Ep020: Putting It All Together

Chris McAllister: Hello everyone and welcome back to the Landlord Profitability Playbook podcast, excuse me, in the 12th and final episode of our 12 part series. What to expect from your property manager, even if that property manager happens to be you. I’m Chris McAllister. It’s my job to create and coach business opportunities and strategies that support net value to the lives of residential real estate investors.

And I’m here today, as always with my podcast partners, Laci LeBlanc, and our Director of Property Management at ROOST Real Estate Company, Gretchen Mitchell. Good morning, ladies. 

Laci LeBlanc: Good morning. Good morning. 

Chris McAllister: So this has been a journey. We’ve been at this for about a year now, and, uh, we’re, we’re finally getting close to wrapping it up.

Laci LeBlanc: And Gretchen, it’s just like, you’ve always been here and you weren’t hesitant to be here in the first place. It’s just, you’re natural at this and you can’t even tell that you, you didn’t wanna do this in the beginning. 

Gretchen Mitchell: It’s just very new to me. I have never done one of these before. 

Chris McAllister: So now you’ve done like a dozen.

Gretchen Mitchell: Yeah, this is number 12. 

Chris McAllister: You’re ahead of the game. So over the last 11 episodes, we’ve explored everything we think you need to know about working with a property manager, and most importantly, how to set clear expectations, how to evaluate their performance, how they control costs, and ultimately how they can help you maximize profitability.

So today we’re calling this bringing it all together. So we’re gonna do a comprehensive review of what. We feel are the most valuable insights from the entire series. So whether you’re a first time landlord or a seasoned investor, this recap hopefully will serve as your go-to guide for building a strong strategic and profitable relationship with your property manager.

So we’re gonna revisit some of the biggest takeaways, highlight some action steps, and hopefully at the end of this, uh, uh, recording, we’re gonna make sure you walk away with a clear. Framework for success. So if, if you guys are ready, we’ll dive in. So part one, if you remember, was titled, get Clear on What You Want from Your Property Management Relationship.

We started off this episode with trying to get a clear understanding of all the things that property Manager does, and again, whether you, whether you’re hiring a property manager, you’re already working with a property manager, or that property manager is you, so recognizing the variety of roles. A property manager can fill for you, whether it’s a leasing agent, accounting person, you know, a day-to-day tenant relations person.

Uh, there’s just so many things, but getting clear on all those roles, all those activities, and thinking through how much of that you’re already doing this, this is gonna help you set realistic expectations for, for the relationship. The other thing we talked about was clarifying your why. You know exactly what are your investment goals?

You know, knowing your why behind investing in real estate, I I is critical. So, you know, whether you are, uh, seeking passive income, you like the idea of having an asset that you can touch and control and see versus, you know, uh, maybe buying stocks, whatever, whatever. Gives you the greatest security and satisfaction.

That’s what’s critical. And it’s important that your, uh, property manager understands that. You know, some investors want to do, you know, wanna flip houses. Some wanna, you know, hold for the short term. Some wanna do, um, you know, short term rentals, Airbnb type things. And, and some wanna hold for the long term.

And quite frankly, those are the people that, um, we’re able to help the most. And, and, um. Really set up for success for the long term. Anything else there, ladies you can think of about setting those expectations? 

Laci LeBlanc: Well, there’s just, there’s not a, a wrong way to do it necessarily. Right. There’s, there’s what we like, which is, I.

Hold it for the long term. Yeah. And then there’s what we can help with, which is property managing for the long term holders, but there’s not necessarily a wrong way to do it, it’s just making sure that you’re clear, like you said, and making sure that you know who you choose to partner with. Property manager otherwise is also clear on those goals, um, so that you can get to.

Get to the end. Um, begin with the end in mind, I think is the, the rule they taught my kid. And the, the healthy habits at elementary school begin with the end in mind. So there’s no wrong way to do it, but you know, when you’re looking for a partner, you have to make sure that, that you’re on the same page.

Chris McAllister: There’s been a lot of talk lately about why, um, investors, you know, hire a property manager in the first place versus doing their, uh, managing for themselves and. What’s interesting is, and I, and we think this is pretty accurate, but somewhere between 70, 60 and 70% of all investors who residential real estate investors, they manage for themselves.

And whether they do it as a part-time job in addition to what their daytime job is or whether that’s what they do full time. They, they, the reason they tend to do it for themselves is because they want the control. And whether that’s because they, they wanna be empowered. They, they, they don’t trust, you know, that somebody else is gonna do it as well as they are.

And we’ve talked to a few of these people, Gretchen and I have, and it’s not so much that it’s about saving the money. Um, that they don’t wanna pay money for professional management. It’s that they, um, 

they don’t wanna let go of it. 

Chris McAllister: They just don’t wanna let go of it. And I think what, um. As a nice thing to touch on here is that you wanna consider the value of your time, you know, real estate investment, especially when managing properties directly, it can be very time consuming.

And even if it doesn’t involve, you know, a, a x amount of hours actually doing the work, it it, it. Lives rent free in your head. Right? It’s a, it’s a distraction. It’s something that you can’t stop thinking about, you shouldn’t stop thinking about. And, and at some point, whether you realize or not, it does take away some other, away from some other things that maybe you want to do, whether it’s furthering, you know, your, your career, you know, your calling, your family, whatever it is.

So. You gotta evaluate the true cost of personal time being spent managing properties versus the cost of hiring a property manager. And, and consider, you know, what that, what that improved lifestyle might, might mean to you. And there is a high cost of going it alone. You know, there’s, there’s, there’s costs that you can’t necessarily put your finger on, and it’s, it’s just harder when you’re by yourself if you’ve got a collaborator, if you’ve got a partner who’s got your best interest at heart, life tends to get easier.

And when you do decide that it’s time to. Hire a professional manager. You want to commit all the way through, and that’s why it’s so important that you, you align yourself with a property manager, property management company that you know sees the world the way you do that you’re confident is gonna support your individual hopes and dreams and, and goals.

Laci LeBlanc: Yeah, I don’t think property management is ever really a part time. Job. I think property management in and of itself is a full-time job because you have to be on all the time, or somebody does. Right? So I wouldn’t qualify even with one property as really a part-time job because if something breaks in the middle of the night, then you know, you’re, you’re always on call at the very least.

And I did talk to a guy that just this week that said, you know, I’m gonna do it. I’m not just, I’m just not sure when I. I don’t wanna give up control, but you know, my, I’ve got little kids and, and I think that’s a really good point that you make about, you know, your kids are only little one time, right? So if it’s taken time away from the things that you, you value, I think everybody got into this for some, some freedom, right?

One way or the other. So, uh, a good way to, to look at that is what is your time worth to you? 

Chris McAllister: Well, it also brings us back that real estate people buy real estate because they think they’re buying a passive income street. And I think people who do it themselves realize pretty early on that there’s nothing passive about, uh, investing in real estate.

You know, there’s wonderful, wonderful fun in mailbox money, you know, coming to your house every single month. But the fact is it does take some effort. It takes some time, it takes some head space to make that mailbox money in reality. The second episode we talked about, it was titled, list and Communicate Your Minimum Expectations and Non-Negotiables.

This fits right into the first episode, but defining non-negotiables and expectations. It’s essential for any property owner to define and communicate, not just have it clear in their head, but to be able to express what their minimum expectations are for their property managers, knowing exactly what you require.

Whether it’s from help with maintenance, financial reporting, uh, you know, getting a lease signed, you know, taking care of tenant disputes. Whatever it is you need to be, you need to really think through and write down those things that, that you want help with. And sometimes it’s helpful to sit down and write down all the things you love about managing your own properties and then write down all the things you hate no matter how minute.

I mean, we’ve got, uh, you know, some of our owners. You know, they want us to do everything, but they want us to do their own maintenance. That seems to be a big one, and we’re always very flexible on that. On the other hand, you know, we have some owners who aren’t quite ready to commit, and I. And, uh, you know, they still want a hand in, um, you know, placing tenants and sometimes that causes assess a tremendous amount of aggravation.

Gretchen, I think you had somebody today that was giving you a little bit of grief about that. 

Gretchen Mitchell: Yeah, it’s one thing we do have this conversation when I talked to potential owners on the phone and. We say, you know, we are really flexible. It’s kind of a la carte, you know, do you wanna do your own maintenance?

Do you wanna do your own turns? Do you want us to do some maintenance? That’s fine. But yeah, when it comes to placing a tenant, a lot of times if owners can’t let go and they just place them themselves, it can be frustrating. But we also offer, you know, tailor our leasing manager, she can call you with an application if she’s unsure, and you guys can make that decision together.

That’s how we like to include owners with placing tenants. 

Chris McAllister: It’s also very, very hard for us to do a good job If you know an owner, you know. Find somebody who raises their hand for whatever reason, takes their first month’s rent and deposit money, and we haven’t had a chance to run an application yet.

Right? 

Chris McAllister: Those are the kind of situations that, you know, almost always end up for trouble for both us and the owners down the road because they weren’t properly vetted and we didn’t, you know, take the time to cast a wide enough net. So, yes, you know, your property manager should be flexible of the services they provide, but there’s also going to be a place where.

You just have to be careful as an owner that you’re, you’re in the interest of control and making sure that your, your properties are, you know, being taken care of. All good motivations, but just be careful that you’re not doing yourself more harm than good is what it comes down. 

Gretchen Mitchell: Right? Because I mean, the one that you just talked about that, you know, this week was kind of an issue.

This tenant had paid the owner. A key lives there, and then they want us to sign the lease, but we’re having a very hard time connecting with the resident because they really don’t need to sign the lease. They already have the key. They already paid what? What’s it to? They’re already there. 

Chris McAllister: They’ve got tenants rights.

Right. So there’s not much we can do to bail anybody out of that situation at this point. Right. And. You know, I’m sure you’re gonna be having an adult conversation with that owner here, uh, shortly. 

Gretchen Mitchell: We sure are. 

Chris McAllister: The other thing, um, about non-negotiables and expectations is I think it’s important that you understand the motivations of your property manager.

I think it’s, I think it’s absolutely a legitimate and appropriately to ask them, why are you doing this, Mr. Property Manager? What, what part of this, you know, why, why did you choose to do this, you know? Is it, is it something that you do, you own real estate and you manage for yourself, so now you’re managing for other people, you know, is this just something that, what you really wanna find out?

Are they just doing this on the side? It’s just, just an extra thing for them to earn a little bit of cash on the side. How many owners are they doing it for? You know, why are they there? Are they legitimately trying to help, uh, residential real and state investors, you know, make more money, you know, build assets for the long term.

Or are they, and, and they deserve to be profitable doing that. Don’t get me wrong. Or is this just a, a sort of a side hustle to their real estate business that they decided to take a stab at? Because commissions are few and far between these days. So just like you wanna understand your own motivations and, and commitments, you, you want to.

Understand the same for your, uh, from your property manager, you also wanna make sure you, you, you’re very clear on what their expertise is. You know, do they, do they manage portfolios of properties like yours in the neighborhoods that you, you have, uh. Uh, your houses. So that’s all important. You wanna make sure that the property manager is appropriately accessible.

I’m not saying easily accessible, but appropriately accessible, and you wanna understand, you know, how they want to be communicated with, and you wanna make sure they understand about how you want to be. Communicated with, and it’s also important that you, you understand, you know, if they have a team, you know, if they’re not a one man band, if they have a team who you talk to for, for different things, you know, whether you talk to the leasing manager when you’ve got a vacancy or you talk to the rehab and maintenance manager.

If you’re in the midst of a turn, it’s absolutely critical that you know who to talk to when. But also make sure that you can get to the property manager or, or the broker owner of that, uh, of that office when, when you need to. We’ve been talking yesterday when we had our big quarterly meeting that, you know, Gretchen, you’re gonna hate me for saying this out loud, but I really want to make the commitment to all of our owners that if they have an issue that they’re going to email us or contact us about.

Our goal as a company is to respond to that email. Or, or that inquiry within the hour. Now, that doesn’t mean that we’re gonna have an answer within the hour. Hopefully there’s not anything so urgent that we can’t have an answer within the day or, or the next 24 to 48 hours, but. I think it’s absolutely critical, and I speak for myself as an owner, that if you’ve got a question to you, it is the most important question of the day, and you’re the one that’s paying our salaries.

So you deserve to, to be acknowledged as quickly as we possibly can. So have that conversation with your perspective property manager as well. And then finally, you just wanna make sure that that property manager’s systems and, and, and honestly their, their business values. Align with yours. You know, if, if you do this right, this is gonna be a long-term relationship, you’re gonna be working with this person, this team, this company for years to come.

So you want to take the time to get it right. And that kind of leads us to, to number three, where we, you know, we talked about meeting the team and then decide, especially this is, this is critical for in-state owners or in town owners, but it’s also absolutely essential for out of state. Owners, your goal when you meet the team is to make sure that you’re getting the boots on the ground that you can trust.

We’ve got a lot of owners who have been burned that, that, you know, live outta state and they’ve been burned with people who just didn’t know what they were doing or didn’t have the same, uh, values, systems weren’t aligned, whatever. So, you know, the first thing that you want to, to be doing, the whole idea about meeting the team is, is you, you want to build trust with the team and they want to build trust with you.

So trust is the number one most important critical factor. And then again, you wanna enter, analyze local expertise. Do they manage properties like yours? Do they, do they manage properties in neighborhoods like yours? How is the team structured? Are they a department mental structure? Are they a pod structure?

Is it a, you know, a manager who does everything with a couple assistants? How is it set up? And does that set up make sense for, for what you’re looking for in a property manager? Are there clear rules? Do they have adequate resources? Do they have the right tools? You know, you know, what, what’s the, what’s the buzz in the office when you, when you come in and sit down and talk to them?

Is it absolute chaos? Is it, is it, uh, professional? You know, you, you can get a real sense of what’s going on, uh, you know, with the property management company just by making a visit to the office. It is gotta be a collaborative relationship. And then probably the, I’m not saying this is the most important thing, but just as important, what are their performance standards?

What are their metrics? You know, what are there, is math involved when you’re investing in any sort of assets and, and that includes. Um, residential real estate. So, you know, what is their time to turn goals, you know, we call that TTT. Mm-hmm. You know, if Brad’s got a property that has gone vacant, you know, how fast does your property manager expect to get that back into service?

You know, our goal is to get things back into service within the month so that we can start advertising that. That property again as early as next month. But what, what is the time to turn the TTT, you know, from the leasing side, what is their average days on market? Right. You know, how many days, you know, has it been on the internet available for rent?

And why hasn’t it been rented yet? What, what? What’s their average days on market? A lot of property management companies talk a lot about, you know, their percentage of rent collected or their occupancy percentages and so forth. Those are kind of fuzzy, but you know, I think Gretchen, the one that we like is super simple, is how many three day notices that they put up.

Right? 

Gretchen Mitchell: Yeah. Yeah. I think my favorite though is the days on market. I’m really proud about how we do that because, uh, Taylor, our leasing manager, she’ll pull a days on market report. And she’ll flag any of them that are about 20 days on market that haven’t been rented yet. And on day 21, that’s when we will go out there.

Hey, is the sign still up? Is, is there trash in the front yard? Why are we getting, you know, not as many hits as we thought we would. So the days on market is something, like I said, I’m really proud of. ’cause we do a really great job at monitoring. Why isn’t this getting rented? Raise our hand, talk to the owner, drop the price, whatever it may be.

Chris McAllister: I, I also love the idea, you know, it’s one thing to know about your occupancy percentages. It’s good to know, you know, of the occupied properties, what percentage of the people actually paid rent. But I love the, the. Um, JJ Just how visceral almost it is when you say, you know, say it’s the seventh, eighth of the month, whatever it is, and you’re running three day notices, and we can say, well, if we had 50 this month, three day notices, people that haven’t paid yet that we have to post, but don’t despair, it’s better than last month, right?

Or right. You know, maybe there’s an issue out in the market because it’s, it’s worse than last month, but depending on the time of year, is it Christmas time? Is it back to school time? And then it seems like we, you know, we had a fantastic month in February with a bunch of late fees and, and past due fees paid.

And, and we think that was because that the, um, income tax rep started to. Yeah, it’s a bit for a lot of our tenants, so, but ask, ask that question because I think that’s a, it’s a great question. It should be an easy question to answer and it’s going to give you a great idea if the, if the property manager you’re, I viewing is in touch with what’s happening with the portfolio that they manage.

So all these points, you know, meet the team and then decide to highlight the importance of thoroughly assessing that team’s trustworthiness. Their expertise, you know how they operate. You, you want to be really, want to take the time to, to do your due diligence before you entrust ’em with your properties.

And four, and this is always a, this is, this is still the biggest thing that we do, I think as a property management company, but part four was can they control rehab and maintenance costs? We have been so focused on this in the last year, and I feel like that we as a company are making huge strides.

Brad’s doing a hell of a job and we’ve got a great group of maintenance people. But the key point in, in, uh, in this episode was understanding the neighborhood standard, you know, highlighting the need to maintain properties to a standard that aligns with the neighborhood. Right? And just as important, you don’t, you don’t want to, you know, under maintain your properties or, or.

Or not enhance the properties. You know, you wanna make sure that you’re at the standard, right? You, you don’t wanna let ’em fall below the neighborhood standard, and you don’t wanna put so much money in that you’re over inpro it beyond what the expectations right or the economies are for the neighborhood.

Gretchen Mitchell: Don’t put a granite countertop in a D neighborhood. Don’t put a grant neighborhood. Right. And when I first started buying rental properties, you know, I, I, I over improved so many properties just because I thought I was a good guy and, and everybody would appreciate the, what I had done and they would pay more or, or, or not pay more care, care of the property.

Chris McAllister: And let me tell you something, it didn’t happen. It’s never happened for me. It’s never happened for anybody that we’ve managed for. What it comes down to is, is that property to the neighborhood standard? Is it what people expect for that neighborhood, and is it priced for that neighborhood? So the neighborhood standard, you know, has to do with how you’re improving the property, but it also has to do with how you’re pricing the property for rent.

And just as importantly, you know how much you’re gonna pay the property if you’re gonna expand your holdings in that neighborhood. Other questions to ask when it comes to rehab and maintenance, are they employing their own maintenance staff? You know, we employ several W2 maintenance people. They’re, they are our employees.

They’re covered by our insurance. The, they have workers’ comp I. All of those things. And, and that works for us. There’s also a couple of very large, uh, firms in, uh, in our market areas where they have zero employees and they task out every single rehab or maintenance item to a third party, usually just a guy.

And then they, they get the work done, and then they, they mark up the. Uh, whatever the cost that that person charges and they pass that along in the markup for construction management services onto the, onto the owner. Personally, I, I think the way to go is the way we do it, because I want the control. I want to be able to tell them where to go, when to go.

I want to be able to, I want Gretchen to be able to make those decisions, and I want to be covered from a liability standpoint and a worker’s comp standpoint. So that works for us. Now, having said that. When there’s a turn, when, when, when a property needs to be, you know, uh, rehabbed, gone over, you know, more thoroughly than, than, uh, a maintenance person can do, then absolutely.

We, we have a whole, you know, cadre of, of, uh, 10 99 contractors that we work with that, you know, we’ll have, quote the job and, and uh, you know, manage them and manage the job to completion. So turns are one thing, you know, nine times outta 10, it makes sense. Maybe less than that now, but it makes sense to have a third party do the turns.

But I think it makes absolute sense to have, uh, you know, their own employees do the, um, the daily maintenance.

You wanna make sure that they are transparent in how they’re charging maintenance costs, right? You, you want to ask them and, and, and they need to be able to answer how they’re handling markups on material, markups on labor. The markups on third party. Um, contractors, you know, do they have trusted contractors that they’ve worked with for, you know, more than a couple of weeks, right?

I think all this is, is transparency helps build trust. And then you also wanna ask them, and, and this, this kind of goes back to getting to know the team, but one of the things that’s really helped our company dramatically is the use of property melt. So, you know, this is a piece of software that helps us schedule and, and take care of tenant problems as they arise.

And it’s, it’s made us incredibly more efficient. And we, we, our guys in the field get. Nothing but accolades on a, on a weekly basis from the tenants for, you know, their efficiency and their skill, and the fact that the, the property mailed system makes it easy to get things fixed. So ask ’em what platforms, what software, where they use to help manage communication.

You know, the approval process, financial tracking, all those things. Because at the end of the day, it’s always going to be rehab and maintenance costs that, that, that drive, uh, residential real estate investors. Crazy. Anything else about that that’s on our minds these days? I think you covered it.

I and I, and again, I, we’ve been focused on this for so long, but, you know, do we, we have, you know, Brad now is our dedicated rehab and maintenance manager and we’ve got Corey who’s doing the dispatching through property Me to, to get the, uh, maintenance guys out to where they need to be. And that’s become, uh, you know, a business and an incredible, it’s important to us as property managers for our business, but it’s also become indispensable for our owners.

So. You know, there’s many times now, which we couldn’t say this a year ago, where it is not just the maintenance, but if there’s a, a, a turn that is really more just a refresh, you know, our guys can do that refresh now, get it done faster, get it done to our standards the first time, and, and be able to do it at a cost that makes sense for the.

Or the, uh, owner. So you wanna ask about that because at the end of the day, it’s always rehab and maintenance that either either makes or breaks a, a residential real estate investor, you think that’s part of the reason there are so many folks who wanna, they want you to, to manage their property, but they wanna do the, the maintenance themselves.

Laci LeBlanc: They wanna keep that part is because they, they feel like. They, they can do it more cost effectively or is it just, I think it’s that, and I think it’s, they’ve known the properties for so long, so they are gonna know exactly what the problem is. Um, but when I talk to a potential owner, I tell them We welcome your input and your experience and your advice on these things, so we’re happy to do it for you.

Gretchen Mitchell: But there’s a chat feature in MELD that you can actually discuss it with. Corey, our dispatcher. We can even send your contractor out, whatever it may be. So I really like that side of property. That’s a good point because one of the things I think that, like when I think about Nana, she’s got a whole, you know, garage full of spare parts.

Laci LeBlanc: We’ll call them for all of these properties, right? So she has the extra flooring already because she hired the contractor to put the flooring in. So if some flooring needs to be replaced, she’s got it. Um, so the opportunity to. Chat about it before you make a decision, um, you know, could, could certainly be beneficial.

And then they could say, oh, I’ve got the, the wood, like I’ll just bring it by and, and your person can put it in or, so that’s really interesting. I hadn’t thought about that. We’ve gone to an owner’s house to pick up some excess flooring and then dropped it off at the house. We’ve done it before. Oh yeah.

Nana’s Garage is a. It’s like a treasure trove of things like a Home Depot, but I do, yeah, yeah. Specifically for her properties. Right, right. And they all have the same floor and they all have the same, you know, toilet and if there’s an extra one or if they, there’s a deal, or if they find one on sale, they go ahead and buy it and they put it in the, you know, the garage and then whenever they need it, it’s there.

So knowing that you can work with, with property owners to utilize what they already have and make it even more cost effective for them, I think is really, is a very, a very cool option as a. You don’t insist on doing it all yourself. Right. Yeah. The other thing is, and this gets back to trust, you know, we, we have had a lot of landlords who I think they’re just a default position is, I don’t want you to do any rehab and maintenance because I’m scared I’m gonna get ripped off.

Chris McAllister: Whether they say that out loud or not, that’s their fear. So they feel like it’s up to them that they have a responsibility to go out and find somebody who’s, who’s going to be cheap or, you know, they’re going to do it themselves. And, and don’t get me wrong, we have a couple of owners that do the work themselves.

They do it great. They love doing it. And they’d have us do everything else. But one of the things I think that we’re absolutely starting to see in the last few months, you know, when we have a vacancy and, and, uh, and Brad goes out to the property and he does what’s called a site audit Pro report. It just happens to be an app that we use on our phones.

So he takes pictures of everything in the property and while he’s there, he takes. Notes of everything that you know, needs to be done. And in a perfect world, you know, he can get on the phone with the owner while he’s there, talk them through, you know, what he’s seeing. They could do, uh, you know, take some pictures, they can do FaceTime, whatever it is.

But one of the things I think that goes back to building trust that, that, that matters directly to rehab and maintenances we’re offering. Two paths to remodel, right? Mm-hmm. You know, we’re, we’re coaching Brad Gretchen’s, coaching Brad, that when he goes to a property, the, you know, the first thing he’s looking at is what is it gonna take, what’s the minimum amount of money that can be spent, the minimum amount of tasks that can be done to maintain the current condition of this property, and ensure as best we can, that, that, that the owner can continue to collect the rent that they’ve been.

Uh, used to getting right. So what can we do just to sort of maintain this status quo, right? So that’s sort of like prescription one. Prescription two is, you know, okay, this is, this is a great, nice house, good bones, great neighborhood, the neighborhood’s coming up. You know, there’s some things that we could do here to bring the property up to the neighborhood standards.

You know, maybe this time instead of just doing a quick refresh or just making sure it’s safe, functional, you know, maybe we do paint the whole unit this time, right? Or maybe we do change out some flooring or, you know, replace some cabinet doors, you know, whatever that is, that is above and beyond, you know, sort of maintaining the status quo.

That’s the second prescription, right? So, you know, if, if a fresh paint job, some new flooring is, is what is customary in this neighborhood. Then here’s what you should consider doing, Mr. Owner. Here’s what it’s gonna cost. But here’s the other half of the equation. You know, let’s, let’s say that they’ve been getting a thousand dollars in rent and the neighborhood standard for, you know, a competitive property is $1,200, right?

So let’s say they can get an extra $200 a month in rent. And let’s say that this, uh, next level rehab happens to be $10,000, right? Nobody wants to spend $10,000, you know, on a rehab between tenants. But if you know for a fact that you’re going to make, uh, $2,400. On that $10,000 over the next year, that makes it an easier pill to swallow.

And the other thing, and, and, and you know, we, we’ve gotta learn how to make this easier for our owners to see is doing that, that next level rehab is going to increase the value of the property. So, you know, doing that 10,000 might increase the, the marketability of that property by 20,000. And in addition to that, it’s gonna allow you to raise the rent by, um, you know, 20%.

So our job as property managers, and I think the job of any property manager that you speak to is. You know, we understand where you’re coming from. Here’s what we, we what you’re gonna have to do just to maintain where you’re at. But let me help you do the math and figure out why this next level rehab for this property might make sense.

I feel like I’m preaching again, but it’s good info though. You preach on. I think that’s where we’re at with our owners. I know that’s where we’re at with my properties. You know that it’s mm-hmm. Everybody deserves to know what they’re spending money on and if it’s, if there’s gonna be a return on investment on that money.

And then, you know, if it comes to pass that nothing makes sense, then that means it’s time to put that property up for sale, harvest the equity, and, and move into another property. So your property manager hopefully can counsel you on that as well. All right, enough on rehab and maintenance. Part five is will they rent your property for Top Dollar Fast?

And we talked a lot about setting market rate rent. Again, market rate rent. Still comes back to the neighborhood standard. What are properties on that street in that neighborhood? What are they running for? It’s not gonna do you any good to expect to get more than that. It’s not going to, you know, and you don’t deserve to get less unless the condition of the property warrants that.

But having said that, I want you to be in a position as an owner. That if the, if, if the rents are, you know, a thousand bucks, I want you to be in a position to come in at $995 and, and still make money because we want to be able to cast the widest net as we possibly can, and we wanna, you know, attract as many qualified applicants that we as we can.

And please understand. And just like Zillow for home sellers, it’s super easy for any tenant to figure out what customary rent is for any neighborhood. And, and they’re, they’re smart, right? You’re, you’re not gonna, you know, trick somebody into overpaying for a property. And if you do, I can almost guarantee they’re not gonna make it to the end of the lease.

So, market rate rent is absolutely key. You want to have expansive marketing and advertising, you know, what’s their website look at for vacant look like for vacancies. Are they pushing their vacancies to all of the platforms, you know, around the internet universe? Are they on Zillow, you know, some of the premium sites?

What, what is their strategy? You know, look at the pictures of the properties that they’re advertising. You know, are they, are the properties being presented in the best possible light? And again, it’s about casting a super wide net, and it’s about screening in qualified applicants. It’s not about keeping people out, it’s about screening people in.

And then they want to ask ’em about what’s their application process? Can people apply online? What’s the cost of an application fee? You know what? What’s the process? Who does it? Who do I talk to about it? And then the other part of, uh, this episode was tenant onboarding. You know, what, what does that, what is the onboarding experience for a tenant?

You know, do they understand their responsibilities and do they understand your standards as a property managers? Uh, how do you bring a tenant on into your company? It would, that hopefully is, is going to take care of my property and in the best case, pay the rent for the entire length of the. Police and leave the property hopefully in even better condition when they leave than they found it.

Anything else there, Greg, that we can add in for? Will they rent your property for top dollar fast? Um, we like to go into detail of exactly what we look for when we screen a tenant, you know, they have to make three times the rent amount. Um, we do a criminal background credit check. We explain that. We don’t look at the.

Gretchen Mitchell: Number, it’s what’s on the credit. Do they owe gas and electric companies? Do they owe previous landlords? So we like to get in detail with that for our owners as well, just so they know standards for who we’re putting into their home. 

Chris McAllister: Absolutely. And that gets us into part six, which is do they have a clear and unbiased selection process?

So do they make three times the rent amount? Right? It’s actually against HU guidelines these days to, um, make a decision based solely on credit score, the credit score. And more importantly, like you said, what’s on the credit report can be a factor that you consider, but it cannot be the sole factor. So having a clear and unbiased selection process means that.

Are they aware of and do they follow and are they complying with fair housing laws? You know, you hire a property manager if, if they end up with a fair housing problem. That fair housing problem isn’t just their problem, it’s your problem as well. So do they know what they’re doing? Are they up to speed on it?

Do they are, are they aware? And in, and, uh, last year HUD did, uh, issue, uh, new guidelines. Uh. That had to do with the use of credit scores, but more importantly had the had to do with the use of artificial intelligence and credit screening. And again, what it comes down to is you’re, you don’t want a property manager who’s just using, you know, one vendor that does AI screening in a black box or one, or is just doing their screening based on a credit score that, that, uh, that could get you both in trouble.

And it’s, it’s, it’s not fair to you as an investor. You’re not gonna cast a wide enough net to get the best possible tenant, and it’s not fair to the prospective applicant either. So transparent and fair screening processes, those processes should be clear. They should be written down, and they should be publicly available.

You know, maybe that’s a next level expectation, but ask them, do they actually have a policy written down that they can share with the tenant for, for how they can, uh, you know, make sure that they’re not wasting their application fee on a property. And, and again, sometimes it’s as simple as, you know, we don’t have any evictions for the, in the past three years, but again, I would advise you to, you know, make sure there’s no extenuating circumstances.

Um, you have three times the rent amount, and that means we’ve gotta see pay stubs, right? You know, for the past, uh, how long, how would we go back for pay stubs? 

Gretchen Mitchell: Three full months. 

Chris McAllister: Three full months. Right? So if that’s your expectation, if that’s the property manager’s expectation, they should have no problem having that in writing, making it available for tenants.

And you know, we put that right on the, uh, the listing on the internet. We, we say right on our. Uh, for rent listings, what, what, uh, what our criteria is, do they have that? This is the part that 

Laci LeBlanc: would be the scariest for me if I was doing it myself, or if I was quote unquote a part-time property manager.

This is the part that would, you know, probably push me towards. Hiring, hiring a professional because not only are you doing all these things, are you documenting all these things so that if, if something comes up, if you know, can you prove that you’ve, you’ve done this in an unbiased and very clear way for every tenant, and that you’ve done it the same way for every tenant.

You know, are you texting with people? Are you emailing with them? Are you, what? Are you printing those out? Are you putting ’em in a folder? Like are they in your, are they in the garage? That’s exactly right. 

Chris McAllister: You know, we text through AppFolio. Everything is in AppFolio. You know, every email, every text that we do through AppFolio with a tenant, it’s all there.

So, you know, if somebody does file a complaint, God forbid, you know, we’ve, we’ve got that, that data in place. And I don’t know that every property manager out there in the world can say that, but, uh, the fact that we have that, like that, you know, allows me to sleep a little bit better at night. How do they educate tenants and owners?

You know, do they, do they actually tell prospective tenants what they expect? And, you know, you could argue that, uh, they should teach kids how to be good tenants in, in high school, but they don’t. So we have to do it right. So we have a little document called Rent with ROOST that basically explains flat out what we expect from them as a tenant and what they can expect from us as property managers.

So I think those, that was an episode in itself, right? The whole HUD thing. And, and you know, we’ve had owners that have, you know, gone for years and, and done everything right and then something happens through no fault of their own. And there’s a complaint. And lemme tell you something, if you’ve gotta go in alone on that and you don’t have a property manager to, to lean on, it just makes that situation that much worse.

So again, back to what did they expect from your tenants, right? So you wanna make sure that they’re balancing efficiency with tenant interaction. And the big part of this episode was there’s a lot of property management companies that are doing everything they can to. To not have one-on-one belly to belly interaction with anybody.

Quite frankly, you know, hopefully they’re talking to their owners, but you know, they’re trying to maintain a certain distance between their office and the tenant. So whether they’re forcing the use of voicemail or emails or texts or what have you, they’re doing everything they can to avoid, uh, having to do personal interaction.

Because let’s face it, personal interaction isn’t all that efficient. We don’t subscribe to that approach. But by the same token, we, we, we want to do all the operational things that we can do to minimize the need for tenants to come into the office or contact directly, but we do the best we can to welcome them when, when they do come in or when they make the call, because at the end of the day, the only reason.

They’re, they’re taking that approach, which these days post Covid seems pretty extreme right? To actually walk into an office, announce, or make an appointment, or make a phone call. It’s because they’re at wit’s end. They’re, it is their last resort, you know, something’s broken. And, and I look at it as, I know Gretchen does that this is our last opportunity to make something, right?

So make sure your property manager is balancing, you know, efficiency. And the use of technology with good tenant relations and, and tenant interaction. The other thing we talked about was recognizing tenants as customers, you know, legally in every single state. Uh, actually Maine’s kind of a weird exception because you don’t have to be licensed as a, uh, real estate professional to do property management in Maine, as crazy as that is.

But our fiduciary duty. Is always to our owners as licensed brokers. Realtor, not realtors, but licensed brokers, agents and property managers. Our fiduciary duty, our loyalty is always to our owner clients. However, the law also says that we have to treat our um, tenants as customers. That means that they have to be treated fairly, honestly, we have to be accessible, et cetera, et cetera.

So please, please make sure that they have, that They understand that their loyalty is to you first, but that doesn’t mean that the best tenant relations they could possibly have is, is, is absolutely in your best interest as an owner, but you’re the client. Tenants are customers and you gotta take care of both.

Clear expectations for the tenants. Again, I, my favorite, you know, basic expectation is, you know, we expect you to take care of the property and honestly, we expect you to leave it in better shape when you walk out than when you bought it. That’s how you’re guaranteed to get your deposit back in full. So again, you know, we have documents about how to get your, uh, security deposit back that we can hand to, that we hand to the tenants.

We have documents on how we evaluate an application. We have rent with ROOST. These are things that we do as a company that we’ve learned for the last, what, 15 years or so. 

Mm-hmm. 

Chris McAllister: That, uh, help get, uh, a relationship with a tenant off on the right foot at the start. Okay. Part eight was What’s on your accountant wishlist.

We had Jill McGregor our accountant on here. So what minimum things that you should expect, right? Clear financial reporting. Your, uh, property manager hopefully is using a piece of software that’s gonna get you a private portal where you can log in and see your financial reports, get a sense of what’s going on with your properties financially.

We talked a lot about trust accounts and I don’t wanna get into that here, but, you know, the management of trust accounts, the other people’s money. That is so critical because you, you don’t want your money being mingled with that broker’s money. That property manager’s money, right? That’s not their money.

That’s your money. And you also don’t want your money, your funds, that maybe you have unreserved being mixed up and potentially used by another owner. So that’s all a violation of state law. It, it also is a, uh, a management skill that not every real estate broker has, and it’s probably the primary reason why so many real estate brokers don’t want any part of property manager is because of trust accounts.

You know, we’ve been fortunate for so many years now that, you know, we’ve got the best people in the world that, that make sure our trust accounts are perfect every single day. You know, Jill’s involved, Josie’s involved, Kelly’s involved, Angela’s involved, you know, and, and I’m probably more cautious about it maybe than other people are, and I probably spend more money making sure it’s perfect than other people do.

But, uh, that, that’s worth a good night’s sleep to me. So, you know, ask ’em about how their accounts are structured. Do they know the difference between an an owner trust account, a tenant escrow account, and their own operating account? Uh, from an accounting standpoint, you, you wanna see efficient rent collection.

You wanna see that your bills are paid on time. You want to be paid on time. Um, there should be perfect record keeping. You know, you’re, you’re gonna get a 10 99 at the end of the year. Um, if you have questions about that 10 99, you wanna know who to call so you can get clarification and. And if your accountant has questions, if, if you’re not, if you, if you employ somebody else to do your taxes, if you’ve got a, a decent sized portfolio, you wanna make sure that there’s somebody in that property management organization that your accountant could ask questions of.

You know, that’s a, I don’t think that’s a bonus. I think that’s just the right thing to do, especially if you’ve got a portfolio of, I would say three or more properties, quite frankly.

And then we got into nine where we talked about expanding your empire. You know, we, we’ve had conversations with our, our most successful owners always are looking for their next deal. They always wanna be able to add to their portfolio. And it’s been tough the last couple of years. Interest rates have been high, you know, there hasn’t been a lot of inventory on the market.

So if you wanna go back and revisit uh, nine, we had a, a nice long conversation with Morgan Cole who created a company called Rediscover, and it’s rediscover that drives the ROOST Investment Gateway. And this is just a really cool piece of software that takes every active listing in the MLS and runs it through an algorithm that, uh, tells us whether or not it’s potentially a good investment property or not.

And, um. You can check that out@investwithROOST.com and you can also check it out@ROOSTinvestmentgateway.com. And as we got closer to the end, we spent a lot of time in, uh, episode 10 talking about fees and. You know, at the end of the day, you want trust, you want this, you want that, but you don’t want to be ripped off and you don’t want to be feeling like you’re paying a bunch of of junk fees.

So we titled that episode. What’s this fee for? I. So you wanna understand the management fees, you know, what is their fee structure? What else do they charge for besides a monthly management fee? Do they charge, you know, a, a leasing fee? Do they charge a renewal fee? What’s their markup on maintenance? And so forth.

And the big takeaway from this episode is the difference between do they take a percentage of. Of your rent as a property management fee, or do they charge a flat rate? So we, if you go back to that episode, you know, we talk about what are the pros and cons of a property manager that charges a flat rate versus the pros and cons of a property manager who charges a percentage of.

Of rent. And what it really comes down to is there’s no right or wrong answer, but I want you to know what questions to ask, and I want you to be aware of the differences and make sure that the, the way the property manager has chosen to conduct their business and the way they’ve chosen to take care of your assets is in line with, with what makes the most sense for you.

And then in part 11. Hiring the right property manager. We actually went through the entire interview process. We went through the PMA, the property management agreement, and what does onboarding a, uh, a new owner look like, at least for us? So when you’re interviewing a property manager, remember it’s a two-way street, right?

You’re interviewing them, but they should also be interviewing you. If you’re not a good fit for their company, it’s gonna be bad for both of you. If they’re not a good fit for your investments, it’s gonna be bad for you. So interviewing a property manager is a two-way street. We, uh, we actually gave everybody in that episode the 10 most important interview questions, and they all focus on tenant screening, how they handle maintenance, legal compliance.

Fees, of course, communication, evictions. How do you do evictions? Uh, you know, how do you maximize rental income? How do you handle pets, you know, order are security, deposits, all those things. Those are all what, uh, uh, episode 11 is all about. And again, we go through, uh, the high points of a PMA so you know what to look for in that agreement.

Remember, that’s a legal document you’re signing up for their services for a specified amount of time. If it doesn’t work out, you want to know, uh, you know, how do you get outta that agreement if something doesn’t work? How do they get out of that agreement if something doesn’t work? Uh, fees. The whole point should be outlined in great detail in there, and a strong onboarding process and, and ensures a smooth transition.

And Gretchen, why don’t you tell us you’ve, you know, you’ve got a couple of people that you’re working with now that are partners and. There’s certain things that you need to get this onboarding done, and why don’t you just give us a quick rundown of where we’ve had some hiccups with these folks. 

Gretchen Mitchell: Um, so they sign the paperwork, okay.

You know, going through dot loop, but in order to really get everything going, we need all of the leases, all of the keys, tenants names, how much they pay. And, you know, it’s no fault of theirs. They’re, they’re struggling to get the information from the current property management company, but it’s hard for us to proceed if we don’t have everything.

Um, so I think I’m still waiting on like a bank account and a lot of the tenant information, so I’m kind of stuck and I’m really pushing to get it done in the next. Three days before the first of the month. Um, so we’re trying to work together and I even offered to go to their current PM’s office and just pick it all up for them.

I’m just desperate to get it all in, so I’m willing to go get it for them, but that’s really where it is, is it’s much easier and much faster, much smoother process if the property manager has all the information they need. 

Chris McAllister: So there’s so much to unpack. I mean, so clearly you know why they’re leaving their current property manager, but you also get to see why it’s gonna be hard for us to do the best job we can on April 1st because we don’t have all the information, right?

So it’s gonna be bad for us. It’s gonna be bad for the owner, it’s gonna be bad for the tenants. That doesn’t mean we can’t manage our way out of that, but the fact is it’s probably gonna take 90 to a hundred days. But you also 

Gretchen Mitchell: just wanna start off on the bus foot, especially with the residents, because.

They need to know who to go to for things. Yeah. And 

Chris McAllister: we don’t wanna lose any residents in that transition process. And you know, that also goes back to the whole idea of, of having good onboarding at the start and, and, you know, making sure that leases are uploaded to AppFolio and leases are available to the owner in the, in the, in the, uh, tenant or in the owner portal.

Mm-hmm. 

Chris McAllister: You know, as an owner. You know, you should get copies of every lease. Just on general principle, it’s, it’s your responsibility as an owner. It, it, it, and, and the fact is, if that property manager can’t get you a lease that, you know was just signed or at least you paid for it, there’s an issue. Yeah.

And they deserve to get it to you and it should be accessible in your portal. So onboarding is critical. You know, it’s seldom that everything, we get a hundred percent of everything that, that we want to make a, a perfect transition, but. You know, Gretchen and, and, and Marcy and Shannon and Tina, they, they do the absolute best they can and, and, but just the takeaway there is.

You know, there’s a transition, always a transition to a new property manager, a new property management company. And that relationship takes a little time to, to gel, takes a little time to get to know each other. And if it’s a really bad situation where we don’t know who’s paying rent, who’s not paying rent, we don’t know the condition of the property.

I hate to say this out loud, but there are times when things will get worse for you in the short term before they get better. So if you thinking you’re struggling now and you want to get help, that’s perfect. That’s the right thing to do. Please know, you may not know how bad things are until you get a professional property manager to really dig in and start setting things right.

So I don’t wanna scare anybody away from getting into this relationship, but you may not know how bad off you are at the moment. 

Laci LeBlanc: That’s, I think that’s important because what I’m hearing is like, obviously through these 12 episodes, we’ve gone over how complicated choosing the right property manager, you know, moving that relationship or changing it from yourself to a property.

It’s really complicated. It’s a lot of moving parts. There’s a lot of legwork that has to be done and but the point that you just made about not, you might not know exactly how bad it is, like it’s not gonna get better on its own if you don’t. Right? If you, if you sense there are problems, they’re not gonna get magically better.

So like waiting to do this process just because it’s long and hard and arduous. Is maybe not the right answer. If you’re thinking, oh, I need to do this, then probably now is a good time to start at least looking into it, right? But there’s a little 

Chris McAllister: voice in the back of your head that says, you knows not right.

I probably at least need to start asking the right questions. But you, you should really heed that voice. There’s, you know, it’s really easy to, uh, you know, ignore things that, uh, sometimes you can get away with ignoring things for a while and then suddenly. You know, you just can’t anymore. Whether it’s ’cause you’re not getting the rent you deserve, or you’re not getting the documentation you deserve, or you know, something happens and suddenly you realize that you know you’re at a loss and you’re at somebody else’s mercy.

So. Anyway, so hopefully, you know, you found value in this re review. We’re actually going to, um, publish a, uh, a little book, one of my little books based on this, uh, podcast series. So it’ll be, you know, these usually run about 65, 70 pages. They take about an hour to read, but the book will be titled. What to expect from your property manager, even if that property manager happens to be you.

So we’ll have that, uh, we’ll probably send link set, uh, to everybody who, you know, has opted into landlord profitability, playbook and so forth. But over the past 12 episodes, we’ve including this and when we covered everything you need to know about working with a property manager, setting clear expectations, screening tenants, controlling costs, maximizing your returns.

And remember, a great property manager is more than just a vendor. They’re a strategic partner. When you choose wisely, you communicate clearly. You must stay engaged. You can free up your time. You’re gonna reduce slip stress, you’re gonna sleep better. And more importantly, you’re gonna build a rental portfolio that that works for you for the long term and not the other way around.

Anything else? Any parting words of wisdom? Ladies, before we, uh, close this one out? 

Laci LeBlanc: I don’t think so. I just, I hope that all, I hope that all of the, all of the folks out there who own properties take the time to listen. Even if you don’t intend to work with a property manager, a professional property manager.

I just think there is so much information here that you know, it’s like an if you don’t know now, you know. Situation. So, um, I, I don’t think I’ve ever heard it in quite so much detail broken down. So the last, you know, 12 episodes over the last year, when you really put it into perspective, that’s how much you need to know if you’re gonna manage rental properties.

And, uh, you know, if you don’t in intend to partner with somebody, then at least take the time to make sure that you’re checking all the boxes on your own. 

Chris McAllister: Yeah. Well, if you’re already working with a property manager, I encourage you to use the insights from this series to evaluate your current re uh, partnership and identify areas for improvement.

If you’re in the process of hiring a manager, take the time to ask the right questions and ensure that their approach to the business aligns with your goals. So what could you do next? Well, I encourage you to revisit past episodes. You can reinforce some of these lessons. Um, you know, check out the blog post 10 critical questions to Ask when interviewing a property manager.

That’s on our, uh, uh, page called Learn With ROOST on the ROOST Real Estate Company site. You can reach out to Gretchen directly, you can reach out to me. If you have any questions, you can reach us through, uh, invest with ROOST.com. Uh, send us an email. All that information is, uh. Is in, uh, the, the, the podcast descriptions and so forth are on the website.

And finally, if you have found this series valuable, share it with other landlords and investors who could benefit and, and don’t forget to subscribe to the Landlord Profitability Playbook. Podcast ’cause just because this series is wrapping up, there’s way more that we’re gonna be talking about in the future.

You know, designed to help you maximize profitability and build a sustainable real estate business that does nothing but generate mailbox money. So thanks for listening. Here’s to your success as a smart, strategic, and profitable landlord. Thank you ladies. 

Laci LeBlanc: See you next time. Thank you.