All Forum Posts by: Greg Weik

We manage about 500 doors around Denver and are expanding into Colorado Springs as well.  We added about 100 doors in 2020 without spending money on marketing - it was just referrals and word of mouth and existing clients expanding their portfolio.  We just started the expansion into CO and are closing in on 10 doors already (it's about an hour south of Denver.)  

We previously had a satellite office in Jacksonville, FL that we operated for 9 years before selling in 2017. 

We've been in business since 2008.  No investors, no partners.  Just my wife and I and now 3 full-time salaried Team Members.  I work about 20 hours per week, my employees work 40.  We're not going anywhere.  We've actually dropped our pricing over the years while increasing our service offering.  

-We dropped from 2/3 month tenant placement fee, to free tenant placement. 

-We dropped from 10% management fee to 7%.

-We changed from 7% across the board to $99 min and $149 max, and this appears to be the sweet spot. In fact, I just took on a $3500/month property today and that owner will be paying us effectively 4%. 

I will let you figure out the math, but with 500 doors, averaging about $135/month/door (not including other revenue streams: we keep pet fees at $250/pet, we keep late fees at 10% of the rent, and we have a $100 annual fee per door on 1/1 each year), I personally bring home about $.60 on every dollar of gross revenue.  

We are legit.  We have solid Google reviews, including a response to each and every negative one (there aren't many, but you know how some people are..) and we've been randomly selected for audits twice.  The auditor the last time told us she wished more people like us did property management. 

Oh boy, here we go again.  

Yes, most landlords lead their search for a PMC by focusing on cost.  The assumption is that PM is PM, basically, it's the same with whichever company you hire.  

I think this is basically true, with the key differences (other than arbitrary pricing differences) really being on execution. There are a few ways landlords can lose money on a rental:  1) Vacancy time.  2) Bad tenants/bad move-outs/tenants who pay late.  3) Overpriced repairs or repairs exacerbated by an incompetent PM. 

Being excellent at 1-3 above doesn't cost more money for the PMC. It requires outstanding systems, process,es and company culture. Therefore, it doesn't need to cost the landlord more to hire a PMC that excels at 1-3 above. This is PM ROI in a nutshell.

It's all about ROI. Good PMs understand the necessity of speed and accuracy in PM. Prospective tenants need immediate responses, so they don't rent something else. Repairs need to be managed effectively and with systems that are foolproof. Marketing needs to be excellent. Responsiveness to clients needs to be excellent.

Company culture needs to reward integrity and competence.  Hire smart people, pay them well, keep them as career professionals. 

Beyond all that, you also need legal expertise.  Many PMs fall short on this because it's not technically required to go out and do PM. 

We could make a case for charging the most in the industry, but we turn that on its head and make the case for charging the least, while still offering the most. 

At the end of the day, taking on a new door as a PM is just a guess.  How much work is this property going to be?  Is it going to have a lot of repairs?  Is it in an area where it's easy/hard to attract qualified tenants?  What's this landlord like - are they going to call me every day or week or are they going to be hands off?  As a PMC, you have to evaluate the TIME suck of each door you add on, and you have to train the landlord and tenants and vendors on how to interact with your company in a way that works for everyone but remains highly efficient.  

@Steve Wilmers I would never sell a single-family to buy a multi-family.  Not in a million years.  

Hi @Nick Symon, it's a good idea vs. selling the first home.  Continue to build equity and wealth in two homes at once (then 3, 4, and so on.) 

I highly recommend you hire a professional property manager. 

I completely agree and echo @Ola Dantis - RoS is my number one factor. Really, time is always the most valuable asset, isn't it? Time spent chasing rent, time spent dealing with troubled tenants, time spent trying to find a decent rental application - it's not for me. No ROI will make it worth my time.

@Bryant Clark I don't know the exact area where you are considering this purchase, but I have seen some investors in pretty rough Denver neighborhoods take 3/4 bedroom units in multi-family buildings, perform a light renovation, and then rent out only to section 8 tenants - because this makes the numbers artificially high -and extremely attractive to the next investor.  One such example was a building that would only rent for $1200/month or so per unit on the open market, but because of 4 bedrooms, I think the Section 8 voucher was $1800/month per unit.  So the original investor comes in, plugs in section 8 tenants so they can show the revenue/cap rate and they flip the project for a profit.  Maybe this is a strategy you can use? 

Last, I would trust the word of a property manager.  There is never an investor that knows the area like property managers do.  The good PMs have properties all over the place and they are really tuned in to the nuances and complexities that drive success and failure for rental properties.  My clients are always wise to ask me if they should buy properties before buying them.  

Keep it simple.  Tell them you did not cause the paint spill.  If they have evidence you did cause the paint spill, tell them they need to come forward with it. If they try to fine you without evidence, lawyer up. 

As a property manager, I deal with HOAs constantly. The people who join HOA boards are usually power-driven individuals with a "small man complex." They are sometimes trying to keep the neighborhood nice, but most often, they are just bullies.

They especially hate rental houses! The HOA for one of my rentals (which is in amazing shape, one of the nicest houses in the neighborhood inside and out) recently emailed me a threat letter because my tenant has tags that just expired. It's unreal to me that some people think that is the best use of their time.

Are you a homeowner?  My advice would be to start by buying a place for yourself if you haven't already.  Then you can consider if you want to rent it out and move to a different home, do a house hack, or if you've saved up enough money, you can try to buy an investment property while keeping your primary residence.   

What @Drew Sygit said.  The lease is always between the tenant and the landlord, you are acting merely as the agent.  Make sure you understand your state's laws about what type of disclosure(s) you need to include regarding your role as the agent. 

Hi @Aubrey P., from what I've read, the proposal will be more transparent, not less-so. 

I don't personally see any "racial inequity" in the current credit reporting system, as seems to be the claimed premise behind the proposed change, but more transparency is generally better. 

In any case, the proposed changes are looking unlikely in the short term - they are talking about a 7-year phase in, if it even happens.  

From my reading:  "The plan calls for a public credit reporting agency to be set up within the CFPB. This agency would develop algorithms that would negate the impact of past discrimination, make credit scoring more transparent (currently, credit scoring models are proprietary and consumers don’t know exactly how they are scored), make the dispute resolution process more accountable and also enable data security.

Under Biden’s proposal, which would phase out the existing private credit bureaus over a seven-year period, adverse input from medical debt and delinquencies on predatory loans would not make its way onto credit reports and the scoring process. And adverse input would only be reflected on a credit report for a four-year period, rather than today’s typical seven years."

I think you need a better lease or a property manager.

You should never put the onus on tenants breaking their lease to market for new tenants. 

Just add an ITF (Improper Termination Fee), usually the amount of the security deposit plus the amount of one month's rent.  Check TX state law to see if there's a cap on what the ITF can be.  Most states will deem clauses such as "rent must be paid through the end of the lease term" to be unenforceable because they create an incentive for landlords to not attempt to find new tenants.  

As to your tenants breaking their lease, once they vacate, make the security deposit claim and threaten to send them to collections for any balance owed (if you so choose, depends on the condition and how quickly you can get it re-rented.)

In our world, landlords normally end up in a better financial situation when tenants break their lease, due to our lease ITF and quick turnaround.  Time is money, don't spend more than you have to on situations like this.