All Forum Posts by: Josh Cissell

Quote from @Benny Dadlani:

@Will Gaston Thanks Will for your insight!

@Josh Cissell Thanks for your advise, I understand what you mean. Right now I have my first student rental property. It makes sense to have your own management team when you have several properties with so many tenants and turnover happening every year.

Let me clarify a little about my thoughts on your second question. I was more referring to whether you should manage yourself or not. If you want to be a property manager, then you have to learn the lessons somehow. You can work for someone else, and they'll teach you the lessons they learned the hard way or teach yourself through trial and error, but it will cost you headaches, time, and money. If you're a really good operator and not a people pleaser, it may cost you less than others.

If you want to be an investor and not a property manager, learning the expensive way is unnecessary. Several of my clients tried managing themselves and learned the hard way why they should use a professional manager. For example, we have a new client for whom we just evicted someone, which we denied 2 years ago. He didn't know what he didn't know, and he got sucked into a bad renter. It will cost him $15 - 20k before it's all over.

@Benny Dadlani Large student housing complexes rent by the bedroom, but that's an entirely different model, unsuitable for single-family home investors IMO. People do it, but it causes a lot of problems and a lot of extra work.

You need to view the party of students as one household and make sure all your language and interactions are consistent with that. If you put them on the same lease but treat them all as individuals, if you ever go to court, it's possible the judge would say, "If it walks like a duck and talks like a duck..."

Regarding your second question, how many properties do you own or manage, and for how long? Will is at a different level than most investors, so unless you're at his level, doing what he does isn't necessarily the best move. The reality is that hard lessons have to be learned the hard way unless you have someone with experience coaching you through everything. You don't know what you don't know.

You also need to decide if you want to start a new job (property management) alongside your current job and if you want to be a real estate investor or a property manager—very different things.

Quote from @Kurinchi Sellamuthu:

Hi all, I'm getting serious about real estate investing and focusing on rentals for the immediate term. I'm curious about listings for student housing [I know zillow and other ad formats] but would like to know if there are websites I should know of to target student shoppers who are looking for housing. 

 We syndicate to about 50 different sites, but the majority of our leads come from Zillow and realtor.com.

Quote from @Rob Manger:

What are your thoughts on renting to a group made up of fraternity members and college athletes? Many screen for these groups as high-risk rentals. Thoughts?

College students are generally hard on properties. The higher rents come with added risk.

Make sure you have guarantors who care if their credit is ruined. You'll usually get paid if the damage exceeds the deposit.

Also, if your property is not well cared for when they move in, they'll treat it the same.

Quote from @Chad Hale:

@Josh Cissell I don't open separate accounts either.  If you did, you still would not give the owners direct access.  That is part of setting it up as a "Trust Bank Account"

 Gotcha. I thought you were referring to opening up an account that the owner has access to.

Our bank does set up each owner on our trust account.

Quote from @Chad Hale:

If you open a bank account using your owner's TIN, you don't need to file 1099MISC as they are receiving the rents directly, not you.  You just manage the account.  Downside is you need to do this for every owner and they usually have to sign the bank docs in person.

 I would not open separate accounts for each owner. I know a few who do, and it's a nightmare. I would never let an owner access the money before I send it to them. 

Quote from @Christos Kappatos:

Quote from @Josh Cissell:

Josh, thank you so much for all this information, it will help me immensely! 

One quick question about turnaround time. When you write the lease are you starting it on the 1st of the month and prorating those 7-9 days? What if they need to move in the 1st day of the month?

We end leases on July 29 and start them on August 4 and 5. No, we don't pro-rate. Our stance on that is that we aren't leasing the property by the day. To get technical about it, if the rent is $1,000/month, the lease is for $12,000, and we're allowing twelve installments of $1,000 due on the first day of each month.

Some companies end leases July 20-23 and don't start new leases until August 12 but still charge for the full 12 months. I'm not comfortable with that, even though, according to the technicality I stated above, it's justified.

If people need a property on August 1, they have to figure that out. 

We don't allow anyone to stay even a day late. When people ask about getting in early, our stance is that we will get them in by the lease start date, but if we can get them in early, we will. Unfortunately, that doesn't allow them to plan.

We usually get many ready early. Sometimes, we have all but a few properties done by August 1 or 2nd, but what you'll find out is they make plans to not get in until their lease start date, so they may not move in early.

 Really appreciate the info man, I can't thank you enough! I may reach out in the near future if I have any more student rental related questions. 

 Glad to help. Student housing can be painful until you figure it out.

Josh, thank you so much for all this information, it will help me immensely! 

One quick question about turnaround time. When you write the lease are you starting it on the 1st of the month and prorating those 7-9 days? What if they need to move in the 1st day of the month?

We end leases on July 29 and start them on August 4 and 5. No, we don't pro-rate. Our stance on that is that we aren't leasing the property by the day. To get technical about it, if the rent is $1,000/month, the lease is for $12,000, and we're allowing twelve installments of $1,000 due on the first day of each month.

Some companies end leases July 20-23 and don't start new leases until August 12 but still charge for the full 12 months. I'm not comfortable with that, even though, according to the technicality I stated above, it's justified.

If people need a property on August 1, they have to figure that out. 

We don't allow anyone to stay even a day late. When people ask about getting in early, our stance is that we will get them in by the lease start date, but if we can get them in early, we will. Unfortunately, that doesn't allow them to plan.

We usually get many ready early. Sometimes, we have all but a few properties done by August 1 or 2nd, but what you'll find out is they make plans to not get in until their lease start date, so they may not move in early.

@Cora Gilmore to add to what @Michael Smythe said:

Since the IRS views your management company as an agent acting on your behalf, the gross income amount you see on your 1099 reflects all funds received by the manager on your behalf. This is standard IRS practice and means that when your management company receives money, it's considered as though you, the client, have received it, even though it hasn't been sent to you yet. That's why you get a 1099 for the gross amount.

This gets tricky on prepaid rent. For example, if your tenant pays January 2024 rent on December 31, 2023, it will be reported on your 1099 for 2023. The manager's accounting system should make sure this doesn't get reported again in 2024.

That brings up something else you need to be aware of regarding prepaid rent and whether you should accept it or not. I'm referring to large sums of prepaid rent, like 6 -12 months. We don't care about a month or two. We will not allow a tenant to pay large sums upfront if it could result in a significant tax liability for the owner. For example, we wouldn't accept 12 months of rent in November.

Quote from @Will Gaston:

@Christos Kappatos nope they can stay (or leave if they want).

The reason that ~all kids are mostly cool with it is because they had to tour houses while pre-leasing too.

It's a necessary part of this business.

Even though students don't complain too much, we stopped openly showing multiple groups because of liability.

1. We really have no clue who is showing up for that appointment. Could it be someone scoping the property?
2. We can't watch everyone in the house at the same time. We could have 10 different groups that want to view a property because we won't stop advertising until the lease is finalized, which takes a lot of time with students and their guarantors. That could be 30 to 40 people walking through a home. Even if we try to stagger appointments, we could still have 6 - 8 people in a home at one time. No possible way to make sure they don't put something in their pocket.