BP Podcast 036: How to Be an Awesome and Profitable Landlord with Kevin Perk

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On today’s episode of the BiggerPockets Podcast, we look at the topic of landlording and get some great advice from long-time landlord Kevin Perk. Kevin is a very successful investor from the Memphis area and has a real good grasp on finding and dealing with tenants as well as some unique methods of financing his properties, getting rid of bad tenants, and building wealth. There is a lot of really great tips and advice for anyone looking to grow their buy and hold real estate business.

Read the transcript to episode 36 with Kevin Perk here.

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Listen to the Podcast Here:

In This Show, We Cover:

BiggerPockets Podcast _ Real Estate Investing and Wealth Building 9.42.11 AM

  • How Kevin finances dozens of properties with creative financing
  • Private lending and methods to use commercial financing to invest
  • Making offers that get accepted
  • The three things that turn a landlord into a slumlord – and how to avoid them
  • Online technology to help attract and manage tenants
  • Signs of future bad tenants
  • How to fill vacancies during the holiday season
  • The best and worst parts of being a landlord
  • Real estate clubs: determining the good, the bad, and the ugly

Links Mentioned in the Show:

Books Mentioned in the Show:

Tweetable Topics:

Don’t drop your standards just to quickly fill a vacancy. (Tweet This!)

When investing in real estate, have some cash reserves. (Tweet This!)

If you bet on appreciation – you are going to lose. Real estate doesn’t always go up. (Tweet This!)

Connect with Kevin:

Kevin’s BiggerPockets Profile

Kevin’s Blog: SmarterLandlording.com

About Author

Thanks for checking out the BiggerPockets Real Estate Investing & Wealth Building Podcast. Hosts Joshua Dorkin & Brandon Turner strive to bring top-notch educational content and interviews to our listeners -- without the non-stop pitch prevalent around the industry. With over 80,000 listeners per show, the BiggerPockets Podcast has become the biggest real estate podcast in the world. But don’t take our word for it. We’re the top-rated and reviewed real estate show on iTunes β€” check it out, read the reviews on iTunes, and get busy listening and learning!

47 Comments

  1. Great podcast. I loved the property management software recommendations. I also loved how clearly Kevin articulated his renter demographic of young, urban, digitally savvy renters. Great approach.

    • Kevin Perk

      Marina,

      The software has been a big help to our business. Technology is amazing these days and it really helps us connect with our tenant base at all stages of the business, from advertising, to rental applications, to rent collection and maintenance requests.

      Thanks for listening,

      Kevin

      • Tom Sylvester

        I agree. One of the best things that I heard in the show was that Kevin was very in tune with where he wanted to invest and what demographic he was targeting. Often times, people will try to advertise in a way that is different than their demographic (ex. advertise online when locals read the paper). Kevin describes how it should be done to maximize return.

        Thanks for sharing Kevin!

        • Kevin Perk

          Tom,

          Very true. You need to know your market and how to communicate with your market to get the best results. This make take a little trial and error to find the right media but once you find it your results will increase.

          Thanks for listening and commenting,

          Kevin

  2. Great episode!

    Kevin, How does it work when you collect the rents and then you pay your own bills? Do you pay yourself a salary or if you need to take $500 to pay a bill, you take it from the account where you collect rents?

    Also, are your properties in LLC? I assume not, based on how you’re getting loans?

    Thanks!

    • Kevin Perk

      Marie,

      We pay ourselves a salary and some of it is loan repayments from money we personally loaned to the company for start up and investment costs.

      My initial properties were not in an LLC as we could not get loans in an LLC at that time even though we had set one up. Today the commercial loans are made to my LLC so the properties are held by my LLC.

      Do you need an LLC to start or grow this type of business? No, I do not think so. We would have been fine w/o one.

      Great questions. Thanks for listening,

      Kevin

  3. Hi Kevin, I have long wondered how you go about rejecting someone you don’t want to rent to when the basis is their occupational field, their general manners, etc., do you give your actual reason or simply flat out reject them? And what do you tell them if they want to know why? How do you avoid being accused of discriminating and how would you answer an accusation if the plain answer is you just didn’t have a good feeling about someone?

    I also loved the idea you gave of providing tenants with a detailed and priced cleanup list before vacating a property. Is there any chance this exit checklist could be posted here on BP? Great show, I really enjoyed it!

    • Kevin Perk

      David,

      You can avoid discrimination charges by having your criteria written down and in your files so you can pull and show them quickly when asked. For example, you may not want rent to lawyers. If not, simply write that down as part of your rental criteria (No Lawyers) along with your credit, criminal and other criteria and keep it in a file. When someone calls about an apartment, as part of your pre-screening, ask where they work (Always ask the same questions to everone who calls). If they say attorney, simply tell them it is your policy not to rent to attorneys. If they say “Well, I will sue.” Say, “That is why I do not rent to attorneys.” Attorneys are not a protected class and this is perfectly legal AS LONG AS YOU DO NOT RENT TO ALL ATTORNEYS, NO EXCEPTIONS. IF YOU MAKE AN EXCEPTION YOU ARE POTENTIALLY BEING DISCRIMINATORY!

      As for other criteria, a ranking system works. Simply rank potential tenants from 1 to 5 on neatness, manners, etc. Then add up the score. The highest score wins. Just document why you gave a low score such as car full of junk, etc.

      Hope that helps. If not let me know. I will see about the list in a future post.

      Thanks for listening and commenting,

      Kevin

  4. Thanks Kevin for the great podcast. Notice you said LLC as in one. Having a business that gets loans and is building a name needs to have a continuous name but you hear the advice to put every property or a certain amount of equity, say 250k, in a new LLC. Have also heard people regret having lots of them because of all the extra work. What is your philosophy?

  5. Hi Kevin,
    Thank-you for sharing that valuable information. I am a newbie and I learned so much from you πŸ™‚ I especially loved the idea of sending that list to tenants that are leaving. I wish you every success for the future.
    Thank you again,
    Michelle Madtes
    Also thank-you to Joshua and Brandon….you are “awesome”

  6. That was so good! Love the podcasts, guys. Kevin, you are awesome! I hope to start purchasing cash flow property and become a landlord and I so appreciate hearing from someone who has it figured out. Brandon and Josh, I love the “fire round”? That’s nice, keep it coming guys, good work and it’s very helpful. –Karen

  7. Good podcast.
    Interesting points all around.

    Like others I would be interested in seeing a copy of the itemized check out sheet.

    BTW I appreciate the Scrooge McDuck Reference, you don’t get enough of those these days! πŸ™‚

    • Kevin Perk

      Al,

      Yes, buy and hold is cool! To be fair though, I have seen some pretty nice checks come to some flippers I know. But you are right, the key is not to bet on it. Diversify with some buy and holds for those down times. Checks are a nice bonus, but cashflow is king.

      Thank you for the very kind words. I do appreciate them,

      Kevin

  8. Hey Kevin,

    Great podcast! Thanks for sharing your thoughts and ideas with us all. I thought the clean-up/move-out price list was a great idea. Do you have a copy of what you use? I would be really interested in taking a look at it.

    Thanks!
    Abbey Wright

  9. Hey Kevin, great talk – thanks!
    Visited your website and noticed you have it all set up quite nicely. I’d like to do this for myself in the near future, but have run into questions of LLCs and business-legal stuff. May I ask if you have each of your properties set up under their own LLC? If not, what do you do to protect yourself? I’d like to do with the parent company as a bigger umbrella organization, and each property filed as a separate LLC underneath… don’t know if this is what most people do, however, and would love your thoughts/experiences!

    • Kevin Perk

      Tiffany,

      I have one LLC for my properties. I think a separate LLC for each property would be overly cumbersome. You can do the umbrella here in Tennessee but I do not know anyone who has.

      For protection I have insurance. A good general liability policy.

      What you want to do will depend on your aversion to risk and how you want to structure your business. Just be sure to get some advice specific to your state and understand all of the costs (administrative and monetary) with setting up LLC’s. Make sure you think it is worth it.

      I hope that helps you.

      Thanks for listening, commenting and the kind words,

      Kevin

    • Kevin Perk

      Cheryl,

      I have found that some long distance landlords just do not realize what they have gotten into. They do not think it will be that difficult to manage a property from 1,000 mil away, but it is. Once they get tired and lose enough money they will list the property with a realtor and that is generally how I find them. Or, they loose them to foreclosure and I pick them up from the bank.

      I have tried marketing to out of state investors with letters but without success. They never seem to want to come down to reality on a price that way. So I just wait for them to get a little more motivated or lose the property.

      I hope that answers your question.

      Thanks for listening and writing in,

      Kevin

  10. Kevin,

    Great show. I have listened to it 5 or 6 times. Question about the software. I am in my third year of being a landlord. Started with a 5 unit and now have 12 other properties. I got QuickBooks last year and have slowly become more proficient at it. I feel like its ok for the bookkeeping but doesn’t seem to do everything a program like AppFolio could. My question is, is Appfolio the only program you use? I feel like using something like AppFolio and QuickBooks would be double the work. I would hate to start over and re enter all of the information I have in QuickBooks, but with the year getting ready to close now would be the time to do it so I can start next year off with a clean slate on whatever program I decide to use. Any recommendations? Thanks.

    BJ

    • Kevin Perk

      BJ,

      Appfolio is the only product we use. There was a lot of re-entering information into the program. Just the way it is but Appfolio is soooooo much easier than QB in my opinion. Is it perfect? No, but what is? Check out the other products on the market, as there are many and another might be a better fit for your properties and business size and structure.

      Hope this helps and thanks for listening so much πŸ™‚

      Kevin

  11. What a really classy guy Kevin is! I thoroughly enjoyed this podcast. I am happy to see that it is possible to landlord with quality in mind. I learned a lot and especially appreciated the tips on how to automate tasks by using Appfolio. There was so much useful detail throughout this show that I would have listened for 3 hours if I could..

    Thanks Kevin, Josh, & Brandon.

  12. Gregory Massi

    Hi Kevin,

    I am a newbie and was hoping you could clear up the analysis you do prior to buying a property. You said you factor in 10% vacancy and 10 to 12% repairs/maintenance and if there is cash flow of $150 per unit (after considering PITI) you will consider buying the property. Are you referring to 10% of the rental income, or 10% of total expenses (mortgage, insurance, taxes, etc)?

    Great show by the way!

  13. mike oconnell

    Thanks for the very informative podcast! I especially like your idea of giving your tenants the “how to get you full deposit back when you move out” form. It’s people like you, with the ideas you pass on to others, that makes BP such a great resource!

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