Chad Gallagher

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Chad Gallagher is the co-founder and co-owner of SlateHouse Property Management. SlateHouse, founded in 2014, manages over 3,500 units across MD, NJ a...
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Chad Gallagher is the co-founder and co-owner of SlateHouse Property Management. SlateHouse, founded in 2014, manages over 3,500 units across MD, NJ and PA for investment owners, with over 100 employees. Chad is also the co-owner of SlateHouse Investments, which owns 200 units, has raised $2MM as part of SlateHouse syndication, and is co-owner of SlateHouse Realty, a brokerage division in both NJ and PA with 20 real estate agents focused on working with investors to buy and sell real estate. Chad recently launched The Hive, a co-working office space network with three office locations at launch, and started Real Estate Hackers, a community celebrating amazing people who built something from nothing in real estate. Real Estate HackersReal Estate Hackers hosts a podcast highlighting how various investors got started in real estate and is also a network of local meetups across the Mid-Atlantic with over 7,000 members.
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Real Estate Investing Basics

Looking to Invest in a New City or State? Consider This First

It’s a huge advantage for an investor to buy across different markets. Multiple markets open up additional purchasing opportunities, rather than introducing limitations. It gives you the ability to pick and choose the best of the best. But the bigger win, in my opinion, is lowering risk within your investments. Ray Dalio, one of the most successful hedge fund investors and founder of Bridgewater Associates, had the following to say about diversification: “I think the important thing here if I’m an investor is that the most important thing you can have is a good strategic asset allocation mix,” Dalio said in an interview with CNBC. “In other words, you’re not going to win by trying to get what the next tip is—what’s going to be good and what’s going to be bad. You’re definitely going to lose. So, what the investor needs to do is have a balanced, structured portfolio—a portfolio that does well in different environments.” There are lots of ways to balance your portfolio in real estate. Diversifying can take many forms, such as unit count per property, economic class, type of rental, or geography. But let’s focus on geography. What do investors need to know before investing in a new market? My company and I have invested in and managed properties across three states, 20 counties, and over 50 cities. We have learned a lot by trial and error, but you don’t have to. Related: How (& Why) to Enter a New Real Estate Market as an Investor What Investors Need to Know About a New Market Local Deal Flow We have found that most wholesalers and commercial brokers operate in specific regions. When looking to acquire properties in an area, establish relationships with the local folks. Once you buy a property there, brokers and wholesalers will be much quicker to work with you in the future. Rent Estimate Rent is something that will obviously change from location to location. We find local property managers to be an ideal source of accurate rent estimates. This is especially true if they will be managing the property you’re looking to purchase. The property manager has a vested interest in giving you a real number since they have to place tenants. Wholesalers and agents can be very shady with estimates since they simply want to see a deal close. Crime Rates Specifically in major cities, crime rates can change block to block. Baltimore, Md., and Trenton, N.J., are great examples of cities where within blocks a neighborhood can change from low crime to high crime. We have found that crime not only impacts rent and tenant quality but also less obvious things, such as willingness of contractors to work at a site. Unfortunately, crime maps often don’t do a great job of showing how crime is changing over time. People who live in the area are usually a better source of information about the safety of an area. Local residents can comment on both immediate crime rates and how crime is evolving. Seasonality Certain regions are impacted greatly by seasonal fluctuations. Potential tenants may be sparse during certain times of year and plentiful during others. For example, we manage and own college housing in a town dominated by the local university. Most students search for housing from February to May and sign a year-long lease. If you miss that time slot, it’s very hard to find tenants. Related: 4 Steps to Take When Scaling Your Real Estate Business Into a New Market Historic Preservation We have found that certain municipalities and cities have very strong historic preservation initiatives. On the positive side, these can provide tax credits. But preservation councils may prevent certain construction projects. For example, a new construction team is working on a development project in Lancaster, Pa., where they want to level a historic building. The historic board is making it very difficult for the development team to get the project approved. Evictions Each state (and even some cities) has their own specific eviction process and rules. It’s really important for owners to get to know the local eviction legal process. Many will argue that filing evictions is the property manager’s job. But investors should also understand the local process prior to acquiring an asset. Even if they employ a property manager, it could dramatically impact your first three to six months of ownership if evictions drag out from hold-over tenants. Inspections Inspection policies also vary. We see city inspections range from every year to every four years, while many towns don’t have an inspection at all. Inspections are important as you forecast deferred maintenance that an inspector may require to be changed. For example, in York, Pa., the city has hired an outside firm to handle all inspections. The new codes team is much easier to work with than those in  neighboring cities, which impacts maintenance costs over time. Cities can even change their policies. Baltimore, for example, just passed a new inspection rule requiring an inspection every two years. Toxins Health complications stemming from lead paint have received a growing amount of attention within the media and courts—and rightfully so. There are three levels of lead paint rules: federal, state, and city. As an example, two cities in Pennsylvania (Philadelphia and Lancaster) require a lead paint safe certificate prior to moving in a family with a child under six. The rest of Pennsylvania isn’t nearly as strict—just requiring adherence to the national lead paint rules of providing notice in the lease. Maryland requires a property to be “lead safe” at all tenant turns. Become familiar with lead rules, so you’ll understand costs and rulings prior to purchasing a property. Codes Just as important is knowing local codes. Local codes are even more critical in the multifamily space. Fire alarms, sprinkler systems, elevators, and electric codes can be very costly to change. We had an instance where a codes officer told us a property needed a sprinkler system. The property was actually grandfathered into not needing a sprinkler system unless new construction started. That would have been a very expensive project had we not known the local codes! Weather Weather can be an issue when it comes to managing properties. Snow, extreme cold, wind, and hurricanes are all classic examples of weather-related issues that need to be planned for in both the pro forma analysis and the management operations plan. Parking lots are an interesting example where weather plays a unique role. Keeping the pavement in decent condition and clearing snow are more complex tasks in the Northeast and Midwest compared to the South. Economic Development It’s crucial to understand where a city and even individual blocks are moving in terms of economic development. It’s key to learn about both long-term changes in a local economy and also more recent trends. Bethlehem, Pa., is a good example of an interesting economic storyline. For much of the last 30 years, Bethlehem has had a difficult economic climate due to a massive loss of jobs in the coal industry. But the last few years have actually experienced positive growth, and the city is revitalizing. What other considerations do you take into account when exploring new markets?  Comment below. Free eBook from BiggerPockets! Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks, and techniques delivered straight to your inbox twice weekly! Actionable Advice for Getting Started, Discover the 10 Most Lucrative Real Estate Niches, Learn how to get started with or without money, Explore Real-Life Strategies for Building Wealth, And a LOT more Sign up below to download the eBook for FREE today! Click Here to Download the eBook Now! We hate spam just as much as you

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Landlording & Rental Properties

Why 3-15 Unit Buildings Offer the Best Returns for Investors

Investors need to work harder to find good deals than they did five years ago due to the more competitive real estate market. Our real estate company decided to use data and insights to figure out which investing class to target. Our company manages over 2,500 units across central Pennsylvania. (We own 200, and the rest we manage for other owners.) We are able to use that data to make better decisions. From our analysis, we have found that the sweet spot to investing is the 3-15 unit building due to lower purchase demand. One caveat to the analysis: We invest based on IRR over a 20-year period. We aren’t flippers, and we aren’t trying to guess at highly appreciating markets. Each investment class has deals in it; we simply think that 3-15 unit buildings are the easiest deals to find. Related: 4 Tips to Find Your Niche in Real Estate (& Actually START Investing!) Single Family Homes Let’s start with single family homes (SFHs). SFH buying demand comes from two major buckets. First, there is the obvious group of people who buy a SFH for their primary residence. The other major demand bucket is high net-worth individuals who buy these as investment properties. Doctors, lawyers, executives, etc. are looking for a place to invest some money. They typically aren’t experts in real estate. They are usually looking for a safe bet that won’t take too much of their scarce time. Also, they often want to acquire a property where they feel secure (both from crime and financial risk)—usually taking away low income housing as an option.   We acquired our first couple of properties from this investment class. The returns have been OK (not great or horrible). They are also easier to manage and have less variance of evictions and maintenance costs. Typical cap rates in Pennsylvania range from 5-8% for class A and B SFH properties. This is the first property we bought, a single family house in Lancaster, PA. Multifamily Complexes On the other end of the spectrum, 15+ unit buildings are attractive to syndications and funds. Managers of big pools of money want to put their money to work in one major transaction. It’s simply not time efficient for them to acquire smaller properties because they need to deploy major amount of money. Syndications have risen in popularity as seasoned investors raise money from individuals and deploy that money all at once to a multifamily complex. This growing demand coupled with a revived economy has pushed cap rates for these complexes much lower into the 5-7.5% cap rate range.   This is the 49-unit complex bought as part of a syndication that we manage in Elizabethtown, PA. 3-15 Unit Buildings We believe the sweet spot for investing right now is the 3-15 unit building space. The only demand for these properties are, for the most part, local real estate investors. These properties are too time-consuming for the major national investment syndications and funds to acquire. The high net worth individual is typically not interested in the complexity of multi-unit buildings. Outside of a few house hackers out there, it also doesn’t work for people looking for a primary residence.   We actually structured a syndication with the sole intention of splitting the gap of demand to acquire $10M in 2-15 unit properties. The syndication investors invest into the syndication without knowing what specific properties will be acquired. But the upside is we are able to target 9-15% cap rate properties—significantly higher returns than a complex would offer. This strategy requires a strong property management partner because it’s much tougher to manage buildings spread out across a region. To get even more specific, we believe the REAL sweet spot is 5-15 unit buildings because these buildings get commercial appraisals. If you use the BRRRR method (buy, rehab, rent, refinance, repeat) of buying properties, the appraisal is key to returns, as it dictates how much money you can pull out of the property. We have found commercial appraisals often appraise higher for strong cash-flowing properties, especially once you have the property leased out. We acquired this 15-unit building in Harrisburg, PA as part of syndication. Downside to 3-15 Unit Buildings There are two major downsides to building out a portfolio of 3-15 unit buildings. First, the acquisition of these mid-sized buildings is harder than buying one massive apartment complex. Negotiating terms of the deal, financing, closing, tenant communication, and initial property repairs can be much more time-consuming with 3-15 unit buildings.   Related: 5 Ways to Jump Up to Large-Scale Multifamily Investing The other major downside to this approach is the property management time commitment. For an apartment complex, it simplifies things having all tenants in one location due to common property features and centralized geographic location. On the other side, SFHs often attract higher rent tenants, who are usually easier to manage. Owning units across multiple 3-15 unit buildings requires strong systems/partners to make sure rent is paid and maintenance costs stay low. Final Thoughts One important note is that there are a ton of caveats, and this was a very broad generalization. Investors can lose or make or lose a lot of money in each investment class. It is just a lot easier to get high returns by targeting unsaturated markets. We’re republishing this article to help out our newer readers. What’s your favorite real estate class to invest in—and why? Leave a comment below! Free eBook from BiggerPockets! Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks, and techniques delivered straight to your inbox twice weekly! Actionable Advice for Getting Started, Discover the 10 Most Lucrative Real Estate Niches, Learn how to get started with or without money, Explore Real-Life Strategies for Building Wealth, And a LOT more Sign up below to download the eBook for FREE today! Click Here to Download the eBook Now! We hate spam just as much as you

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Real Estate Deal Analysis & Advice

The Essential 11-Step Guide to Refinancing Investment Properties (For BRRRR Strategy Followers!)

Refinancing investment properties continues to be a hot topic among real estate investors. The combination of historic low interest rates and rising housing values has lead investors down the refinance path quickly. But many investors take the refinance for granted and miss out on speed and additional value creation. If you are a disciple of the BRRRR strategy, you know how important the refinance is to buy-and-hold real estate investing. We have refinanced about 40 properties now and have learned a lot over the years. Here is our guide to the successful refinance. 11 Steps to Refinancing Investment Properties Step #1: Stabilize the mechanical and aesthetic condition of the property. It’s important that any changes needed at the property get done prior to refinancing it. Typical items would include new roof, new HVAC units, painting, plumbing, adding a wall to create an additional room, etc. By making the rehabs prior to the refinance, the valuation of the property will be higher, which will allow you to pull out more money in the refinance. Make sure to save your receipts. Some lenders will want to see proof of the cost that you put into the property. Step #2: Sign new leases at market rents. Oftentimes properties are rented below market value due to landlords not increasing rents each year or landlords not realizing market value. The process of getting leases at market rent may take a few months, as you may need to evict tenants who are not currently paying rent. Our property management company does everything possible to get month-to-month leases turned into new year-long leases. This is especially helpful for old leases, which may not have the best protections for home owners. Related: 5 Refinancing Steps You’ll Need to Complete for the BRRRR Strategy Keep in mind, new leases at higher rates will matter more for 5+ unit buildings, commercial, or mixed-use buildings. These types of buildings require a commercial appraisal. Commercial appraisals use the net income of the property as one of the major ways to define the value. Higher leases can dramatically increase the value due to the cap rate multiplier used. An increase in $100 per month for one lease of a building could increase the value $15k if there are no other costs added! Step #3: Put financial documents on Google Drive. This sounds like a little detail, but one huge issue with refinancing properties is getting approved by a bank. You want to make it as easy as possible for a banker to approve you. Plus, you want to decrease your own time. Most bankers will request the same documents—so you can give each banker an updated Google Drive link that has everything they need. Documents usually include tax returns from 3-5 years, rent roll schedules of current investment properties, a copy of your driver’s license, real estate management experience, and a personal finance statement. While each bank will have their own version of the personal finance statement, they will usually accept a general one as well. Step #4: Be up front with the banker. We find that bankers work better when all of the cards are on the table from the beginning. When we were first getting into real estate investing, we were candid that we had just started investing. Certain banks love working with newer investors, while other banks may want to see years of experience. Either way, you get to the point quicker and do not waste anyone’s time. Ultimately, the lender usually wants to get the deal done for you and is your ally through the approval process. Step #5: Create relationships with bankers. When we first started investing, a mid-sized bank was not interested in working with us because we wanted to refinance at 80% loan-to-value. So, we worked with smaller credit unions that were happy to work with us at those terms. However, we kept building a relationship with this bank even though they weren’t doing loans for us. After two years and numerous lunches and meet ups, the mid-sized bank changed course and gave us the exact terms we asked for. They had seen our relationship and business grow over the years. Step #6: Negotiate more than just the interest rate. For the first deal we ever did, I remember calling six different banks to “shop” interest rate terms. I settled on the lowest interest rate, not considering any other terms. When I got to closing, I realized there was a 1.25% initiation fee. Plus, there was another $500 in totally random fees. The fees easily made this a less desirable loan than others we were offered, but we didn’t even realize it because we were fixated on the interest rate. Things that we now focus on include length of fixed interest rate, overall length of loan, fees at closing, appraisal cost, percentage of loan-to-value, and time to close. I’m not saying interest rate doesn’t matter, but often those other metrics are easier to negotiate and can make a huge difference on overall returns. Step #7: Meet with the appraiser.   Typically a property has a back story to it. We always make sure the appraiser understands the back story of the property. For example, let’s say we bought a $100k multi-unit building 5 months ago. And let’s say the building was overrun with drug addicts who weren’t paying rent, so we bought a security system and got new tenants in the building. I would want the appraiser to understand everything that we had done because the property would most likely appraise higher with that additional info.    Step #8: Pull comps of similar properties for appraiser. This step is REALLY important. I like to pull comps that help tell the story we are trying to tell. The comps should be similar properties with similar (or higher) values. While you may think that it’s the appraiser’s job to pull comps, I prefer to help them avoid missing key comps. Related: The 5 Primary Risks of BRRRR Investing and Flipping Houses Step #9: Make sure appraiser stays on track with timeline. This sounds very odd, but often timing in these deals matters. When we refinance a property, we typically have another property that we are using the funds to acquire. A couple of our appraisals were delayed weeks because the appraiser didn’t get a report completed on time. As you know, delays on the buying side can throw off future acquisition deals. I typically like to check in with the appraiser and banker about once a week through the process to remind everyone when we want to close and make sure nobody is behind. It’s amazing how much it can help to keep things on time with a simple check-in. Step #10: If appraisal comes back low, challenge the appraisal with evidence and data. There is typically a lot of data that goes into an appraisal. The same property can easily appraise at a range of 10% based on a wide variety of factors. When we first got into investing, we assumed that an appraisal was the final word. But we have found that occasionally you can send an appraiser additional guidance, data, and info that may help improve the appraisal. This will never work 100% of the time, even if your data is accurate. But we strongly urge you to give it a try and to use data and facts to guide your points. Step #11: Keep asking for better terms from the bank as your business grows. For future refinances, never be content with the lending terms. As I mentioned before, most of the terms are highly negotiable. As your net worth and experience increase, you are much less of a risk to a bank. Use that lower risk to your advantage. Get your lender to lower your fees, decrease your rates, or put down less money at closing. Did we miss anything that you do for your refinances?  If so, add to the comment and we’ll chime in as well! Follow me for future articles, I write about technology, property management, and buy-and-hold investing strategies. Free eBook from BiggerPockets! Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks, and techniques delivered straight to your inbox twice weekly! Actionable Advice for Getting Started, Discover the 10 Most Lucrative Real Estate Niches, Learn how to get started with or without money, Explore Real-Life Strategies for Building Wealth, And a LOT more Sign up below to download the eBook for FREE today! Click Here to Download the eBook Now! We hate spam just as much as you

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Business Management

8 Digital Advertising Tips And Tools for Real Estate Investors

Prior to starting a property management company and becoming a real estate investor, I spent 10 years in the digital advertising industry. I’ve found that most people in real estate do not have a very strong understanding of digital advertising. Digital advertising has been a major key to my ability to improve our property management company and investing business. If you are looking to scale your investing, I highly suggest improving your understanding and execution of digital advertising. This article will give you some high-level basics to get you moving forward. 1. Develop a Goal First, develop a clear metric of success for different attributes of your business. Examples of this includes: time needed to fill a vacant unit, leads on owners who want to sell their properties, etc. Some of these goals may have a couple different metrics. For example, if you are a wholesaler, you’ll set a goal for number of leads and a goal for deal profits. 2. Track Relentlessly Keep your leads in an online database that you’ll save forever. Make sure every lead has a defined source, such as Facebook, Meetup, etc. Over time, you will most likely add additional profitability metrics. If every lead has a recorded source, you can go back and understand granular profitability by channel. When you’re trying to find a tenant, for example, you’ll be able to track where the tenant found out about the rental. For advertising sources that overtime prove they aren’t effective, either turn off that source, or spend time fixing it to make sure it’s working better. Related: 5 Tips to Attract Tenants Using Online Advertising 3. Build An Effective Website I’m amazed at how many people in real estate do not have a website. If you are a wholesaler, real estate agent, flipper, etc.—you need a website. Period. You can build it yourself through sites like WordPress or Squarespace. It’s not that expensive, and I believe it’s essential to building leads online. Once you’ve built your site, make sure there’s an easy way to contact you. And set up Google Analytics so you can understand your data as your business grows. 4. Search Engine Marketing (SEM) SEM is the sponsored advertising tied to specific search terms. Depending on what data source you trust, Google represents approximately 80 percent of SEM scale, and Bing represents about 20 percent of SEM scale in the U.S. We recommend starting with Google but then also including Bing as you get more serious about your business. You can bid on a cost-per-click basis. Then, track to see if the clicks are leading to conversions. This way, you’ll understand what words are working well. For example — if you’re looking for direct homeowners who want to sell — we’d suggest buying keywords against terms like “sell my house in Philadelphia.” Get started at low-spending amounts, because there is no minimum spend! Be sure to either target specific geographic locations or target specific geographic words. So in the Philadelphia example, you could target people who are searching in that city — or people who are searching for Philadelphia in the keyword set. SEM Example: These blue links are sponsored ads that you can buy on a cost-per-click basis. 5. Search Engine Optimization (SEO) SEO means you increase the natural search rank of your website on search engines for certain keywords. Unlike SEM, SEO is free: you don’t pay for the clicks. We think of SEO as the golden goose, because once it’s working, it produces leads forever at no additional cost. To get started, figure out which keywords your business should rank highly for. Then, make sure your website is optimized for those keywords. There is a lot of material online that can help you out, step by step. One simple suggestion is to make sure you have specific cities that you are targeting through your website. If you are a buyer who specifically targets Trenton, NJ, make sure you have Trenton in your website’s keywords and in your site’s content. Google uses your content and keywords to help organize your ranking for different searches. List your company on the major local and national business sites with accurate business and website info. Site links are key to increasing your SEO ranking. SEO can be a lot of work — but the payoff will be immense for your business. Final advice, mobile will most likely be the dominant device for people to find your site. Make sure you spend the most amount of time on optimizing for mobile devices. As an example, our company website gets 70 percent of it’s traffic on mobile now! 6. Facebook Facebook is often overlooked in the digital advertising spectrum, especially by people who didn’t grow up with social networking as a major part of their lives. Today, there are real estate companies who drive all of their leads via Facebook! There are three things we recommend to use Facebook efficiently. First, make sure you post content on Facebook as often as possible. This includes both content from your company page and content from your personal page. Second, join any local, relevant Facebook groups—and join the conversation. Third, buy targeted Facebook ads against your relevant geographic and demographic targeting. Unlike SEM, this targeting is more tied to individuals, but it can still be wildly profitable for your business. 7. Content Production Content production typically doesn’t fall into digital advertising, but I added it here simply because it’s so important, and it complements the other parts so well. Producing content can range from blog posts, YouTube videos, Facebook posts (think videos, pictures, or shared marketing copy), Instagram posts, and much more. My suggestion is start with whatever medium feels most natural to you. Cover topics that you understand the most. It may feel strange at first, but you’ll be shocked at how valuable it becomes for your business. Related: Online Marketing is a MUST for All Real Estate Investors — Here’s Why 8. Retargeting Retargeting is when you place a cookie on a user who visited your website and you target them with advertising as they visit other websites. Google has a really nice integration between Google Analytics and Google Display Network. You can use the Google Analytics code to place the cookie, and then target that user with banner advertising across the Google Display Network. Typically, retargeting has really high conversion rates because the users have already expressed interest in your company. Similar to SEM, you can bid on a cost-per-click basis, or you can also bid on a cost-per-impression basis. The ads will show across thousands of major websites. People may even comment about seeing your ads everywhere! 9. Track, Optimize, Iterate Finally, make sure you continuously go back and optimize your content. I suggest doing it every couple of months. Pull data to better understand where your profitable leads are coming from. Also, major companies like Facebook and Google will give you free advice for how to implement their platforms better. I recommend spending a half hour with one of their consultants to get educated. Do you have any questions about this content? Share them below and I’ll answer them! Free eBook from BiggerPockets! Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks, and techniques delivered straight to your inbox twice weekly! Actionable Advice for Getting Started, Discover the 10 Most Lucrative Real Estate Niches, Learn how to get started with or without money, Explore Real-Life Strategies for Building Wealth, And a LOT more Sign up below to download the eBook for FREE today! Click Here to Download the eBook Now! We hate spam just as much as you

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Business Management

9 Tech Tools Transforming the Way Real Estate Investors Scale Their Portfolios

Real estate is one of the last industries to adopt technology, and investors can use that to their advantage to literally make millions today. Real estate continues to lag other sectors in terms of technology disruption. But for tech savvy investors, technology is creating scalable opportunities like never before. This is the second of a series of articles on how technology is changing real estate investing. You can read the first post on how technology is changing property management here. For this article, I detailed a list of tech systems that we have found beneficial for investing. 1. Free Online Education Let’s start at square one: getting educated about real estate. The wide proliferation of the free podcast has been a game changer for real estate education. Forget paying $20k for a weekend retreat taught by a “guru.” All of the education you need is available online for free in the form of articles and podcasts. This may seem very basic—but I think it’s a fundamental shift in how information and knowledge is broadcasted. In terms of podcasts, I recommend three podcasts: BiggerPockets, Real Estate Guys, and Masters of Scale.   The BiggerPockets Podcast does a great job of describing the basics of real estate investing in an easy-to-consume fashion. Real Estate Guys Podcast digs into syndication, a next level up in the investing game. Masters of Scale Podcast by Reid Hoffman gives you the mindset and systems thinking needed for scaling a business with technology.   2. Availability of Sales Comps Zillow is a huge game changer for any tech savvy investor. The Zillow filters make pulling comps a breeze. Zillow’s filters make it so easy that you can pull reasonable comps in literally five minutes. For any BRRRR investors out there, comps are essential to the eventual refinance, and for a flipper they are a must-have to figure out resale value. Related: 7 Ways Technology is Completely Overhauling Property Management Do I also use the MLS? Yes, I do use the MLS to dig for more granular data when needed, as I realize that not all data exists on Zillow. But I believe you can get 90 percent of the way there in a lot less time using Zillow data to pull comps. Zillow.com Screenshot of Comp Data 3. Easy-to-Find Rental Estimates Rental estimates are so interesting that they could probably be it’s own topic! There is a ton of data available online if you know where to look. We use four different sources to triangulate around rental information. Zillow is a decent first place to start, specifically for single family homes in highly populated areas. Next, we suggest using Rent-o-meter. As a third source, we use our own home built rent estimate tool, AccurateRent. This is only available currently in PA and NJ, but we will be expanding it to other areas in the future. It uses our own property management data to improve the algorithm and gets smarter over time as more data is available. Finally, we email a local property manager for a final check if the rents are key to the purchase price. Put these four data points together and you have a pretty solid estimate—without needing to ever leave your living room! We believe these data sets will only improve in the future as more data in available online. 4. Quick & Easy Marketing to Would-Be Sellers Even just a couple years ago, the major way to find a deal in real estate was “driving for dollars.”  Think about how inefficient it is to get in a car and literally drive block by block trying to find an old, run-down house. Then you have to go knock on the door and see if the owner is home to try to negotiate to buy their house. Don’t get me wrong, driving for dollars is still a great way to get a deal. But it’s very hard to scale a business by driving for dollars. Today, marketing can be almost 100 percent automated in the form of buying a database and targeting via online advertising. Just this week, we sent a message to 600 owners in Chester County, PA. All-in, it took about an hour to drill down to the right data set and another hour to properly set up the right message. I can’t imagine how long it would take to go knock on 600 doors! 5. Access to On-Market Deals Many buyers scoff at buying properties on the MLS. I personally do not agree that you can’t find deals on the MLS. The key to buying on the MLS is to be ultra organized and very persistent. I think technology strongly helps in both of those areas. I keep updated filters in different markets to get notified when a property fits our criteria. Then I try to get an offer to the seller as soon as humanly possible. If the seller rejects the offer, we add the property to a database for followup at a later point if property is still on the market. But all of this is easier through using MLS filters, rather than relying on local signs, agents, etc. 6. Simple Ways to Evaluate the Deal I highly recommend using Google’s shared spreadsheets to evaluate deals. I have a specific form that I put in for every deal. I share that model with our acquisition agents so they know exactly how we evaluate the deal. Then the agent puts the variables directly in the model so we can immediately evaluate the price we want to offer. We also have the agent upload the pictures/video of the property to Google Drive. This way, I can evaluate the expected maintenance cost in seconds. SlateHouse Proprietary Investment Model 7. High-Tech CRM Lead Databases Once you have a lead for an owner who wants to sell, a CRM database is crucial to staying organized to stay in touch with the owner until they eventually sell the property. There are many CRM databases out there in the marketplace. I think the key is to make sure you use at least one of them, rather than use your memory alone. We find that Google Sheets works fine, but know many investors use Salesforce and Podio. The key is to track the lead and follow up relentlessly. Without tech, followups just do not happen and leads never go anywhere in the future. Related: 4 Ways Technology is Shaking Up Commercial Real Estate (& Why Multifamily Will Pull Ahead) 8. Useful Property Management Ledger/Databases In my previous article, I covered the many technologies that property management companies leverage. One of those technologies is a back-end accounting database. This database is crucial for investors because they can track, manage, and optimize their properties quickly. I firmly believe that the sweet spot for investing success is to check-in against a data heavy dashboard with a property management on a weekly or every other week basis. This gives the investors an eye into what’s happening, but also the freedom to find more deals. 9. Valuable Online Communities One of the best tech tools for investors is to be a part of an online community. For local knowledge, I recommend a local Facebook group. In Pennsylvania, we created a group for investors and joined another group specific to landlords. Both have been very beneficial, and I highly recommend creating one like this in your community. Of ourse, we also plug into the BiggerPockets forums, but you probably already guessed that! Actual Post from Central PA Real Estate Investors Facebook Group So, what technologies do you use that I missed? Leave a note in the comments! Free eBook from BiggerPockets! Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks, and techniques delivered straight to your inbox twice weekly! 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Landlording & Rental Properties

7 Ways Technology is Completely Overhauling Property Management

There’s no question, technology has disrupted just about every industry over the past ten years. Tech has changed transportation, media, communications, retail, travel, and more. Yet, I’ve heard many people argue that real estate is immune to much of the technology disruption due to its hyper-local nature. The CEO of a property management company even told me technology didn’t matter for property management!   In many ways, the lack of tech adoption in real estate has created a massive opportunity for new companies and individuals.  Since the opportunity is so great in real estate, I decided to write a four-part blog series on the disruption of technology in the real estate industry. In this series, I will cover tech disruption of property management, tech disruption of real estate investing, using digital advertising to scale real estate companies, and finally, a primer for what to expect in the future (think 2025). Hopefully these posts become a catalyst for investors to increase their technology usage. Feel free to connect with me on BiggerPockets to make sure you catch all four blog posts. 1. Going Paperless First, property management can now be an entirely paperless business. When our property management company moved offices a few months ago, we literally threw away our filing cabinets! We kept one file cabinet because the Pennsylvania Real Estate Commission wants to see a file cabinet that can be locked! Years ago, a property manager would need to dig into a file cabinet every time there was a question about a lease, an owner contract, a maintenance bill, etc.  The logistical and organizational issues with keeping physical copies of everything was a disaster and impossible to scale without mistakes. Property managers scan and throw away paper files with no file cabinets in the office!   Our last remaining file cabinet! 2. Moving to the Cloud Every document, interaction, text message, request, rent payment, employee manual, etc., sits in the cloud and can be referenced by anyone in the company with a click of a button. Even better, many documents are electronic all the way through the process.  Ninety-nine percent of all leases are now signed digitally—meaning a property manager or tenant can save tremendous time on logistics rather than trying to meet in person to sign a physical lease or application. An average property manager signs 10-20 leases a month. Let’s say it takes, on average, one hour to get a physical lease signed. That means that digital leases can save a property manager 10-20 hours a month. That’s a big deal, and is just a small piece of the puzzle! Unfortunately, there isn’t just one single type of technology to do everything. The best property managers will leverage a variety of technological solutions. But, we do also recommend using either Dropbox or Google Drive as a catch-all for anything that doesn’t fit into the specific technology suites.   Related: 4 Ways Technology is Shaking Up Commercial Real Estate 3. Maintenance Logging Taking this concept one step further, a property management company can keep a record for eternity on every property. Let’s play through a typical scenario: Tenant reports that the roof is leaking. Previously, a property manager would need to have the memory of Ken Jennings to remember the maintenance history of a property. Did the property just get a new roof and she should call the old roofer under warranty? Does this roof always leak and therefore needs a different solution? Is it not a roof leak at all—but something unique to property that causes strange water run-off? A backend database store this information, forever!   Putting together a system can be difficult, as often one technology stack does not have all of the features that you’ll need. For example, the major technology platforms for tenant management are Buildium, Appfolio, and Yardi. However, a property management company that has full-time maintenance crews will need one to two additional, separate technologies to manage technicians like plumbers, cleaners, and carpenters. For example, with the right technology, a company can track, via GPS, where the contractor is at all times. This is a great way to make sure contractors are not over charging for time spent on a specific job. In addition, large projects require a much more difficult organization of timelines, tasks, priorities, and various contractors. Without technology tracking a timeline, major flips will almost always take longer, as it’s very difficult to juggle jobs. But, implementing the right technology makes the project management much easier and lowers the overall project risks. GPS tracking of technicians shoveling the day after a snow storm 4. Tenants Ledger Not only do properties have a history, but tenants also have a clean ledger that anyone can access. To make it even cleaner, our property management company doesn’t accept cash at all.  Seventy-five percent of the tenants actually pay online, and the rest pay via check or money order. Why not accept cash? First off, holding cash is a major security risk that we do not want endure. More importantly, not accepting cash means a tenant can never claim that they paid a property manager when they haven’t. Every transaction is kept in an online ledger that can be digitally accessed by the tenant and the property manager. When sitting in front of a judge to argue an eviction, it makes for a much easier discussion when there is a central ledger with transaction history and tracking codes.   5. Smartphones vs. Brick & Mortar Smartphones have essentially replaced the need for massive, centrally located brick-and-mortar offices. Huge, expensive offices to hold physical files have been substituted by all the information on properties, maintenance, and tenants that’s now available in the palm of your hand. Many of our property managers spend much of their days at the actual properties they manage—as everything they need sits in the cloud, available on their smartphone. We actually think big offices are a liability and a crutch—the best property manager, in 2018, should spend their time at the actual property or working on their smartphone from the most convenient location.   Tenants now have a 24/7 emergency number to call, or they can put in a maintenance order via their smartphone. The new challenge for property managers is staying organized with all the different forms of digital communication. The single most important trait for the 2018 property manager is organizing electronic-communication flow. Throw away the physical journal!      Another key technology suite is the call-center operation technology. Vonage, Ring Central, 8X8, and Google Voice are all examples of different call-center technology options. Technology sends the call to a certain property manager or call center during work hours (and to a separate number during non-working hours) to handle emergencies. We actually service our emergency line with a rotating senior manager, but we’ve also heard some companies use off-shore emergency response call centers. A strong call-center technology connects those with issues to the right person 24/7.   Related: 8 Awesome Tech Tools for Landlording, Lead Management, Productivity & More 6. Faster Rental Information Flow The tech advantage begins at the stage of setting a rent amount. Rental information used to sit mostly in the memory of local investors and property managers. Now, you can find a decent rental estimate using different websites as data points. To make it easier for our property managers, we just launched an app that sits on their phones with the actual rent amount for every property we manage. GPS mapping lets the property manager easily find units that are right down the street from the new rental house.  Screenshot of in-house rental app data showing data from actual unit To find a tenant, a landlord used to post an ad in the local paper. The landlord often relied on a leasing sign outside the property to get interest. This process was slow and locally confined. Today, landlords list properties on sites like Craigslist, Apartments.com, Zillow, and more, to generate interest from anywhere in the country from the tenant’s smartphone or computer. Larger property management companies can even utilize SEO to rank in the top-ranked sites on search engines like Google and Bing. SEO rank matters because you want to be the first stop for a tenant in search of a rental.   Once a tenant finds a property they want to see, they schedule a showing with a click of a mouse. How cool is that? Just like ordering a pizza, the tenant can schedule a showing, 24/7, without even talking to anyone. Three different technologies merge together so the showing appointment blocks off time on the property managers’ calendars. This speeds up the time to fill tenants significantly.    Once the tenant finds the house they want to rent, landlords can easily do a credit check. With a couple clicks, you can find out if a tenant has ever been evicted. Eviction data is the most important data-point for a landlord to research.  7. Integration Technology Seamlessly integrating systems can be very tricky and time consuming. But you can’t be a cutting-edge property manager or landlord in 2018 without integrating different technologies. We currently have licensed and/or built 14 different technologies to manage our properties. This creates an issue because technology updates from one system may cause an integration issue in the future. We have to constantly monitor our technologies to ensure everything still talks to each other correctly. So What?   What does all this mean to investors? It means property management is improving everyday. Rates can be lower than they were even 10-20 years ago, without compromising service. Where it used to be normal for property management rates to cost as much as 10 percent, I believe 6-7 percent should be standard, in 2018 and beyond.  Additionally, advertising costs should be close to zero, and vacancy times should continue to decline. Amazon is a great example of technology driving down cost. These are all huge wins for investors: a 3 percent increase in net-profit off of gross income can make a massive difference to returns in the real estate industry.   Next week, we will dig more into how technology affects investors in other ways. Hope you can use some of these tips for your own rentals! How do do you use technology to manager your properties? Share in the comments below! Free eBook from BiggerPockets! Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks, and techniques delivered straight to your inbox twice weekly! Actionable Advice for Getting Started, Discover the 10 Most Lucrative Real Estate Niches, Learn how to get started with or without money, Explore Real-Life Strategies for Building Wealth, And a LOT more Sign up below to download the eBook for FREE today! Click Here to Download the eBook Now! We hate spam just as much as you

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