Modern Day Landlording on Auto-pilot?

Question

I have recently read Landlording on Auto-pilot by Mike Butler. A good book for tips on systems, etc. However, some of the book is a little outdated. I'm trying to decide whether to begin property managing on my own or continue to use a property manager. A few questions:

1) How are self managing landlords handling tenants calls during off peak hours (nights, weekends, vacations)? I don't think pagers are used a whole lot nowadays as mentioned in the book.

2) There are several post about setting up your own property management LLC. Any links to posts or resources on how to do this effectively?

3) Computer based property management software looks good but how much of the tenant base has computers? What if they don't have computers are landlords leaving it up to them to figure it out if they need to file a work order?

Thanks for the help!

Jeff Blanchard · Answer

This is because of the limits of what your website does. My website is the central point for all correspondence with my tenants. They check their balance, pay their rent & submit repair requests online. I do not accept cash and soon will not accept paper checks.

Some people do not want this level of automation in their business. I prefer to take as many physical steps out of the process, as that is my primary limitation (space & time).

Jeff Blanchard · Answer

With all due respect, there is a difference in being in touch with current technology vs observing trends and being prepared for market changes. I know quite a lot about my current real estate investments; I couldn't tell you anything about what to expect out of Phoenix in the next 5 years.

I used to build my own PC's in college as well -- and I'll never do this again. Why? Because the cost savings in that era are completely gone now; it's much wiser to go into an Apple store and buy a Macbook Air, and get back to work. The industry has evolved.

Likewise with PC's in general. "Desktop" software is nearing obsolescence, except in the professional grade (think advanced publishing, video production, web development, etc). The rest is rapidly moving to light apps and cloud-based services. Information has less value if not easily sharable and modifiable by all parties involved.

"Phablets" are globally bridging the gap between smart phones and tablets; soon (or already) they will be considered the same "small glass" format. People without a mobile-optimized website, again, will be at a competitive disadvantage as people place ever-greater importance on speed and accessibility of info.

I note that you have a website -- so you are engaging the mobile sphere whether you intend to or not. Chances are more than half of the traffic to your site will be mobile traffic this year. Will your visitors see what they want?

To take it a step further, are they being *served* by your website, or are they just getting some info? You have an operation that you are keeping track of in Excel, etc, and some of that operation is segmented from your web presence. This creates more work for you, and less accessibility for your customers (renters).

My overarching point is that everything is converging. Service, information, communication. If these pieces aren't tied together by you, they will be by your competition. PM software at best provides convergence for your efforts to work with your renters in the PM market; Excel is a desktop program for (time consumingly) organizing data for you only.

George P. · Answer

@Jeff Blanchard i am very much in touch with current technology. not a trend setter by any means, but i used to build my own PC's until laptops became dirt cheap.

and i still think one does not need a PM software.

can you explain how and why you think a PM software is so important?

i do think smart phones are the path to the future, but not tablets. tablets are a toy and people dont use them like they are using phones or laptops. typing on them sucks and people just browse stuff or play games.

Jeff Blanchard · Answer

Regading 1 & 3: The "mobile market" is changing the way people communicate and make transactions. Some people in the tenant base may not engage technology as readily, but the smartphone market is accelerating globally and transactions via these will only increase; in time people will not use debit/credit cards anymore, but their phones for payment, for example.

What this means is, ultimately, tenants will expect the same simplicity, transparency and seamlessness in the "rental accounts" as they do for other services. And of course, there is more involved in the tenant/landlord relationship than just finances.

Landlords who do not adapt to this landscape will be at a competitive disadvantage. Meanwhile the apps out there need to bring more to the table to facilitate the relationships and the processes. One thing I would like to see is a checklist for both tenant and landlord that lays out the move-in/out process for both parties, so accountability is easily understood.

Look at AirBnB for an example of where things are going. They have put R&D into a "smart" app that handily facilitates the guest/host relationship and transaction (ie, Host Home).

A lot of investors who understand the real estate market but not technology will advise against PM software. These may be some of the same people who though the tablet market would not surpass the PC market...

Bill S. · Answer

@Tim C. I totally understand the idea and it sounds greate. My point is that the devil's in the details. I only pointed out one concern but there are many many other things to address for that structure to follow the theory. To really get what you want, requires lots of hoop jumping. Search for LLCs here on BP and read up. You'll get an education.

Tim C. · Answer

Thanks @Jon Holdman @Jennifer Lee @Bill S. @Bob Hines . Thorough and helpful!

My guess is a property management LLC would create some transparency between the owner (landlord) and the tenant. There's also the whole corporate veil idea. Keeping your assets in a separate LLC from your managing business (LLC) while both are separate from your personal accounts could maintain the asset protection idea? Just guessing though. Thanks for the input!

Jon Holdman · Answer

Thankfully none of mine are that bad.  But I'd rather deal with a troublesome tenant than discover major damage.  Water is the real killer.  A small leak can turn into a serious problem.

Jennifer Lee · Answer

Hi @Jon Holdman

Thanks for that reply.

I don't have that clause in my contract, but was recently at a visit with an attorney with my client. This was the attorney's solution.

My clients tenant calls daily about little issue. She fixes and they break it again.  This is in war zone and professional tenants.

But you have a valid point, I agree!

Attorney said this is a way to deter phone happy tenants.

Jon Holdman · Answer

@Jennifer Lee I think this is a very, very bad policy:

If something's wrong with MY property I want to know about it.  Otherwise small maintenance issues can turn into huge expenses.  Now, if the tenant caused a problem, they get to pay for it.  But I don't want a tenant to be afraid to call because they don't have the $50 to pay their part of the bill.

Late night calls are uncommon.  Evening calls, OTOH, are more common.  Why?  That's when people are home and notice problems.  Rarely do these require immediate action, though.  Usually I end up calling someone to have a look at the problem.  Doesn't really matter where I am to do this.

As to whether or not your tenants will use some sort of online system depends on your tenants.  If you're renting high end units or Class A/B apartments, this might work.  OTOH, those sort of properties tend not to be particularly profitable.

Bob Hines · Answer

Question 1: How do you handle calls from friends/relatives/telemarketers late at night, weekends or vacations?  With caller ID, just don't answer if it's inconvenient to you.  Let it go to voice mail or let tenants know you prefer text.  If there is an actual emergency while you are out of town, you should have a contact with someone you could call to take care of such an issue-friend or handyman.  In my experience, I've received more annoying phone calls at 3 am from friends and family than I have from tenants (0 so far).

Question 2: I don't see what the advantage of a PM LLC would be?  Many on here will argue against having an LLC for owning properties in and I can't see what a PM LLC would do.

Question 3: I'm a Luddite, so I'm not exactly sure what is being meant here but I have found that when tenants come from online advertisements, I end up with more computer literate tenants than those that respond to a sign in the yard.  If you are wanting a more computer literate clientele, go hunting for them where they are.  My standard response to technology, modified for this question, is: "How many thousands of years have humans been renting without online work orders?"

Since you're thinking about self managing, honestly, it's not bad.  I work my butt off in the beginning to find a good tenant and then after that, most months all I do is take checks to the bank with 11 properties.  While I'm not there yet, I can't imagine it would be all that bad at 20 or 25 properties by doubling the calls I get now-very few.  I understand the PM fee for finding a tenant as that is a good amount of work but I don't understand paying +/-10% every month to mainly collect rents.

Modern Day Landlording on Auto-pilot?

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