Latest / Short Term Rental Problems and Solutions / Bad Management Will Put You Out of Business, How to Find A Top Property Manager

Transcript

Bad Management Will Put You Out of Business, How to Find A Top Property Manager · Short Term Rental Problems and Solutions

• Jeremiah Noll: Admit it, you expected guests to act like you would. You expected cleaners to be professional, contractors to be honest, now you realize it's not all sunshine and five-star reviews. That means you're in the right place. A I get really frequently is how to find a great property manager. It's way more important to your success than most people realize. So today I'll answer this question from Quinn so that he can find the best of the best and maximize his return on investment on his investment property. That's because this is the community where we talk about the gross, awkward, and the operational messes, as well as the real strategies that help you keep going instead of quitting. Because you are not a quitter and this industry is somewhere where you can win. Welcome to Short-Term Rental Problems and Solutions. Let's get right into today's question. Jeremiah, know you don't manage property near my cabin in Holly, but I still feel like I need some help from a property manager. What questions should I ask when interviewing a property manager and is there a better way to find them than Google? ⁓ ⁓ there is. And I'm so glad somebody finally wrote in on this question. ⁓ I do get this question a lot, but it's mostly from like contemporaries, peers, other property ⁓ or realtors. There's so many property managers out there that are only looking at this as a six month relationship and you really need better than that. ⁓ need somebody gonna look at this as a five, 10, 15 year investment ⁓ of time and energy. ⁓ that they're investing into your relationship. They need to be willing to take good photos and take those photos over again and save those instructions and write up a guest book, all these different things that make for a good property management. And don't look at this as a short-term thing either for yourself because if you're just saying, I'm gonna start managing this myself after a year and I'm just gonna see and learn what they do, I'm gonna use them for that information, And usually it's investors who are looking in other marketplaces that they're asking me this question. And a property manager is a great person to ask this question of. there's a lot of reasons for that, You know, you gotta make sure that they're okay with that. If they understand that this is just gonna be a one year deal, then I think you're doing the right thing. But giving them the false impression that you expect them to manage this for years and getting them to make an investment of time and effort into your property really just self-serving. Anyway, another reason need to at this as a long-term strategy. Some property managers that are out there are just terrible ⁓ stewards ⁓ and so why this matters. I was actually interviewing to be the property manager of a property over in Pocono Lake. And it was a lakefront property that was previously under good management that was making the property owner around $60,000 a year. Gross. They, I'm sorry for the little ears in the audience, but they're just pimping out your house to the highest bidder. And they don't care how your house gets treated. There could be scuffs on the walls, rips in the carpet. There could be all kinds of issues going on. They need to be focused on the long-term health in this strategy of your property. This needs to be sustainable. They need to be building a business that's not gonna go out of business in five years, like 95%, right? So. And when he transitioned to a new property manager, that new property manager, for all of their flaws, were able to get the revenue up to $120,000 per year. Actually, it was more like $10,000 per month. He was only about like six months in when he decided to make a change. And that's why he was calling me. It's because operationally, we were a lot stronger than his current property manager, who was really just strong in revenue management. So in this situation, example that I'm giving you is like ⁓ ⁓ that's long list of things to not do. ⁓ Right? if today's episode sounded familiar, you're not alone. These are just challenges no one talks about when they sell the dream of easy passive income. But they're exactly the problems that make or break your operation. If you've got a situation you want to share them, please email me your question. Reach out if you're willing to call in info @ galvanized management.com big of a difference there is between some property managers and others, because some will make you $60,000 and they'll tell you all day long that you're maximizing your return on investment. And then others will make you $120,000, literally double, and they're charging you the same percentage. Now, a lot of property owners find themselves in the first category here where they are, you know, making good money, like maybe five grand a month. And... Your problem might be the next one that we break down and chances are you'll help a lot of other hosts in the process too. If this episode helped you share it with another host who's in the trenches, like and subscribe too so that we can organically reach more people. That's how we make the industry better. I'd also love to see you follow us on TikTok at Galvanized Investments and Facebook and YouTube at Galvanized Management. Until next time, stay steady, keep learning and keep building something real. This is Short Term Rental Problems and Solutions. and they're wondering what they can do to offload some of this work and they're saying, is it really worth the 20 %? Well, yeah, obviously it's worth the extra 20 % if they make you an extra 50%, right? So if they make you an extra 100%, then yeah, why would you not go with property management? So this is a really important question because there is a huge spectrum of performance and Some people are really just not that good at this job. And some people are really, really good at this job. They're like property manager geniuses. And how to find one of them can be like looking for a pot of gold at the end of the rainbow. As soon as you get close to where it was, no longer there. another good reason why this is an important question is things like compliance. So I actually, I'm a real estate broker and one of the agents in my team recently sold a house and that was managed by somebody who's really not a good property manager. One of the ways we know this is because the property owners were expecting their property manager to keep them in compliance with the township. And I had a conversation with the compliance officers in the township and they had no idea what this property was. So the property was the entire time it was under management. It was at risk of being completely shut down or facing heavy fines, like thousand dollars for the first fine, $1,500 for the second occurrence. So the property owners were at this risk because of the property manager they chose. ⁓ Nice little bit of extra info is that that property manager was only charging 15%. So yes, they were saving, I don't know, maybe four grand a year versus like a normal property manager that would probably be more like 20%, but they were making less money and they were still at risk of being heavily regulated. So they were just at risk of going out of business because of this. And it was really just because of the manager that they chose is just not a good manager. It seems like in Pennsylvania, anybody now can call themselves a property manager. I know of companies that only do landscaping and they call themselves property management. also Google's not a place where you can find this So let's talk about what most people do, because we're going to go through what most people do, and then we're going to get into what I recommend you do. people start searching on Google. They say, like, ⁓ me property managers near me. And find ⁓ some that way. A lot of those property managers are managing only long-term rentals, ⁓ or they're managing short-term rentals. ⁓ And it's difficult to know just from their website. A lot of times, you find their websites are really not well done, and that's not to be much of surprise either. Sometimes people will talk with ChatGPT, but ⁓ that ChatGPT doesn't know makes a good property manager and what doesn't. You're gonna actually have to prompt ChatGPT for that ⁓ and have enough options that ChatGPT can find. So ⁓ that's a mixed bag too. Some people will ask the realtor for referrals, but like oftentimes they bought the house with a who's really not that active. or doesn't sell a lot of short-term rentals. And that's its own mistake. they can, I mean, ask a local person for referrals and that's not necessarily a bad thing, but there's some things you got to consider there. Facebook referrals. How often do we see people on local Facebook groups like Pocono Lake United saying, hey, I need a good property manager. And all of a sudden everybody comes in. It's like, oh, you need to try this guy. Oh, you need to try this cleaner. Oh, I do property management. The little hand up in the emoji, right? So this is like really, really common and I don't take it with a grain of salt, okay? So moving on. So the second thing that most people do is when they're interviewing a property manager, they have all the same questions. I know this because I'm a property manager and I get these questions constantly. So is your percentage? How many rentals do you manage? How much do you think my rental will earn? What technology do you use? How much is the cleaning fee? ⁓ And... How many platforms are you gonna post my house on? Now, these are all like legitimate questions and all, but a lot of them can be like assumed. Like if you found a good property manager, then these other things are not really that important. The mistake a lot of people are making is they're trying to get to like the deeper questions, but they're asking very surface level ⁓ So what do you really need to about? you care about my success? How good are you at your job? And how or professional are you? But that still only scratches the surface. So how I recommend you search for a high performing property manager. And it starts with a plug. I'm not promoting this as a service. You can find other services for this. The one that I'm most familiar with is AirDNA. AirDNA, in case you didn't know, look at your listings on VRBO and Airbnb and booking.com and they look at those listings and they look at it today. and they store the information about how much each night was priced at. And then they look at it tomorrow. When they see it's blocked off, they assume it got booked. ⁓ mean, that's a very surface level, but that's how they do it. So they're trying to get an idea of how much money an Airbnb is actually making. That way that people can make decisions based on comps, right? They can figure out ⁓ much is my place gonna earn based on these other houses that are just like it. And trying to gauge how much those properties are earning based on the calendar day after day. So that's how AirDNA works. this, they actually have, I think, kind of an expensive subscription. I think it's a lot of money. You get a lot of value out of it, but only while you're focusing on it. So ⁓ I've subscribed AirDNA, and then I stopped my subscription, and then I started back up when I needed it again. ⁓ And think that you should do the same thing. Maybe just pay for a subscription, ⁓ cancel a month later, that sort of thing. So obviously can tell I'm not promoting AirDNA because they would not want to pay me. ⁓ to tell you to cancel after a month. But once you've got the information that you need, you really don't need it anymore. if you're gonna use a professional property manager. ⁓ lot of the information that AirDNA is gonna give you is just gonna cause you to ⁓ your manager. Let them do their job. Anyway, ⁓ get a subscription, go on there, and look at your local marketplace. All of your listings. So gonna use the Poconos as an example. There's like 8,000 listings. So organize it, meaning sort. based on the top performers, the ones that are making the most money. Now you can add in some filters. You can add in things like the number of bedrooms. You can add in things like know the location. You can filter down to just your town even. But a lot of those things are not really gonna help this next step. So once you find those top performers in the area, take the top like 20. I would right click and open in another tab. That way you've got 20 tabs of the top Now you go into their Airbnb profile or their VRBO profile, on there, ⁓ So you're to go into those profiles and you're going to look for these ⁓ signs. And are clues leading you back to the property manager. ⁓ So number look at the name. Who is the host? Who is the cohost? Look for patterns. If you see that Joe is a cohost on this house, but then there's like three other houses in the top 20 that Joe is also a cohost on, then there's a good chance that Joe is actually a property manager. ⁓ So keep data. maybe write down the names of all these different hosts that are in your area that are hosts of the top performing properties in your region. ⁓ you heard like where there's smoke, there's fire. So you're using AirDN A to figure out where the fire is. And then once you find that fire, you're going to find out who's tending and building that fire. That's the idea. So you oftentimes reverse engineer from the Airbnb listing if this is a professional property manager or something else. So click on their profile, you can view some information about them, what decade they were born, what their favorite music is, you know, whatever, all this unnecessary information. But what you're actually trying to get to is little clues. Like, do they mention that they're a realtor? Do they mention that they love living in the mountains? If it's a mountain marketplace? Do they have a name like Galvanized Management or Calibrate Estates? do they have in there that they're a real estate agent for Remax Property Specialists? Because these are all things that you can use to find them, right? So it says that they are Kelly Rakowski, don't know, ⁓ that's made up name. But if says that they are Kelly Rakowski from Remax Property Specialists Pocono Lake, now you can Google that. Once you Google it, then you can find their cell phone number usually. Sometimes you can find their office phone number ⁓ and you can them. to ask them if they're professional managers. If they're professional managers, when a good time is to interview them. ⁓ you found this listing and it's the reason why you're interested in using them for management. This is like a really good strategy ⁓ my opinion. I know I'm saying it out loud, but is what I recommend that you do. Because you can look through those top 20 listings ⁓ and can find maybe three or four that are actual property managers ⁓ or who are considering becoming property managers. Now I definitely would not message all of them through Airbnb. That could get you flagged. Part of the reason is are not supposed to solicit services through Airbnb. It's just supposed to be for guest communications. ⁓ if you message the it's going to show up as like a, know, this guest kind of a thing. ⁓ The host now has to respond ⁓ and ⁓ that's what you're trying to do. You're to in touch with them some other way. So if they're property manager, then part of their profile, part of their naming convention is going to help you get in touch with them. And that's all you're looking for. If it's difficult to get in touch with them, they're probably just a property owner who's operating their own house or something else is going on. ⁓ I'm not here to explain all the different things that could be going on, this is a good way to find the people who are attending the biggest fires by looking at from the smoke and the signals and here's Air DNA and the listings that are actually doing really well. So if you can find one that is doing really, really well, then here's some things I would expect from that. I would expect them to have a good handle on property management, on systems and people, and that they actually have high standards, that they know the secret to success, or at least in that listing, what made it successful. So these are all things that lead you towards finding a good property manager. Now, is this the only way to find them? No. I'm also gonna recommend that you look for referrals. So consider talking to your agent. your agent might not be ⁓ active in real estate. ⁓ Or maybe were not from the area. Maybe you live in Philadelphia and you used your brother to be your agent in the Poconos. That's a bonehead move. I'm sorry if I offended you. And I'm sorry if you're the brother in Philadelphia, but at the end of the day, you need a local agent that knows their business and is specialized in this investment category if you're going to find a good property, a good deal. But whatever, we're past that. We're not talking about finding the investment property or choosing a real estate agent. If want to know more about that, I've got some strong opinions and some good advice on it too, so email me. But moving on. You can check with any real estate agent. You might actually be getting contacted by real estate agents who are interested in selling your property. The people who laud themselves as being short-term rental or real estate agents, ⁓ asking on Facebook who's the real estate agent that knows the most about short-term rentals. ⁓ You're necessarily looking to sell, but these are people who build their business on referrals. So what you're doing by getting in touch with them is asking them if they have referrals for property managers. there's a good chance they are one or that they have one or two or three, they refer their clients to. It's a referral business. And if they don't have good referrals, then their buyers are not gonna buy a second or third property, right? So that's one good way. Another one is builders. I know in my area, there's a bunch of builders that kind of specialize in building like A-frame chalets and contemporary homes, the things that are gonna rent really well. Those builders probably know a few property managers they can refer you to and they might be happy to just send you a few phone numbers, but that's another source. Investor groups, going to like bigger pockets like that, or investor groups that are on like Facebook or Instagram or whatever. like those are some other places where you might be able to find a good property manager. another one is looking on Google and asking the property managers. Mostly nobody thinks of this, but a great question to ask a salesperson and specifically a property manager in this situation ⁓ ⁓ would you consider your top competition? And then listen, because if they don't know who their top competition is, ⁓ they're probably not all that great. They should know who they're competing against. If we're talking about a product for sale, that's a little different. know, now it's a widget and you're thinking about who else makes a widget like this. But when you're talking about services like property management, like roofers know all the other top roofers. They know who they're losing jobs to and they knew who they're competing with. And that's part of being a good business owner, right? So part of being a good ⁓ is knowing who your competition is. ⁓ they should be able to articulate and tell you like three or four right off the top of their head. And ⁓ Allow them the opportunity to save face and tell you why they're better than those competitors. I think it's right thing to do anyway. that'll give you a good idea of what those property managers think makes a good property manager and what doesn't make a good property manager. ⁓ this is all just so you can build your list. All right, the going on Air DNA, the asking for referrals, it's now helping you whittle down a couple of property managers that you're gonna call. and schedule an interview for. These are probably busy people. If you just call them up and say, I'm looking for a property manager, the chances of them giving you free time, ⁓ they're free, are slim. Call, text, email, whatever. Don't rely on just one form of communication because you've already done enough work to get to this point. You might as well set an appointment. So contact them, ask, is this a good time to talk? And then be ready to interview them. And that leads perfectly into my next point, how I recommend you interview that property manager. Question one. Hey, so tell me about your team. You ask this question, leave it completely open-ended. Allow them to brag about their team, about their systems, what makes them unique and special, because this ⁓ key. What you're listening for in this conversation, what you're listening for in this example is ⁓ kind of ability do these guys have to scale? Are they able to grow? ⁓ they able to grow with me? Or are they already too big? Have they outgrown their shell? ⁓ What kind of challenges am I going to have to face because of them and their team? to ⁓ they manage stressful, busy seasons. We all get ⁓ stressed out during the 4th July, ⁓ Day, Memorial Day. For us in the ski areas, Christmas, New Year's, and Day. ⁓ All those different holidays. And if they can't articulate for you what their busy season is, a noob. They don't know what they're doing. But they can all tell you what the busy season is, and can ask thoughtful to kind of probe into what is your plan for when things get really busy? Like, what do you do in order to be able to handle all of it, right? Another one is you're trying to listen for accountability. Their team should be accountable to somebody. People don't really do well without accountability. If they're relying on like 15 subcontractors that don't take well to feedback, constructive feedback, then that tells you that there might not be a whole lot of accountability there. ask them about their team in order to get all that other information. This gives you an idea of how professional they are. If they have the ability to handle another property. ⁓ they care about their homeowners, if they care about their team. Next Tell me about your best performing properties. Now you found them possibly because of AirDNA. So you already are familiar with one of their listings that they did a fantastic job, but there's also a chance that they had nothing to do with the success of that listing. And when I say nothing, like they could just be like micromanaged by the property owner. This does actually happen in this industry ⁓ somebody is given a blank check. Basically, they're being told, hey, do this and this and this. I already set up the house for success. Just don't screw it up and you'll make great money. And the property manager is just a little pawn in this whole chess game. They don't know what they're doing. So when you ask this question, listen for what is their strategy? What part did they play in the success? Why is that house successful? And how you can learn from that in order to apply those things to the success of your property. You're also looking to see is this person the team captain or are they like the tight end, just running the plays that the quarterback calls. The next question I recommend asking is how do you go about choosing contractors for a property? Now this is a property manager. going to be entrusting them to solve ⁓ the problems associated with your rental. ⁓ you've gotta trust their judgment when it comes to solving problems. so them telling you how they choose cleaners, at what point time to fire a cleaner and hire a new one. how they choose contractors, and even utilities like collecting trash. Like are all very important functions that property managers are outsourcing. Generally speaking, they're outsourcing this to somebody. And you've got to find out from their perspective, what qualifies somebody to work on my house? Like ⁓ know what judgment I would use to choose somebody for this, but what about you? You're the property manager. You've got all this experience, right? Tell me how you choose contractors. ⁓ is it just because they're available and reliable? Or is it because they have standards like yours? Is it because ⁓ actually care about their job? Or is it because they're really excellent? Did you have to recruit this one? I've seen property managers out there that actually recruit cleaners because they're looking for somebody with really, really high standards and reliability, and that's sometimes very hard to find. So while we're on the topic of reliability, ask them about their communication style. So for communication, what should I expect from you? Now this is their opportunity to tell you. Every month when I do my account statement, I review the account with you. I call you or I send you an email or there's a description of this. When there's a problem, I contact you in this way, blah, blah, blah, blah. You know, as a property manager, I actually have a matrix of communications. It's people and their job titles and their phone number and their email. And then we have a whole nother matrix of who to contact first, second, and third in what situation. So that way it's very clear, it's laid out, it's a record that can update and change so that if we have somebody who I have to let go or if we change their title, ⁓ gonna edit that document as well. So the homeowner knows who to contact when and for what reasons. And my homeowners know that they can CC me or add me into a group message with any communications. especially if it's something that's like time sensitive or urgent or they want my personal perspective on it. So for communications, it's important that you know that they're gonna communicate with you because if they take a month to respond or if they're just really not that motivated to put time and effort into you or your property, is probably not a relationship that you wanna get into. next question, how often should I expect you personally to inspect my property? Now this is going to throw a lot of ⁓ managers ⁓ a loop. ⁓ gonna throw them off because again, is ⁓ pet peeve. There's a lot of property managers, even ones that I'm competing with that are in Colorado, they're in Florida, they're in Delaware, they are sometimes a plane ride away from coming to visit your property. So how often do you think they're actually gonna walk through your house? That's right, almost never, almost ⁓ never. they think that they're doing a good job of managing your property because it's always booked. And because it's always booked, they can't find time to get in there. But that's when they are needed the most. So think about their location and if they are actually going to be not on site, like some of the top property managers in this area live in, live an hour, two hours, three hours away from the Poconos and they might own property here, but they're trusting somebody else to like to manage all the operations sometimes. So some of them have an operations manager. I've seen this becoming really popular lately because they recognize that, you know, to manage property properly, they have to be site. They have to be there, they have to actually inspect, they have cleaners accountable. These are ⁓ property managers that hiring somebody called an manager. Now this operations manager is their boots on the ground. Now if you are interviewing not that person, then guess what? you're not getting the full picture because you wanna build a relationship a person who's actually walking through your property. you need to interview the inspector, the operations manager, the one who's actually solving problems, the one who's boots on the ground, the one who's local. That's the one that you need to be interviewing, not the salesperson or not the business owner who's located in Colorado or somewhere else. You need to be talking to the team that's actually gonna be solving problems for you. So that leads me to the next thing, like check and see you can do an inspection, ⁓ that you'll actually do a video call with the person who's doing the inspection. Again, multiple reasons for this. It's not just to hold them accountable. It's also because you wanna see what they're looking for. You wanna see that they're detailed. They should it's their job. You wanna see that they are qualified and that this gives you also opportunity to build a relationship with them. you wanna see what their quality assurance is like, their QA, right? ⁓ any industry should have some sort of quality assurance. And if your property manager ⁓ relying on guests complaining about their rental to tell you that there's a problem, you have a terrible, terrible property manager. I'm sorry to say it. I hope you're listening very closely. Obviously calling and talking about my opinion, but my opinion... is that you are completely negligent if you are trusting a property manager who never shows up who doesn't care about quality assurance. See, nine out of 10 guests are gonna walk right past that crack in your tile floor. Nine out of 10 guests are gonna go and notice all the cobwebs and say absolutely nothing. It's that one out of 10 that's gonna leave you a three or four star review that seriously impacts your revenue. it's because the property manager's not walking through it themselves to get ahead of these problems. ⁓ can't tell you how many times I've stayed at a rental and the host has said, thank you for bringing these up. Guests, don't tell me about these issues. I'm really thankful that you told me about the issue. I'm gonna take care of it as soon as possible. But what does that tell you? That tells you that the host didn't know about this issue. Some examples, lots of hair in the shower or slow flowing shower drain. If these things are issues, a lot of guests will not tell you about the problem. They just deal with it like it's normal. You know what? The other day I stayed in a green roof in and they were 40 bucks for the night and I didn't care that the mattress was terrible. Did I report it to the people at the front desk? No, I figured they probably wouldn't care. They're running a slum and their cheap price It's why I'm not gonna complain. It's why I'm not going to ⁓ say anything to anybody because figure they don't care about it. I don't care about it. I got my $40 worth, an uncomfortable night's rest. and I was out of the rain, right? Now, did this actually happen? No, it didn't. I didn't stay at a green roof inn But you get the idea, right? When you're talking about an Airbnb experience, you wanna be guest focused, you wanna provide five star service every time. Now, if you don't have standards like that, then this is not the podcast for you. I don't know why you're listening to it in that situation. If you have high standards, if you want to get the most out of your property, if you want to elevate this industry the way I do, then you should have these high standards. And what you need is a property manager that also has high standards. Because if they are okay with all the cobwebs, and if they're only stepping foot in your property after enough guests complain about issues, then are they even managing a property? Or are they just trying to get as many rentals in there as possible? Are they looking at it long-term or are they looking at it short-term? Because this is a property, it's an investment property. You didn't underwrite this to own it for one year. You didn't underwrite it to own it for two years. You're looking at what can I do? I'm gonna add a hot tub, I'm gonna add a sauna. These have an ROI that stretches out two, three, sometimes four years. I'm investing into this property. Let me find a property manager that has a long-term perspective. They're going to be in business five years from now and I'm not gonna have to keep finding a new one. Breaking up is hard to do and if they start lowering their standards or they get too busy to manage your property well, there's there's major implications and I think that you need to get out ahead of this. You need to find a property manager that cares about quality, that's doing inspections because if they're not doing inspections, you're leaving yourself liable for all these problems and. I know I have another episode about this. Your cleaner can't be the one who's responsible for walking through and doing quality assurance. They should do their own quality assurance. But what's your cleaner concerned about? They're concerned about their job. Is the house clean? Did I change the sheets? Did I fold the laundry? Did I organize my cleaning closet the way it belongs? They're not telling you that a door handle is loose. That's not necessarily their job. Hopefully it's part of their job, but that's actually something that your property manager should be taking responsibility for. the door handle is loose, what happens? Well, the door handle falls out. Now the guest can't open the door. So now a little child walks in, pulls on this thing, the screws come out, now they're locked in the bedroom. This becomes an emergency. They might call the fire department, they might call the police. You don't know what's gonna happen now. And that's all just because your property manager wasn't walking through the house quality assurance check. That's ⁓ frustrating. I'm thinking through this scenario for you. and it could actually happen. It's never happened to me, but it could actually happen. And it's a terrible thing to happen, but it's so avoidable. That's why it's so like, that's why I care about this so much is because it is so avoidable that this doesn't need to happen. So I'm just telling you, when you're interviewing property managers, find out what their system is for quality assurance, how they can make sure. that the guest is not checking into a house that's full of dust, that has pet dander all over the place, that there's a foul odor, or like, and a lot of those property managers will just say, ⁓ I've got a fantastic cleaner. He or she would tell me if there was ever an issue, but they're not checking the roof for missing shingles. They're not looking in the driveway, like they'll step right over that puddle in the driveway, and it was left that way because all winter long, your plow guy was pushing all the gravel right to the end of the driveway. And now there's a big puddle that guests are going to complain about, or they might not. See, nine out of 10 guests are not gonna complain about that puddle. They're just gonna assume that's the way it is and walk right around it. So now the guest experience is being impacted by something that your property manager has no idea about. And I can't tell you how many inspections I've done for other property managers of confidentiality, but where there were... Horrible issues going on in the property that the property manager was completely unaware of that impact the guest experience and Just present this humongous risk and some of the property managers believe it or not that have high revenues are watering down the chowder me qualify that ⁓ have you heard of the idea of somebody buying a diner that's known it's popular and it's making money because of its quality like lobster bisque or its chowder. And to make more money, they make the same amount of chowder, but then they water it down so they can sell it, right, for the same price, but now it's watered down. They're ruining the one thing that made them successful. And property will do this sometimes because they're focused on short-term gains. You're going in on a contract with them with the expectation that you're gonna manage this for years and their expectation might be that they're only gonna manage it for six months. that they're gonna manage it through the summer. There's no guarantee of next winter. So they're going to water down the chowder because they don't care how it affects your property. The practical ways that this actually takes effect for you and your property is like all the scuffs on the walls, the furniture falling apart, things like this that can get them through, like they'll put band-aids with duct tape on problems in order to solve them for now so that they can continue charging these high rates for guests. I'm sorry, but there's so much in this industry that you might not be aware of and it's best to become aware of it now while you are looking for a property manager than to assume that all property managers are bad like this. hear some of these horror stories from people like me, you should realize that there's actually really good property managers out here and some of them have trouble differentiating themselves against all the bad ones because they actually have systems for things like this. They actually do care about your property. They actually do walk through your property frequently. And so many times, people are asking those stupid questions that I mentioned earlier, what's your percentage? What platforms are you gonna place me on? And how many properties do you manage? They're making their decision based on something like that instead of actually asking real important questions like, what is your quality assurance like? And then listening. because this is such an important thing. Next one, let's move on. What are some tasks that you can handle so that we don't end up needing a contractor? Think of things like light bulbs getting replaced, extension cords being used or replaced, replacing an area rug. I'm looking at an area rug right here in this rental I'm sitting in and it needs to be replaced. So I'm making a note, we're gonna order a new one. It's like a $95 area rug. I'm gonna come over, roll it out. Perfect. Am I gonna have to charge for this? Absolutely not. Because that's what a good property manager does. They'll do the little tasks like changing a light bulb with no charge. I know so many property managers though that do not visit the property. They don't have an operations manager. They are relying on subcontractors for literally everything. And the way this affects you as a property owner is that they pass through those expenses. because they expect that they can do this job from like Aruba or from the Philippines. And I'll get on that in another minute, but they expect that they can just do this the easy way and never actually show up, never actually be on site and never actually solve any real problems. And that bothers the hell out of me. You're a property manager. You can go over there and unroll the rug. This is not a high skill task, but what do they do? They ship it to their cleaner. and they expect the cleaner to roll out that thing. So now they're using some of their favors, some of their goodwill in order to get this done, but a lot of them are just saying, oh, just charge me an extra five or $10. Can you do that? And the cleaner is doing it and charging an extra five or $10. And now you as the property owner are having to pay that invoice and you're getting nickel and dimed to death. And it's death by a thousand cuts. five bucks to roll out a carpet and $10 to tighten the handle on the grill, things that a property manager can and should be able to do. I can give you an example from earlier today. There's a toilet paper holder on a drywall wall and it's getting loose because anchors that it was installed with came with ⁓ in the kit. So when it was purchased, came up with these ⁓ little plug things. So getting loose. ⁓ So do I do? I take out my toolbox because I drive around in my truck with a toolbox. Why? Because I'm also a contractor. But even if I was just a property manager, I'd still have some tools, some simple tools. And this problem can be solved simple tools. All I needed was the right size Allen key ⁓ and Phillips head screwdriver. So I took this thing apart, took it off the wall, took those plugs out of the wall, ⁓ and I replaced them with the kind I like to use, the drywall anchors that screw in, because they're actually way better and stronger. ⁓ And I screwed everything back in. put it back on and it's all fixed. Am I gonna bill the property owner for that? Absolutely not. Because I think that part of my value as a property manager is that I'm able to solve problems like this. I know how to solve problems like this. And even if I have to rely on somebody else to do it, and they give me a $25 quote, I'm gonna be like, that seems a little bit high. You know how easy this is, right? Yes, it's very easy. They give you a $250 quote, they're just taking you for a trip. And some of these property managers, are charging you as the homeowner 10 % on any invoices that they get. So their incentive, if you think about it, is actually to get those billables as high as possible. This reminds me of a gentleman I interacted with maybe six months ago. He is a owner of a short-term rental that was converting into a long-term rental. And if you listened to last week, you heard an episode on conversion, short-term rentals to long-term rentals. So check that out if it's something you're thinking about doing. ⁓ he said, no, Jeremiah, I'm not thinking about short-term rentals because I've already played that game, you know, the game where everybody else makes money except for you. And I'm not surprised because again, there's a ton of property managers in this industry that are just greedy little operators and just trying to take you and your shirt for all it's worth. And if they can get a high performing property that earns $85,000 a year, and they can siphon $85,000 a year out of that property where you barely make anything or even, God forbid, lose money, that property manager's getting rich from your misfortune. That should scare you into following some of these recommendations on how to hire a good property manager. because it happens, it happens more than you know. And oftentimes it happens in a way where the property owner blames themselves. So they don't leave a review, they don't tell anybody their story, they just quietly quit. And I see it too frequently. seeing it one time is more than enough. The last question on this level of the interview ⁓ is What is your pricing strategy generally? ⁓ So ⁓ in ⁓ normal cases, how do you price a property? So should be able to talk what steps they take, what your potential are be. should be able to tell you based on other examples of properties that they've onboarded. What their strategy is for pricing the property accurately. If they're just going to post it up on there and say Airbnb thinks this is a $213 night, so I'm gonna charge $213 for it, then you are not looking at somebody who knows anything about revenue management. They should have a clear strategy. They should be able to talk to you about price labs or dynamic pricing. They should be able to talk to you about their pricing tools. which one they chose, why they chose it, they should really be able to get into this, this information with you in an intelligent way that can communicate value to you, that you know that this person knows what they're doing and they're not asleep at the wheel. Some property managers will just put it at $120 bucks every weekday, $250 ⁓ weekend, and it's the same amount all year long. And what ends up is there's weekends that you're overpriced and there's weekends that you're underpriced. And your guests are not booking the ones where you're overpriced. They're only booking the ones where you're underpriced. And if they're only booking the ones where underpriced, then you're leaving money on the table. And if they're not booking the ones that are overpriced, then you're also leaving money on the table. So if you can just adjust everything based on its actual demand, then you'll actually not be leaving so much money on the table. And you'll be consistent year round and you'll be consistently booked. So a great question to ask your property manager because some of these property managers are just property and they know enough about operations. but they don't know anything about revenue management. Other property managers are just these like white shirt, of white collar people, and they don't get into operations at all. And I feel like that's an issue in American culture, is that some people just, you know, focus themselves in on one identity or another. And what you're actually looking for is somebody who can do both. Somebody who is that white collar ⁓ genius that knows revenue management, technology, and everything else. as well as is willing to get their hands dirty and really get into the mud. So on. So the next step, so after you've gone through all of this and you feel comfortable hiring them, what I want you to do is meet them in person. ⁓ is the beginning of a relationship and it should be made before you make a commitment to have them manage your property. Meet in person, treat this relationship like a partnership. They are stakeholders. They're stakeholders just like you are. and you want them to succeed, but you also wanna build some goodwill. You wanna be their favorite property owner, right? So walk the property with them, listen to their ideas, listen to their passion, listen to their stories, make a connection, find a way to offer value beyond just money. Remember favors will get you favors. So think of ways that you can do favors for your property manager so that they feel comfortable giving those favors back. because there's gonna be plenty of times throughout your hopefully and prosperous relationship ⁓ you're gonna be calling in a favor. It's like, Joe you know we can't find a contractor to go over there. Could get out of bed and go help that guest get back into the house? Like we can't find a locksmith. So can you go over and do that? if you've done a whole bunch of favors for your property manager, then you're much more likely to get them to say yes. But if you've done absolutely nothing for them, then they feel like the balance in this relationship is a little skew and that they've done you a lot more service than you paid for. So build a relationship, find out what motivates them, find out what would be a win for them, find out how they would like to grow and see what you can do to help that happen. Now some of them don't want to grow, but you got to figure out what motivates them. lastly, and I'm going to go through this quick. The list of things to not do. From my perspective as a property manager, I'm gonna go through this quick Do not treat your property manager like a replaceable widget. Breaking up is hard to do. It's not just like you can replace one with another real easy. ⁓ Do not assume ⁓ that your property is worth their time. Assume that their time is valuable. and it's worth more than yours. Coming at them in this humble kind of way is going to help you find a good property manager. Do not assume that every property manager is interested in taking on another client. It's not necessarily even about time. It's about what they're willing to do and if they're already at their limit. Do not accept a property manager with standards that are lower than yours. If their standards are lower than yours, you are setting yourself up for failure. because you're never gonna be happy with what they've done and that is going to be communicated through your tone, your voice, and your words. Over and over again, they're gonna feel like they're failing you, so why try? Do not negotiate their fee. You get what you pay for. If they charge all of their other clients 25%, you don't wanna be the only client that they're discounting their service for because they're only charging you 20. Do not negotiate their fee. You might be able to brainstorm different comp structures in order to add incentives. But that is beside the point. Do not assume that 20 years of experience is better than three. Just because somebody has experience, like this industry is changing constantly. The algorithm is changing constantly. We've now got AI to deal with. And somebody who was in business 20 years ago might be so averse to technology that you're gonna be at a disservice because of it. Long, like two decades of experience is not necessarily better. do not accept a property manager who prices every weekday the same amount and every weekend the same amount. That is a big red flag that they don't know anything about revenue management. If their portfolio is spread out into multiple marketplaces, then you need to make sure that you interview the specialized local team and make sure that there actually is a specialized local team because that's actually the one that you want to build that rapport with. Do not focus on the short term. This is often done at the expense of long term.