All Forum Posts by: Kristen Williams

I was JUST going to post a new thread, about the difficulty in this seller's market, to obtain a personal home loan using income from an LLC. They are making it increasingly tough to qualify, even if you do; the amount of hedging and effort we are required to make is making it less simple to make offers. I recently lost 2 bids because it was taking so long to get the lender's underwriters happy. I was told quite frankly that if you offer cash or a conventional mortgage you will be put ahead first. Years ago, it was the hard-working business owner who was favorable with the bank, but now, it feels like a beggars market. We shopped for other lenders but there's so many; we have pretty much decided it's not worth overpaying for higher priced property and to wait it out. And in your situation Jay, it seems shady for them to change the terms in an existing agreement; someone is money-hungry, like many we are seeing these days.

@Marty I.K. Mills Thank you for your excellent post just now. I do see it. I didn’t see it when working with him to assist in the purchases and extra efforts. I did feel it a little when he mentioned his financial stretch. He’s never been that plain. I actually worried he was ill, suddenly setting up the trust and wanting everything to flow that way. Is advised him of the laws regarding security deposits and their use, but to no avail. 

Last night he repeated a text asking for his Sep and Oct financials, which I had sent at their proper intervals. It was then I felt perhaps he was weakly finding a way out of our agreement. 

So it is time to recognize he clearly is in over his head and doesn’t see our value but the cost only. Typical.

I do enjoy the teamwork and partnership of growing portfolios or the thrill of learning from a seasoned long-term investor, so this thread has been a healthy feedback forum to see the forest for the trees! I’ll take a peek at the read as well! I have an amazing mentor, Brian Rawson from My Alma Mater who teaches an amazing course on negotiations and I’ve taken it and any new course I can to stay relevant. Have a fabulous day!

You are invited to my birthday party!! Thank you!

James, that is a great, encouraging share. I appreciate hearing this. I worked as an exec in aviation for over 20 years when I realized that just like high school, things change and people move on and it's about the big picture. I do like your comment about the percentage of loss. I did have to entertain the idea of some losses actually being good for us, as the clients were very inexperienced and demanding and some very toxic. But I have always been a glass half full girl. I do have great confidence in my business model - we are the only one in our area with the matching concept and our numbers show it. We have 98% occupancy on all of our portfolios, only 1 eviction in 5 years, and long-term tenants and clients. I am very thankful. 

Perhaps I have been too open here, but one of the things I have worked the hardest to do, is break the mold and behaviors of this industry. You have to love doing it to stay in it. I made more money at Learjet, but that's temporary. Residual income and relationship value and staying true to self will have to win out. This is why I believe I will have to take what may be coming, because I'm staying true. 

I was just getting ready to report back to each of you who took time to share experience and guidance regarding the client asking me to lower my fees by 3% and tell you how we were able to turn it around into success! 

Until today; anyone building a PM business should never do it lightly. You've got to have a strong finance background, excellent communication skills, an eagle eye, great marketing ability, technology and be able to listen. I've been asked before to lower, and just recently, won a multiple 4 plex community, but lowering just .5% to build trust. 

However, when you invest years into a client, develop a relationship, and go over and way beyond expectations, you often enjoy the benefits indirectly. Since my post, my client was buying full-priced higher-end homes, all on one street, and I was able to pre-lease using live videos and virtual tours, set the market rate, higher than the surrounding homes, help him get it made ready, any new additions, shared my resources in terms of contractors, get him everything he asked; copies of leases, deposits, etc. He personally called me at the end of this and said I was a great help to him, and we had done an excellent job getting everything ready. He said he appreciated us and how well we handled everything. In hindsight, it's like being cheated on. Truly. Giving you praise and then I learn from one of my valued contractors, that he was going to purchase one more house on the block, that he asked our advice on, and market-rate, just like the others. However, he didn't call me this time to pre-market. To video, tour or assess. I tried calling or texting and it got really cool. I finally was direct and asked him if we were going to manage this property. No answer, only other requests. Such as new larger copies of our monthly P & L's. Today I decide to check the address for the final sale. Not only did he purchase it a few weeks ago, but he has also hired someone else to lease it. We have one of the best reputations for leasing, not just PM. A million thoughts entered my head. Hindsight says he either wants to self-manage now, or he's trying the one house out with someone willing to take less since I wouldn't. Finding it online is like finding out your grandma died on Facebook!

This is where I shake my head. I have checked every area to evaluate our services. Do we communicate well? Did we disrespect him in any way? The list goes on, but I have done all but call and ask him what is happening. If he fires us, we have lost 5 years of making him a lot of money, but income for ourselves, and his affiliation. He is very well known in our community and extremely influential in many circuits. It's easy to say, sure, we'll get another one. But what is so very hard to swallow, is the amount of effort, belief, time, and talent put into the entire process, from pre-screening tenants, getting higher rates, exceptional make-readies, and cleaning, and catering to the personalities that want certain things once moved-in, all kept quiet and discreet in order to show a bit of class. All the hard work, to be turned over to someone who will simply collect a check and the benefits without any effort. Am I bitter? No, I don't know yet if we are done, but I suspect at least by year-end, he will go another route. I had offered to come down 1%, but this is the wrong direction for our business. Am I being a big baby? :)

Excellent thought into your reply and greatly appreciated. We actually have 4 revenue streams; management, leasing, project management, and market analysis.  At present, we charge a flat % per portfolio and do not upcharge for maintenance handling at all, except for certain trip fees, which are very small. After onboarding a client, we use several checklists at every step, to get to know the owner, the property itself, etc. We begin with a maintenance checklist to inspect the property in all areas, and we take inventory and serials/models on all major assets as well, so we can be proactive. We also lend them our VIP discounts for HVAC, plumbing, etc.. as well as supply stores. Most PM's charge a 5% fee for arranging this, we do not. Our Project Management fee is a % of the cost of a large project, such as a patio, pool, deck or garage, etc. We use accepted supply chain practices and get RFQ's and vet each one, after securing a budget cap with our owners. We see the project all the way through and keep in communication with the owner to deal with snags, pricing issues or hidden problems.

For Leasing, we do not get paid until we get the lease. We use strong credit and criminal background screening, as well as income verifications, identity and work verification, as well as home care and character references. We use a checklist again, to follow all Landlord-Tenant Laws, federal housing, and more, so it's consistent and fair for each applicant. We get 1/2 of one month's rent. We handle all videography, photography, social media, and advertising over 80 different global platforms, as well as HR coordinators, military housing, and more. 

Market analysis is hourly, or most always waived. This is the biggie for our owners because we set the rate almost all the time. We use a global instead of a local scale because we economize the rental based on what the global market is willing to pay, versus what the local pool of renters is. We are not greedy, but every time we get a maximum rental rate, and we use checklists beforehand to make sure the tenant is getting what they are paying for, which is a deep-cleaned, landscaped, updated and well-maintained home. We make sure to protect the owner's property while making them more money, which naturally flows to us by our monthly rate. 

Today I contacted the owner to request a formal sitdown presentation as if we were brand new PM's being interviewed. Oftentimes we get owners by word of mouth from others, and they love us until they decide to grow their portfolios, and devalue PM for savings. We have a really good relationship, and I believe if he truly knew what we did behind the scenes, and what legal barrier we help provide to him, he'd be able to find other avenues of savings more significant than our fees. I am researching as we speak how he can capitalize on insurance, for example, by having these multiple, high dollar executive buys bundled.  The other conversation I may try, since he comes to me every time he buys a new house, and asks advice, one area is that he is loyal to his realtor - and although a great negotiator, is buying off the market directly, as opposed to other, less expensive ways to purchase great properties. 

I do hate to lose him, but I have had to part ways just this year with folks who have, in my opinion, ran us ragged for every little thing that has added up to lost time and value. I've had to learn how to walk away and trust God to supply the best relationships. Hoping this one can be talked through. Thank you again! Pretty neat formula you came up with. In our case, we never charge for renewals, and because we choose hard early, we tend to get long term rentals, with gradual, acceptable increases where needed. 

We have worked hard to build our relationships over time, with owners and investors, and we are even expanding. We have done this by evaluating workload, and setting fair Property Management rates with our owners, on a case by case basis. We treat them all as equally as possible, but realize some are very high maintenance, and others, sadly, have taken advantage of us, asking low rates to begin with, as they build, and then we make them a lot of money, only to ask us to lower our rates, so they can earn more by saving on our cost, since we are to them, essentially, overhead. I have been working with a certain client for 5 years now. We started out leasing for them only, and he and his family self-managed. Then, tenant issues started arising where they were wanting maintenance done, it was promised and not completed, etc.. so we showed him the benefit of professional management. We set a very fair rate, and have managed 3 of his properties. Now, he is buying 3 more properties, and I already have 2 of them pre-leased at an excellent rental rate with qualified, impeccable tenants. Now, he has asked us to lower our rates by 3% so that he can save money, because it is tight for him, as he is buying up. He is a very well respected, very kind and thoughtful individual, so I was surprised at this. I felt that he did not value our services and asked if we had not provided them well enough. He was very pleased with us, but was strictly looking at savings, and said he and his wife and grown son could do the maintenance themselves, and save that money. He has also asked us for all the security deposits to be sent to him to put into a trust - which takes our compliance into a worrying level, so we are going to have him sign a statement that he is responsible for them.  I understand his perspective, but as a PM business, will the stance of "some money is better than zero money" going to diminish all the extra and above things we do for him, and devalue our business? Or should we remain solid in staying at our current rate. We have not raised rates on any owners in the past 3 years, in order to keep them. Thank you in advance for your thoughts. 

Please note your link to the credit score gives a warning by Safari that it is impersonating your company and that it may be invalid or an attempt to fraud. 

I'd like to say something, from a PM perspective, if you don't mind. Upon our learning curve for the Wichita metro market, we have experienced some bumps and bruises - to our ego and our pocketbook, in relation to fees. To set ourselves apart, we initially offered the lowest fee rate; 6% of the gross yields. We gradually grew, and never up-charged for maintenance, lease renewals, credit reporting, etc. Our only fees have been PM and Leasing, which included not only credit reporting costs, but videography, photography, showings, vetting, etc.. and did not get paid until we got a signed lease. We used OUR attorney and our leases to ensure we followed strictly with the Kansas Landlord-Tenant Laws, Federal Fair Housing Laws, HUD, Americans with Disabilities Act and local governing ordinances. We eventually got to 10% with some, even though some homes ended up being so much work, (inheriting bad tenants, previous PM failures, lack of investment into property maintenance), that we would take a hit.

My eyes have been opened in the past year, that PM's are often seen as glorified secretaries. No amount of formal education, recurring education, experience, or proof of ROI and our value, seems to make a difference. We are data geeks here and from my 20 years in aviation in finance and marketing, as well as International Business via WSU, we track everything. I had one owner quit us after 5 years of helping him set market rates, build equity and have zero turnover in tenancy, because he wanted cheaper than 8% PM fee. As his portfolio grew, so did his wallet. When we could feel that he was going to go with a college girl for 6%, we sent him charts and graphs showing his monumental growth by using us. We did so many things without charging, so we could grow together.., as we do with many owners. I have owners who I go ahead and stay at a lower percent, but some we have actually had to cut from our business, because they were breaking serious laws.

I guess my point is, if you're getting great service, and even bumpy during strange times, and you have a healthy grasp on your Profit and Loss statements, PM is one of the lowest expenses, doing the most amount of work. You may say, "then quit and don't complain", but I love what I do - and am very good at it and am willing to learn and grow with each investor. Our value is much higher and deserving of respect if you allow us to work for you, and not be micro-managed or undermined, where you ask for one thing and then go and work with a tenant without sharing that communication or plan. Why are we valued? We know your property! We know the locale, the market, the climate of the times, the laws that need to be balanced, the best way to vet the tenant before they become a problem. Of all the properties we manage, we have had only one court-actioned eviction in 5 years! The biggest challenge we've had is lease breakers who don't care, whether it's a job loss, a desire to move, etc.. but we work to mitigate loss for our owners. 

So I guess if your only value of a PM is the price on their head, and you think they should be paid the lowest on the totem pole, you are entrusting a huge asset to someone you don't value. Not everyone is the plaid jacket short pant salesman with a gold tooth and a greasy handshake. 

Our world demands excellent communication, organizational skills, technical savvy, social media presence, tight legal documents, flexible and often very late work schedules, financial acumen, and much more. Now, PM's are an open target, just like tax preparers and CPA's. One wrong move and someone can blast you before you can even speak - and ruin you. We are here to work for you, grow your portfolio, provide great housing choices for our citizens and maybe make a few friends along the way. Sorry for such a long response. :)

Hi there! My name is Kristen and I'm usually a contributor on the advice side in the forums. I have enjoyed the brother/sisterhood of Bigger Pockets and it has been a blessing in the building of my PM enterprise.

We began and continue to build on a matching concept, and now have 4 revenue streams; Leasing, Management, Market Analysis, and soon to launch in 2019; Tenant Direct.

I had brought 20 years of business aviation, finance and marketing to my business and through networking and building relationships have enjoyed careful growth and gained much wisdom along the way. Trial and error included.

After reviewing the past three years and forecasting where we need to go for 2019, I find myself in need for the first time. In order to really stay above my competitors and serve my owners and tenants, I'd like to continue to use technology and efficiencies we've implemented in order to really be better at what we do and set higher goals.

I really do not like the idea of loans, I've explored the many offerings and daunting possibilities to go into debt. We are currently debt free. So the next option is, should I consider outside investors in our company, or will that take too much out of the growth? Will I have to subject myself to someone else's possibly differing philosophy, or control?

What about an Angel investor? I will be transparent in stating that I have never considered nor truly researched that end. I have found so many partnerships who butt heads or can't work in synchrony together that I wonder if should just continue doing what I"m doing?  My goals are two-fold, in case you are wondering: 1. like everyone else, to earn more money 2. To expand operations to utilize the best in technology in order to maximize our strengths.

Disclaimer: this is not a veiled search for an investor. Please do not delete this post. I welcome a side conversation for guidance in my business growth. I have built this from the ground up with a great deal of pre-work and love watching it grow and fill the niche we have found with it. I only want to make a wise choice in handling the obvious needs facing our success.  Thank you so much!