Over the last 6 years, I have managed hundreds of houses, apartments, and condos in the Central Mississippi Area.
- This is not a part time or side job for us. Property Management is what we do everyday and plan on doing for a long time.
- We have a qualified staff ready and willing to meet the needs of our residents and the owners
- We have a sophisticated online based accounting system that is top notch. It allows our residents and owners to have 24/7 access to the important information that they need such as:
- Allow residents to download a scanned executed copy of their lease
- Allow residents to make secure payments online. Also have the option to setup recurring ACH payments.
- Create work orders For maintenance requests online. These work orders are emailed to the tenant and to everyone on our staff.
- Residents can view payment history and maintenance request history and time log.
- Maintain a full financial picture with complete general ledger accounting
- Owners can run key reports instantly 24/7 from anywhere that has internet access.
- Pay owners directly with ACH payments into their bank account
Here are some of the Costly Mistakes we see some Rental Owners Make
Costly Mistake # 1 – Potential Tenants don’t lease your house because they can’t get the information needed to make an informed decision about your house. Here is what most landlords and property managers do when there they have a vacancy. First the sign goes in the yard with the landlords phone number. Next, a few pictures are posted on Craigslist with the same phone number. The phone starts ringing and the landlord tells the same information to one after another un-screened prospective tenant. After about 3 calls, he doesn’t answer the phone anymore. The owner has a bad case of Phone Burnout and no rent is collected for days! We do something quite differently. On all our advertising, we direct families to our 24-hour recording that gives specific details about the house and requirements to lease. Also, they can “text” a number to get immediate information delivered right on their smart phones. What do they get? Every available house gets their own professional quality 3 to 5 minute video that can be watched on their computer or smart phones. We find that 40% of the people watching our videos view them on their phones. So it has to be “mobile friendly.” Very important to get all the pertinent information to the prospective tenant instantaneously! Very cool & very effective.
Costly Mistake # 2 - Your Prospective Tenants can’t make an application.Here is what I mean by that statement: Let’s face it! The old way of finding tenants simply doesn’t work today. Many tenants are moving into the area and need EVERYTHING accessed via computer, including the application. We provide our tenants with a fill-able online application that gets delivered to the manager via email. The qualification process starts immediately and we have multiple applications on each and every property.
Costly Mistake # 3 – You Don’t Treat Your Rental House Like A Business. Think of it this way. If you have a $100K house, you have more assets than 95% of all businesses in America. Just think if you have 5 houses. Compare it to a hamburger franchise. Your assets total could easily be more than a successful burger restaurant. What do we do to treat our rentals as a business? One of many ways, we use Buildium, a terrific property management accounting software that requires us to input financial information on a daily basis. And, here is the cool part! You as owner can access your “financials”, Income Statements, Lease and Management Agreements 24-7. These are online – real time reports that you have complete access to. And, probably the most important fact for you the owner . . . we send your payments on the 15th of each month directly to your bank account.
Costly Mistake # 4 – Ignoring this Business Principle – “If you’re not generating leads on a daily basis, you’re not in business!” Gone are the “good-old days”… of just throwing out a rental sign in the yard, on Wednesday, and the home would be rented by the end of the weekend. There is just too much competition out there, at the moment.
Let’s Face It, Finding Quality Tenants Fast, In This Economy, Is Extremely Difficult
If it were easy, you and I wouldn’t be having this conversation. There is no way anyone can successfully manage properties — especially a large volume of properties — unless they have a proven system for finding quality tenants quickly. We have spent years creating, testing, and refining our marketing system. We call it our “Tenant Placement Service,” and it generates 5 to 7 times the amount of tenant calls as the traditional rental signs on the property and ad in the newspaper.Let me discuss a few of them now, but keep in mind, all these methods are trade secrets that my competitors would love to learn. Therefore, I obviously can’t reveal all my strategies so I will only highlight a couple of them.
• We generate 532% more responses than a newspaper ad using a little known but highly effective website for advertising rentals. I know this sounds unbelievable, but we have tested this over and over again, with the same results. Nowadays, tenants simply prefer looking for rentals online, rather than the newspaper (as evidenced by many newspapers, around the country, struggling or going broke recently).
• A rapid process for qualifying good tenants, and getting them to put down a deposit on your rental, quickly. Most managers take 3 or 4 days to approve a rental application. By that time, the tenant has often found something else. Now this is not to say that we aren’t being picky, WE ARE. For example, we have found that about 30% of tenants are lying (a little or a lot) on their rental applications. They might use their friends as their landlord or employer, give a false social security number, or are currently under eviction at their present address. There are dozens of scams that horrible tenants use to try and slip under the radar, and move into your home. However, the reason we focus on completing the background checks for a possible new tenant — within 24 business hours — is extremely important. When you think about it, the tenant is still out there… looking at other properties. If he or she appears to be a quality tenant, we want them off the market by signing your lease, sooner rather than later. At last count, we had over 17 different methods for attracting quality tenants. This stuff took years of testing and refining all sorts of ideas, to find the ones that actually work.
Costly Mistake # 5 - Allowing a property to sit vacant for 3, 5, or even 7 months, hoping for a good tenant to come along. Let me assure you about one thing when it comes to finding a good tenant: Hope…Is Not A Good Business Strategy! I see this mistake all the time. So let me give you my “cardinal rule” for property management:
IF your property is sitting vacant for more than a month, there is at least one thing WRONG that must be fixed, and I have NEVER found an exception.
And YES, this is true even in today’s economy.The first and most common issue is the rent is just too high and has to come down a bit. Right now, tons of people are sitting on empty rental properties, because they’re trying to find a tenant to pay a rent high enough to make their mortgage payment. These owners are understandably reluctant to rent out their beautiful home at a loss, each month. Pulling money out of a savings account to make up the difference between the rent and the mortgage is not anyone’s idea of fun.The unfortunate reality is we are in a down cycle of the real estate market. Therefore, it’s critical your rental rate is competitive with similar properties in the surrounding area.
Your property manager must give you an honest, No B.S. Assessment Of Market Rent! In other words, how much can you realistically rent your home for in the next 30 days? And by the way, you should be willing to drop the rent a bit below that price (if necessary) to start getting cash flow rolling in.Without question, in this economy, renters will negotiate rent. And the reality is, the property owner who is flexible will get the best tenants for the longest amount of time. Look, I know this is not a popular topic to discuss. After all, who likes to talk about getting less money? However, I’d rather have you know this up front rather than after your property has been sitting vacant for six months, because the rent is too high. I’ve routinely seen rental homes sit vacant for being just $50 a month more than the going rate for similar homes in the neighborhood. So it’s extremely important you get this right.The second common issue is something goes wrong inside your rental, after it was painted and cleaned. Let me tell you a strange story about this. One month, there was a dead cat in the driveway of one of our available rentals. We were wondering why tenants weren’t putting in rental applications, after they looked at the house. So, one of got in our car and drove out to see what was wrong – a very good technique by the way. Sure enough, once we removed the “dearly departed,” the house rented within 2 weeks.
Or sometimes, bugs will suddenly show up. Not to be gross but a few dead roaches on the floor will scare away just about anyone. Other times, the roof, toilet, or sink might suddenly start leaking, and anyone who visits starts wondering what else might be wrong with the home. So, they pass on your rental property because they think if the owner missed these “obvious” repairs, it is just the tip of the iceberg. In their mind, there is probably a hell of a lot MORE things wrong, they can’t see.
The key is to get feedback from tenants after they look at your rental, so you can spot this stuff early and fix it. We are constantly quizzing tenants who visit one of your properties to find out why they didn’t rent. Based on their feedback, we make any necessary issues to your rental, immediately. For example, the carpets may need to be steam cleaned again, because some stains showed back up, or the maid needs to clean the bathroom again, because she forgot to wash down the tub. You get the idea.
Although this may sound very simple, this is extremely uncommon in the property management industry. Most property managers don’t own rental properties of their own, and therefore, haven’t had the painful experience of their own rental property sitting vacant because of one of these issues. Regardless of the reasons, we have learned (the hard way) that well over 65% of all tenants who look at a typical rental property, are turned-off, instantly. They are turned off because either the rent is too high in comparison to similar properties in the neighborhood, or one or more things are wrong inside the home, like bugs or leaks. Think about it, haven’t you experienced the same negative first impression, looking at places to rent when you were younger?
We have learned to carefully and objectively research the real world, rental rates of properties we manage for our clients. We check online and in newspapers to see what properties are currently available for rent, in a specific neighborhood or zip code. Our goal is to find 4 or 5 similar properties so we are comparing apples to apples. If you price your rental $75 above what other similar properties in the neighborhood are priced at, it will sit vacant… a long time.
Is it a bit more complicated than this? No, not really… However there are a large number of things inside your rental that need to be checked carefully so tenants are not turned off.
We also carefully inspect your home with our unique 67-point “Ready to Rent” Checklist.
This checklist was developed from years of trying to figure out why certain homes rent quickly and others do not. My inspection staff checks everything, from ensuring the closet doors is hung properly in the bedrooms, to looking under the sink for any water leaks. It is vital we are thorough; because each of these 67 areas will either offer a positive or negative impression to tenants. My operating philosophy is if my mom wouldn’t be 100% satisfied with the cleanliness and condition then the rental is not ready to rent. However, the average property manager or landlord often just does the minimum to get a house ready for rent. This is a mistake and results in the property sitting vacant for months, and eventually, renting to a lower quality tenant, who typically pays the rent late and doesn’t take care of the home.
Costly Mistake # 6 – You are falling prey to unscrupulous or inefficient repairmen. If you have owned your property awhile, I am sure you remember the annoyance of being over charged by one of these guys.For example, your Plumber shows up to fix your leaking toilet, charges you $75 to drive out, $85 to fix the toilet, and $35 in parts for stuff that costs $8 at Home Depot. OR…Your AC repairman comes out to fix your system. And after just 20 minutes of looking over your AC unit, he tells you it can’t be fixed, and you need a brand new system. You’re left wondering if he is really looking out for your best interest… or his own. Does any of this sound familiar? After a couple of years of experiencing this type of service, I decided to do something about it. We created… Our own 24/7 Zero Overhead Repair Service
We went searching for and found electricians, plumbers, and AC repairmen that are 1 or 2 person businesses. They are licensed and insured and operate out of their work trucks. There is no office space, fancy trucks, expensive advertising, or employees, so their over-head is next to nothing. These guys constantly suffer from inconsistent business: a typical “feast or famine” cycle. So when they find us, we give them steady work which smoothes out that annoying problem. In other words, we can instantly fill 50%-75% of their time, and they never have to spend any advertising dollars to keep this business. We simply insist they do quality work, and our clients receive discounted rates.For example a typical electrician might charge your $125 an hour, $75 trip charge, and a 300% markup on parts. On the other hand, our electrician charges us $40 an hour including the time it takes to drive to your property and zero mark-up on parts. He comes out ahead because he is NOT just fixing your house that day. We have also given him one or two other electrical jobs at other properties.
Keep in mind; the electrician we hired spent no money on advertising, office rent, receptionist, or any of the other significant costs. Therefore, he is earning more “take home” money compared to the electrician working at a large electrical company, with far less headaches. Can you see how this would work for him (and you), in a positive way?
The net result is your Cost To Repair Electrical, AC, or Plumbing Issues Is At Least 50% Less Than You Will Pay Working With Other Property Managers.
Our ballpark estimate of what our typical clients save in repair costs is $875 a year per property. More importantly, you typically don’t need to hire an electrician, plumber, or a contractor for minor repairs. A well-trained, responsible handyman can easily handle 80% of repairs that typically come up. You end up saving even MORE money on these types of repairs.For example, any handyman (worth is salt) knows how to quickly repair broken or leaking toilets and sinks. You don’t have to hire a plumber for that kind of stuff. If you do, it is simply an overkill and much more expensive. It’s like visiting the emergency room for a migraine headache and getting a prescription. The visit would probably cost you around $700 while your neighborhood walk- in clinic could provide the same thing for $75.
Obviously, our licensed and insured plumber, AC tech, electrician, or contractor will handle any type of serious repairs. But, the fact of the manner is that most repairs are minor and do not fall in that category.
Be leery of any property management company that just hires repairmen from large companies driving fancy trucks. You end up “paying through the nose.” The property manager is paying top dollar to companies with huge amounts of overhead.
Not to mention, these repairs are being completed by an over qualified technician, which (more often than not) could be repaired by a competent handyman, at a fraction of the cost.
Costly Mistake # 7 – Your Property Manager Doesn’t Own Any Rental Properties, and therefore, doesn’t share your perspective.
This is THE ONE question you must ASK before you even think of hiring a Property Manager. I am sure you would agree, if I haven’t “walked in your shoes” as a property owner, how can I understand your pressing needs to find a good tenant. Or just how vital it is to keep maintenance costs reasonable?
It’s like asking a guy for parenting advice, who is a 40 year old, confirmed bachelor…He just doesn’t have your frame of reference.
Did You Know That Most Property Owners Are Losing At Least $1500 A Year Of Income On Each Rental Property… Which could have (just as easily) ended up in their wallet.
Why? Because of lack of urgency of their property manager — who has never owned more than one or two rental properties in his life (if that many)? He or she just doesn’t understand the need for passionate attention to detail in marketing, screening for good tenants, or finding high quality, inexpensive repairmen.
I live these issues everyday with our own rental properties. We own over 20 single-family homes. In order to meet our mortgage payments, property taxes, insurance, and repair bills, we had to figure out how to solve these problems, and do so quickly.In fact, it is from learning how to make our own rental properties profitable that we developed our marketing, tenant screening, and maintenance systems.
These systems now form the core of our business. Without question, there is nothing like the necessity of having to pay over 20 mortgage payments each and every month to provide inspiration and desire to get better and better, as a property manager.
Costly Mistake # 8 - Paying Unnecessary Fees to your Property Manager • A Set-up/Processing Fee of $250-$400 simply to set up your rental property in their computer system? To be blunt, this fee is completely bogus. In the real world, it only takes about 5 to 10 minutes to type in your information into the computer. Okay, to be fair, it might take a few more minutes to pull out a filing folder, label it, and put the management agreement into it, but that 15 minutes of work doesn’t justify this fee.• Charging the Leasing Fee UP FRONT – This practice is absolutely absurd. Normally, all management companies earn 50% to 100% of the first month’s rent, to find you a qualified tenant (i.e. leasing fee). This fee should only be paid once they do (in fact) find you a quality tenant. NEVER pay this fee in advance, because there is no incentive for the company to make the extra effort to find a great tenant quickly.• Advertising Fees of $500-$700 to “market” your rental – The bottom line is this should be a cost of doing business for the property manager (not you). You shouldn’t be charged a dime for this. It’s like going into a grocery store, and the checkout clerk tacking on an extra 15% “advertising fee,” once she rings you up. It just doesn’t make any sense.