All Forum Posts by: Kenny Dahill

Hi @John T., it's your choice.  Personally, I handle the AC cleaning coordination for our semi-annual cleanings.  If you expect the tenant to pay and coordinate, it'll probably never happen and you risk a hefty replacement cost one day.

There are elements of property management one can slack off on and little repercussions.  I would advise HVAC not being one of those 'slack off' items.

Unit Replacement:  My last unit cost $6,700 in Fall 2018.  Since I don't pay the electric bills, this was the cheapest model.  I did replace my primary home with a higher SEER in 2013 which cost $6,400.  Bigger unit too.  So HVAC units are getting more expensive; whether due to labor or material costs not sure.

Life Span:  From my understanding, your HVAC will last about 6-8 years if you let it be.  That breaks down to $850-1,100 annually.  If you have proper Preventative Maintenance that unit can last 12-18 years.  That's $375-560 annually, plus the additional $100 per unit for the cleanings.  You're still saving money for the long run.

Filters:  These little guys make a world of a difference for the life span of your unit.  A dirty filter causes the HVAC to run harder to suck more air in the return, which translates to more energy.  More energy = higher electric bills.  In Arizona, changing out your filters every 3-4 weeks could save your tenant $15-30 on their bill.  That's my pitch to the tenants.

Who should change filters?:  A lot of landlords/PM's use the opportunity to change filters as a way to see the inside of the property and its conditions.  You can leave it to the tenants if you trust them, although my experience has been mixed.  

One home with a dog hadn't changed their filters during the winter; the unit worked harder and actually had moisture in the return because of the temperature differences.  It was actually leaking from the return vent.  That moisture started to rust the heating pack which cannot be undone and while it's a relatively simple fix, it requires the entire unit to be removed from the roof.  Cranes aren't cheap.  Unfortunately I now face a HVAC that is a time bomb until it rusts out and I have to replace it entirely.  Lesson learned and now I am more assertive about changing out the filters routinely.

@William Houstian, you shouldn't have anything to worry about.  

You're past the 'rowdy' part of your life.  Although 25 is still in the back end of that phase, the fact there's somebody else in their 40's would signal to me you weren't ever a rowdy person or at minimum, not rowdy any more.  It's not difficult to meet somebody and quickly know they're not the rowdy type.

As a landlord, I  always tell my tenants that if they break up or friendship ends it is not my concern.  They are still responsible for the lease and either one pays the entire lease or they find a qualified tenant to replace their half.

Hi @Leonard Whitted,

This is a slightly loaded question.  Are there differences? For sure.  But what do you define as the difference because there are large local PM's and small commercial management companies as well.

End of the day, the firm doesn't matter.  The individuals are what matters.  The larger commercial PM's are still local franchise owners and have the same knowledge.  And just because they're small doesn't mean they're good at responding.  The units:PM ratio is more important than being a big or small firm.

My recommendation would be focusing on the following, and make sure you're completely honest with yourself:

• How much are you willing to pay?  This is the biggest and most important question that every landlord should ask.  We get a lot of landlords that say they want the best, but then complain at their rates.  Unfortunately, you can't have it both ways.
• How much work will your properties require?  There can be a significant difference in labor to manage a Class A vs Class D property.  If you have a property that is older or low-income class of tenants then it will require more time for the PM.  More maintenance and repairs to coordinate.  More chasing tenants for late rents.  More evictions. Etc.
• What is your top criteria for PMs?  Cost, communication, size of staff.  This will help you prioritize when interviewing PM's.
  • Cost:  Previously discussed.  However, do not be fooled by the simple lower monthly fee.  Make sure you've reviewed their Property Management Agreement and understand every way possible for them to make a fee.  Or, what you have to pay for.  Some PM's charge a higher rate but include eviction court appearances or even a tenant placement guarantee.
  • Communication:  This one seems simple.  But the truth is these PM's have hundreds of tenants, landlords and contractors trying to contact them daily.  Ask them about their communication practice and who you would be communicating directly with.
  • Staff:  Larger staffs can help with the communication issue, but also cost more.  Double edge sword.  Clarify how many units they manage and the quantity of PM's.  Then confirm if they do real estate sales as well.  You'd be surprised how often I talk to a PM that is on their way to a sales showing.  Knowing that your PM is 100% or 50% dedicated to being a PM is important to know.

@Alexander Hernandez, 

Any out-of-state investor should visit the market they're going to invest in.  Even if you buy a cheap property at $40k, it's worth the $1k to visit the city for a few days.  Learn the different submarkets and see their conditions.  Real estate investing is all about due diligence, last thing you want is a terrible experience because you were not willing to spend the small amount of time and dollars to do the proper due diligence it deserved.

Hi @Anne M.!

I find this comical because I've had the same thoughts and discussions with my girlfriend.  I'm not here to tell you relationship advice, except to always own a dog.  That's the only love relationship advice I give people.  However, I love my GF and these thoughts/actions have nothing to do with distancing myself from her or some negative.  They're positives to help my real estate investments and she understands because we have a conversation about it.

There are several reasons he might be asking for a lease.

• Proof of Income:  If he is buying this house as an 'investor', then he might need a lease to help him get better rates or even qualify.
• Proof of Income (primary):  Maybe he has enough for the down payment but doesn't qualify for their Debt:Income ratio. Which I believe is around 40-50%. Showing that the entire mortgage will be split with someone else helps improve his DTI ratio.
• Taxes:  There are benefits for showing your rental income on tax returns.  Maybe his accountant suggested it to help get more money back.
• Any benefits to you:  Talk to his accountant and find out if there are any benefits to you signing the lease.  Maybe there are write offs for each of you.

And lastly...

• Locking it up!:  Hey, maybe he just wants a guarantee you'll stay for another year!
• Life-time Lease:  Trick him by changing the date out 100 years and see if he notices.  Stage 5 clinger.  I'll find you...

But in all seriousness, just ask him to explain why.  I'm sure he has a valid reason.

Hi @Andrew Ault.  Kudos to you for wanting to start early!  It was my senior year that I realized I wanted to own house rentals and get into commercial real estate.  But it took me 7+ more years to make both happen.

What type of real estate do you want to get involved with?  Being a realtor, property manager, renovating houses, analyzing deals, residential, commercial, etc.

I'd encourage you to go to the local REIA / REIC and meet people. Ask people to meet for coffee and start picking their brains. Real estate on all levels is about networking, so start now. Start educating yourself and be ready to act when somebody gives you your chance.

@David Moore, good stuff!  There are definitely benefits to finding a great property manager.

@Justin Egge

@Justin Egge, I think it is mostly best practice so the former tenants can't come back.

Hi @Albert Gutierrez,

Real estate is all about due diligence.

What are the market rates telling you about rent?  And what about the selling price?  It could be an urgency sale and they're willing to take a hit.  Or, it could be an inflated lease that you shouldn't underwrite.

Does each unit rent for $800 or is there a primarily large rental from one of the units?  The seller is always going to do their best to make the property/deal look attractive.  That's why due diligence is so important. 

I suggest you do research on the market rates for rental price and selling price, then see how well the deal pencils.  You'd hate to buy the property and a few months later realize the largest rental was significant overpriced and now makes significantly less than you expected.

Hi @Daniel Badke,

A few questions and suggestions:

• What type of property(s) do you have?
• What part of town?
• What price range are you looking for?
• When do you need property management?
• Any special accommodations, such as Section 8?
• Any requirements you have yourself for the PM?

Suggestions:

• Ask local real estate agents, be careful though as sometimes they get kickbacks.
• Ask local maintenance companies which PM's they prefer to work with.  They'll tell you who pays quickly and easy to communicate with.
• Lookup Zillow records for active rental listings and see how long some of them have been listed for.  That'll give you a track record how quickly they place tenants.

Hi @Dan H., it is best if you provide some additional information about what you're looking for.

Property managers can be selective about what type of properties and where.  It's best if you provide the following:

• What type of property?
• How many properties?
• What part of town is it located?
• Do you have a price range you're trying to stick within?  Whether it be a percentage or dollar range.
• Does it need any special accommodations: Section 8?
• Any special requests that you have?  Such as preferring to use your own maintenance team
• When do you need property management?
• Is there a PM currently in place?