials are seemingly more into,
certain experiences are visiting your friend’s house a vegan Bistro coffee shops and a Meditation Retreat,
well game pieces are sunglasses a camera and a hashtag as for the community chest and chance cards it always feels like treat to pick up some of the descriptions include your cellmate is sick of you blogging about prison life
get out of jail free or your mom learned how to text advance to go and.
You get a 4th job hashtag hustle hashtag sidegig hashtag no days off.
The game is sold exclusively at Walmart and as of right now the game is completely sold out.
[8:40] I don’t know if it’s because they didn’t make very many or if it’s because really it’s that popular but I wonder if one of the little moving pieces shouldn’t be,
you know a beard I don’t know maybe this video
the Hipster generation is not Millennial who knows I’m an old man I don’t know speaking of old man I’ve got a couple of stories about we work in the news today I’m going to skip over to that.
[9:04] And the real deal realdeal.com I picked up a story saying basically commercial landlords were asleep at the wheel while we were came in and took over the world and they have they are the largest
property owner largest tenant in mini,
major American cities they have more office space than any other of the big players and they have turned around the way offices get rented now
this is where the I’m old comes into this I’ve looked at we work and we considered we work and you know it’s all cool hip and trendy to you want to go shut the door and have a private conversation you know,
we have a saying for my generation about he who lives in glass houses I just don’t know how I would enjoy the owl sitting in an office all day.
[9:55] It with glass walls and everybody’s watching what everybody’s doing it not that I’m really do anything all that private except,
you know what this is another sign that I’m old occasionally around 2 or 3 in the afternoon,
you know I’ve been up for a while I’ve usually been at the office since about 6:30 or 7 and it’s starting to feel like nap time now I learned
back in the 70s how to take a 5 minute nap and you know power nap and get refreshed I don’t do it everyday,
but some days there is just a need and you know I don’t want to be sitting in my office with my head back and my feet up,
drooling on my chest or whatever it is I’m doing while I’m taking that power nap while everybody else is standing outside gawking and laughing.
[10:39] Just don’t want to do it I like to be able to go in and have no privacy shut the door and let you know just you know,
there was wrong you need to blow your nose is sometimes you got a little something stuck up in there and you got it.
Take care of that how you’re going to do that if you’re only living in a glass house that’s just me and we work I seem to be in the minority with that. I know my my buddy and my partner Jim Beach agrees with me we’ve talked about,
most of these people today just love this open for playing and it’s fine now the other thing in the story that I picked up is there companies like common and another one that we talked about on the show called hubhaus there bring the same model to housing
so you have co-working spaces now you’re about to see KO Living Spaces one more story about the Wii work and.
[11:28] The author of the book too-big-to-fail says that.
We work now maybe too-big-to-fail it’s been called a 20 billion dollar house of cards and summer calling it a Ponzi scheme what I call it is a bad investment.
We work is cool we work as hip we work is Trinity we work is also not making any money and.
Really not likely to anytime soon so
that this is not stock advice friends because I don’t give stock advice I don’t play in the stock market but I just thought I’d let you know and then I’ve got a story I’m not going to spend any time on it really just a story about
from The Wall Street Journal about how they kept the 1031 tax Exchange in the tax code and that’s just for your benefit to read on if you don’t know about 10:30 ones maybe one of these days we’ll do
a half of a showed devoted to the topic it’s a great way to avoid taxes but my rule of thumb is once you’re in one you don’t get out for life it’s something you leave to your kids will be right back in a minute.
[12:39] Have you ever seen one of those Fix and Flip TV shows and thought to yourself I could do that or even better I’d like to do that.
But there has to be a way to get started that’s what we will do for you at flip starter flip starter is our 8-hour course designed to give you all the information you need in order to get started in the business of fixing and flipping houses on Roger Blankenship,
the flipping America guy who is fixed and flipped more than 800 properties over the years,
I will share with you the tools I developed for use in my own business the strategies the management techniques and the systems are used to build a business that was flipping a hundred properties for year.
What would it feel like if you could quit your job and not only work for yourself but own a business that will ultimately provide you with more income and more free time.
My goal is to train the next generation of real estate Millionaires and I want you to be one of them.
Find out more at flip starter event.com.
I thought it was amazing I took pages and pages of notes.
And I just want to recommend that you go to it because in my opinion the information that he gives on contractors alone makes it worth the price but that’s not the only thing that he talks about I highly recommend that you give to his lip starter it’s worth every dime.
[14:12] Well the cards and letters are pouring in in the phone calls and all this stuff and basically what people are saying is will you please do another flip starter the last one we did sold out
and so we’ve been talking over with the team and we are going to do another foot starter is going to be either January 18th and 19th or,
January the 19th and 20th of 2019 I wish I could say for sure which it is,
I originally thought we would just do the Friday night Saturday for Matt but we’ve been kicking around the idea today of doing a Saturday Sunday the reason is
in metropolitan Atlanta it is almost impossible to get anywhere with a reliable trip time after 3 p.m. on Friday.
[14:52] Rush Hour on Friday starts at 3 p.m. and all of the major,
arteries and most of the minor roadways are clogged with cars trying to get out of town for the weekend and we observe this we did have a full house and it was sold out but we were 10 to 15 people short.
When the evening started at 5 p.m.
Last time and so we’re seriously considering going to all day Saturday and some of the day Sunday format coming up in January to go ahead and Mark that weekend
18th and 19th or the 19th and 20th of January 2019 wherever you are in America you want to be if you want to be in this business if you want to learn how to fix and flip houses you want to be in Atlanta that weekend,
and come to flip starter and you can go to the website.
Flipping America network.com or you can go to flip starter event.com which is bounces you over to a page on the website but either way you want to go,
make sure you get the flip starter and sign up today where we’ve already turned on the early bird special the regular price is $299 and the early special you can come for half of that.
So that’s it flip started event.com now look on this show.
We don’t encourage everyone to just drop what you’re doing and start flipping houses like you see on TV.
[16:18] But I will say with a strong measure of gratitude from my heart that those house flipping shows on TV,
are a big part of the success of this show I would like to think it’s because I’m a cool guy I’m entertaining and funny and informative and all of that and maybe that’s what’s keeping the listeners coming back,
but what’s getting listeners to us in the first place I’m pretty sure it’s the fact that this is just such a popular topic and I’m grateful for that but we don’t encourage everyone that listens to the show to do that because it’s not for everyone however.
We do encourage everyone.
That is listening and even the people who don’t listen to consider real estate as a part of a balanced Investment Portfolio and to that in,
we want to bring you the best news and information statistics reports Trends Graphics tips techniques demographics whatever it is that we can,
bring you to help you make a good decision about your own relationship with real estate everybody needs to be
tied in with Real Estate One Way or Another they are really three ways to make money in real estate know we’ve documented 86 different career paths in real estate and there are multiple variations of every one of those but.
[17:34] They can all be boiled down into one of three things.
Actively buying with the intent to bring value or add value and then resell for a profit or.
Actively buying and putting tenants in to create cash flow or.
Thirdly investing the app in the activities of one of the other two and that’s where you have your
crowdfunded Solutions and Real Estate Investment Trust they’re acting they’re investing in the people who are out there in the air in the field actually doing it okay
so we’ve been talking a little bit about property managers and Property Management end in in the coming days we’re lining up some people who actually owned rental properties besides me to talk to you about their experience and.
Give you some tips and pointers from their point of view but today it falls upon me to start talking to you about
hiring Property Management that’s the topic for today and I’m just going to go ahead and dive right into it okay your property manager is a vital link to ensure the long-term viability of your property this person
or firm is your trusted Stewart they are looking after your investment.
[18:55] And there are a key component in your real estate business hire them with extreme care
plan on researching and interviewing at least two and preferably three management companies in your area small towns may not have a lot to choose from
but perhaps there’s a good candidate in a neighboring town to may be willing to travel a bit if you cannot find good management and you’re not in a position to manage it yourself you’re only real options are either
don’t buy the property or flip it or sell it using an installment land contract I know that some
some of my friends say well I’d rather do a lease with an option to purchase than installment land contract there are significant differences between those but,
the most telling difference is Annalise in most States,
you can put the language in the lease if you want to but it is not enforceable that you can require the tenant
to make repairs and maintain the property because the tenant does not have Equitable interest in the property.
[20:01] However in an installment land contract that contract gives that person,
Equitable Title to the property and therefore they can be required to maintain and repair the property and this is what you want this is how we work with properties you know hundreds of miles away that we.
Haven’t seen aren’t going to see don’t want to see and they’re in towns that really aren’t are not on our bucket list of places to go before we die so.
[20:32] This is what we do we sell them with an installment land contract is this abusing anyone know it’s not abusing anyone that’s giving people an opportunity to achieve home ownership who may
be outside the path to North home ownership to normal financing mean such as to the bank or a mortgage company and usually the prices are much lower there,
their payments are
no more than the rent lot of times lower than what fair market rent is and that depends a lot on the condition of the property when we put them into it.
All right so that’s a little bit about land contract we’re not going to talk about that anymore today cuz we’re going to talk about,
hiring a property management company do your due diligence before you even contact the company’s here’s some of the things that you want to know if you can find out if you can possibly find out before even speaking with the company you want to find out number one when was the company organized
one of my mentors in the business World said to me and this is been many many years ago when I was still young man he said,
Roger nobody can be in business in the same place for 25 years who consistently screws people over.
[21:46] I didn’t even realize how that worked at the time I just kind of accepted in at face value.
You know especially I think this is true in medium to small towns in large cities there they seem to be large enough that they could run the same scam over and over again,
and there’s always new suckers who have just moved into the area who may fall for what they say but I still think that even if if a person gets a reputation of just taking advantage of other people they’re not going to stay in business very long
so you want to know when was the company organized the longer they’ve been organized the better.
[22:22] Number to has the company ever operated under a different name or names if so why the change.
I didn’t used to think about this until I got burned by it.
I had a contractor who had a clean record clean bill of health no complaints with this entity from the state or the Locale of the municipality where was located come to find out
once we started having problems which seem like man oh man
not only is this guy a problem he is really shrewd in the way he creates problems that worked his own financial advantage and I was talking I’m talking about a contractor here,
but it turns out that he had a history of doing this and this was his fifth different company in the same town and.
The other ones had been shut down due to complaints or lawsuits and we didn’t think about looking under other names,
so you need to take that in consideration when you’re looking at a property manager company now look there’s not that much money to be made in Property Management so.
[23:26] I don’t know.
Why they would be bouncing from one to another but I do know that that comes into effect when we talk about fees and just a moment never three have they been a property management company the entire time did they start Life as a
normal real estate firm and realized they’re not any good at selling
property so that just manage properties that’s happened I’ve seen it happen and you have to wonder a little bit about people who have the inability to sell properties and so little that is managed rentals what wait a minute,
there’s some selling involved in this and your deficiencies in selling,
properties are selling yourself to buyers and sellers of properties to get yourself in that stream those deficiencies are going to become obvious
when you’re trying to basically sell yourself as a property manager or sell a tenant on the idea,
of renting your house you see what I mean even though it’s a lease there still some selling skills involved so you don’t want someone who sucks at selling right.
[24:29] Part number for licenses or certifications you want to look for these types of certifications.
The National Association of residential property managers narp,
and they’ve got a whole bunch of different classifications all of these to the National Apartment Association and Institute of Real Estate Management irem,
and this look for the different types of
certifications that they have they all have four or five different things that the their members can achieve I don’t want to go through all of that but just look and see if they’ve got a filiation certifications and of course they need to be licensed Realtors as well.
Why because you have to be a licensed realtor to at least in the state of Georgia in order to manage property that doesn’t belong to you.
[25:22] That’s right so.
Joe investor can’t go manage Bill investors properties just because Bill doesn’t want to unless Joe investor is a realtor a license realtor now,
I’m in Georgia all you need to be is a license realtor you don’t have to have any of these other certifications which means that you may,
hang out a shingle and call yourself property manager or not have the first clue about what to actually do but my friends
you are going to get the show notes from the app or something and maybe out the website and you’re going to have all these questions available to you that we’re going to ask all 50 of them coming up in just a few minutes alright.
The number of employees in The Firm that’s number 5 number 6.
And you going to have to kind of observe this and you probably did this is not something you’re going to ask so I put it here.
You know I got this little thing about dressing and acting professionally.
[26:17] There’s a time and a place to to be super casual I mean we’re fairly casual all the time this just a casual world that we live in and I’m grateful
most days that I don’t have to get up and put on a tie but I also noticed that some of my colleagues in the real estate investment business
get up everyday and put on a suit and tie anyway because they take themselves and their business that seriously and they think that you know makes them feel good or whatever whatever but.
That they at least need to dress professionally.
By the standards of the day they don’t need to look like a slouch and I look for the same things that I look for when I’m watching the contractors I see what kind of car they drive I look what kind of condition is in is it for Junk is it filthy.
Well that’s somebody who doesn’t organize themselves and their life very well and that makes me wonder a little bit now I’m not being judge of just makes me wonder okay and then you want to find out how many properties they manage.
You also want to find out where this company is local Regional or national how big are they you want to find out whether or not they manage Section 8.
And probably most importantly how far away from your properties are they because you want them to be able to go by anytime right.
I didn’t use it means we got to go pay some bills will be right back.
[28:01] Braswell Capital Solutions is the number one source for investor-friendly residential and commercial real estate loans across the u.s. we offer a variety of loan
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[28:32] Larry Lucas and I’m a student in Rogers.
Mentor program and I’m happy to say I’m working on my very first house we see this house gilding.
[28:48] Maybe $70,000 in profit but flipping America mentoring program is the only one that includes.
Financing your debts so the mentoring program does exactly what.
The contracts to do Rodger and Andrew and the other fellas in the team Tony have been super in providing oversight and guidance flipping America has been the.
Vehicle that is allowing me to achieve my dreams and becoming a real estate investor.
[29:41] And we are back I’m Rodger Blankenship and I teach people how to make money in real estate.
Today we are talking about rentals were in a multi-part series on rental properties and rental property management this is part 4 and we’ve been,
I just gave you in the last segment 10 things to look for when you’re selecting a company at least selecting a company to interview and after you selected a couple of companies to interview here’s a list of questions you will want to know the answer to remember that,
I’ve for every person you ever hire the three most important factors are there character.
Their skills and their capacity to do this job.
[30:23] Be ever Vigilant in listening and observing any and all indicators of these three most of your evidence is not going to slap you in the face but it’s going to come from
offhand comments unplanned remarks and responses to situation pay attention.
Be watching for these verbal and auditory cues that tell you what a person is really like their their answers are going to be what they expect.
You want to hear.
[30:50] But the truth is going to be what they reveal that’s why I don’t do these interviews on the phone I want them to come into my office or I’ll go to their office but prefer
preferably when I’m doing the hiring I want the person to come to my office
our office is not that particularly intimidating and I’m not that particularly intimidating but it’s certainly more so when they’re coming to my place
I’m comfortable here I’m in charge year and and that sort of thing gets communicated and you know,
when they come here I’m sitting in the big cushy comfortable chair behind the desk not sitting across from them and their big comfortable chair where they feel comfortable and confident so you want to put them on their heels a little bit because
a life and rental properties are going to do that when they’re out there and you need to see how people think,
okay so the first thing you’re going to get this number one here we go with the list of 50 Questions number one references.
You’re going to get a list of references like you do with anybody else and you’re going to check those references other you want references of other landlords that.
[31:53] For whom they Manage Property and you would like references for vendors that they use to make sure they pay their bills.
[32:00] Number to what type of properties do you manage do you manage single family homes exclusively do you handle Apartments do you have.
A commercial building the studio office space what is it you actually do and of course I want someone who.
Really specializes in whatever I said I have apartments are single family homes the number of properties they manage.
It doesn’t have to be 300 but it also needs to be more than three.
[32:31] Everybody has to start somewhere and everybody gets a chance to be new okay fine.
[32:40] But I don’t know how to say this without the seeming cold and harsh be new with someone else.
Okay look nobody’s cutting me any slacks or give me any breaks.
And I’ve had to earn everything that I’ve got and every opportunity that’s in front of me is something that I’ve worked hard to get so.
[33:02] It’s okay to make your is the people that you want to hire work hard to earn your trust number for.
[33:11] Are they licensed Realtors just got to make sure that you.
Pay no mind your p’s and q’s there and number 5 let’s talk about the fees.
Now when we talk about fees for management this is one reason a lot of my friends don’t want to pay management because they don’t want to pay these fees and so.
You know if they really want to challenge me about it the way I approach this and I say alright.
How much money do you make in your primary line of work with maybe it’s flipping houses okay I make $250,000 a year flipping houses side if you make $250,000 a year flipping houses,
let’s see how that match works out to.
$150,000 a year and how many hours a year you going to work / $2,000 equals $125 an hour.
Okay is that what you’re really making well I don’t really work but no full-time,
this to make 250,000 but anyway let’s just figure $125 an hour how many hours is it going to take you to get that house marketed show it.
[34:18] Go to the pre-inspection do all this stuff and blah blah blah blah blah let’s say that the the typical fee is half of the first month’s rent and then 7 to 10% is common for
are management fees if have the first month’s rent $350 are you going to spend 3 hours.
And the marketing in the showing of your house before you put it in it probably.
Already right there your break even you might as well just hire it out okay now.
[34:49] What I’d say is a general rule of thumb is your first five for sure and probably your first 10 you should self-manage why,
you need to know the pain
you need to know how hard it is you need to learn what you’re doing you need to go through dispossessory court and do an eviction,
you may want to end up in some of the state’s is a little bit more difficult than and the tenants have more rights than in others George is a very landlord friendly State and so far
I am undefeated in self-representation and dispossess record yay me well it’s not hard.
Either they paid the rent or they didn’t either they paid the mortgage or they didn’t either way if they didn’t pay their out they cannot win not Georgia anyway so.
[35:35] It’s fun to say I’m undefeated but it’s also not hard to be undefeated.
But different areas I have a way different attitude toward tenants and you need to be aware of that but you need to go through a little bit of this pain,
you need to see the time involved do you need to experience it yourself then when you go to hire someone you’ll understand the importance of some of these other questions I am about to ask
now when you start looking at the fees like I said half of the first month is okay and 7 and 10% is common,
but watch out for some other fees that slip in there in the fine print for example property vacancy fees what the heck.
Why would they charge a property vacancy fee if it is as far as I’m concerned if you’re managing my property you’re responsible with making it not vacant and so,
if there is a vacancy fee I should be charging you the vacancy Fino not the other way around but some will try to do that
then there’s the tenant finder fees
you know that’s what we give half the first month rent for and for you to do the tenant finding don’t try to be no double up your expenses on me maintenance markups sometimes this is a thing that I would be okay with but.
[36:51] I’ve also had situations with management companies where I’ve said you know I have my own crew I have my own people every time you get a repair request I want you to give me the first right of refusal if I’ve got somebody I can get out there
I would rather have somebody that’s already on my team that I’m paying and the maintenance markups can be a real problem.
I told the story on the show before of the $900 water heater why was it so much well because they had to install it on a weekend,
this was a tiny little house in the tiny little water heater and we were talking about two nights in a hotel that could have cost me $100 back in those days and I told the guy next time you just stick them in a hotel for the weekend where they have hot water and we’ll get a water heater in a regular price on Monday
okay been there that’s another thing emergency call outs
there can be a fee for that sometimes they add an additional fee on for evictions not sometimes they always had a fee on for evictions if there are extended court cases there more fees sometimes they will charge you for viewing set,
that I objected that’s just part of their marketing expense
their cost of doing business and they should absorb that I don’t bark too much if they have to do The Vixens where I do get concerned.
Is when we’re evicting someone that’s been living in the property for less than a year but that means is there were probably something missed in the tenant screening process.
[38:20] But we’ll get to that in a little while number 6 how do you set the rent amount this is an interesting question in the reveals how they think.
Can you want to know how systemic they are on it number seven how do you collect the rent.
And in my little book they get a bonus if they use some sort of electronic means or direct deposit ACH something like that I don’t really want them to be handling checks but if they do number 8 how do you handle bounced checks.
For years I have had 10 and said didn’t have checking accounts because they didn’t trust system and now I’ve got younger tenants who don’t know how to write a check
because they never had they do everything electronically so yeah you just never can tell.
But now you got to think about how you going to handle the payments and when the payments bounce what you going to do how you passing the fees off
that’s where that questions really coming from how often do you raise rent and do you put this and that’s number 9 and number 10 is do you put rent escalators into the lease or rent escalator is where,
you stayed up front that the rent is going up next year by $25 or whatever it is.
You can change your mind and come down you probably can’t change your mind and go higher.
And you can raise the rent at any time with proper notice according to the terms that are in the lease however.
[39:44] When you raise the rent you run the risk of stretching the family beyond their ability to pay how could $25 a month do that well because most
people and I know this is going to come as something hard to believe for you my real estate investor listeners you’re going to find this hard to believe but most.
Do not have an extra $25 that they can find to pay the rent.
[40:10] I know I know they could cut out the Starbucks for one week a month and they could make that extra $25 I get it but they don’t realize that they can do without that and that’s why.
A lot of times that’s why people are renters in the first place but let’s not get into that I don’t want to try to put renters in a bad light because renters are some of my best friends.
And I’m even a renter okay.
[40:38] Let’s see what’s the next question number 11 how do you handle delinquencies yeah what do you do.
What I’m looking for here is the rent due on the 1st it goes late on the 5th are we issuing delinquent letters on the 6th are we moving to dispossess record by the 15th.
That’s what I want to hear if I don’t hear that.
I’m moving on I mean I may ask the rest of the questions but I might not I might just say thank you very much I’m not going to try to get somebody change their business practices just to do things my way I’m going to,
did try to find somebody that’s smart enough to do it my way already.
[41:18] Alright I never 12 this is another telling question what percentage of your current properties are delinquent now if they have a fairly High number of delinquencies stay above 15%.
Maybe even above 10%.
What that tells me is whatever that percentage is that’s the percentage of time they didn’t do a really good job with their tenant screening so if they have 15% delinquency then.
They’re they’re missing the boat 15% of the time on their tenant screening and you could argue well.
You know maybe it’s a substandard property or maybe it’s a rough area and it’s hard to find good qualified people you could argue that all you want to but I know that.
Landlords don’t have to take on a client if they don’t want to.
[42:07] You know they don’t have to put their own reputation to stake by trying to do Property Management in the hood.
[42:15] Okay we have fair market obligations when we’re renting the house but the landlords are talking with a supposedly sophisticated business and they don’t have to take that business they don’t want it.
All right what is your process for handling evictions I just like to hear them tell me how it goes and what their experiences I have plenty over a hundred.
Yeah really over a hundred probably cases of eviction court now most of the times I’ve been in dispossess record,
we’re not because of my own tenants in fact that this happened very rarely,
I’ve been in dispossess record so much because we buy foreclosed homes at the courthouse steps and we go over and try to do a cash for keys program with the people that lost the house and people
either refused they will come to the door or
there nowhere around we can get in touch with them even in that case you got to go to a dispossessory process before you attempt to gain access to the house you got to make sure that you’ve gone through every step of the process to make sure they’re out.
And so you go through this possessory you get the they don’t answer you get a writ of eviction you go over there with the deputy you pry open the door and okay they’re gone it’s done and all is on the up-and-up.
[43:37] That’s what you have to do when you buy a foreclosure so having bought hundreds and hundreds of foreclosures it shouldn’t be a surprise that I’ve been in dispossess record a hundred times or more and I seen a lot of crazy things happen there.
[43:50] Got it so I want to know,
how the property management company is handling their addiction or do they hire a lawyer if they hire a lawyer who’s paying for the lawyer probably me but if I’m paying for a lawyer I’m not paying an additional eviction fee to the management company.
Why should I need to pay them they’d all it is turned over to a lawyer what’s involved in a phone call to a lawyer right.
I asked how many did you do last year how many evictions and I compare that this question number 14 I compare that to how many properties they have under management.
Because if they’re doing a lot of evictions as a percentage then it tells me they’re not doing a great job with screening.
[44:31] Did number 15 typically how long does your eviction process take boy oh boy I have a story about the very first eviction I ever did and.
This is a case where you learn lessons the hard way and they end up costing you money you didn’t know you were spending and I’ll tell that as soon as we get back from this break.
[44:56] We did a one-day flip starter in Chattanooga Tennessee and low and behold one of my old College friends came out to the event his name is Peter Faulkner and here’s what he had to say about the event.
[45:08] Peter Faulkner here I send it a one day flip starter training session led by Rod.
[45:16] Amazed to see what has happened in Rogers Live from the lab.
[45:20] Flipping over 800 houses and then this one day training he told how you did it and what the pitfalls.
[45:32] And how to do it and I was so impressed with how well organized and how smooth.
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[46:56] I’ve always been a little bit of a do-it-yourselfer in I’ve just tried to figure out a way to learn this stuff as I go.
And so the first time I went to dispossess record I was sitting there trying to figure out what in the world was going on.
And I filled out the paperwork and calculated the amount of Brent these people had missed and it was a protein $3,000 on a house that we rented out for about 800 a month.
With ranch and late fees it was right at $3,000 and 800 month was a fairly fair market rent in that area at that time in that county,
and then I sat there and listened to the judge go to the calendar and people were being put out of their places with rent being old and amounts of 600
[47:42] Hardly ever more than a thousand but then when it came my turn and I’m at 3,000 I felt like a fool.
What have I been doing I tell you what I’ve been doing I’ve been listening to sob stories and and working with the people and being patient and trying to work things out,
and finally let it get to a point where it just we couldn’t go there anymore and it gave me great pains to admit that we’re going to have to evict you and blah blah blah turned out these people are old hands at this they lived in my house for next two to three months for free
because I was not doing what I needed to do as a good manager of my own property learned a lesson from that.
That’s why you know you miss a payment.
On day 5 if you getting the letter on date 10 you’re getting an eviction notice and you got to answer the court because 30 days from there we’re going to be in court.
And you’re going to make me whole or you going to move out I will do a cash for keys Arrangement sometimes with people like that.
[48:44] We don’t mess around anymore and we don’t let people sit there and live for free I don’t get to live for free to you.
Summer sixteen I asked do you provide eviction insurance or do you have a tenant replacement policy this is especially important to me in the first year I don’t want to pay a placement fee,
Eddie know if they put somebody in there and in four months later they’ve had to throw them out because they haven’t paid any rent
and they got to put somebody else in there I don’t want to pay another 10 in place with the I want to hear them say we will not charge you to tenant placement fees in the same unit.
In the same year in the same 12 month. It just isn’t going to happen.
[49:21] We will replace that tenant at no charge to you because we miss something in our screening.
[49:30] Number 17 what is your process for managing repairs,
what I’m looking for here is transparency in their answer I want them to get in the repair request you know if it’s $100 or less or 250,
just do it but if they’re talking about well we’ve got to replace the air handler and it’s going to cost you $2,500.
And well I may know it’s going to cost 2500 because I know a couple of things about that but then they come back and say it’s going to cost $6,300 I want to see that well what I want in any significant expense like that is I want to see the bed
and I want to see the answer to my question how much are you marking it up.
Because this is one of the things that management companies will do they will mark up the repairs just because they were.
The ones doing the scheduling and making the phone calls just a little bit of extra work and they don’t consider that to be part of what they’re getting paid to do all right.
So I want to know what their process here and if they tell me that they charge a 10% fee on top of the manager on top of the actual repairs and they’re going to put that they’re going to disclose it that’s fine
but I’m listening to see what they’re actually going to tell me I want to know.
[50:51] Is the repair or maintenance company owned by you or do you hire Outsiders I have been consistently screwed more times when the repair company is owned.
I would not when its employees ever big enough to have their own repair employees it’s not so bad.
But when it’s a little bit smaller firm and the person has a spouse who runs their repair company then they’re getting it both ways to repair companies making money on the repairs
and they’re not coming in at the cheapest price because they have a captive client right we don’t have a choice and,
the management company is also marking up 10% on top of that I don’t appreciate that and I watch for that.
[51:36] Then I asked is your maintenance crew whether it is owned or hired are they insured bonded and have workers comp.
And I want to see those documents I begin to vet them just like a vet one of the contractors that work on my Fix and Flip houses then I say number 20 can you provide a list of your primary vendors.
[51:56] A number 21 how did you find and select these vendors,
we’re looking for potential conflicts of interest such as a spouse or other prior relationship like your friend’s cousin’s best friend’s brother in law or,
somebody that I went to day camp with when I was a kid is in the business now and that’s how I hired him I want to know how they found these people.
And how thorough they were in the search number 22 I just asked him point-blank what surcharge do you add two repairs number 23.
How do you handle emergency or after our repairs number 24.
[52:33] How do you schedule routine maintenance at the properties if so what type.
I want to know if somebody’s going to be replacing the air filters in the.
In the air movers in the house number 25 cuz the tenants aren’t going to do that number 25 what are your rules for contractors entering occupied properties I want to know that they’re minding their business and they’re taking care of business and their.
Doing the right thing by the local and in the state laws about entering the properties and notifying tenants and that sort of thing
do you provide number 25-6 do you provide out of my statements that include detailed accounting of all work done
27 do you allow tenants to make their own repairs I want to hear them say no we never do because you see folks that’s not a good thing for your property.
Those tenants nine times out of ten or not going to do a great job making the repair even if they’re trying their best they’re not Pros.
[53:30] Okay why I had some pros do some pretty bad jobs also but I can go back to them and make them keep doing it till I get it right there were 28 do you allow tents to hire their own repairment this also is not a good thing.
So I die I want to hear a no to that answer I mean to that question 29,
how do you handle lawn maintenance there are some pros and cons here going back and forth some would say you should just send the guy over to cut the grass and you pay them and that makes it easier on the tenant you know here’s a renter they don’t have a lawn mower than a one lawn mower
and all that that’s a good argument for that.
The opposite side of that is increases your expenses and you probably need to charge a little bit more for the rent to cover that but it may be worth it because then you get the long-haired for in the way that you want and boy have learned that lesson the hard way.
[54:18] Number 30 describe your turn around process for rear-ending what do they do to get the house ready for the next 131 describe your move in inspection process and do I get a copy of that report,
and do you keep a do you keep a file on all this number 32 how often do you inspect the properties during the lease term number 33.
Do you notify tenants prior to inspection 34 may I see a sample copy of an inspection report.
35 how do you advertise the homes for rent now on this one you expect to hear MLS classifieds signs but also.
Craigslist other online portals Flyers social media if they say social media I’m getting a little depressed because most of them going that far there are 36 what is your current vacancy rate.
[55:09] Number 37 how long does it normally take you to fill a vacancy more than a month is not good.
If it’s more than a month and they have either a property problem or pricing problem and it could be both,
but you know if we saw the property problems then we got a deal with the pricing problems and get those things printed out you don’t want to be sitting there making your mortgage payments month after month
with no tenant in there they don’t cover that cost number 38 what is your cost per lead be very impressed if they know.
Don’t be surprised if they don’t because they’re probably not tracking their marketing that way.
But it’s just a way to see what if there a professional Market are they really are 39 who feels the inbound leads
40 how quickly do you respond to inbound leads 41 how do you prepare home for showing 42 do you show occupied houses this should only happen in well-maintained properties.
43 do you allow unattended showings with a lock box generally I think that’s not a good idea in fact almost all of the time it’s not a good idea 44.
Describe your tenant retention program what do you do to make them happy and keep them there because we wanted to stay for years 45.
Do you hold properties for prospective tenants before lease is signed if you do what’s the fee you charge for this number 46 what steps have you taken to protect.
[56:38] Yourselves from rental scammers number 47 describe your tenant screening process.
[56:47] Number 48 but tenant qualifications are most or more important than others number 49 do you have an application fee.
[56:56] Number 50 do you require all adults living in the property to complete an application and guess what folks I got 4 bonus questions for you,
absolutely no extra charge 51 do you require all adults in the property to be on the lease,
52 ask for a copy of their typical lease at 53 ask for a copy of a typical management contract that’s the thing between you and the manager company
play very close attention to the length of the agreement and the termination procedures for either side and number 54 plan to have your attorney read the contract which is
someday you’re going to pay for but a worthwhile expense there’s several things to be looking for in there.
Indemnity agreement sent and minor fees and that sort of thing that you want to pick up on now I know folks that I breezed through those questions my only purpose here was to let you know,
how important it is that you engage in a comprehensive process for hiring a rental property management company this.
Show today it’s been about hiring property management and is only a small part of the rental property ownership process which is only a small part of the road to wealth which is what we’re on here at flipping America.
That music means we’re running out of time my friends so I just want to encourage you to get out there and get looking and get going with your own real estate investing and we’ll talk again very soon.
[58:49] Will Rogers said I don’t make up jokes I just watched the government and Report the facts.
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[59:31] You’ve been listening to flipping America real estate investing for everyone if you have any questions about real estate send them two questions at flipping America network.com,
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