All Forum Posts by: Greg Weik

I would discourage self-management, even if you lived next door to your rental, unless you have that very specific skill set and you're willing to commit to it as a job.  

I wrote a short article on the topic not too long ago that covers some aspects you may not have thought of - https://resrents.com/5-reasons... 

Finding a great PM company can be hard, but not impossible.  You've gotta ask the right questions to find out how they operate and how they will manage your investment. 

As a general rule, collections debt and low credit scores generally, post more of a bankruptcy risk than an eviction risk. 

Commonly, landlords look at collections and worry about rent payments.  15 years in property management and I can tell you that's not the real concern, it's the bankruptcy, and here's why. 

If your tenant files for bankruptcy, they can list the lease under their list of debts.  This means that you, as the landlord (a creditor) cannot make any efforts to collect on this debt while the BK process is unfolding - including filing an eviction.  If you violate this, I believe the fine is in the order of $10,000

So in the event you have a tenant who files for BK, you will need an attorney to file a motion called a lift of stay.  This is an attempt to remove the lease from the list of debts the tenant has filed with BK court.  If granted (weeks, probably $500-$1,000), you can then re-initiate the eviction process. 

Long story short, your best bet is to collect a larger security deposit if credit is not great - but even that depends on the context of the property, i.e., how much interest is it getting, how likely are you to find a better applicant, etc.  

We look at medical collection debt differently than rental collection debt, for obvious reasons.  Most people prioritize paying their rent, and I see thousands of medical collections come up on credit scores every year.  

Hi @Matt Sullivan, phew, that's a lot to unpack!

I have to ask "are you sure?"  Before going further.  Is there another PM company that might be able to offer pricing more in line with what you need to be more profitable?  That could potentially save you an enormous headache. 80 doors is a lot of doors to manage on your own. 

If you insist, I would not use Buildium, but use Propertyware (both owned by Real Page) - Propertyware is more robust and more customizable.  

1) Your transition plan has to have a checklist for each door.  You have to get the tenant's information, their payment history, any relevant lease notes, repair history on the door including open work orders, all into your management software.  You need to enter that data 1 door at a time into your new system. 

2) Make sure to coordinate the transition with your current PM, right after rents are paid.  The data entry part will take longer than you might imagine.  I suggest with 80 doors, making sure you have 2 escrow accounts, 1 for security deposits and 1 for the draws to yourself or the entity that owns the doors.  Your property management software will make this easier, but you will need to do monthly reconciliations to make sure the numbers match (I strongly encourage outsourcing this part.) 

Make sure you have the security deposits from your current PMC that match up with your leases.  This should be part of step 1, your spreadsheet should have a column for this number so it can easily be added. 

Make sure you get the contact information for any vendors doing/have done work on your 80 doors; particularly any ongoing maintenance, so you can enter those vendors into your new system.  

Make sure your current PMC notifies tenants of the transition of their security deposit and of the management of the units. Make sure the PMC gives out the number/email you want to be fielding calls/emails from.  Highly suggest a dedicated line and email address.  

After the current PMC notifies the tenants of the transition, you will notify them of the transition.  This is where I would suggest making sure you have up-to-date contact information for all your tenants; and if possible, get all of them to pay rent online via the tenant portal (most software has this functionality.) 

Last, pay attention to lease end dates.  You need a process to make sure you're not letting all the doors slide to m2m.  If you use a software like Propertyware, it's easy to run reports monthly with leases coming up for expiration, and then to track where you are on the renewal/non-renewal process.  It would be terrible to do all this work to save money, only to lose it on vacancies that sit on the market.  Good luck! 

@Caleb VanTimmeren If the tenants have good payment history, I would sign them for a 12-month term, pending a walkthrough inspection.  It's all about stability, IMO. 

Something to consider - I'm not sure how things are being handled with the pandemic in MI, but here in CO, it's impossible to evict anyone for non-payment of rent until the end of the year (at least.)  So part of your strategy might be to tread lightly if MI has any kind of similar moratorium on evictions (I believe the CDC hardship order is a nationwide consideration, but I'm not sure how MI is implementing this.)  If there are units with larger security deposits in place, that would factor into my strategy. 

@Kinjal Patel, I do think home warranty policies are generally a scam.  It's like all insurance; their goal is to not pay out claims unless they are absolutely forced to. 

I own a property management company, and a few of our clients do have home warranty policies.  The bottom line is that all these HW companies are doing, is the same thing we do as a property management company - they send out vendors to address the issues.  The problem is, most of the vendors the HW company finds are the sketchiest, least reliable vendors out there.  On top of that, the HW company is heavily incentivized to deny the claim if they possibly can. 

There's one HW company here in the Denver area that is pretty good - Blue Ribbon Home Warranty, but I think they might be local.  The big guys, like American Home Shield are, in my professional opinion, completely worthless.  They're so bad, I had to change our Property Management Agreement to let clients know that we will not sit on hold with their HW company for 30 minutes and we won't chase them to show up for repairs. 

Sorry you had a bad experience, but my experience over 15 years in property management has been that the HW company is generally not worth paying for.  Best of luck. 

@Caleb VanTimmeren I agree with @Will Gaston, and I would suggest moving on the slower side.  You're actually very lucky to have 14 m2m leases in place! 

If you have a payment history on each of the doors, I would start there.  Take the m2m tenants who are late the most/most often and come up with a game plan for those doors first.  If you're sure that they are under market, you could start by offering a 12-month extension at the market rate.  Just be really careful about what is called "retaliatory landlording" - in other words, you need to make sure you have documentation available in terms of the market rate. 

I'd start with 3 or 4 doors and offer market-rate 12-month extensions to start building some stability on the building.  If any of those 3-4 doors move-out, you've got to have contractors ready to go in and tackle your projects on day 1.  It kills me to see units sit empty because of the renovation time frame.  

Take it a few doors at a time, build stability, and improve the building and grounds.  Then flip it :) 

I checked out the link and it looks like a pretty decent software as a service for a DIY landlord.  

Interested to hear your feedback once you're underway with the software. 

I've been in property management for about 15 years, and have used a few software applications in that time.  Sometimes, you don't realize the bottlenecks and shortcomings of software until you are in way too deep.  Making a switch from one provider to another can be a real bear.  Even with 17 doors.  Every lease, all the notes, all the maintenance history, it's a lot!  

Measure twice, cut once, as they say. 

We currently use Propertyware and generally, love it.  Extremely customizable and generally good customer service. 

I'm curious as to why with possibly 17 doors soon under your personal management, why you would not enlist the services of a professional company to help you?  

Some good advice here, but I just want to add that you should hire a professional property manager. 

Owning a rental property is inherently risky, but a solid property management company will minimize your risk and should make you more money than you lose by paying them.  

I also would echo that a lease term longer than 1 year is fraught with risk of its own.  1-year leases allow you to see what you're working with and then offer 12-month extensions based on the tenancy and market conditions.  

If you're seriously considering the STR route, I would definitely get with a PM Company that handles them and get a sense of what you need to do to make the property attractive as a STR and determine if that's worth the hassle.

For $10k/month, I would put up with a bit of hassle!  

Never use the security deposit for anything other than it's intended purpose. 

You charged $2,000 for a reason - this tenant is risky. 

If the tenant doesn't pay and has to be evicted, or if he ends up trashing the place, you will want that $2,000 to help make yourself whole financially. 

Additionally, this gets really complicated if you work out the logistics.  What is a renovation, exactly?  How does it affect the tenant's right to quiet enjoyment of the property?  What if he won't provide reasonable access to the vendors?  What happens to the rental rate on this renovated property? 

Bad idea, don't do it.  :) 

Thanks Steve, it's my opinion that cashflow tends to be a bit over-rated.  I've worked with a lot of what I call "spreadsheet investors" over the years who are convinced that cashflow is the be-all, end-all for investing.  

With where I am in life, I'm more interested in making my money work for me hard, without me having to work as hard for the money.  If I tie up $125k or so in a property like this, that money is making me money without any hassle.  I don't want to even think about my rental properties.  Set it and forget it, other than important maintenance like the roof, siding, etc. 

Alternatively, I could have purchased 5, 1 bedroom condos. That would be 5 sets of likely marginal tenants, 5 sets of appliances to break, 5 sets of plumbing issues to deal with, 5 sets of HOA complaints... and still lower appreciation.

As a longtime property manager, I see the large single family home as the home run, if it's done right.