All Forum Posts by: Kenny Dahill

@Aaron Moayed, a little late to the party but nonetheless...

I view properties as one of two types: Make money on their own or work to make money.

• Make Money on their Own:  These assets require very little effort to manage.  They're often located in good markets that tenants choose to live in.  They're often newer or remodeled, still newer appliances.  Overall these properties are easy to rent out and easy to manage.  You should expect to make 90-100% of your max Gross Income.
• Work to Make Money:  As you've probably figured out, these assets require a lot more effort to manage.  Often they're in areas tenants don't desire to live but must.  Older homes that aren't very well maintained.  It's a struggle to find tenants who qualify.  It's a struggle to collect rent each month.  You should expect to make 50-80% of your max Gross Income.

Why am I bringing this up?  Because the type of property you have should dictate what you're willing to pay for a PM!  

• Okay to be cheap, only once!:  If you purchased the 'Work' property, you went cheap.  That's alright.  But don't go cheap again!  The worst move you can make is hiring cheap management and expecting them to produce at the top standard.  Hire a great PM who will work to earn you more money.
• Hire a PM Asset, not PM Liability:  Ties into the previous point.  If you went cheap asset, pay your PM!  A cheap asset with cheap management will get you 50% of your max Gross Income.  A cheap asset with good management will get your 80% of your max Gross Income.  Hiring a good PM is an investment move that will generate you more income.  They're an asset!  Cheap PM's are liabilities.
• More than PM Fees:  When it's a 'Work' asset there's more than just monthly rent collection and occasional maintenance.  'Work' assets has legitimate risk of vacancies and evictions.  Make sure you are comparing more than monthly fees as some PM's include Eviction expenses (paperwork, court appearances, etc.) into their guarantees.  They might earn fees based on rent collected and not expected, helps align your incentives.  There's more than fees that you should analyze for PM's when you're dealing with lower rent assets.

Hope this helps!

@Veera Vala, absolutely!  Hopefully it helps you find success.

Hi @Idan Narotzki, good question.  I'll do my best to provide insight but please note I'm not a PM.

Blunt answer:  Any PM who claims to be self-respecting will not do a month-to-month contract.  Not that all who claim to be great are great, but the actual great ones will probably not accept.  They will use their contract and make you succumb to their terms, afterall they've got enough other clients and can't manage various contractual terms.

Here's why PM's will say no.

Leasing:  It's not uncommon for a property to sit vacant during the leasing period.  What happens when they are working hard but on Day 27 you tell them you're firing them.  There's no protection for their sunk labor costs.

Great Tenant:  Let's say they do finally get an amazing tenant!  Understand PM's make half, if not more, of their earnings through leasing.  If they landed a great tenant that is easy manage, that's money in the bank.  That's the difference of spending 5-10 mins per month vs 1-2 hours if they're difficult.

1 vs 100:  Chances are your PM will have dozens, if not hundreds, of clients.  They  can't make exception for just one of you, or else they'd have to do it for everybody.  Especially if you only have a single property and just starting with them.  I alluded to this earlier, but PM's have their own lawyers write their contracts.  This allows the PM to master their contract.  It wouldn't make sense to operate under numerous contract variations.

Termination Fees:  This might not be popular opinion, but PM's can benefit when their landlord fires them.  Every contract will declare a termination clause, typically owners have to give 60 days and PM has to give 30 days.  Along side the termination notice, often the landlord has to pay a termination fee.  That fee typically consists of their remaining contractual fees.  Unfortunately that is a lose-lose for landlords: pay for 2 PM's in 1 year or stick with them and they know you're going to fire them at end of contract...  Yikes.  They put these notices/fees into their contract for protection.  While I agree with the intent, I think they should be a percentage of the remaining balance and not necessarily the entire remaining balance.

So who would do M2M?  There are alternatives and you can message me for some additional information.  However, here are a few.

Starting Out:  To be a PM, most states require you be licensed.  You might find an individual who is attempting to start/grow their own firm that would be willing to accept M2M.

Realtors:  Some states only require a real estate license to be a PM.  Realtors might consider managing a few properties to create steady monthly income or to grow their potential client base.

@Andrew S., are you still in pursuit of a new HOA Mangement firm? We focus primarily on PM's right now, but I would definitely be willing to help you on this search if you need.

Wow, thanks @JoJo Tucker for the kind words!  Bottle of whiskey isn't needed, a 6-pack of IPA's will do the job.

@Andrew S.

@Andrew S., can you please clarify if you're looking for property management or HOA management? There are settle differences but from my experience a lot of HOA management companies won't do property management. There are some property management companies that will do HOA management. Clear as mud?

The biggest difference: HOA management don't do leasing or rent collection. The 'tenants' are the owners, or the owner's responsibilities if they rent out the units.  They also don't handle internal maintenance issues, that's the owners responsibility.

The similarities are related on maintaining the grounds, coordinating vendors, and accounting services.

@Shiva Bhaskar

@Shiva Bhaskar has some awesome contacts as well.  He's a great guy and loves connecting people!  Maybe I'll forward that whiskey bottle from Jojo to Shiva!

Hi @Breanne Weber.  Sorry to hear about the tenant placement issues.

First, inform the property manager of your decision to step in to take over.  You'll need to figure out the payments later, chances are they will still want to be fully paid their leasing fee anyways it isn't occupied.  If that's the case, then make sure they're still working in parallel with you while you start to source the leads.

There are several options for listing your rental property. Realtors love MLS because it's for realtors, but there's a cost to it. I personally refuse to pay for a listing unless I'm desperate, 5 units and 5 years as a landlord I haven't hit that desperation level yet. Zillow is my go-to, but Facebook Marketplace, Trulia, RadPad, and dozen more all are free.

How are the photos and description of the property?  Most tenants I find don't use realtors, it's easy to look  yourself now.  Photos are key!  If needed, pay a professional for some top quality photos and those can also be used for future years as long as the property remains the same.

Also, I don't blame your PM for passing on the month-plus out tenants.  As long as they were receiving enough leads, I would roll the dice as well.  If you weren't getting any leads, that's a different story.  You can also also the applicants to pay a holding fee or negotiate a longer lease so you minimize vacancy loss next year to help balance.  There's always a solution.

You shouldn't need a realtor to help you show it.  If you have a PM already, do the listings and sourcing yourself and then require they show the property to applicants you pass along.  Avoid bringing in another realtor if your PM is going to require you to pay them regardless!

@Dominic Franco

While unfortunate for Tenant B, you have your own guidelines to follow.

Cozy and all the other management software firms typically charge the tenant.  Not sure if any of them allow you to choose if the landlord wants to pay.  I know we do but can't confirm others.

My opinion is re-screening tenants should have been included in your acquisition cost/assumptions.  I understand 4 reports is a lot, $160, but the tenants are being financially burdened for the transition of ownership.  Doesn't seem fair, I personally prefer to start off the relationship better and not have them annoyed or hate me from the get go.  Not sure how many units you have, I would even consider giving them a $25 gift card as our token of appreciation for this transition.

Consider this: they qualify but move out because they don't want to pay for the screening.  You risk revenue loss from vacancy.  Plus the cleaning crew fee and any other repairs you'll need to make the unit ready.  As an investor, I'll eat $40 to eliminate my vacancy risk all day!  Qualify everything else about them first, make the screening reports last just in case they have another showstopper.

Obviously it would depend on the quality of tenants.  If the only issue you have with them is the late rent but always paid, why would you at least not consider an alternative that benefits both parties?  You minimize your vacancy risk, add some clauses in there to protect yourself for evictions, work out semi-monthly rent payments and then analyze if the deal works out for both parties.  

I always consider a 2-year lease over a 1 year if the reward outweighs the risk.  Which only this landlord will be able to determine himself.  All we can do is provide suggestions and alternatives.

If they're bad tenants and not taking care of the property then no way you would consider that.

Hi @Dominic Franco, congrats on the first deal!

Should you screen inherited tenants?  Yes.

Here are some things to consider, for you or others in your position:

When to screen:  Ideally as their lease is about to expire.  If they're on a lease then the new landlord must honor the existing lease.  So it doesn't make too much sense to screen during the lease, especially if they're not going to renew.  Ask them if they want to renew their lease.  If they're M2M and want to remain M2M, I would inform them of your screening requirement.  That might force them to move out or renew their lease.

Who pays:  Somebody will have to fork up the dough.  Is it fair for tenants that are renewing a lease to have to pay another application fee because of a new landlord?  This will be a personal/business decision but if they have been good tenants, pay on-time, and keep the property maintained then you should consider the price of your relationship.  It'll cost $30-40 per report.  Since it's for your peace of mind, I would personally cover the expense as landlord.  Having them pay could cause a rift or give them considerations to move out.  It's your decision though.

Where can I screen tenants:  There are a host of management softwares that work with the same affiliates.  At the end of the day, the reports should always be nearly identical due to the core source.

Thanks for sharing.  Based on that order, you have several options to cover your bases.  I'm not quite sure on all of their QuickBooks capabilities.  I'll send you a DM with additional information.