All Forum Posts by: Corey Conklin

I think it's important to set criteria in screening tenants for each individual property instead of a blanket policy over all of your properties.

It's important to understand the property value and what kind of tenant you should be attracting. If you have a class C/D property in a less desirable location you shouldn't ask for the same screening criteria for a class A/B property in a great location. I see a lot of people make this mistake. If you have a great property don't sell yourself short. If you have a pile of crap don't expect too much from your tenants.

Setting income requirements, credit score, criminal history, pets, etc. is a great way to set a standard but its not going to always weed out bad tenants unfortunately. No need to beat yourself up about it. Reading people in a 10 minute window is about impossible without major red flags.

(PERSONAL OPINION: If you think vehicle cleanliness is the secret to good tenants you are out of your mind.)

One of my best tenants was someone who needed a co-signer and no rental history. A couple of my worst tenants were high earners, great credit scores, and clean backgrounds.

I'd just tell your friend they better buckle up because they're are in for a treat!

Excel works fine for tracking expenses with minimal units. I use Turbotenant for collecting rent and electronic lease signing and it's been great. I use Zillow for property marketing and applications.

So far that combo has worked on the 6 properties that I self manage.

Quote from @Michael Calvey:

I’ve been seeing a lot of articles with people (millennials, mostly) struggling to buy properties, whether it's their first home, or for investing in real estate. Curious what has been the experience here. If you’re millennial, even better but just want to gauge what the struggle is.

Not enough properties? Interest rates? Down payment? Not sure you're making the right decision?

I'm a millennial that's been investing the last 4 years. None of your items are that big of an issue for me.

Interest rates aren't near as big of a problem to me as insurance rates. You can lock in interest for 5-30 years, and you have a potential to refinance at a lower rate down the road. You have to renew insurance every year and it NEVER goes down. Way harder to forecast your investment if you are getting hosed by insurance companies.

Another major issue is how to handle the management of properties. I know everyone says to hire a PM company but that is rarely a good choice when you are starting out (at least in my area). They eat up your cash and really don't provide much value in my opinion. The current model doesn't allow for proper compensation for a management company, therefore they give you a lackluster service. These PM companies are a revolving door of $15/hr managers that are overworked and underpaid. It's not uncommon to see a PM company hire 3-4 PM's (actual people) in a calendar year to manage your portfolio. Anyone want to sign up having your properties managed like that?

I self manage my portfolio while having a demanding full time job so that's always my pain point.

Quote from @Michael Smythe:

@Stuart Udis man, you're changing the point we were debating!

In your new example, we wouldn't clear the snow. We'd hire a company on behalf of the owner, and make sure the snow removal company has liability coverage.

Maybe some PMC's would have W-2 staff remove the snow. In that case the PMC should have their own CONTRACTOR liability insurance.

Now if the PMC neglected to have the snow removed or even if a contractor they hired didn't get it done quick enough and there was a slip & fall resulting in a lawsuit - isn't that why the owner had landlord insurance on the property?

Whether it's the PM's own staff or a 3rd party contractor doesn't really matter to the owner of the property. If the contract between owner and PM spells out that the PM company is responsible for removing snow then the responsibility falls on the PM company. If the PM company has GL insurance then that will cover the claim.

As the owner I understand that I will keep GL insurance on my properties no matter what. But if I hire a professional to perform work on my property, I will 100% expect them to have it as well. If it is a claim that is caused by the professional company (the snow removal example) then their insurance would cover it. This wouldn't make my insurance premiums go up due to negligence on the part of a PM company that I hired to do a job (which they clearly didn't do). Now if I made a mistake and hired a PM that didn't have general liability then yes, I would be at exposure for the claim.  

So to answer your question. No I wouldn't want my GL to cover a PM's negligence. That's why I would want a PM company to have GL insurance. 

Quote from @Stuart Udis:

@Michael Smythe challenge accepted :) I am not trying to give you a hard time but you need to find a new insurance broker if you are being told only a property owner can obtain general liability coverage. All businesses should have this coverage.  Again, why would a general contractor or even a sub contractor for that matter be able to get this coverage but not a PM? It makes absolutely no sense.  Here's a copy of last years policy for my construction business. It is not tied to a specific property. The only wrinkle with this certificate is the fact the city of Philadelphia, where my construction company is  licensed has to be listed as a certificate holder so that the city is then notified in the event a contractors insurance lapses. However, when the construction company performs work on a job site, the owner of the property is then added as additional insured and any subcontractors who perform work list my company as well as the property owner as additional insured. That's how the system is supposed to work.   I am sure as a PM you sub contract services for properties you manage. From what you are telling me, nobody who is performing work at your clients properties has GL insurance? That should really be addressed both for your clients benefit as well as yours.

 @Stuart Udis I thought this was pretty standard stuff and I'm glad you are clearing up the confusion. No reason a PM company can't obtain GL insurance. I'm not even sure you should be running any business without GL insurance.

The whole saying that you should work with companies who are licensed and insured....well a GL policy is part of being insured. If they don't have it, they aren't insured and you shouldn't do business with that company.

Quote from @James Wise:

Quote from @Corey Conklin:

Comparing Verizon (one of a handful of cell phone providers) and a PM company, which is ridiculously competitive industry, is comparing an apple to an orange. PM companies don't have the leverage like Verizon.

I get what you're saying about companies not wanting to change their agreements but there are circumstances that a PM company would modify a contract for a potential client. I've worked in that world and we did it for the right circumstances. 

If a large investor with 100 units wants to use you as their PM and their portfolio is a great fit for your business I know for a fact that almost every PM company will play ball and negotiate fair terms. If you just bought your first rental and are looking to negotiate the PM agreement, yeah that's not going to happen, they'll tell you to pound sand in that situation. Negotiating any situation is always about leverage. 

 If you're an investor with 100 units you aren't posing this question or reading this thread for advice. I've been in the game a long long time. People reading this thread have like 1-3 houses, tops. It ain't happening bro, real world.

 Alright bro. I'll keep at it in the real world and know that if I ever need any answers that there is a guy on the internet that can always tell me how it is.

Comparing Verizon (one of a handful of cell phone providers) and a PM company, which is ridiculously competitive industry, is comparing an apple to an orange. PM companies don't have the leverage like Verizon.

I get what you're saying about companies not wanting to change their agreements but there are circumstances that a PM company would modify a contract for a potential client. I've worked in that world and we did it for the right circumstances. 

If a large investor with 100 units wants to use you as their PM and their portfolio is a great fit for your business I know for a fact that almost every PM company will play ball and negotiate fair terms. If you just bought your first rental and are looking to negotiate the PM agreement, yeah that's not going to happen, they'll tell you to pound sand in that situation. Negotiating any situation is always about leverage. 

Here is my advice to move forward with your goals.

Go buy your first property! You have the capital, your goals are pretty clear. The only thing missing is action.

You'll learn 20x more by taking action than by reading a book or listening to a podcast which are always general knowledge that gets repeated over and over.

Once you dive in you will start to come across specific issues and problems you didn't even know existed! When that happens you have a great forum at BP to help you with those specific questions.

Dive in and get started! Good luck!

You'll have the same issue with 99.9% of agents. Part time, full time, experienced, not experienced it will all be the same issue. Your issue isn't on these agents, it's your expectation of your agent.

You are a real estate newbie. Having an expectation that your agent should jump at your command is not realistic and you will constantly be frustrated. To be able to get that respect from any agent you need to have a proven track record of closing deals. Until you do that you need to understand where you are on their totem pole. 

I had a very similar problem when I first started buying properties and I'm sure anyone starting out had a similar problem. I chose to get my license to combat the issue. It taught me a lot about the industry and how to handle agents moving forward. Now that I've been able to build a portfolio I get a little more enthusiasm from agents compared to when I started. It's all about earning your stripes.

If building a real estate portfolio is something you truly want to do, you'll find a way. If it's not, you'll find excuses and/or blame others. 

Quote from @Zander Kempf:

I don't see listing prices being adjusted. If you were about to sell your house and your listing agent told you that you only need to pay 3% now instead of 6%, would you drop your price by 3%? Nope, sellers will just pocket the difference. 

 This is spot on. Agent commissions have nothing to do with the market rate of a property.