Property Management

Welcome to the Leading Lane podcast for Real Estate Pros by Real Estate Pros with your hosts Ashley Frederick and Stephen Burch. If you're looking for an honest, authentic and raw perspective, you found it. Hello everyone and welcome back to the Leading Lane podcast. Today we're going to talk about property management and I know Stephen has some fantastic stories as they manage a boatload of properties. But also for me as a novice landlord and looking to accumulate more businesses, I think what does that look like to have a property management company and what are their roles? How does it help the landlord, how does it help tenant? Those types of things. So Stephen, you are the expert. Take it away. You know, like when property management actually kind of fell in my lap, I never wanted to do property management whatsoever. Had no intentions to the what happened there. So just so that everybody is clear, property management is not always the fun and glorious type of thing. Yes, it makes money, it's another great income source, but it's also a headache if you don't have it set up properly. When I first had, what happened was we, my grandmother had about 35 different properties that we were managing. She had a, another agent in the office that was co managing it with her, if you will. Long story short there, that agent decided to dip out and go to a different company and she signed out all of the social or excuse me, the security deposits out of our business account. Security deposits. And it was just a big old fiasco right then and there. Like when that happened, like illegal all over the freaking place, like that was money out the door. And I was like grandma, like we can't, we can't allow this whatsoever. So we went to our attorney and did a demand letter for her to be able to return all of those gracious gracefully or if she was not going to, we were going to submit her into the real estate commission and sue her. Luckily she went ahead and returned all of those. So now at that point I had 35 properties that I started managing, had no flipping clue what was going on. I did not know the lease, I did not know the property management agreement whatsoever, knew none of the tenants, knew none of the owners and so literally thrown into it. So over the years, what the best way that I can describe it is each time that there's a situation that occurs, I look back to lease and the property management agreement, I'm like, man, I never want that to happen again. So let me write in a nice little bullet point for a clause to be able to ensure that going forward we can try to go ahead and protect ourselves that we're not going to have that. So fast forward, we went from 35 properties that we managed and now we manage about 180 doors and then an HOA, which has a couple hundred doors under there as well, so have grown it tremendously. We have a fantastic property manager, Shani Stoner, shout out to her and I think that she'd be a great person to bring on here and talk really, really, really easily about the PM side of things. But, you know, I think it's funny that, you know, we have owners that are like, oh no, I can do it myself. Yeah, you can just like, I mean, you can sell your house yourself, you can do anything yourself. But at the end of the day, do you want the headache? Do you want the liability? Since, you know, all of these years and these different situations that have occurred, you know, our property management agreement and our lease is pretty freaking solid. So, you know, you're, you're hiring us to make sure that we have your best interest at mind and so that you don't have to worry about these, the situations that occur. The most recent one that I think is just crazy. We have a fourplex with an investor and he's going to rehab it and he has not gotten to it yet. And just the other day we had some squatters catch fire inside of one of the units upstairs. So he's not here. You know, we're technically not managing the property for him. We have other properties that we are managing for him. But, you know, we still took care of it all for him. You know, we met the fire department, we did the police report, we're starting the insurance claims for him, getting all that stuff together and lining up vendors. Like he would have to physically fly back here from D.C. and, you know, do all of that himself. Like, we're, even though that we're not getting paid, we're doing it again for free for him. But that has saved him thousands of dollars and saved him tons of time not having to leave work, what he had to do back home. So the, the other side of this too is from a tenant perspective, there are a lot of, as they're called, slum lords that are out there. Right. And I wanted to sure that we were not one of those. We, we have very high standards for any property that we bring in into our portfolio. We have a lot of requirements for our owners to be able to do to ensure that we have tenants that have, you know, clean, quality homes moving into them and safe. You know, like, I, I don't want to just be collecting checks from people and having a, a poor reputation out there. We want to make sure that we're taking care of our tenants and that we have the, the laws in their favor and we have our leases that are written out. And again, very clearly, so that there's no, hopefully no issues going up. And if there are ever an issue, we can refer back to the, the lease and the management agreement that we've written out. So there it has again made us a lot of good money. But at the end of the day, from an investor standpoint, like, I think in order to grow your portfolio, you need to find that good partnership with the property management so that you can focus on what you're really good at and then you can allow a company to be able to, or a property manager to focus on what they, they're very good at. And once you find that good working relationship, you can really start building your portfolio. And I think that there's only going to be so much that you're actually going to be able to manage yourself before you can truly hand that over to somebody else. Yeah, I mean, I think that. Yes. Shout out to Shani if you're not following her on Facebook. She's got some great reels and some great tips that she's doing. I think the one that she shared this week that I took note of is, I think it's called timestamp, but she uses it for her, right, like things that happen in apartments. But for me, I was like, man, like, how great would that be for us as agents, that if I'm at a property and something is wrong, like, I can take a picture of it and it timestamps and dates it so that there's no question. So some of that, you know, it can apply, but I think it'd be great to have her on, just like to get some in depth of what her day looks like and what she deals with. My question for you though is, right, so, like, I own several properties. It probably goes back to this control freak situation that I have. But what do you, like, what do you think is the best benefit for landlords? Or. I know that like a lot of landlords, right, they might not be slumlords, but they maybe like, don't like to spend the money and they're like, I'll just take care of it myself. Like, what do you think is the best rebuttal to that? So really, I guess it depends on, you know, if you were to call me up, I would say, what, what Is your end, what is your end goal? Like what are you trying to accomplish here? Yeah, I don't want to deal with it. I don't want to deal with people. Yeah. Like, so then that's, that's what we're here for, right? Like, you know, you don't, you don't have to worry about the 24 7, you know, maintenance, right? Like, you don't have to worry about if somebody's going to call you at 3 o' clock in the morning and wake you up. Like you have to go out there. Like we handle all of that for you. So our goal for the mass majority of our owners is that we want you to be able to receive a check every single month. And you'd be like, man, that was the easiest money that I've ever made. I didn't have to do anything. Right. Like you got it over into our portfolio. We'll take the rest of it from there. So the other part of that too, I think is like we're dealing with humans and so there's a lot of motions. And obviously as you as an owner, you're going to have a lot of emotions attached to the property that you own. And so therefore I think sometimes owners don't really, they can't separate that, you know, what is right and wrong necessarily because they allow their emotions to take over or they think trying to take advantage of them. So it's our, you know, our job. Like the way I look at it is we're kind of the referee in between, making sure everybody's playing fairly. But at the end of the day, really the, the goal is to make it as seamless as possible, communicate with you as much as we can to ensure that you know what's going on. So you can lose or not lose, but let go of some of that control, but still know and have the reassurance that we are working in your benefit and that you made the right choice to be able to hire us. So yeah, like, I don't even like the, the phone calls at 2 o' clock in the morning or you know, when we had the pipes, we had the crazy sub zero weather that came through, you know, all the pipes were frozen and we had all of these tenants, know, going berserk. Like my, our pipes, our personal home, you know, we're frozen. We don't have control over mother nature. But imagine having to pick up your cell phone, you know, with how many other properties that you have and you know, time after time after time to be able to answer the same Question over and over. Well, to where now you no longer have to even worry about that. We communicate to the tenants and update them on what's going on and keep them afloat as well. So we try to remove the headache really is the main goal for the property. We get like inundated with like the application part of it, like that's the part that I can't stand is it's just like nonstop and you have to like check references and all of that. So I assume that that is something that you're a property manager, like literally like just they only know like openings, here you go, here's the building, etc. Yep, absolutely. Like in, you know, think of all the freaking paperwork. You have fair housing that you comply with, obviously. And so you have to keep everything consistent across the board and everything documented properly. So you know, for us we have the, there's like five different checks that we do. Background check, criminal income, your rental history, obviously your credit. Like we look at all of these different things and so we file those so that we make sure that we're in compliance and keep it consistent across the board. But then even when you go into that, like we then from there make sure that the tenant has renters insurance and we make sure that we're named on there as well. I think there's a lot of homeowners out there that don't realize that there's a difference of homeowners insurance and rental insurance. And so we want to make sure that they are protected for their belongings and the property is protected as well. Then you have to verify that all of the utilities are turned on properly in the correct date, all the billing is done properly, all of the inspections and you know, documenting properly of those, those photos to make sure that, you know, when that tenant turns around and moves out, that was that hole in the wall really there. And how are you going to prove it? A lot of the laws are written in favor of the tenant. So it's all about documentation and making sure that you know that at the end of the day that if you have a tenant that skips out or damages the property, you have the proper documentation to be able to truly go after them, to try to get the funds to be able to, you know, put that back into the property. I mean, that alone right there is worth somebody else doing for, for me, in my opinion, that I don't have to deal with all of the documents because then I'll be like, where in the hell did I put it? You know, we have an online Portal. Everything is documented properly. So. Absolutely. Let me flip this actually like the control thing. What do you feel that you would be losing control if you were to hire somebody? I think probably just like knowing who's coming and going and that, you know, just like a matter of just who's there. Right. Like because Ben likes to stop by the house. So that's the other part of it. Right. Is you know, Ben would probably play some of that maintenance type role. But I don't know, I don't know why because it's the thing that I struggle with. Right. But I think like knowing who's there, like knowing when they're leaving. I think for me like it's always a matter of like making sure I know what like when they plan to leave. So it's a little bit different here. And then a lot of our rentals are based off of our medical facilities. So we actually have like furnished apartments. Right. And then that's like 13 weeks contracts which I think is such like a different mindset of somebody signing a one year lease than like a 13 year lease. So I think like for me, like I think I have to have a pulse on the way for 13 weeks up. Are they going to extend? Like how quickly can I fill it? But again I would like to not focus my time on that and plenty of other things to focus on. So I think it's definitely something we have to consider. So then I think, you know, from an owner standpoint of a real estate company, that's why you and I started talking about it is like, well, in our area we don't really have a lot of property managers. I think there's like, there's one for sure that I know of. I mean I can guarantee you like there are way more people that are just doing that themselves. So. Right. It's something that we consider like hey, we should maybe look at that avenue. So talk to me more a little bit about like being in a real estate company but then also having like a property management company as far as like how that helps thing. But I think in me talking to Shani like it's. I think it's also like a nice avenue that not everybody's going to rent forever. Right. Like how does that transition, transaction, transition look to, you know, help them be buyers? Because it's kind of like a one stop shop, right? Well you know, back in a while back we didn't have an issue or. Yeah, we had an over issue of inventory. Right. Like we had too much that was available and so that's really when we started throwing more properties and really trying to promote and get more properties into our portfolio. And so if we had a listing that was not selling and we knew that the owner was, you know, military and PCSing out or they had to go, you know what, whatever their next move was and it was not selling that they needed to find their next home, whatever else the area that they're going to, we then would offer them like, hey, like I, I know that you want to sell, but we do have a property management division that we can, let's market for sell and for rent and see which one comes first first. So let's try to help you in your, your life and your next step. And so that has been nice to be able to, you know that we're not losing that to a different company and then we nurture that relationship with that owner for the year or however long we have them for and then we'd be able to turn around and relist that property is the ultimately the goal. But that tenant that is coming in, they may, you know, like a lot of people don't know that how easy are the steps to take to, in order to buy a home? So when we are taking their application, we are looking at their credit, we start that conversation like have you ever thought about purchasing before? And just that one question we're able to see, like, is this something that we want to be able to, you know, get you a game plan for, be here for this lease for a year and then start looking for the next house or what does that really look like for them? And I think a lot of people really appreciate that we're taking the time to, to see that they could be in a position to be able to purchase. And it doesn't always mean that they have to have great credit. Like we're looking at their credit, we can see that, you know, if we start this plan, it could be a six month or you know, a two year type of plan if that's the direction you want to go. Let's help you get to whatever your, your dream for homeownership is going to be. So it's a nice way on both sides of those to be able to keep the listing here and then keep the tenant here, hopefully eventually get them to be a buyer and then those buyers are going to be eventually sellers later on or then start talking to them about investment opportunities too for their own portfolio and wealth. Are we frozen? I just can't hear you that well. Can you hear me now? I can. Yep. A Little bit better. Yep. Okay, cool. And you know, let me be extremely clear here too. Like as far as from a company standpoint, like owning the real estate company and having the property management division, if we didn't have the property management side of things, there would be the. Looking back, there's months that we would have a hard time, you know, keeping the doors open, but because of the consistent income that we're getting from the property management side of things to help offset those, those slumps in the sales. And that has been extremely nice to be able to have that there too. So they really complement one another extremely nicely to be able to grow a company. And I think the other thing that I would definitely say is that I know a lot of broker owners that are out there in real estate look at it as allowing like each of their agents to have a property management. You know, each agent is allowed to take their own properties to manage themselves. Really for us, it all just funnels directly into Shani. And so we like to keep it completely different and not conglomerate what is really going on with sales and property management. So it, we, we do look at it as, it's a different company. Yes, it's under the same umbrella. But yeah, I, I really, I don't understand. And maybe it's just because I'm, I, I'm not in those types of markets, but I think things can really start spinning out of control very quickly. And then the other part of that too is your reputation. You know, we, we really pride ourselves on high quality. And so if we're having somebody do something that doesn't really meet our standards and now they're, you know, talking crap about their experience and then that can reflect poorly back on the company. I mean, we've made mistakes that we least we can own it up and know where we can grow from versus having everything so far spread out. So two questions. One, like, if you're a landlord, at what point in time do you think that somebody should look at having a property manager? Like how many, how many doors? Honestly, the first door. I mean, again, it depends on what your, your end goal is. You know, like for me, I think it's the very first door. Once you establish that, because you're, then you're going to start learning like what you like about the property manager, what you don't like. And if they're a good property manager, when you provide them feedback, then you guys would be able to find a happy medium and a solution. But don't you like a lot of, a lot of people that are like buying investment properties. They're looking at it as like a, a wealth building type of investment. Right. But just because you have the means to buy an investment property might not mean that you have the knowledge to run a property. So do you know the landlord tenant laws, do you know the time frame of how long to recur and earnest money for? I think like that's what I found is that a lot of these quote unquote investors have the means to like fill these properties. Like you mentioned, a lot of them don't live here. So like I know some of them will like give codes like via online to someone to look at their house and like what a risk that is or if you don't live there and like for example, like we had a hail storm and if you don't live here and you don't know that there's a hail storm, like did someone look at your roof to make sure that there wasn't any damage? You know, it's like there's, there's that missing, you know, piece of it. So I think that's you know, great piece. Secondly, like if, if you are a broker owner or someone that's contemplating a property management company, like at what point in time do you think it actually, how many doors do you think it makes sense in order to like have a position like that? Yeah, you know, it depends on your fees and everything. When we first started with the PM side like we kind of had like it was an admin shared with property management. And so as we grew then we moved over to a full time position really I, I think where I started, like I couldn't manage it anymore. On top of my sales and then on top of managing, I was right around that 50 mark, I was about pulling out my hair. But then that when I really honed in and focused in on systems and automations and templates and making sure that I try to simplify it as much as I possibly could so that I don't have to recreate the wheel every single time. So I think I was right around that 50 mark. One of the things that you just kind of, you threw out there and I just think this is a great example to show people like you know, you, you give that person, you know that code that you were talking about, that owner's not there, they give them a code to go look at the house and do that self guided showing. Well what happens if that person never leaves? They become a squatter then. Now they have squatter rights. Right. Like now you're into this whole different ball game because you gave access, somebody to the property. Now you have to go through the legal system to be able to actually evict them and get them out. And there's a whole freaking process to be able to do it. And a lot of people don't even know about squatter rights and how difficult it really is to get somebody out of their property. No, not at all. Like, you think eviction is like, hey, you're evicted, get out. But then what, when they refuse, what happens then? I mean, like, it's this whole, again, trickle effect to where, yeah, you want to do everything yourself and yes, you have the, the means to be able to. To have these investment properties. But for somebody not paying for six months or a year, how quickly will that deplete all of your, you know, your operation expenses? Do you have the finances to be able to do that? And I'm not saying that we would be able to, you know, 100% prevent not allowing or not doing evictions. We, we've done, you know, a handful in the last couple years. But again, as we progress, that's where our, then our policies and procedures have been implemented and became a little bit more strict or written in a better way to make sure or try to prevent those situations from occurring. But I see even some of the slum lords around here, they're doing evictions left and right all day long. It's because they don't have those clear expectations up front. They don't have it written out. They're just flying by the seat of their pants. And I can even imagine kind of legal fees that they're paying. Like, why wouldn't you just want to pay somebody that knows what they're doing? Right. Almost at like a hundred percent occupancy. Yeah. Shani's at 100% occupancy. Like, yeah. I mean, I think that that goes back to having the right system in place. Like, if you have the expectations up front, if they know who to contact, if they know what it looks like from day one, like, I think that's how vacancies are, you know, not there. Because you've done the expectations up front versus just a slum lord that's like, I'm fit now, like, whatever. Didn't pay their rent so well. Right, Absolutely. And, you know, then we have sky, our marketing director. She's able to do all of our photography and matterports and everything else. So it really does complement a lot of the things that we already have in place. And so it Just made natural sense to continue to. To grow that. But Shani has also done a fantastic job with creating a great relationship with Fort Riley and Fort Riley Housing. And so they're the housing office that helps the service members find housing off post. And so that relationship right there, a lot of people don't even know that is out there. And being able to have that relationship and go through those inspections with them and, you know, Shani is able to really just reach out to them, hey, we have this property. And they say, hey, we have these, you know, people that are looking. And a lot of times she can fill the properties before we even hit the open market or even before it vacates, you know, the previous tenant vacates out of the property. So having least amount of time of vacancy, you know, within your property, I think is absolutely huge in making sure that you're getting the best return of investment. Yeah, I mean, you make a good point, is like one, it's the right person, right? Like, Shani is the right person for that role. But I also think you make a great point as far as pictures, because there are some, like, really nice properties that are for rent. But I've seen the pictures and I was like, oh, that's so sad. Like, they are not doing justice for what is actually available. I think that that's a great point. Absolutely. And I mean, like, and even from where, you know, your standpoint, like, imagine being able to go out and you have these properties that you're showing a potential tenant and, you know, being able to have that conversation about, hey, what, what about purchasing instead? Like, not that you're trying to move them away from that property, you know, that owner that you're representing very well may want to sell. And you know that. And they love this home. Look, you can just be able to put that transaction together and help them and not only the, you know, get them as a tenant, but then putting that transaction, and now they're no longer paying rent to you. They now own the home and building equity for themselves. So it's a really beautiful thing to be able to work into your business. So, so when. When are you doing. When are you going to start your property management company? How about in the summer? Got some other things going on. I love it. Love it. Yeah, yeah. No, I do think that, you know, for. For this is a great one to kind of table right here and let's get Shani on with us and so we can ask more questions and anybody that's listening, I mean, since we're going to be queuing up for Shani. If you have questions about property management, you know, anything in general, like, go ahead and let us know so that we can make sure that we ask her when we get her on here as a guest. Perfect. Thanks for your time everyone. We will talk to you soon. Toodaloo if you've enjoyed today's episode, please like subscribe and share with others. Stay connected for more genuine insights and strategies to boost your real estate career on Facebook or check out our website. We'll see you next time.