Listening To Podcast – RETipster 38
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Hello, this post is sort of a way to listen to helpful podcast and perform a review of the information with time stamps.
This one is covering “The Most Misunderstood Facts About Property Management – Interview w/ Tim VandenToorn”
This is a rough draft 10Apri19 – Just listened to and made quick notes 🙂
Podcast Questions & Information
#Q1 – 8:50 Who Started The Business?
Father started business, sister had gave the idea and started in 2008.
#Q2 – 9:42 In your opinion how many properties does it take to smooth out income, enough to live on and don’t all crash?
20 is comfortable, depends on how leveraged you are and where you are buying properties at. Highly Leveraged can be very risky if your cash flowing $200-$300 per door, but 10-15 is comfortable to leave w-2 job
#Q3 – 11:01 At what time do you feel comfortable going full time as a property manage to pay the bills, handle employees?
You can make a living off managing 50 rental properties, as fee is based off rent – so it can vary. Avg rent around $1,000 with 10% Fee = $100 per property * 50 = $5,000 if you were self managing. They have friends with 1/2 virtual assistance and have 100 properties starting to outsource to do more with less. 100-150 you need to scale up and hire in more employee’s and need more full time staff around 100 units.
#Q4 – 13:29 How do you screen tenants outside of credit report?
Subscribe to software and use local resources, landlord reference, length of employment, debt, credit report, other information online. They are strict with their screening process due to economy being strong, but if conditions change can offer incentives to apply.
#Q5 – 15:47 How do you handle evictions, minimize damage?
They do get emotional stories, issues with fair housing and treat everyone the same. If someone has an ‘unexpected bill” you can emphasize, but cannot exceptions or play favorites. Staff has to understand it’s a business and it becomes easier and comes up with a solution with tenants. They have a collection agent “tenants relation manager” who takes care of those who can’t pay rent, need to go to court. They have an in staff team such as attorney who knows what goes on. Rent is due 1st, if not auto system sends 7 day notice – they have a system to talk about payment plan and will file with court which can make it difficult to get out of that hole and once tenant does it once or twice tenant learns and avoid in future.
#Q6 – 18:34 What happens when there is a big expense, what is process of approval?
2 Years ago they started informing of all maintenance, started with $300 would notify owner anything under would notify owners – went to $500. Big reason owners would switch property managers was transparency with maintenance cost, now they send email when a work order is opened with a summary of issue, pm calls tenant to work issue and works through it and you get an idea of what the cost may be with a receipt and pictures of repair to see what was purchased at home depot / Lowe’s and picture of repair.
#Q7 – 21:40 If somebody does not have the money for the repairs that must be paid, is there someway to help them with that?
It is a big hurdle to take on a property from another PM as the user has deferred maintenance that needs to be resolved and the owner gets hit with a larger then normal bill. Owners now are counting on no maintenance no leverage and cannot have that 2000 furnace replacement. They have offered a grace period through rent and upcoming payments, if they don’t there are interest charges on “loans” to pay for repairs. If you find a good property you might be able to get pm assistance to cover costs or a property.
#Q8 – 25:55 Do you have any plans in place to increase rental income, and monitor anything?
Depending on location PM can make specific improvements that would have high demand for a nicer high kitchen, bathroom. Will push investors who have higher potential, on the otherhand condition, location will always have section 8 and evaluate on a case by case basis. They always negotiate months in advance to reduce vacancy to get higher rent.
#Q9 – 27:12 How much does it actually cost to hire a property manager?
Depends on what the property manage provider, but even some of the best are industry standard which is 10%. There are some startups and can range between 8-12%, the future may revolve around brokers and agents starting their own property manager and people are becoming more mobile and rental market will continue to grow. Quantity and Quality of property can move fee towards 8%, so if they charge less 5% – but they have high vacancy and bad marketing can set you back in cash due to the “fee” vs. focusing on the “vacancy”. Make sure the PM has processes in place to move to repair, pictures and get a tenant in place quickly for a low vacancy and lower turnover equals a higher return.
#Q10 – 31:50 Can you provide 3-5 warning signs of a really bad property manager, or how do you police them?
1. Communication – PM should respond within 24 hours to answer those important question.
2. Rent Checks or Interruption with Rent, if they are not collecting your rent or giving you the correct rent.
3. Transparency with bills and maintenance, if the PM is charging for random acts and there is no proof (receipts/pictures).
4. Look up their marketing pictures, information are they doing professional pictures and doing a good summary – let the owner know their property is on the market/off the market.
#Q11 – 35:24 How often should the property manage visit and check properties?
If there a tenant issue or property issue they will go out to the properties to visit, perform health checks to make sure heat/filters are working. As standard practice they use a 4 month inspection (120 day inspection), to check for additional tenants, pets, smoking, violations. If tenant renews only do annual inspection after that for filters, faucets, etc – don’t want to look for work and charge the owner. Fine line to walk to manage/watch property, but not over bill owner.
#Q12 – 37:44 How do you figure out where the equilibrium to navigate owners expectations?
Get to know owner, does owner have cash reserves and their goals. Do you want bushes, curb appeal, could draw in better rent depending on area. It depends on both owners and tenants, if they used to manage it themselves it could be tougher as they have higher standards. Set expectations of the roles and who’s doing what.
#Q13 – 41:28 Would you rather have 1 owner 50 properties, or 10 owners with 5 properties?
Definitely spread the risk around, as the owners can dictate your business if they get to big. Your business can depend on that owner and it’s nice to have a lot of owners.
#Q14 – 41:18 What were some of biggest obstacles to get into the property manager business?
Depends on growing pains, and employee’s. It comes down to keeping employee’s moral high while they get collecting rent and getting yelled at. It can be tough to find employee’s a fair salary due to low amount of properties, but as you grow your business it can be much nicer. If you build a large office force and work force it can be extra ways of creating income and doing in house maintenance. It can be tough to coordinate maintenance and understand projects and balancing budgets. It’s a service based company to keep cost same, but become efficient.
#Q15 – 45:17 What is the best part of being a Property Manager?
Reality is that while a PM you end up counseling and listening to tenants can be tough to give value due to it being “business”. When you can truly make an impact on someone’s life and really means it. Likes to buy foreclosures and old homes that have lots of items to scavenge and find collectibles and building a museum of trinkets and items found in homes.
#Q16 – 47:32 What advice would you have for a newbie who is thinking of getting into property management?
Start by managing your own properties, or work with a property manager to find what you live or don’t like. If you manage low manage homes you can build passive income, but you will face evictions maintainace problems, tenants, etc. Would not pm others until you know how to write a lease, start as an investor and manage your own properties and maybe expand to manage others.
#Q17 – 49:18 Is there education or licencing to become a property manage license?
You need to operate under a managing management comp broker, your leasing agents are required to be licensed as agents. To show houses, write leases and you do have to have that to lease properties for other people. Depending on state rules, you may need to be under a specific broker.
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