How To Be An Awesome Profitable Landlord

Blog BiggerPockets Real Estate PodcastBiggerPockets Podcast 036: How to Be an Awesome and Profitable Landlord with Kevin Perk

On today's episode of the BiggerPockets Podcast, we look at the topic of landlording and get some great advice from long-time landlord Kevin Perk. Kevin is a very successful investor from the Memphis area and has a real good grasp on finding and dealing with tenants as well as some unique methods of financing his properties, getting rid of bad tenants, and building wealth. There is a lot of really great tips and advice for anyone looking to grow their buy and hold real estate business.

Read the transcript to episode 36 with Kevin Perk here.

Listen to The Show on iTunes (Preferred Method!)

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Listen to the Podcast Here:

In This Show, We Cover:

How Kevin finances dozens of properties with creative financing
Private lending and methods to use commercial financing to invest
Making offers that get accepted
The three things that turn a landlord into a slumlord – and how to avoid them
Online technology to help attract and manage tenants
Signs of future bad tenants
How to fill vacancies during the holiday season
The best and worst parts of being a landlord
Real estate clubs: determining the good, the bad, and the ugly

Links Mentioned in the Show:

Books Mentioned in the Show:

Rich Dad Poor Dad by Robert Kiyosaki
Cash Flow Quadrant by Robert Kiyosaki
The E-Myth Revisited by Michael Gerber
The Book on Flipping Houses by J Scott
The Book on Estimating Rehab Costs by J Scott

Tweetable Topics:

Don’t drop your standards just to quickly fill a vacancy. (Tweet This!)

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When investing in real estate, have some cash reserves. (Tweet This!)

If you bet on appreciation – you are going to lose. Real estate doesn't always go up. (Tweet This!)

Connect with Kevin:

Kevin’s BiggerPockets Profile

Kevin’s Blog: SmarterLandlording.com

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By BiggerPockets Real Estate Podcast

Real strategies that work for real people seeking to build wealth through real estate investments. Co-hosted by Brandon Turner and David Greene, this podcast provides actionable advice from investo...
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51 Replies

Chris Haas

Replied about 7 years ago

Nice episode, very informative. I like the idea of the pricelist / expectation list for cleanup when a tenant is moving out.

Kevin Perk

Replied about 7 years ago

Chris, Thanks for the ind words. The price list is a big help. Seems to be a good motivator. Thanks for listening, Kevin

Simon Lloyd

Replied about 7 years ago

Great show Kevin! Would you be willing to share (post or pm) the itemized repair breakdown you use? Such s great idea! Thanks for many great tips and information.

Kevin Perk

Replied about 7 years ago

Simon, I will work on just such a blog post in the future. Thanks for listening, Kevin

Marina

Replied about 7 years ago

Great podcast. I loved the property management software recommendations. I also loved how clearly Kevin articulated his renter demographic of young, urban, digitally savvy renters. Great approach.

Kevin Perk

Replied about 7 years ago

Marina, The software has been a big help to our business. Technology is amazing these days and it really helps us connect with our tenant base at all stages of the business, from advertising, to rental applications, to rent collection and maintenance requests. Thanks for listening, Kevin

Tom Sylvester

Replied about 7 years ago

I agree. One of the best things that I heard in the show was that Kevin was very in tune with where he wanted to invest and what demographic he was targeting. Often times, people will try to advertise in a way that is different than their demographic (ex. advertise online when locals read the paper). Kevin describes how it should be done to maximize return. Thanks for sharing Kevin!

Kevin Perk

Replied about 7 years ago

Tom, Very true. You need to know your market and how to communicate with your market to get the best results. This make take a little trial and error to find the right media but once you find it your results will increase. Thanks for listening and commenting, Kevin

Marie

Replied about 7 years ago

Great episode! Kevin, How does it work when you collect the rents and then you pay your own bills? Do you pay yourself a salary or if you need to take $500 to pay a bill, you take it from the account where you collect rents? Also, are your properties in LLC? I assume not, based on how you’re getting loans? Thanks!

Kevin Perk

Replied about 7 years ago

Marie, We pay ourselves a salary and some of it is loan repayments from money we personally loaned to the company for start up and investment costs. My initial properties were not in an LLC as we could not get loans in an LLC at that time even though we had set one up. Today the commercial loans are made to my LLC so the properties are held by my LLC. Do you need an LLC to start or grow this type of business? No, I do not think so. We would have been fine w/o one. Great questions. Thanks for listening, Kevin

David Moore

Replied about 7 years ago

Hi Kevin, I have long wondered how you go about rejecting someone you don’t want to rent to when the basis is their occupational field, their general manners, etc., do you give your actual reason or simply flat out reject them? And what do you tell them if they want to know why? How do you avoid being accused of discriminating and how would you answer an accusation if the plain answer is you just didn’t have a good feeling about someone? I also loved the idea you gave of providing tenants with a detailed and priced cleanup list before vacating a property. Is there any chance this exit checklist could be posted here on BP? Great show, I really enjoyed it!

Kevin Perk

Replied about 7 years ago

David, You can avoid discrimination charges by having your criteria written down and in your files so you can pull and show them quickly when asked. For example, you may not want rent to lawyers. If not, simply write that down as part of your rental criteria (No Lawyers) along with your credit, criminal and other criteria and keep it in a file. When someone calls about an apartment, as part of your pre-screening, ask where they work (Always ask the same questions to everone who calls). If they say attorney, simply tell them it is your policy not to rent to attorneys. If they say “Well, I will sue.” Say, “That is why I do not rent to attorneys.” Attorneys are not a protected class and this is perfectly legal AS LONG AS YOU DO NOT RENT TO ALL ATTORNEYS, NO EXCEPTIONS. IF YOU MAKE AN EXCEPTION YOU ARE POTENTIALLY BEING DISCRIMINATORY! As for other criteria, a ranking system works. Simply rank potential tenants from 1 to 5 on neatness, manners, etc. Then add up the score. The highest score wins. Just document why you gave a low score such as car full of junk, etc. Hope that helps. If not let me know. I will see about the list in a future post. Thanks for listening and commenting, Kevin

Jeff S

Replied about 7 years ago

Thanks Kevin for the great podcast. Notice you said LLC as in one. Having a business that gets loans and is building a name needs to have a continuous name but you hear the advice to put every property or a certain amount of equity, say 250k, in a new LLC. Have also heard people regret having lots of them because of all the extra work. What is your philosophy?

Kevin Perk

Replied about 7 years ago

Jeff, Good question. I think it is more trouble than it is worth for most. For more on my philosophy, see here: https://www.biggerpockets.com/renewsblog/2013/03/25/is-incorporating-worth-it/ Thanks for listening and commenting, Kevin

Kevin Perk

Replied about 7 years ago

Michelle Madtes

Replied about 7 years ago

Hi Kevin, Thank-you for sharing that valuable information. I am a newbie and I learned so much from you 🙂 I especially loved the idea of sending that list to tenants that are leaving. I wish you every success for the future. Thank you again, Michelle Madtes Also thank-you to Joshua and Brandon….you are “awesome”

Joshua Dorkin

Replied about 7 years ago

Thanks Michelle! We are indeed! 😉

Kevin Perk

Replied about 7 years ago

Michelle, Thank you for the kind words. Remember, we were all newbies once! If I can ever help, let me know. Thanks for listening, Kevin

Kevin Perk

Replied about 7 years ago

Awesome yes. Modest no. 🙂

Karen

Replied about 7 years ago

That was so good! Love the podcasts, guys. Kevin, you are awesome! I hope to start purchasing cash flow property and become a landlord and I so appreciate hearing from someone who has it figured out. Brandon and Josh, I love the “fire round”? That’s nice, keep it coming guys, good work and it’s very helpful. –Karen

Kevin Perk

Replied about 7 years ago

Karen, Thank you for the kind words and thanks for listening, Kevin

Shaun

Replied about 7 years ago

Good podcast. Interesting points all around. Like others I would be interested in seeing a copy of the itemized check out sheet. BTW I appreciate the Scrooge McDuck Reference, you don’t get enough of those these days! 🙂

Kevin Perk

Replied about 7 years ago

Shaun, I think I showed my age with that reference. 🙂 I will work on such a post in the future. Thanks for listening and commenting, Kevin

Al Williamson

Replied about 7 years ago

Kev, You made me proud to be one of your blog subscribers! Buy and hold is cool!!!!!!!!!!!!!!!!!!! Paying off rentals and not counting on appreciation is HOT!!! Thank you for representing us non-flippers with class!

Kevin Perk

Replied about 7 years ago

Al, Yes, buy and hold is cool! To be fair though, I have seen some pretty nice checks come to some flippers I know. But you are right, the key is not to bet on it. Diversify with some buy and holds for those down times. Checks are a nice bonus, but cashflow is king. Thank you for the very kind words. I do appreciate them, Kevin

Abbey

Replied almost 7 years ago

Hey Kevin, Great podcast! Thanks for sharing your thoughts and ideas with us all. I thought the clean-up/move-out price list was a great idea. Do you have a copy of what you use? I would be really interested in taking a look at it. Thanks! Abbey Wright

Kevin Perk

Replied almost 7 years ago

Abbey, Thanks for listening and commenting! Look for the list in an upcoming post. Kevin

Abbey

Replied almost 7 years ago

Great! Thanks!

Tiffany

Replied almost 7 years ago

Hey Kevin, great talk – thanks! Visited your website and noticed you have it all set up quite nicely. I’d like to do this for myself in the near future, but have run into questions of LLCs and business-legal stuff. May I ask if you have each of your properties set up under their own LLC? If not, what do you do to protect yourself? I’d like to do with the parent company as a bigger umbrella organization, and each property filed as a separate LLC underneath… don’t know if this is what most people do, however, and would love your thoughts/experiences!

Kevin Perk

Replied almost 7 years ago

Tiffany, I have one LLC for my properties. I think a separate LLC for each property would be overly cumbersome. You can do the umbrella here in Tennessee but I do not know anyone who has. For protection I have insurance. A good general liability policy. What you want to do will depend on your aversion to risk and how you want to structure your business. Just be sure to get some advice specific to your state and understand all of the costs (administrative and monetary) with setting up LLC’s. Make sure you think it is worth it. I hope that helps you. Thanks for listening, commenting and the kind words, Kevin

Cheryl P

Replied almost 7 years ago

Hi Kevin, great podcast! You mentioned that you pick up properties from long-distance landlords. Are you marketing to this group (if so, how) or do they just find you?

Kevin Perk

Replied almost 7 years ago

Cheryl, I have found that some long distance landlords just do not realize what they have gotten into. They do not think it will be that difficult to manage a property from 1,000 mil away, but it is. Once they get tired and lose enough money they will list the property with a realtor and that is generally how I find them. Or, they loose them to foreclosure and I pick them up from the bank. I have tried marketing to out of state investors with letters but without success. They never seem to want to come down to reality on a price that way. So I just wait for them to get a little more motivated or lose the property. I hope that answers your question. Thanks for listening and writing in, Kevin

Replied almost 7 years ago

Kevin, Great show. I have listened to it 5 or 6 times. Question about the software. I am in my third year of being a landlord. Started with a 5 unit and now have 12 other properties. I got QuickBooks last year and have slowly become more proficient at it. I feel like its ok for the bookkeeping but doesn’t seem to do everything a program like AppFolio could. My question is, is Appfolio the only program you use? I feel like using something like AppFolio and QuickBooks would be double the work. I would hate to start over and re enter all of the information I have in QuickBooks, but with the year getting ready to close now would be the time to do it so I can start next year off with a clean slate on whatever program I decide to use. Any recommendations? Thanks. BJ

Kevin Perk

Replied almost 7 years ago

BJ, Appfolio is the only product we use. There was a lot of re-entering information into the program. Just the way it is but Appfolio is soooooo much easier than QB in my opinion. Is it perfect? No, but what is? Check out the other products on the market, as there are many and another might be a better fit for your properties and business size and structure. Hope this helps and thanks for listening so much 🙂 Kevin

Frank

Replied over 6 years ago

How many units do you own? When talking about property mgt were you referring to your own or do you manage as a business for other owners?

Kevin Perk

Replied over 6 years ago

Frank, Sorry about the late response. We just manage our own properties, SO when talking about management I was just referring to my own stuff. Thanks, Kevin

Vana G.

Replied over 6 years ago

What a really classy guy Kevin is! I thoroughly enjoyed this podcast. I am happy to see that it is possible to landlord with quality in mind. I learned a lot and especially appreciated the tips on how to automate tasks by using Appfolio. There was so much useful detail throughout this show that I would have listened for 3 hours if I could.. Thanks Kevin, Josh, & Brandon.

Kevin Perk

Replied over 6 years ago

Vana, Thank you for the kind words! Kevin

Randy

Replied over 6 years ago

Is there an example of the form discussed in the podcast, the move out prices?

Kevin Perk

Replied over 6 years ago

Randy, Base it on what you think your time is worth to change a light bulb, remove a fork from a drawer or hangers from a closet, paint a room etc. It will be different from everyone. Thanks for listening, Kevin

Kevin Perk

Replied over 6 years ago

Gregory Massi Investor from Mahopac, NY

Replied over 5 years ago

Hi Kevin, I am a newbie and was hoping you could clear up the analysis you do prior to buying a property. You said you factor in 10% vacancy and 10 to 12% repairs/maintenance and if there is cash flow of $150 per unit (after considering PITI) you will consider buying the property. Are you referring to 10% of the rental income, or 10% of total expenses (mortgage, insurance, taxes, etc)? Great show by the way!

Kevin Perk Rental Property Investor from Memphis, TN

Replied over 5 years ago

Gregory, 10% of the gross income. Thanks for listening! Kevin

Mike Oconnell Real Estate Broker from Fredericksburg, VA

Replied over 5 years ago

Thanks for the very informative podcast! I especially like your idea of giving your tenants the “how to get you full deposit back when you move out” form. It’s people like you, with the ideas you pass on to others, that makes BP such a great resource!

Kevin Perk Rental Property Investor from Memphis, TN

Replied over 5 years ago

Thank you Mike!

Michelle Cobbs Investor from Copiague, New York

Replied about 5 years ago

Excellent podcast Kevin definitely in my top 5 I have to listen again I really enjoyed from beginning to end. Thanks to you all.. Josh and Brandon. Michelle

Kevin Perk Rental Property Investor from Memphis, TN

Replied about 5 years ago

Thanks Michelle! I appreciate you taking the time to listen and the kind words, Kevin

Julie Marquez Investor from Seattle, WA

Replied about 4 years ago

Great podcast! I want to be an awesome landlord too! How many hours a week do you spend on your business? Also, what software do you use for your property management? Thanks!

Julie Marquez Investor from Seattle, WA

Replied about 4 years ago

I listened to the end of the show too, Appfolio is the answer. Also, I’m interested in what is on your move-out form for the tenant. That sounds like a very useful tool!

Andrew Fowler Real Estate Investor from Griffith, Indiana

Replied over 3 years ago

This is absolutely the most informative episode I’ve listened to on the podcast thus far. As someone who has not begun real estate investing yet (still in the education phase), I’m really impressed by Kevin’s approach to buy-and-hold RE investing. I hope to model my future properties based on this. I found his screening process to be very useful! I hope to hear more from Kevin as I listen to all the podcast episodes!

Joseph M'Mwirichia Rental Property Investor from Sarasota, FL

Replied 4 months ago

Great podcast and tips on tenant screening, holding higher $$ reserves.

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BiggerPockets Podcast 036: How to Be an Awesome and Profitable Landlord with Kevin Perk

Listen to The Show on iTunes (Preferred Method!)

Listen to the Podcast Here:

In This Show, We Cover:

Links Mentioned in the Show:

Books Mentioned in the Show:

Tweetable Topics:

Want more articles like this?

Connect with Kevin:

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BiggerPockets Podcast 036: How to Be an Awesome and Profitable Landlord with Kevin Perk

Listen to The Show on iTunes (Preferred Method!)

Listen to the Podcast Here:

In This Show, We Cover:

Links Mentioned in the Show:

Books Mentioned in the Show:

Tweetable Topics:

Want more articles like this?

Connect with Kevin:

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