What Makes a Successful Property Management Company – Videos 1 & 2
Video 1 Transcript
Jason: Guys, we’re really excited to be here, I’m Jason Otts. What we’re going to do is we’re going to go over property management. What I’m going to do is I’m going to talk about what you can expect from a property management company, how to work with your property manager, go over expectations, and how it all works. You might take home some ideas, you might go to your property management and go, “I heard this is something that we could do.” Just give you some ideas and then rehearse with it.
We’re going to talk about marketing, different ways of marketing property, what’s the most expensive thing for landlords. Ways that ONEprop, how we market our clients’ properties. Questions you should ask either you management company, your potential management companies, or yourself if you’re self-managing.
We’ll talk about tenant screening which I think is one of the most important things that any company has to offer or any landlord needs to do. We’ll also talk about the property management aspect as well as the repairs and the accounting side of it.
What is the most expensive cost for a landlord? Normally on this slide, I have it where you don’t know the answer. I ask and you guys all got to guess, and you’re all going to get it wrong. Then I come out with the big surprise and tell you, but there it is right there. There’s the answer. Vacancy. Anybody have an idea why? Anybody agree with this or disagree with this? Vacancy, right? Yes, that’s what we’re trying to avoid because what are we trying to do?
Audience: Try to make money.
Jason: Try to make money. If the property is vacant, are we making money? No. What are we doing? We’re losing money because we still got to make that payment. Even if the house is paid, clear, and free there’s still taxes involved, the insurance, there are still costs involved. One of the biggest enemies to a landlord is vacancy.
How do we avoid vacancy? I can’t tell you how many times we put a property on the market or we’ll talk to someone who’s looking to invest in real estate, and they might have different ideas of marketing. It might be vacant at the time they’re looking to market it, and they’re saying, “This neighborhood I know is going for $1,800, but I want to put my probably on the market for $2,100. By the way, the carpets, I think could get away with a shampoo.” What’s going to happen with this property? She’s laughing over. What’s going to happen with this property?
It’s probably going to sit vacant because next door neighbor’s house is going for 1,800 bucks with a brand new carpet in it. These are items that your property manager, When they look at the marketing aspect, they might walk the property. This is what we do with our clients, we walk the property. We look at it and we say, “This carpet, it looks pretty old and dingy. We don’t think a shampoo will save it. In order for you to get the top dollar of rent, at what the comps are going for. Instead of aiming for that $2,100 hoping to hit it out of the park which isn’t realistic, we’re going to bring it back down to $1,800 and tell you how to get to the $1,800,” and make those recommendations.
We’re trying to reduce, what? Vacancy, that’s days on the market. We want to get that rent coming in. I can’t tell you how many times we’ll see someone who will try to go for that home run, try to cut out on the repairs, or whatever needs to be done on the property; upgrades. Then what happens when it sits for a month? Did that just cost them money? How much money did that just cost them?
Audience: Good chunk.
Jason: Good chunk, what’s a good chunk? Let’s think about it. 1,800 bucks of rent that they just lost that they should have got, what else? Mortgage payment, if they’re making a mortgage payments. Not only did they lose $1,800 on lost rent, but they also had to make a mortgage payment, there’s insurance, taxes, there’s a lot of stuff. Vacancy, you see where vacancy adds up pretty dang quick?
The other thing that we see as well that’s very important just like any company, a car dealership. What do they need to do when they have a product they need to push? What do we see? Advertisements.
In Texas, there’s this funny Kia commercial, they’re pretty aggressive. I don’t know if they’re like that out here. There’s one guy out there, he’s really just obnoxious, out there, and he’s like, “I don’t care how you get here folks, just get here,” just really obnoxious. That’s advertising. It’s the same thing when it comes to you guys own rental properties, we have to advertise it. How do we advertise it? How do your property managers advertise it? How do you plan on advertising? Those of you who leased out your own properties, what did you guys do? Who’s that? You said Craigslist? Why do you use Craigslist?
Audience: It’s free.
Jason: It’s free, what else? Emails, use anything else?
Audience: Sign outside.
Jason: Sign in the yard. How many of you guys use a property management company right now? Show me again. How does your property management company advertise your property?
Audience: it’s different.
Jason: MLS, okay. Why do you think that is? Why do they advertise different than what you guys were advertising? Any idea? Okay. Yes, they’re realtors. Yes. Somebody said something over here?
Audience: Better tenants?
Jason: You guys hear that? Better tenants. Why would you think there would be better tenants?
Audience: It’s from a legitimate source.
Jason: We see that as well. We actually do not advertise on Craigslist. If Craigslist works for you, that’s fine. We don’t do Craigslist. We do websites like hotpads.com, rentals.com, we see Trulia, Zillow. Where we do a lot of our sourcing for tenants is on the MLS. We put it out there, and we advertise MLS. We have a great reputation amongst the markets that we’re in amongst the realtors out there because we pay their commissions. When they bring a tenant to us, we’ll pay their commissions. I can’t tell you how many phone calls I get where a realtor will talk to client who’s relocating or they’re looking to downsize or get a bigger home because they’re having a baby.
It’s a great client who makes good money, who’s got good credit. This realtor is calling ahead of time saying, “This client’s well qualified. Do you have anything coming up?” We’re able to plug them in together real quick. Now, why do these realtors want to call us? Why is that?
Jason: Commission. We can all agree in that commission, right? They’re getting paid for it. What are we doing? Who are we employing? We’re employing professionals to work for us. We’re paying their commission. That essentially what we’re doing. We’re not taking a shortcut. What are we reducing by doing that?
Jason: Vacancy. We’re reducing that vacancy which is the most expensive cost. That’s what we’re trying to do there.
I don’t know if you guys can see this. I like to throw this in here. Anybody see that? It’s always good to disclose things on your home. That’s a realist thing. Anybody see that? You see that on the back? It’s the real listing, it says, “Not haunted.” It’s good to disclose that your home is not haunted apparently.
Let’s talk a little bit about screening. Those of you who at one time or are self-managing, how do you screen your tenants? What are you guys doing?
Audience: Call the employers.
Jason: Call the employers. What else?
Audience: Previous landlords.
Jason: Previous landlords. You’re doing a rental history check.
Audience: Credit reports.
Jason: Credit reports. Where are you getting the credit reports? What’s that?
Audience: In credit history report.
Jason: From the tenant themselves?
Jason: You have them pull it and then bring it to you? Okay. Anybody else? We’ll talk a little bit about as far as screening, what we do is– I’ll jump to the next slide real quick. We check their credit check, we do a criminal history check, check th national sex offender list, employer verification, rental history. I heard spots of different people checking that. Why do we check those things? What are we trying to reduce?
Jason: Vacancy, right? Do rental histories help that? Yes, they do. We’re looking for well qualified tenants. What’s the other thing you want to do? Protect the investment. How does protecting the investment– How does doing a background check protect the investment? Any ideas? Are human beings creatures of habit? We are, right? We don’t just one day decide, “I’m going to be the worst tenant in the world today. I’ve been a good tenant for the last 10 years, I’m going to be one today. I’m going to just throw out my credit out the window today.” No, we show history of that. That’s what we’re doing, that’s how we protect the investment.
When we talk to the previous landlords, what are some of the questions we want to ask?
Jason: If they have evictions. Did you have to evict them? Did you ever file? Did they leave the property owing money or did their security deposit cover it? Questions we want to know, right? We’re doing our due diligence because we’re trying to protect our investment. What should we expect from a tenant? When we’re doing these background checks, these screenings, what makes a reasonable tenant? What’s that?
Audience: Pay the rent on time.
Jason: Pay the rent. We want them to pay the rent. What’s that?
Audience: Pay in full.
Jason: In full. That’s right, in full.
Audience: Their utilities.
Jason: Their utilities. The partial ones are fun to deal with. Should a tenant have perfect credit? Should we take the highest credit score that we can get? What’s that? I’m seeing some nos, some yes’s. We’ll jump into that in the next slide, we’ll do a scenario where we look at it. What about job history? Should they have a good job history?
Jason: Steady job history, right? Is it what you’re looking for? Yes. These are all basic ideas. When it comes down to it, what gets in the way when we’re making these decisions? When we’re looking at somebody and we’re making a decision, what gets in the way? I’ll tell you in my case. When I had my investment property, what got in my way, was me. I mixed personal feelings with business feelings. Anyone ever done that? You don’t have to admit, don’t admit it. I’m just kidding. I did that. I bought my first rental property, we had fixed it up, we had put tile floors throughout, trying to do what we call bulletproofing the home. Making it to where, you guys know. You don’t want carpet in main areas. What we were doing was we were getting ready to be a great rental. I was there one day painting it myself.
First of all, that was a mistake, I was painting it myself. I am not a painter, I’m terrible at it. I was painting it myself, my wife was helping me. We’re there painting, and this couple pulls up. We had a for rent by owner sign out in the yard and I didn’t even think I’d mowed the yard in two weeks. They pull up, they walk in, and she goes, “My husband and I are looking to rent a property. We’re looking to start a family and he works for Cracker Barrel. Right now, he’s doing the contract. He’s building–” do you guys know what Cracker Barrel? Do they have Cracker Barrel here? Okay, so he was building the Cracker Barrels throughout Texas.
He was a construction guy and he talked about things that made me, “Yes, you know what you’re talking about,” because I didn’t know what he was talking about, so I figured he knew what he was talking about. He comes and goes, “I can finish painting this for you. You’re also putting in baseboards, we can do all that for you. Can you make us a deal? Can you skip out on the security deposit? Can you wave that?” I’m like, “All right, it’s fine.” I had a good feeling about it. They were a young couple. My wife and I had only been married for a couple years, so we felt what they were going through. They deserved a house, right?
We felt that pain so we’re like, “Yes, we’re going to let them go ahead take it. This is great.” See, I told you I didn’t need to have property management come, I did it myself. I didn’t even have to do the painting at all. I got away from that. I had figured out the system, okay?
A little couple of months later I received this. This right here I carry with me. This is from 2006. It says December second 2006 for $1,000. Here in the subject line, you’ll read very clearly it says November’s payment. We’re already off to a great start, right? What happened was, her mom had passed away. She just called me, says, “We can’t pay rent my mom passed away,” and I’m feeling really bad. I’ll get into the next slide, what we did after that. What happened here? We’ll pick up that story next segment. What happened? What did I do wrong? Help me out, guys.
Audience: Emotionally involved.
Jason: I got personally involved. I said, “These guys are good people.” What are we running here? We’re running a business, right? That’s right. Was I treating this like a business? No. That was probably the first mistake I made. Now, what was the next thing I did? What did I let them do?
Audience: They didn’t pay.
Jason: I didn’t make them give me a security deposit because why? What were they going to do? They were going to finish painting, do the baseboards for me. I got a deal. What else did I do wrong? I’m missing something that I did not do.
Jason: I actually did do a lease. I forgot to tell you, I actually did have a lease written up. One that I googled and found. I don’t even really know what it said, but I googled it and found it. What did I do wrong? What did I forget to do?
Jason: I didn’t do any type of screening at all because I felt good about them. They’re like us, my wife and I, newlyweds. Heck, we even thought about hanging out with them. Talking about taking it to a whole new level of personal. I didn’t do any of this. I didn’t check their criminal history, their good job history, their rental mortgage history. I didn’t do any of that.
Let’s jump to a scenario real quick.? We got Tenant A and Tenant B. Who’s Tenant A? They’re relocating, 740 credit score, relocated from out of state for a promotion. This is a real scenario that we had. This person was relocating. They were taking over the Texas area to be a regional sales rep.
All the background checks looked great. We recommended one month security deposit because the risk was low. Now, we also had another tenant apply for the same property, Tenant B. They had a 590 credit score, recent foreclosure. All background checks, they were fine, no criminal history, anything like that. We recommended two month security deposit since they had some issues. How many of you guys would take Tenant A? How many of you guys would take Tenant B? Now those of you who would take Tenant A, why would you take Tenant A? Don’t be shy.
Audience: Numbers are better.
Jason: What’s that? Numbers are better on their credit, okay.
Audience: They have a job when they come.
Jason: They have a job when they come in, right. Just got a promotion. Those of you who would take Tenant B, why would you take Tenant B? Someone said two months security, that’s what I heard, you said that, right? Okay. That’s a very legitimate reason, okay? Vacancy. Who’s going to be in this property longer? Tenant B is, why? What do they have? A recent foreclosure. I forgot your name back there, I’m sorry. You did the mortgage presentation.
Jason: Jaden, how long after a tenant goes to a recent foreclosure, how long before they could buy a home? How long?
Jaden: Four years minimum.
Jason: Four years. What are they going to be looking to do in the next four years?
Jason: Rent, and try to do what? Because at one time they were a homeowner. You think they want to return to being a homeowner again? Absolutely. They’re going to try to build their credit, so they need good rental history. They’re going to be a little more motivated. Not only are they going to be motivated to pay because they want to build that to be able to buy a home, but the other reason is you’ve got two months of their security deposit. They have more skin in the game. Just like you guys have to put that down payment on, same thing, that’s what they’re looking at. They’ve got skin in the game. All right, so going back to this.
Now, I’m going to finish my story. Understanding your relationship. We’re going to jump into property management. Understanding your relation with that tenant. Now you’ve got Tenant B in the property. Of course, you want to screen them or whatnot. If you’re self-managing, you’re the property manager. If you have a property management company, you should expect them to treat it as a professional relationship.
She calls and says, “My mom just died, we’re late on rent.”
I don’t have a security deposit, I’m like, “Man, what are we going to do?” I was like, “I feel really bad.”
“Me too. What are we going to do?”
“We should make them lasagna.” That’s what every reasonable landlord would do, right?
Her mom just died, so we made lasagna. We go over to the house, knock on the door, I’m like, “Sorry about your mom.” She opened the door, she was surprised to see is there. We lived only 10 minutes away from this property. She opens the door, and I’m looking in like this. I’m like, “Those walls are red. They weren’t red when we were painting them.” I’m like, “He’s building Cracker Barrel. He knows what he’s doing. Right, give him the benefit of the doubt.” She’s like, “Thanks. It’s tough,” We leave, “When will you able to get the payment in?” She’s, “I’ll get it in soon.” No rent comes in that first month they’re there. The first month they’re there, no rent.
The next month comes along, and that’s when she partial pays, going back to that partial payment when you said that. Partial pays, I’m like, “Okay, this is getting tough.” Then a couple months later, comes down the road again. Guess what? She calls me back, she still hasn’t caught up from the first month. It’s going awful.
She calls me back and says, “My mom just passed away.”
I’m like, “Heck no.” This is terrible. I can’t believe this.
She’s like, “My mom’s– I’m sorry. I can’t make rent.”
I’m like, “You said that four months ago.” You know how you catch somebody when they lie? You know how you you know? It was that stutter.
I was like, “Man, we’ve been duped. Made her lasagna, the best lasagna.” My wife makes pretty good lasagna. We’ve been duped. What did we not realize? Were we maintaining? Were we understanding the manager and tenant relationship? Was I? No, I wasn’t. That’s where it’s crucial. I can’t tell you how many times we see where investors or management companies fail because they’re making deals with the tenants that is so hard to keep up with all the deals and everything that’s going on. You got to understand this is a business. If a tenant fails to pay rent, should they be living there? Unfortunately, not. I know that sounds hard, but that’s the way it is. We got to understand that, that relationship. I was failing to do that, and that’s why I carry round this check. That reminds me of that.[00:20:00] Very important to always keep that in mind is understanding that relationship.
Now, communication. Let’s say you have a good tenant that’s living there. How should communication be with your tenants? Timely and effective communication. What does that mean? I can’t tell you how many times I’m with somebody and their phone rings and they go, “Oh,” I know what that means, right? What do you guys say when you see your property manager or the phone call coming in? You know what it means, right? It’s rough. It’s important to maintain that communication with them. Have that communication with your property managers.
Also at the same time, if you have a good paying tenant, what else do you need to provide? Good customer service because you want them to do what at the end of their lease?
Jason: Renew, right? The magical renewal word. That’s why we maintain that communication with them. If you guys are managing your properties and you’re the property manager, your number one goal is to collect the rent. What about bookkeeping? When I rented my own property, I did the shoebox accounting. Anybody ever done that? Where you’ve got all the receipts in the shoe box and whatnot. That’s what I did. You should expect from your property management companies, this is how Oneprop does it, is we do monthly accounting. We send our clients monthly statements every month. We also will send them annual statements. When we collect the rent, we direct deposit, rent to their bank account. It’s electronic. They know, they just look and there it is.
These are some of the things you’d expect from your property management company. If you’re self-managing, you should be doing monthly accounting. Treat it like your own company. You’re going to send yourself statements, annual statements, it makes accounting easy. I hear a lot of investors doing QuickBooks.
Let’s talk about repairs. This is always a fun one. An emergency repair comes up. How do you know what emergency is? Does the city determine what an emergency is? Does the state determine what an emergency is? Does the federal government determine what an emergency is when you’re renting a property? Who determines an emergency out of those three? All of them do. You have to know the local laws as well as state laws as well as the federal laws.
I’ll give you guys an example. One of my favorite examples to share in Texas. It’s August. Now, I know hot here is 80 degrees, is that right? Is that what what hot is? That’s what I’ve been hearing. I heard last week you guys had 80-degree weather and everyone was flipping out.
When it’s 80-degree weather in Texas, we’re like on the patio, we’re enjoying it, we were like, “This is great. I hope it stays around forever.” Hot in Texas is 100 degrees, humidity, sweating. What happens is, it’s July fourth, Friday night, tenants’ AC goes out ten o’clock at night. In Texas, ten o’clock at night it doesn’t get cool. We’re lucky if it gets down to just right above 90. It’s still really hot. Your tenant’s calling, “It’s an emergency, I need somebody out here right now.” You call your AC guy, he can’t get out there, he’s got other stuff he’s doing. They’re saying it’s an emergency, now you’re kind of scared, right? What if this is an emergency? What if something happens? In the state of Texas, and I always ask this to all the Texas investors when I teach this class. I asked them, “Is that an emergency?” What do you guys think? Yes, these are things you expect your property management company to know.
This is why property management companies are crucial at this time because how they treat this and what they do. Technically, the state of Texas, does not consider this an emergency. Now, if it’s 100 degrees outside and the water heater goes out, the state of Texas considers that an emergency. It’s kind of funny, right? You have to know these different laws and these different rules. That’s one of the things is knowing those laws and those rules.
I want to jump over to this because we’re running low on time. When it comes to accounting on properties, if you are self-manager or your property management company. IRS requires if someone works on your property and they do over $599 of work, you got to send them a 1099. Your property management company should be doing that. We do that for our clients, so they don’t have to deal with that. Again, trying to avoid that shoebox management, that shoebox of accounting. Talked a little bit about the statements.
One of the things that we do for our clients that they absolutely love, as a property management company in different states, you guys can’t just jump in a car and go check on your property. Sometimes it’s difficult because different time zones, we have some investors that are in Australia, different parts of the world that just can’t pick up a phone and call because it’s the middle of the night here or just time differences. One of the things we do is we have a great property management software that we use that works through our website. Our clients can log into our website and they can see if the rents been paid on their property. They can see if their tenants are making repair request. It makes it really easy to know what’s going on. Run rent reports, expense reports, have an idea what’s going on.
Video 2 Transcript
Kathy: Great to have you here.
Leah: Before I get started, I’m going to tell you just a little bit about me. That’s because many of you have probably heard me speak before, but just in case I want to make sure you know who I am and why do I have authority to speak on this matter. We are a full-service real estate investment firm, we specialize in property management in investment property sales and acquisitions. We are not a mom and pop shop, we have a team of 27 and we grow pretty much every month. All the things that I’m talking about, you’re going to hear me talk a lot about what I do and what we do. I think that, that is one of the things that is so important to why we do business the way we do.
All these ways that we see people get taken advantage of are the things that I’ve had clients come to me from that position. I’ve had situations like what Kathy mentioned in Cleveland. We’ve had people come to us where someone’s gotten sick or someone’s died, or someone’s taken off with their money in escrow account, all sorts of things. It’s really important that you align yourself with someone that you can trust, someone who’s knowledgeable and someone who is, God forbid, they get sick or they die, that the company continues.
There are a lot of people who like mom and pop operations. If that’s the way that you want to go, that’s great, and certainly, I would not be one to deter you from that. What I’m going to do is tell you what you should be looking for, and what I feel are the most important pieces when you have an investment property that’s being managed. Because whether you’re holding that home for 2 years or 20 years, at some point in time you’re either going to have to re-rent it or sell it. If it’s not being properly managed, you’re not going to be able to do that or you’re going to have significant cost to be able to do that.
Of course, we’re A+ rated and accredited with the Better Business Bureau, A rated on Angie’s List. We have hundreds and hundreds of clients. We are licensed and insured in Texas. Moving forward from there, let’s get started talking about what you need to be looking out for.
Kathy: Well, right there you just mentioned three things that people can look for. You can look up Better Business Bureau, you can always just Google the business name and find out if people hate them. If the tenants hate their property manager that’s not a good sign. Then, they’re licensed and insured. How do you suggest people look up to verify that a company is licensed and insured?
Leah: Well, Kathy, that’s actually one of the things I’m going to talk about here. I can really only speak to Texas, so a lot of these things are going to be generalities. In general, a lot of companies are not insured. In Texas it’s actually not required. I could do business without insurance. That’s a pretty significant concern, because even the best company can make a mistake, and if that company has no insurance, then you’ve got a problem.
One thing that is beneficial in Texas is that there’s something called the recovery fund. It’s actually maintained by the licensing entity. If there’s some type of egregious claim and there’s no insurance in place, or often for unlicensed companies, people can claim into that recovery fund. One of the questions a lot of people ask me is, “Well, I’ve been taken advantage of, I’m missing money. What do I do?” Of course, you can always contact an attorney, but one of the big things I tell people to do is if they are a realtor, contact the Realtor Association, or if they’re licensed, contact the state licencing entity because most states do require a license for almost all property management activity, and almost all states have recovery funds.
There’s a couple of loopholes to having a license. If you own the building and you self-manage or you have an employee who manages, then no, they don’t have to be licensed in a lot of cases. Apartment complexes, this is how they have leasing agents that aren’t licensed. If you are not an owner in the property, or an employee of the owner, a property management is not an employment situation. I’m an independent contractor on my client’s behalf.
If you hire someone to manage your house, you hire a friend to manage your house, they must be licensed, especially in Texas. Some of those laws have recently changed, and a lot of companies have not kept with the times. I do run into companies that don’t hold active licenses and it’s a scary situation because if they’re not licensed that means they don’t know the new laws, they don’t know what they need to be doing. That can be a real concern and real devastating blow to your investment.
Kathy: Okay, so, property management.
Leah: You kind of hit my first point here.
Kathy: All right. Sorry to jump the gun there.
Leah: I know, exactly. Obviously, my recommendation is you always use someone licensed. I think that using a friend, or using just a colleague is a very dangerous recipe for disaster. It’s also very tricky if something goes wrong. It’s very tricky for them to know if something goes wrong, not on their mistake, but with what the tenant does, how to handle it. You really want someone, it should not be a hobby.
One thing that we saw when the market drops, especially here, is the agents that have been doing just a few deals, barely enough to get by, when those deals stopped they all became, “Property managers”. They held themselves out of such, they were doing it without the knowledge of the broker. The state requires the broker be involved in everything. If you got this individual agent who’s either quoting you a really good price, or they’re having you send money to them directly or to their bank accounts, that’s a red flag. The broker has to be involved, the bank account has to be through the broker, and that’s the thing a lot of people don’t realize.
One of the biggest complaints that I see when people switch management to us from another firm is that either an agent was managing improperly and money is missing, or they did a poor job. I would say that at least six or seven times a year I have a client who comes to me with a $10,000 to $15,000 deficit from another manager. That’s a pretty scary situation to be in because even if that money is missing, you still have to account for deposits and things to the tenants. That can get very ugly very quickly.
I already talked about how insurance is not required in most cases. There are a few loopholes to that. If the majority owner in a company does not hold a real estate license, then some states are going to require them carry insurance. It’s an important question to ask, “Are you insured? Are you licensed?” You can verify that by a very quick Google search of whatever the licensing entity is. Another thing about that is most of the states’ licensing entities will actually let you search disciplinary history. When you view the license on Texas’s website, you can actually see if they’ve ever had a complaint filed against them with the licensing entity. That’s a real, real good indication of the type of person that you’re looking at.
Another thing, I mentioned that I’m not a big fan of mom and pop shops. That’s true. Experience level does matter. Size can be a good indicator. There are companies that have 50 properties, 100 properties, 200 properties. They may be very good at what they do, but if you’re looking for the best of the best, you need someone who has encountered pretty much anything that can come up. Whether it’s a drug house, whether it’s a tenant that has destroyed a property and now has filed bankruptcy and you have to get a lease stay on that bankruptcy to evict them.
Whatever the situation may be, it’s important to have someone who’s experienced. One of the things that’s very, very interesting is property managers will say that they manage a certain type of property but they may not have any. It’s important you ask. If you’re bringing a 15 unit apartment complex, you need to ask them, “Do you have any units this size? If so, where?” Or if you have a duplex, “Do you have any duplexes in this area?” That’s one of the most important questions I think to ask because property management companies often are very, very starved for business.
They may take a property that doesn’t fit their model. They may take a property that’s further out from their comfort zone. I’ve got a team of 27. If I need to send someone an extra 20 miles, I can do that. Your mom and pop shop may not be able to do that. It’s important you ask those questions so that you accurately know what you’re getting into.
Kathy: Very good. Back to the insurance piece of it. Would you think it would be normal for a customer to say, “I just want to see proof of insurance.”?
Leah: I’ve never had someone ask me for proof of insurance but I could certainly see that somebody could. A lot of the state licensing entities actually require you provide proof to the state or it’s posted on the state, just like with a lot of contractors. That’s certainly one avenue that you can do. Typically, if you’re dealing with a reputable company and you ask them for license and insurance information, they’ll be able to provide you a policy number or a carrier.
Kathy: Good. Importance of accreditation, absolutely.
Leah: Yes. I’m going to talk a little bit more about this than we talk about leasing. This is a good example of what we carry. You’ll see there’s a lot of places that we are members of and the importance of that is a few things. First is going to be they have their own code of ethics. As strict as the state may be on licensing requirements and things of that nature, the Association of Realtors is even worse. This is actually the board that my husband and co-owner served on, hearing the complaints against other realtors. They have their own tribunals that do this.
It’s a very, very important piece of our business because things that are ethical but perhaps versus moral, that’s where your license versus this accreditation is going to come into play. Things that may be legal but are immoral with the state law, is going to be something that the Realtor Association is probably going to consider against their rules. It’s very, very important that you work with realtors. I’m going to talk more about why in a little bit, but I want to make sure everyone hears that clearly. You should be working with realtors. It’s very, very important.
Probably the most important piece of all of this is without being a realtor, they do not have MLS access. That’s something that a lot of people do not realize. A real estate agent means you’re licensed with the state. A realtor means you belong to the Association of Realtors, and that is what controls the MLS. If your agent is not a realtor, if your manager is not a realtor, they cannot market your home on the MLS and that is huge.
In my company, the majority of my agents carry very high designations as well. ABR, GRI, e-PRO, all these different certifications that we send our people for. We actually do monthly training in our office for MCE credit for our staff. That’s one of the things that we do to make sure our team is trained. That’s definitely something that you want to ask the people you’re working with too, “Do you have licensees working for you? Do you train them? Or are they people that come in with no experience and they just work like assistance.” That’s an important piece of this too.
Kathy: Anything else on this page? Are we good?
Leah: No. I think we’re good.
Kathy: If you want to just tell us a little bit about some of the guidelines that NARPM has, that if your property manager is not a member, they might not be living up to those standards?
Leah: I don’t find NARPM as important as The Realtor Association. The Realtor Association has really been one that you want to deal with because they’re the ones that can assign them to classes and they’re the ones that can revoke their MLS. NARPM is good and it’s great for education, but most property managers will subscribe to it just to put it up there. The Realtor Association is going to be the one who handles the orientations and they’re going to be the ones that teach a lot of the continuing education classes. They’re the ones that are going to be making sure that you’re not violating MLS listing rules and that you’re marketing fairly and all those types of things.
A lot of the rules that we’re talking about here of fairness and treating others fairly. As a landlord, you wouldn’t think that would affect you very much but think about it this way, if someone list the property and says,”This is a great home for a young couple.” You are not appealing to the majority of the people who are looking for a rental property.
Or if you list a property that says, “This is a great young family with kids neighborhood.” Who’s not going to want to look at that property now? Those types of things are against the rules in these listings. That’s one of the things that’s called MLS checker and especially North Texas MLS NTREIS, they’re at the forefront of this technology.
The Realtor Association is also going to be making sure that your agents are marketing properly and not opening you up to liability because if that agent list that property where, God forbid, they say that they’re not going to take someone who’s color purple. Who is that going to come back on? Is that just going to come back on the agent or is that going to come back on you as an owner? Or, if they say that they don’t want more than three children in the household. Well, of course, that’s not allowed by law. These are the types of things that are so important with The Realtor Association.
The other thing it does, is it puts you in mediation. If you have a dispute between one realtor and another or you’ve got a dispute when you’re selling the property, they’re going to go to mediation first. That’s a really important step because none of us want to have to involve attorneys unless we have to. More than anything, they’re making sure that everyone is being treated fairly, including the client and the owner.
Kathy: Very good. Let me just check and see if there are questions. Okay. People are saying, how do I contact her? We’re going to give all that information at the end. Our teams are so very, very overwhelmed by [laughs] the amount of investors that we have at RealWealth. We always like to have everybody come to us first, so we can answer the most basic questions and then refer over to our different teams. We would just want to know a little bit more about you and what you’re trying to achieve so that we can answer the questions first, so we’ll get that information to you.