All Forum Posts by: David K.

Welcome! I'm on the north side if you ever fancy up this way. Lot's of good action up here too. Alpharetta straight up 400.

This is fun town!

We use a candidate scoring system. Hits a bunch of categories and assigns a number based on where they are. That way no one category makes or breaks the applicant. Income, Rental History, Payment History, Credit, Employment, Bank Balance, DTI and a few others. There are a few automatic denials, like open bankruptcy, current eviction. Then we have a few criteria that can require additional security deposits.

All you have to do is score above X number and you're in.

I CANNOT TELL YOU HOW MANY STORIES I DON'T HAVE TO LISTEN TO NOW. It's wonderful.

Smartest thing we ever did.

I can make money pulling comps for people? OMG

No idea what to charge. 

Are you trying to budget? Do your taxes? What?

Atlanta, north side. Give me a ring. :P 

Tax returns. Go over those bank statements hard. Previous balance, ending balance, deposits, total withdrawals. Don't make excuses to approve him, look for reason to deny. If he's genuinely close, and your policies dictate, get multiple months security deposit.

No story's, no hardships, no explanations. They either qualify or they don't. With no evictions they gotta be perfect to approve.

Good luck.

You're the second investor I've interacted with today that mentioned Idaho. That's the first I've ever heard of Boise, that's worthy of investigation.

I have little factual backing of the cities you mentioned, but I do hear Indy, Charlotte, Raleigh-Durham, and Nashville are solid. Consider Atlanta too, very hot.

Shoot me a PM if you'd like to talk about Atlanta, I've know of a building putting out new SFH's that make great rentals, right around $250K. Great place to 1031 some capital and cash flow immediately.

I'll chime in on my lane. Let's shoot for non "Yes" or "No" questions.

• Property Manager
  • What are your fees (flat fee/% of rent) - This is everyone's first question, but it shouldn't be. We're 10 months into an eviction moratorium that will last for who knows how long. Once it's lifted, the courts will be backlogged for years. Over focusing on lowest cost puts an investor in a position to be dissatisfied and vulnerable. Proper management can't be a $79 special without fees elsewhere, or just terribly quality. All of your questions should lead you to what you're getting for the price you're paying.
  • Do you have references - I get this regularly enough that it's worth discussing. Make a list of questions for the references the PM is hand picking for you. Make it worth your while.
  • How many are you currently managing - Good question, a better question might be about support staff in reference to door count. 500 doors and a staff of 3 should be a red flag, just like 40 doors with a staff of 12 would be.
  • How often do you check in on tenants - "Can you give me three or four examples of how you check in on tenants? I'd hate to think my property went unmonitored for months at a time." Asking for 3 or 4 examples makes them think beyond the common 1 inspection per year answer. Look for that their vendors report back their findings, or that the PM keeps is in regular contact by text, etc.
  • Who keeps the damage deposits - In my state security deposits are held in trust by the brokerage. IDK other states, but that's kind of a red flag question for me. If we need to discuss who holds the deposit, this conversation is about to end.
  • What do you charge for evictions - how about "What does the eviction process look like as far as cost goes?" I'm not saying people don't mark up evictions, I'm sure they do. Of course the PM's time has a cost, as does the attorney's, court costs, etc.
  • Will you advertise and show property while occupied - Yuck, I don't lol. Good question though.
  • How long does it typically take you to turn a property around between tenants - Good question, I'd get some sort of commitment to the answer. A good PM is motivated to get the property on the market to get the placement fee, and start earning the management fee again. Maybe ask what the process is that they use, and what amount of time each step takes. Move out inspection, time for tenant to fix, return remainder of security deposit to tenant, scope make ready, time to complete once owner approves, time from make ready to marketing, time from marketing to showings....etc. 
  • Do you conduct background checks on tenants - This should be a given. "Can you tell me about your screening process? Also, in this time of no evictions, can you tell me what you're doing for additional scrutiny for candidates." This is a trick question. The perfect answer is "nothing." Meaning their processes were already solid enough that this no eviction stuff didn't give them any pause or require a policy change. However even my answer is a bit naïve, because we all stiffened up some in March.
  • Do you take photos of the property before and after move - Another yes or no question we can rephrase. "What do you do to catalog the condition of the property pre and post tenant. I do throw confusing syntax and vocabulary at people to see if they're really on the same page. My wife is not a fan.
  • Do you offer a tenant placement guarantee - This answer should be no, but the question brings a better conversation. A good PM who loses you a paying tenant through their action should place a new tenant for free. However, a guarantee, I wouldn't expect that...at least I've not heard of it.
  • How do you handle calls for repairs -, do you try to solve the problem before sending someone out  Stop where I bolded and let them answer. Yes, you want them troubleshooting over the phone, but don't tee that up. Many PMs Step 1. Get Work Order Step 2. Dispatch Vendor. Great question, make sure they answer it.
  • Do you establish a threshold $ amount on repairs above which you always call the owner - Your management agreement should spell this out. I call it NTE (Not to Exceed) I learned it somewhere, someone told me. This should be agreed, but an investor should also understand that some things need to be fixed without a discussion. Uncontrolled water, no heat, no AC when its freezing or over 90° etc. "Give me a few examples where you wouldn't call me?" These type of situations are both right and wrong. The goal should be to establish a relationship together over time that eventually you trust the PM to operate on your behalf. 
  • Who do you use for repairs - A follow up to that answer could be "Will you use my guys?" The answer should be "maybe". All vendors should be vetted, have licenses and verified insurance. The things I just mentioned almost always eliminate the cheapest fella. The bigger issue is that they're cognizant of who they're sending to your property and that when something happens, there's insurance to handle it. I had a guy drop a garage door spring onto a Jaguar. I've had guys drop things from chandeliers that ruined the table below. These things happen, "Thank you for letting me know Vendor Bob, I'm going to call the tenant and then your insurance company."

The only other questions would be about:
-Tell me about the rent collection process (online portals, eviction timelines)

-How many pending evictions do you have right now?

-When do I get my money?

- Will you (or whom) will be managing my property directly?

That's all I can think of at this late hour. Good luck, PM me if you'd like and I surely think of more to say.

"Don't be afraid to have no tenant, no tenant is better than the wrong tenant."

DK 

Not specifically, I'm sure there are features to avoid in certain situations. It's really more of mortgage v. target rent balance to find the desired cash flow. The last couple of investors, or at least the last investor that comes to mind for us needed to 1031 a healthy amount of cash. The debate was one fully paid off house or two houses with small mortgages. They went with the latter, the first rented in a couple of weeks, the second one in days. That was July/August, only one work order for maintenance between the two in that time, and that was for an oven fully under warranty, I just called the Whirlpool guy.

Both are around $2K/month rent, I think the investors mortgages for each are under $1K, so they're just crushing it. 

Absolutely! We have several builders here in Atlanta that are building brand new homes that make great rentals. We currently manage 5 or 6 with one builder alone. They demand excellent rents and just fly off the shelves when available. It helps having a year builders warranty to get any imperfections fixed, and then all of the appliance warranties. Generally speaking there's very little maintenance those first couple of years, knock on wood.

I would just check with the builder to make sure the HOA doesn't have any rental restrictions. Lot's of neighborhoods can have a maximum number/percentage of rentals allowed, so getting in on that at the ground floor is advantageous. I think it's the best way to go if you have the equity to make it cashflow decently. You're 5-10 years away from early appliance replacement, and with proper HVAC maintenance, and inspections, you could get 15 years out of that house and get out before having to replace anything big.

That's all in a perfect world. We've got some pretty good areas in North Atlanta for this....if you ever want to leave 100°temps to fly to Atlanta, and feel what 170° is like when it's really only 86°.