All Forum Posts by: Franklin Spees

For the past 17 years I've been practicing as a real estate attorney, broker, investor, urban planner, syndicator and owner of a mid sized property management company in California.  It has been my experience and observation that the relationship between the Landlord (LL) and the Property Manager (PM) is critical and cannot be overstated...but it is also extremely precarious.  

For investors in today's market, the competition for properties with healthy cash flow is intense. Interest and vacancy rates continue to remain low (for now) and the common perception seems to be that virtually anyone with some spare cash (or a self directed IRA) can fix, flip, reposition, rehab, swap, wholesale, lease to purchase, buy/hold, etc. But for those who decide to keep the property, they often go in search of a good property manager to implement their grand plan of maximizing rent in search of the coveted passive income. What they quickly discover is that virtually a single capital expenditure, a few inflated vendor invoices or a slow turn, could literally obliterate that month, quarter or year of being in the black.

Likewise, PM's have to be concerned with much more than "Tenants, Toilets and Trash". We work in one of the most regulated and litigious industries in the country, especially CA. It is a daily challenge to navigate the local, county, state and federal governments; local Code Enforcement, Housing Authorities, Department of Real Estate, Franchise Tax Board, Secretary of State, IRS, Dept. of Fair Housing & Employment, HUD...to name a few.

I have come to believe that in order for each party to meet their respective objectives both sides must meet in the "reasonable" middle. On the one side, LL's need to get comfortable paying for value and stop chewing down reasonable fees which are necessary to make the business model perform and prioritize the property.  Moreover, set realistic expectations within the scope of their responsibilities. Don't expect PM's to repeatedly chase down third and four bids (burning out their vendor relationships) and then expect that they will be construction managers as well. On the other hand, PM's need to get better at communicating, implementing available tech tools and managing expectations.

What other elements am I missing in designing this symbiotic relationship?

Real estate discussion and networking. I'm a real estate broker and attorney who enjoys meeting with people to discuss creative investing strategies. I would like to network with real estate professionals (agents, investors, landlords etc.) to expand my connections in Sacramento. I additionally intend to share ("pitch") my approach to property management. I believe I have developed the ideal way for investor/landlords to maximize their cashflow and minimize their involvement/stress/liability of day-to-day management. I'm also available to discuss legal liability mitigation strategies such as entity formation, insurance, compliance, operations, etc.  Let's take a lunch hour and find ways to add value to each other this Monday. Looking forward to meeting up with new and old faces.

Here's a link to my background if interested: https://www.linkedin.com/in/neighborhoodrei

Franklin Spees, JD, CCRM, TCS, LEED AP
916-999-1905
[email protected]
www.MyPMessentials.com
or message me on BP..

 Summer, it's a great question and one we come across regularly in our business. I would also say it depends on who you ask. I'll provide my perspective as both a real estate attorney, broker and owner of a property management company. I own and rent properties in the Central Valley and Sacramento regions here in CA and it gets triple digits hot...so pools can be an absolute perk. We actually pursue properties that have pools as they are a valuable amenity and add a premium to rent. Here are a couple considerations you might consider when renting a home with a pool: 

• Maintenance - our recommendation is to pack the monthly service into the rent because (similar to lawn service), if a tenant fails to properly maintain it correctly it could lead to over taxing your equipment, getting pool water out of balance and potentially require a costly drain and refill at turnover.
• Fencing - I would check with your local jurisdiction and maybe also your local apartment association and attorney, in order to determine whether or not you have a legal requirement to fence your pool when renting it out to the public. That said, even if there was not a requirement I would strongly consider you fence your pool, especially if they have small children. But also keep in mind, all it takes is a visit from family or friends with small kids to expose them and you to the risk.
• Insurance - I also recommend you talking with your insurance agent just to confirm your coverage for the pool but also what type of coverage you can expect should their be an injury or worse. Better to know ahead of time what you have and make any necessary adjustments.
• Advertising - Of course, a pool looks great in photos so I would be sure to maximize that in the ad and disclose whether or not the 
• Leasing Provision - setting that expectation is critical in the lease related to who is going to maintain the pool. In the event you decide to allow the tenant to care for the pool, you might also consider adding in a provision that triggers your ability to raise the rent and hire a pool company in the event you observe the pool being neglected. 
• Vector Control - if they fail to care for the pool and it were to turn, you might also be subjecting yourself to a visit from the County Vector control agency in their attempts to mitigate the mosquitos...which are really bad this year in CA btw.
• Alarm -  an additional consideration might be (if not legally required) to install the alarms at the doors leading to the pool which sound/beep/alarm when those doors are opened.

I hope this list provides at least some initial considerations related to renting a property with a pool. Although I mentioned many mitigating factors and always tend to plan for the worst...in our 15+ years of management we have not had any significant negative incidents related to renting properties with pools. Best of luck to you Summer.

Franklin Spees, JD, CCRM, TCS, LEED AP

PM Essentials 
www.MyPMessentials.com
"Only Pay For Services You Need"
Serving California Landlords with low cost property management
(DRE#01963981

Hey Sacramento Real Estate Investors. I'm a real estate professional who has 15+ years of experience in investments, brokerage, property management, real estate law...and I'm getting more active in the Sacramento area. My passion is real estate and I enjoy getting together with others to network and find ways to share and add value. I'm proposing to schedule a GoToMeeting to discuss real estate topics in general and see where the conversation goes. 

I also plan to accomplish two of my personal goals: 1) locate any available residential small to mid size investment property opportunities in Sacramento; and 2) discuss a lower cost tech driven property management solution I'm rolling out in the Sacramento region...it's a unique approach and I'd like to get your feedback and gauge any interest. I suppose it would technically be a pitch for both finding personal deals as well as promoting my property management service: PM Essentials. (you can learn more here: www.MyPMessentials.com).  Other than that we can see where the conversation leads and hopefully make some new connections.  I will be in Downtown Sac at the time of the webinar so several of us can meetup in person during or after our online discussion as well.  Looking forward to talking real estate. Here's a link for more information on my background if interested: https://www.linkedin.com/in/neighborhoodrei/.  Message me if you have questions or comments.

I'm curious about the real estate market evolution of the property management industry. I am a relatively seasoned real estate professional with experience as a broker, property manager, investor, syndicator, attorney and urban planner...and I like to think I have at least a sense of the CA market from multiple perspectives. My current focus is property management. The industry is so ripe for discussion with all of its: negative stigma, tenants/toilets/trash, fee-drivenness, landlord friendly, investor driven, technologically evolving and legislatively active...environment.

There's the historic landlord and agent PM legal agency relationship with a traditional scope of service, duties/responsibilities between LL&T, evolving retail/consumer trends/expectations, etc. But I am also witnessing as well as organizing a newer more scalable model providing for a more cloud-based, remote, less-than-full service--model that is appealing for a large amount of investors and property owners who are interested in receiving many of the traditional services (rent collection, bookkeeping, leasing, noticing, maintenance coordination, answering phones, etc.) but who would be willing to pay about 1/2 the monthly fee in exchange for participating by physically being present to allow access, showings, servicing notices, etc.

Curious to know what anyone else thinks about this new evolution in the property management industry...

Franklin Spees
MyPMessentials.com

So, it looks like your plan overall requires $2M+ in capital with a 20%+ return consistently on each investment as it comes in the portfolio.  I suppose everyone would want this metric of performance, right?  Tough to achieve and highly ambitious for sure...but be encouraged that just developing a plan like this and moving toward it will yield so many new relationships, experiences and likely toward a particular specialization and investment structure that you could have never designed at the outset.  I say go for it and see where it ultimately leads.

Ben,

Very exciting for you.  Would you mind writing a detailed post on all of the steps you are taking to lock down the deal, secure a commercial bank loan and also syndicating the downpayment and other up front costs.  I'm just curious exactly how you are structuring the deal, finding your investors, managing any carrying costs, pref returns, hold/timing strategy, sweat equity, etc.  You may have already blogged or posted in detail about this so feel free to just push me to that if it exists.  Congrats again!

I was thinking the same thing @Karen Margrave .  There is usually a reason for builders leaving remnant lots.  If the deal was that great they would likely build them out themselves. Now there could always be a logical reason (lawsuit, sold company, someone died, or some other explanation).  Might want to gather info from the seller/builder and then head over to the planning department and corroborate and do your own due diligence.

Online payments are an amazing advancement in the apartment industry, no doubt.  In fact, it's so convenient that I as a management company pay the .50 transaction fee.  It automatically synchs with my online accounting, it time stamps, and tags the late fee the second it becomes past due.  That being said, In CA we can mutually agree to allow online payments, but I believe we are also required to provide the alternative payment such as a check.  But laws aside, why not allow a tenant to mail a check or money order to a PO Box?  I know I have many low income and elderly tenants that would be at a complete loss of online was the only payment option.  I will say that I'm continually surprised at how many people are paying rent and logging into their account on their smart phones.

Thanks Chris.  I just didn't want to violate any BP policy or put off any of our members.  I have done that already a few times which is great.  I was just trying to think about how to send something to a group of people based on their interests and geographical location.