Why Use A Property Manager

I started a podcast called the "Young. Wild. Financially Free." podcast. This is a great episode about a property managers view of tenants and owners. Listen to the full episode on any podcast platform or follow this link! https://apple.co/2OjRwBd

Intro: [00:00:18] Hey everybody! As many of you may know, my co-host Matt Teifke, owns a property management company here in Austin, Texas by the name of TRE Homes. The lead property manager for the company is his wife, Lexi Teifke. We thought it would be a fun episode to talk to Lexi about playing the middleman between tenants and owners. Basically a property manager is always trying to please both sides and keep both people happy. There is a balance that you have to play when owning rental investments. So today is a really good episode. You can see both sides of the game. So stick around to the end. It's a good one.

Andrew Roberts: [00:01:10] First Lexi, tell us a little bit about yourself and what you do daily.

Lexi Teifke: [00:01:16] Thanks for having me!

Matt Teifke: [00:01:19] Happy Friday, everyone!

Lexi Teifke: [00:01:23] Well, Friday doesn't really count in the property management world because it's a seven day a week job. Problems don't stop and that's why I think property management is important. It's just all the time.

Lexi Teifke: [00:01:36] So currently I'm transitioning into more of an Operations Director and overseeing everybody. We've added a lot of different parts to our team including maintenance, leasing, and accounting. So now I'm the Lead Property Manager. I make sure that everybody works together and everything stays on track. I am also being a support to owners and tenants when needed.

Andrew Roberts: [00:02:01] For those listening that don't know, what is property management?

Lexi Teifke: [00:02:07] We are here for the the tenants and owners so people can own an investment property and not have to worry about it. They can just have money come into their their inbox. We collect rent, and a lot of people think that all we do is collect rent and handle maintenance issues. They think it's so easy that they can do that. However, there's so much more that goes into it. We're maintaining a property and maintaining people's lives. It's not always a perfect world where there is a 12-month lease and tenants are in and out they leave it in perfect condition. We screen tenants and we do everything we can do to try and make it as great as possible but the world's not perfect. So that's why I think it's important to have a property management company to help you when things don't go like they're supposed to.

Andrew Roberts: [00:03:01] Right! So essentially, you're the middleman between a renter and a homeowner?

Lexi Teifke: [00:03:08] Yeah.

Andrew Roberts: [00:03:09] So you take care of all the work for the homeowner that they don't want to do?

Lexi Teifke: [00:03:15] That's where I think it gets a little bit complicated because you are the middle man. It's not always our call. Tenants think it is our call if they want certain things taken care of. Well, certain things might not be as important to the owner in their investment property. Some tenants want to have a perfect landscaped yard and owners see that from a business perspective and think that doesn't increase my value of the rental. Usually we're managing expectations of the renters and the owners. When you're working for many different owners that have different expectations on their their rental properties it's hard to have a set system. That's where we try and help owners get on board with us. We want to find that balance and keep a good, maintained properties. If the tenants are happy they're going to take better care of the property and they're going to stay longer. Getting owners on board with that mindset that can sometimes be a challenge. It can also be a challenge for tenants to understand that it is a rental property. We always welcome our tenants to make it a home and do what they want to the house to make it their own, with boundaries. It can be difficult to find that balance between the perfection that the tenants want and the cash flow that the owners want.

Andrew Roberts: [00:04:42] I gotcha. I know that finding a balance is the goal for you as a property manager. Say an owner comes to you and has complaints about the tenant but the tenant hasn't done anything wrong. How do you choose a side in that situation? Who do you put as the priority? Is there an example you can walk us through.

Lexi Teifke: [00:05:16] Yeah, great question! It's not always black and white. Sometimes it is black and white thoug. We have to follow a lease contract and sometimes we'll be asked to do things from an owner that's beyond our scope from the least. We are confined to at least contract, but sometimes it's not always that simple. I can give you a great example that we're dealing with right now.

Lexi Teifke: [00:05:41] One of our owners has a pretty big piece of property. So the tenant that leased it liked it because it was a big land. He has two boats, a car, a golf cart, and all this extra stuff. The owner really thinks it looks trashy and he doesn't like the tenant there. So his answer to that was to evict the tenant.

Lexi Teifke: [00:06:08] Well I'm not really allowed to do that. I can send the tenants a violation for extra stuff that their not allowed to have or I can make them have it in a certain area; on the driveway or in the garage. Besides that, I don't know if I would be able to win a court case. So that's where I tell owners that I'm going to waste a lot of money and a lot of time at court and I might not even win the eviction. Then you're dealing with a tenant that's really mad because you tried to evict them and you didn't win. So it creates a really hostile situation. I think sometimes being on the owners side is advising them of what they should do to be on the tenant side. Sometimes it is creating that balance.

Matt Teifke: [00:06:52] That's a good point.

Andrew Roberts: [00:06:53] In this situation, evicting that tenant seems like such a simple solution but at the end of the day it would cost the owner a lot of money. The cost of going to court, vacancy times, new leasing fees to finding a new tenant. So at the end of the day it's not worth it.

Lexi Teifke: [00:07:17] Yeah, when it comes to eviction we're very serious about when rent is due and tenants following their lease contract. But when it comes between eviction and non-eviction, if there's a way that you can work with the tenants it's worth it. Maybe even allowing them out of their lease a lot of companies even do "cash for keys". There's so many different things you can do besides just jumping straight to an eviction. Property owners might think it's our job to do the eviction right away, but it's really our job to help them make the best decision. We're investors ourselves, so I think sometimes that's advising them against that. Matt and I, with our investment property, would work with our tenants until the end before we evicted them. Plus evictions are a lose-lose. The owners lose money and then it's on the tenants record, and it's really hard to get that off. Ten years down the road, it's still going to show up on their record. A lot of property management companies have a policy if you ever have had an eviction they will not least to you. It really hurts your credit if your trying to buy a house. It's just a bad situation that we really don't want to put our tenants in if we don't have to.

Andrew Roberts: [00:08:35] So you just mentioned "cash for keys". For those of us who don't know what that is can you dive into that and what that means.

Lexi Teifke: [00:08:45] Yeah! Actually, Matt and I just recently did this for our office. So we we bought an office that was in a lease. Most leases do survive a sale or a transfer. So just because you buy a property and it's changing owners hands, it doesn't necessarily mean that lease is now void. A lot of times the lease is still good and the tenants still have rights to the property. So when we purchased this office it had tenants in it. We really wanted to try to get them out so we could get in and get settled. We really have a need for an office. We can't force them out if they're following the lease and they're paying the rent. So we gave them an option to get out of their lease, but they decided that it was easier to stay. So we did "cash for keys". We said "we will, basically, buy you out of your lease. We'll give you cash if you give us the keys". It's a win, win. So now they have the money upfront to go find another rental and to pay for moving expenses. Plus they usually have a little bit left in their pocket for the trouble.

Matt Teifke: [00:09:55] Regarding the "cash for keys", it would be beneficial from our perspective. So we're paying rent for an office space here a Vessel Co-Working. We knew that we're going to be paying for at least six or seven more months until at least expired with the tenants. So we just decided to offer them what we were paying in rent as a lump sum. Now they can get out early. They get a good chunk of money. We may have overpaid a little but it gets us in our office building faster.

Lexi Teifke: [00:10:27] Matt, can you go over "cash for keys" if you're buying a foreclosure property?

Matt Teifke: [00:10:35] We could do a whole podcast on that. There's a late fee that that people rack up if they're not making their mortgage payment. We've come in in certain situations and paid $20,000-$30,000 to help somebody avoid a foreclosure. Then you acquire all the equity in the property that they have. You can pay $50,000 when they only owe $30,000. Then you give them $20,000 to keep in their pocket which is a really nice thing to do. Then they can turn around and lease it from you or move out. You got to be careful if you're going to turn around and lease it to someone because they're already going through troubles. They had a hard time making their mortgage payments so you might be starting that process over again with them being late on their rent payments.

Lexi Teifke: [00:11:26] Very good point! Maybe those people got behind because they lost their job, but they have a job now that they can keep up with payments now. They just need a clean slate to start over now. So it's a good idea to screen the owners because now they're your tenants. So you should treat them just like they are a tenant.

Andrew Roberts: [00:11:51] I guess what I'm hearing is that a lot of times the owners don't know the situation that the tenant is in and they can't see it from the tenants perspective. A renter and a property owner are in two different places in life most of the time. So getting the owner to see it from the tenants perspective and the tenant to see it from the owners perspective is the goal?

Lexi Teifke: [00:12:24] Yeah. We're here so that the owners don't have to carry all the sympathy that the tenants will give you. There's a lot of stories and there's a lot of drama that goes into it that we like to save our owners. Whenever you have a property manager you don't get to know anything about your tenants. We get to know their kids, their dog, their spouse, etc. We get to know a tenant for over a year and we've been working with them a while. For example, what if one of their kids ends up in the hospital? Well we feel it a lot more than the owners do and we can sympathize with them. There's always a balance, right? I think it's our job as a property management company, especially as a small family owned company, to help the owners realize that the tenants have been great for a year and a half. They're running into something hard and we should work with them.

Lexi Teifke: [00:13:23] There is a difference between that kind of tenant and one that's always late on rent or they're violating their lease. If they run into something difficult we have to questions if it's just another story. So that's where we help with the balance of bringing the information to the owners that's really vital to helping them make the right decision but keeping them out of the drama.

Matt Teifke: [00:13:43] That's a good point. On the flip side of that, because they're out of the drama the first time they may hear about a tenants personal issue is when the rent's late. We may have known about it three months ago. So that's part of that balance. It's not only financial. We want to work with the tenants and do the right thing.

Lexi Teifke: [00:14:06] I think it really comes back to building a trust with the owners so that they know that we're making the right call as if we were them. They can trust us to make that call and know that we have their best interests in mind, even if the best interests is working with the tenants.

Matt Teifke: [00:14:25] I think that's a great point. When an owner is calling us and worrying it's because they don't trust that we're doing the right thing. So if we can build that trust it saves everyone time and, more importantly, it's the reason why we're here. Our purpose is to keep the owner out of it. The idea and why someone would use a property manager is that their time is more valuable spent focusing on what they're good at, their job, or even their free time than handling maintenance calls and running over the property when they just got off work. I actually talked to a firefighter the other day and the way he values his time when he's off work is basically what he gets paid in overtime. Because that's what he would be getting paid if he was still at work. Is it worth him taking a call and running out to a property when he could be at home with his family? That's why we're here. So the more the owners get involved the less reason that we're in this in the first place. We're trying to save them time. The owners have to trust that TRE Homes is doing the right thing versus spending two hours on a weekend trying to figure out a problem.

Andrew Roberts: [00:15:58] From the tense perspective, there is a benefit of renting from someone who has a property manager. From what I'm hearing some of the owners are not as sympathetic with renters personal situations. So having a property manager be a middleman between the tenant and the owner would be beneficial. Say I had a medical situation going on and I was late on rent, the property manager might help me out more. The owner might not be as sympathetic and is just looking at this as a way to make money.

Matt Teifke: [00:16:45] Also, the owner might not be able to help because a lot of property owners have jobs. If you're a firefighter and you're working a 24 hour shift you're not taking maintenance calls so you're gonna call them when you get off. When you get off you probably want to go to sleep. We can save time and then have those relationships to take care of things so that as an owner you just collect that check every month. That's the ideal owner.

Lexi Teifke: [00:17:14] As an owner, a lot of times you're just dealing with situations as they come up. With a property management company, we're seeing these situations over and over again. Most likely when a situation comes up, we've dealt with it before and we've already created a process on how we're going to deal with it. So we're dealing with it the same every time. Whereas if you're an owner you're dealing with it all willy nilly. Sometimes if you're in a good mood you're doing it one way and if you're in a bad mood you're doing it a different way. Tenants see that and they know how to start like working the system. With us, if we have a set process you can't work the system because the system's working you.

Matt Teifke: [00:17:52] That's a good point.

Andrew Roberts: [00:17:53] Some property owners or people who are interested in getting started in investing in rental properties may hear this and think that all tenants are late on rent or tenants damage the property. As property managers we have a certain set of standards that we put in place so that we can find the optimal tenant in the first place. Is that correct?

Lexi Teifke: [00:18:23] Yeah that is correct, but it's just not a perfect world. If it was we there would be no need for us? So we can screen all day long...which we do. We have a very extensive screening process and are trying to find that perfect tenant. To give an example, you might have a great job and be really good at paying your bills but you might be an animal lover. You can't say no to a stray dog and you're just going to let him in. You might not really care about how clean your place is. So the stray dogs start to chew up the carpet.

Lexi Teifke: [00:18:58] That kind of situation could stress an owner out and they're laying up at night thinking about it. We already have systems in place to be able to take care of that. So you don't have to worry. Things like that don't stress us out because we know how to deal with them. So the point is, yes, we look for an optimal tenant but people are people. You can't tell exactly everything about a person from a piece of paper. Everybody is different. Everybody lives different.

Andrew Roberts: [00:19:32] Yeah, for sure.

Matt Teifke: [00:19:34] I just think it's interesting. At the end of the day you're a property manager and you're handling all the accounting and knowing all the laws, but you're also like a part-time counselor. You're hearing about people's lives and some people just want to talk. It's important that you treat them like people and not just like a number in our system. Sometimes they do need to share and they really appreciate that. We've had tenants in all the properties that we own that have stayed there for multiple years. I'm very confident that the reason they're still there is because of how you've treated them and dealt with them when they had some needs.

Lexi Teifke: [00:20:29] Thanks, I appreciate that. Yeah, I think you can still be a friend to owners and tenants and still have boundaries. I think that's where a lot of property managers get caught up. They think in order to have a professional relationship and in order for people to respect you and to follow the rules, you can't be friends with them or you can't be nice or listen to them. They think it needs to be all business. I think that's kind of what makes us different. I do have a great relationship with a lot of our tenants. I do know a lot about their personal life and what they're going through. It makes the job fun. It relates it the to real world and I like that.

Matt Teifke: [00:21:06] How many calls and e-mails do you get a day?

Lexi Teifke: [00:21:09] So many! I bet that just during this podcast I have 50 missed calls and 200 emails.

Andrew Roberts: [00:21:15] Oh wow!

Lexi Teifke: [00:21:15] It's crazy! It's needs of people. A lot of times it's quick stuff and they just want to feel heard, and I can quickly answer problems. Sometimes it's delegating and sending those calls to who needs to handle it. It's a busy role and a role that really never stops. You gotta be on your toes.

Andrew Roberts: [00:21:43] Thanks for being on our podcast, Lexi!

Lexi Teifke: [00:21:43] Thanks guys!

Outro: [00:21:46] Hey everybody thank you so much for listening to the podcast. As always, please leave us review. Let us know what you think. If you have any need for any real estate investing advice or property management services please check out our website at www.trehomes.com and be on the lookout for our podcast episodes coming out in the upcoming weeks.