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Property Management Secrets with Jason Martins · The Academy Presents podcast

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  Did you know that 90 % of the world's millionaires
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  invest in real estate? Well, I'm Angel with the
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  costly mistakes, and begin living the life you've
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  You're already taking the first step. just by
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  joining us here today. So back up to the CVS
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  thing. So somebody's trying to pay you cash.
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  Because I just think of our grandparents. People
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  would come in to pay in cash and grandma and
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  grandpa would hand write a receipt. And this
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  was, I mean, I'm talking like even probably 10
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  years ago, they were still handwriting receipts.
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  This was not long ago. And so you're saying that
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  like you've got a barcode. they can go to CVS
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  Walgreens wherever you'll see that and it'll
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  pay direct to their account paid direct to their
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  account they give CVS the cash and right away
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  their account gets credited for that rent yeah
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  yeah yeah it's pretty amazing it's pretty the
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  technology nowadays pretty amazing what we can
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  do Okay. So let's kind of, I just had to go back
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  and catch that one in a second. So let's kind
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  of go, I guess I'm kind of all over the place
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  here, but so like in a lot of your contracts,
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  or at least in a lot of our contracts. So residential
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  property management is 10%. That's the industry
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  standard here, or actually in all the places
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  where we have singles, that is the industry standard.
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  And so we just don't mess with that too much.
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  Now people talk about how in multifamily, it's
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  so much less because the contracts and everything
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  you sign say three, 3 % to 4%. But after you
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  look at payroll and then you get charged per
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  door or you get charged a flat fee for the software
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  and you get charged for your personnel. So like
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  once you've got all of those things in there,
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  it's probably closer to like eight percent. Is
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  that like if you're going from that to taking
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  it in -house, I mean, you're still going to have
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  personnel charges and you'll still have like
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  your maintenance costs for the supplies and stuff.
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  But how much do you think you can get it down?
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  Yeah, so 3 % is really when if you have like
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  a large multifamily that's really kind of like
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  the lowest that they'll That a third party company
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  will charge but you're right. Yeah, you don't
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  need charging 3 % You saw that sounds great.
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  But guess what you have to pay for their maintenance
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  people You have to pay their salary for their
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  office personnel So that doesn't go away. But
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  if you bring it in house, you at least save the
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  3 % Now, how much does that come out to a year?
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  I mean, it's you know several tens of thousands
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  of dollars which is significant savings. So if
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  you have multiple properties of these and you're
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  doing everything in house, I mean, it's huge
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  savings. Plus the other thing too is management
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  companies and I, because I do this as well, we
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  all do this, is that we have our maintenance
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  people and we pay them a certain salary, but
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  then we upcharge the salary so that we can make
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  a profit on that. But if you have everything
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  in house, you just pay that. The maintenance
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  person who works for you, you don't have that
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  upcharge. So there's some more savings there,
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  huge chunk of savings. There's all these little
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  things all the way down the line. That's why
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  I recommend larger companies just bring it in
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  -house. Have a good asset manager on your team,
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  and that's their role, and they manage those
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  people and everything. And there's just so much
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  savings. What the numbers are, I mean, it depends
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  on how many units you have, but it's tremendous,
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  and it adds up after quite a bit. And I'm not
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  saying that some of these manager companies aren't
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  worth the 3 % of the paying. They certainly are,
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  but I don't, I think that sometimes we forget
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  that, um, you know, yeah, we're paying 3%, but
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  we forget that we also have to pay the salaries
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  of these other people and all these other things.
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  So I just want to remind everybody. I think we're
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  also paying for like, um, any kind of website
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  or website maintenance you're paying for marketing.
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  I'm sure that we're paying for the background
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  checks or maybe not the background checks, but
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  the membership into the like the Texas Apartment
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  Association or whatever it is, if it's Texas
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  or nationwide, like I'm sure we pay for all of
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  those things. And so really the savings is that
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  3 % bump on the top. But when I think about like
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  in -house stuff, I think about, okay, how do
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  you do the background checks? Like is there a
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  program you sign up for? Is there something?
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  Because like to me, that's like the base level.
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  Somebody comes in, they fill out an application,
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  you have to run a background check. That's not
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  just open access to the whole world. You can't
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  just Oh, hey, I'm gonna run a background check
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  on somebody. Like that's a... How do you do that?
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  Right through our property management system.
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  And we give them the link. We send them a link
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  for the application. They pay the application
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  fee, which we do make a little bit of a profit
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  from. They pay the application fee. And on that,
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  we check everything. We check their income, their
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  criminal background record, their eviction record,
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  their sex offender record. everything everything
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  is checked right online and we get that full
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  report now we can do further investigation right
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  like we can ask them to confirm pay stubs or
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  call their landlord and things like that certainly
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  that's helpful as well but everything is done
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  right online right through our property management
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  software it's so easy nowadays it's not like
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  it used to be wow yeah i'm telling you for my
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  grandparents literally my grandmother would call
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  me I was in college and she was like, hey, Angel,
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  you went to school with so -and -so, right? I'm
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  like, yeah. Like, what do you remember about
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  them? That was how she background checked. She
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  called me and this would have been like late
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  90s, early 2000s, but they didn't have access
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  to background check information. And I don't
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  know, I don't know how grandma, grandpa figured
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  out the income piece of it. Cause like now it's
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  like they want you to have three times the income.
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  of your rent. But I don't know that grandma and
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  grandpa did that because I know grandma and grandpa,
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  like, they would rent to people that did side
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  jobs for cash. I mean, that was, they had, I
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  don't want to call it low income housing, but
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  they did like efficiency apartments. And then
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  they had their small trailer park or mobile home
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  community. So they had, they had housing for
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  working class people. but a lot of people have
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  a working class job and then run side gigs and
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  cash on the side. So I don't know how, like I
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  have no clue how Grandma and Grandpa would figure
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  that out. Well, you know, the other side of doing
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  background checks, and this is more like in the
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  detail, like the site manager would really be
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  doing this kind of stuff. Not so much like the
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  asset manager, the upper level, but the site
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  manager is, and I'm big on this and we do this
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  in our company and this is a very, a huge part
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  of how we decided to run to is the is the one
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  -on -one interview. Like you really need to have
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  a gut feel about somebody and you can often tell
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  someone's characters like you know by asking
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  the right questions and and having that one -on
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  -one interview. So that's big in our interview
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  process. Of course, we do the background check
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  and all those things, but the interview process
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  where we sit down and talk to them, just ask
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  them some questions, and that can be like at
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  the showing. Like you could just pull them aside
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  in a room and just talk to them and say, you
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  know, well, you know, how's work going? Okay,
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  you've been there. Interesting. Oh, you're not
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  at this place anymore. What happened there? And
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  you listen to what their responses are, right?
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  And you kind of get a feel for someone's character.
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  And that plays a big role in how you decide who
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  you're going to rent to. Look, I tell this to
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  all our new clients. I'll put our record of leasing
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  up apartments against anybody's because we're
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  very thorough and we go through this whole interview
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  process with them. And our record is as good
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  as it gets because of that process. The ground
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  checks. So I recommend that everybody do that.
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  Again, you know, when you're talking about a
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  multifamily GP team that, you know, maybe that
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  person not doing that, but when, but you need
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  to train your site manager on to do that stuff.
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  Cause that's key and critical to keep getting
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  good tenants in who pay on time, keeping them
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  long -term, keeping the rents coming in and all
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  that stuff. So that's a major part, even for
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  like small time people who have their own property,
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  the interview process is critical in deciding
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  who to rent to. Yeah, I didn't even. So I don't
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  know about all the little pieces that go with
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  it. I just know what my two weeks of the burning
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  was like. But like I. I think that would be tough
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  for some for certain people that have really
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  strong personalities, because I have a really
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  big, strong personality and people either like
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  me or they don't. And I have a tendency to either
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  like people or I don't. And so that would make
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  it really difficult to have those kinds of. Interviews
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  with people because what if you just have a conflict
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  of personality? But this person could be a really
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  good resident and now you've screwed up because
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  you had a conflict of personality So then I would
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  wind up with a whole property full of people
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  that I mesh with personality wise But what if
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  they aren't really good residents? Yeah But is
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  that something that you do or you want to do
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  or do you just think that there are a lot of
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  people out there like that? I Don't know I bet
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  there's less than I think there are. It's just
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  I want to assume people are with me so I don't
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  feel so alone. Yeah. Yeah. Well, you know, maybe
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  that's like a little self -reflection too, right?
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  If a person wants to self -manage and they just
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  don't think that they're fit for interviewing
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  people, then maybe you are better off hiring
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  someone, hiring a third -party manager. Because
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  that's so critical. picking the right tenant,
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  I mean, can make or break you sometimes. You
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  picked the wrong tenant and you're in it for
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  a world of hurt. So you wanna make sure you,
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  if you can't, if you don't think you can do it,
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  hire someone to do it, hire a management company,
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  but it's critical, absolutely critical. When
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  I think about like our singles, I think. when
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  people live in singles or even duplexes in their
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  residential, in the rich residential area, I
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  think they're longer term tenants and they're
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  harder on the homes. Like we had a resident that
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  was in one of our singles here in town for, I
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  don't know, for several years and moved out.
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  And we went to go look at the carpet and I was
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  like, Oh, cause we still have carpet in them.
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  Right. And it was like, Oh boy. So I'm trying
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  to find somebody that can dye the carpet to match
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  the level of stain because pulling all the carpet,
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  it's like a 17 or 1800 square foot house, but
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  pulling all the carpeting that's in there and
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  replacing it is going to be incredibly costly.
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  And that's one of the that's one of the not great
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  things about residential is you can't spread
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  the cost out. Not the same way. Now, we have
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  a property management company in Lubbock that
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  will front the cost out. and they'll let us pay
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  off, which is super nice. I see your eyes. How
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  long they've been in business? Well, we've had
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  that house since 2003. Yeah, OK. You get since
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  07. So at least 15 years, but I'm pretty sure
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  they've been a business before that. Did I do
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  the math wrong there? 7 to 20. Well, that's that's
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  business, right? Yeah, that's risky business.
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  I mean, I would do that for a customer that I've
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  known for a long time or had a good relationship
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  with, I would start the rehab or something like
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  that. But for newer customers or, you know, that
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  that's risky because you do that rehab and then
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  they don't pay you or they sell out from under
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  you're in trouble. Well, I think if I remember
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  correctly, we signed some kind of an agreement
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  that said, like, it gives them first right refusal
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  if we sell or I think they could probably put
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  a lien on it if we don't pay. Yeah. which we've
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  gotten in a bond before. Like one time it was,
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  is it a furnace? I think it's anyway, HVAC went
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  out, head of your place. And that was like five
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  or $6 ,000, which they covered. And we paid that
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  off. Then we had a long -term resident move out
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  and they did like $9 ,000 worth of repairs, even
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  though we said, keep it at five. That was a hard
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  one, but we weren't about to sell to them because
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  we were like, they put us in this position to
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  make us sell to them. So we just scraped by,
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  we figured it out. But I know that's not the
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  norm because our property manager here in Wichita
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  Falls, I'm pretty sure they won't front out because
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  they keep, we have to keep some money on the
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  side so that they can make repairs and they can
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  make repairs up to a certain amount without contacting
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  us at all. And then they have to contact us if
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  it's over like four or $500, I think. But we
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  just found that by making sure that money's in
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  the side and letting them make those decisions,
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  repairs tend to get fixed faster. But the other
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  thing we've come into on the residential side
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  is like you really have to make sure there's
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  a lot of communication there so that your residents
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  know to call if something goes wrong. Otherwise,
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  they'll let leaks or drips or even foundation
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  issues go on longer than they should. And it
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  makes it harder to take care of later. And one
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  of our houses, because everything here is slab.
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  one of the houses like somebody was walking across
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  the living room and of course I said it's carpeted
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  and it was sloshy and somebody they thought they
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  spilled something at first and so they let it
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  go for a little bit finally we got the call and
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  they had to reroute up through the attic because
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  they can't like if there's not enough pipes sticking
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  out they can't do the pro press or the shark
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  bite or whatever so they have to reroute up through
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  the attic but it was a it was a slab leak And
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  so I just can't help but think if there wasn't
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  good communication, they might have left that
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  go on for weeks and weeks and weeks instead of,
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  hey, did we spill something? Oh wait, no, this
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  is still wet. We need to call. Yeah, like I mentioned
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  earlier, the communication is huge. The other
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  thing I love about the software nowadays is one
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  thing we don't do at all anymore. We don't allow
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  tenants to text us directly anymore. Phone calls
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  are one thing, but texting, we don't do that
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  anymore. the software program that we use, there's
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  a texting module built into it and it texts directly
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  to the phone. So they now know that they're texting
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  us, we receive those notifications and that conversation
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  is now documented right on their tenant page.
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  So that gives them a lot of confidence knowing
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  that they're definitely reaching us. The conversation
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  is documented. The work is going to get done.
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  All those things. It's so huge nowadays. But
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  we stopped allowing even our small, single -family
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  homes that we manage, we don't allow them to
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  text us anymore on our cell phones anymore. We
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  stopped doing that practice. Because then they're
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  going to text you and like, oh, I texted you
• 16:07
  at this time. Oh, I didn't get it. No, it's all
• 16:09
  documented right here on your portal. So that's
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  just another little tip. There is no more texting
• 16:15
  to my cell phone. Don't do that. That makes sense.
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  Cause like with the property that we recently
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  acquired in the first two weeks, residents were
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  like, Oh my God, you're actually taking care
• 16:26
  of our maintenance requests. And so I don't know.
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  Actually, I do know we went from res man to real
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  pay a real page. Okay. But, um, or one site,
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  I don't know. it doesn't matter anyway this program
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  is supposed to keep up with all of it too but
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  I think they print out the sheets and once the
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  sheets get printed out they get filed into like
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  this thing on the wall like what's at a doctor's
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  office on the front of their door yeah so I think
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  that yes and I don't think I think it's another
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  job of that on -site person not just the maintenance
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  person but like the leasing person to say hey
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  Are we getting our maintenance request done or
• 17:13
  is something staying in the back because you
• 17:15
  don't really want to do it? So you just keep
• 17:16
  putting it to the back and put it to the back
• 17:18
  because oh that's a plumbing thing. Look at that.