All Forum Posts by: Greg Weik

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Quote from @Grant Farrington:

Our tenants just moved out. The first floor is about 580 square feet, and the flooring is bamboo. Bamboo is a fairly soft flooring as far as wood floorings go, so to help prolong them, we do have a no pet policy. Our tenants got around that by having a large pitbull as an ESA. Upon moving out, the floors are covered with divots and indentations all over the floors. It looks like the finish is just scratched, but each scratch is actually a depression in the flooring. The only fix would be to have the floors sanded down and refinished, or put down new flooring.

Does this go beyond normal wear and tear? Through 4 others tenants the floors have been fine, and you can clearly see where the couch was sitting in the living room because that is one of the only spots where there aren't any scratches.

Any advice is appreciated! The property is in Ohio if that matters.

 Hi Grant, how is your move-in/move-out documentation?  It needs to be EXCELLENT for you to have a chance at a claim like this.  Crystal clear move-in photos of the areas in question and crystal clear move out photos of the same areas.  If it's not, cut your losses and chalk this up as the cost of education. 

Our policy:  If an owner allows pets, then light scratches from animal claws are ordinary wear and tear.  If they allow pets on a bamboo floor, then the divots you speak of would fall into the OWT category as well. 

What you're asking, however, is a legal question that no one can answer with certainty.  Likely not even an attorney can definitively answer this unless they can find case law that covers this exact scenario.  And even then, you would need the unassailable move-in/move-out documentation I alluded to above. 

If you've got great documentation, I would move forward with a claim.  I don't believe solid floors - even bamboo - can be reasonably assumed to have a depreciating lifespan, such as carpet and paint would.  I think there's a strong case to be made that you should be made whole, with new bamboo replacement floors.  Depending on that cost, I would consider consulting an attorney. 

Like many things in PM, it's a question of degree.  How much time and energy are you willing to spend fighting for this?  

A lot to unpack in this thread.  PM Companies are all very different, in terms of fees and services. 

-I hear DIY landlords tell me all the time that they are "good at tenant selection" - as noted above, eye contact, handshake, etc.  The bottom line on that is no DIY landlord has the empirical data to know if they're good or just lucky.  As a PMC with thousands of doors to draw experience from, we are actually, objectively, good at it.  Our criteria and selection process are never going to be rivaled by a "DIY handshake" landlord. 

-I absolutely help my clients identify their next rental investment properties, and I do it for free. It takes me only a minute to look at an address, determine what it will rent for, and draw from our vast portfolio of nearby properties to give the client some insight into what type of tenant applicants we are likely to see for a given property.  I know that if they buy the right property for us to manage, it's a win-win.  No reason for me to charge for this good-faith gesture on my end.  No one has a better front-row seat of which investment properties succeed or fail than a seasoned property manager.

-Fees:  they range quite a bit from company to company, but we place tenants for free once a client brings 2 or more doors for us to manage.  With a single door, tenant placement is a nominal $500.  Monthly management is 7%, capped at $149.  The only other fee is a $200 annual fee on 1/1.  For that, our clients get the best service and results in the industry, hands down.  Other companies charge more because they have to... because they are generally inefficient. They also pay their in-house PMs commission, which necessitates higher prices to the client. PM is all about systems and processes and technology, and most PMCs are stuck in 1995.

-To the OP @Chris Lo - the reason most DIY landlords don't hire PMs is that they often step over dollars to focus on pennies.  Most DIY landlords in my experience do not have the right philosophy on building true wealth through rental property ownership.  They often see a PMC as an "added expense" and believe they could "do that themselves."  Many DIY landlords do manage their properties successfully themselves - at least for a time - and they believe this is proof they "know what they're doing."  But... many of those same DIY clients end up coming to RES, hat in hand because at some point the wheels have fallen off and they don't know what to do. 

Rental property wealth (if you're doing it right) happens with appreciation and not strictly through cash flow.  Cash flow should be money in the back to prepare for the rainy day.  I've trained most of my clients over the years to trust the process, to trust that RES has their back, and to not sweat the small stuff.  

When you own a rental, there will be repairs, there will be vacancies at times, there will be problem tenants.  But when you look back over a 5 or 10 year period and realize the appreciation you've gained, you then realize that the PM company was there all along to manage the small stuff and they were worth more than you paid them.  

Time is your most important asset - even when it comes to a rental property.  If you value your time, find a good PMC who can give it back to you for a small fee. 

Mostly very good information in here, but a couple things:

-NARPM (1) doesn't mean anything, other than the PM paid an annual subscription to say they are a NARPM member.  It definitely doesn't mean the PMC is better educated, better qualified, more ethical, or more competent.  It's similar to being a "BBB Member."  They're paying to use a logo and brand recognition. 
-NARPM (2) - locally here in Denver I got into it with the VP of our NARPM chapter about "unattended showings", which are becoming prevalent in the PM industry. In addition to being a PM, I have a legal background.  Short version: The issues with unattended showings are too many to list here.  PMs allow them because they are lazy.  The fact that a NARPM authority would be fine with this, and that NARPM would not take a position against it, tells me it's not a serious organization. I have a blog on my website about unattended showings if anyone would care to read about why they are a problem for the industry. 

I agree with a lot of what the other PMs have said here - new clients typically shop based on price, but once they've been with a bad PMC, the client realizes that price is only part of the puzzle. 

We get a lot of new doors to manage from all of our local competitors.  The reasons clients tell me they made the switch to RES are usually related to communication and repairs.  So those are the things we focus on the hardest at my company.  Excellent communication, excellent handling of all repair situations.  We fall short sometimes, but we are constantly improving our systems, our training, and our personnel. Company culture matters.  A lot. 

Repairs: Any company that profits from repairs are not watching your back when it comes to controlling costs. 

Last point: keep in mind that companies charging a full month's rent for tenant placement (or the equivalent thereof) have little incentive to keep your tenants in a property at lease renewal time.  If a PMC has 300 doors coming up for renewal in the summer, do you think they want those tenants to stay, or do you think they want the new tenant placement fees?  A good PMC has a fairly even spread of charges throughout the life-cycle of the rental property; that keeps their interests more in line with the client.  If the PMC's fees are all front-loaded, that should be a red flag. 

I agree with @Nathan Gesner but I would also just request that you do not call yourself a property manager.  You are a private landlord and that is very different.  If you do not have any formal training, if you don't possess a real estate license, if you do not have an understanding of the proper systems and legal documents, if you are not familiar with the Warranty of Habitability, etc., you are not a property manager.  You are a private landlord. 

You're not a lawyer if you represent yourself in court. 

No offense intended, but those of us that put in the time and dedication to make this a career, are property managers. 

This may not be a popular answer, but you don't really have to put yourself in a category (introvert or extrovert). 

Be what you need to be, at any given moment, to get the job done. 

By default, I prefer systems to people.  I am passionate about efficiency and much less so about human interaction.  :)  But I'm also socially adept when I need to be.  I think this describes a lot of people - maybe it describes you as well.  My career as the owner of a property management company requires me to step out of my predisposition to avoid people. Talking to prospective clients, meeting with new clients, handling showings, training new employees, etc. 

If you're motivated to be successful, you will do what it takes.  I would suggest not labeling yourself. A label such as "introvert" is only noise IMO and not helpful to achieving your goals. 

Originally posted by @Eric James:

Originally posted by @Greg Weik:

Always focus your investment dollars on appreciation.  Homes that appreciate faster, do so because they are more desirable.  In my many years of property management and personal investing, the clients who typically chase cash flow, will often have properties that do not appreciate all that well, and those properties tend to be less liquid.  The factors that add to strong appreciation also benefit liquidity.  

Appreciation allows you to pull equity and buy another property, another, etc. 

The best rental properties to own are some of the more difficult to acquire.  There are not often deals out there, and sometimes you have to buy at market price - and that still can be a winning strategy if you buy the right property. 

This being said, cash flow and appreciation are not mutually exclusive concepts.  If you can find a good deal on a home in an area that has consistently strong appreciation, that would be the best of both worlds. 

When I think of cashflow properties, I think of multi-unit or house-hack.  Both of those property types/approaches have added risks and pitfalls associated with them, in my experience.  Oftentimes, I see people go into those types of properties with spreadsheet (or worse, their sales agent-assisted) projections, and the projections often do not match up with the reality on the ground. 

When I think of appreciation, I think of a single-family home in an established neighborhood with good schools and low crime.  

Advice: build a relationship with an experienced property manager if you can.  On any given home you're considering putting an offer on, check with your property manager and ask what they think of the property you're considering.  There's a good chance the property manager knows the area, knows the rental rates, understands the tenant qualifications common to the area, etc. My best clients do this and when they close, and we begin managing the property, it works out better for everyone. 

A problem is, without good cash flow you reach your DTI limit and can't qualify to refinance your equity out of those appreciated properties.

If you have a good relationship with a bank and you have even break-even numbers on your rentals, there's usually a solution to be found to acquire more properties.  Even if that is not the case initially, strongly appreciating properties also tend to see corresponding market rental rate increases - meaning that an initially weak cash flow property could become stronger in a few years' time.  

I was curious about this, so I just looked up the rules in Washington State.  You only have to wait 30 days if the value of the items is >$250.  I'm not seeing any definitive rule that states "who" makes this determination, so if it were me, I would say it's simply not worth that amount.  

Here's why:  1) It was left at the property.  Valuables would not reasonably be left.  2) the items being on the street for more than 1 day is prima facie evidence of the value being under $250, in which case, you only are required to wait 7 days to get rid of everything. 

Good luck!

Always focus your investment dollars on appreciation.  Homes that appreciate faster, do so because they are more desirable.  In my many years of property management and personal investing, the clients who typically chase cash flow, will often have properties that do not appreciate all that well, and those properties tend to be less liquid.  The factors that add to strong appreciation also benefit liquidity.  

Appreciation allows you to pull equity and buy another property, another, etc. 

The best rental properties to own are some of the more difficult to acquire.  There are not often deals out there, and sometimes you have to buy at market price - and that still can be a winning strategy if you buy the right property. 

This being said, cash flow and appreciation are not mutually exclusive concepts.  If you can find a good deal on a home in an area that has consistently strong appreciation, that would be the best of both worlds. 

When I think of cashflow properties, I think of multi-unit or house-hack.  Both of those property types/approaches have added risks and pitfalls associated with them, in my experience.  Oftentimes, I see people go into those types of properties with spreadsheet (or worse, their sales agent-assisted) projections, and the projections often do not match up with the reality on the ground. 

When I think of appreciation, I think of a single-family home in an established neighborhood with good schools and low crime.  

Advice: build a relationship with an experienced property manager if you can.  On any given home you're considering putting an offer on, check with your property manager and ask what they think of the property you're considering.  There's a good chance the property manager knows the area, knows the rental rates, understands the tenant qualifications common to the area, etc. My best clients do this and when they close, and we begin managing the property, it works out better for everyone. 

I'm with @Lucia Rushton, buy and hold.  Don't be swayed by a "sellers market."  Those come and go.  The value of your homes, over time, will always trend upwards.  And adding passive income to the mix is a no-brainer to me.  

Pull some equity from the homes if you need to, to build your dream home, but use that debt to your advantage.  Having three homes is the smarter play, vs. selling the two and then building the new one with cash.  

A simple analysis looks like this: If you have $500,000 to invest, would you buy 1 home for $500,000 cash, or would you buy 5 homes, each with a $500k sales price and with $100,000 down?  Some people "feel" better without debt, but if you buy a single home with the cash, you are not building nearly the wealth (x5) you would if you had the 5 homes.  

In the example above, assume each home appreciates at a certain rate.  5%, for example, or $25k/year.  If you own 1 home that appreciates at 5%, great, it's worth $525k at the end of a year.  If you own 5 homes that are appreciating at 5%, however, your wealth grows 5x faster - $125k wealth built in that same time frame.

You alluded to being nervous about being a landlord and renting out your properties.  Don't be.  If you prepare them - ensure they are in great shape when they go on the rental market - and if you find a property manager who knows what they are doing (and how to place great tenants), you will do just fine.