All Forum Posts by: Shannon Robnett

Did someone say contractor?  Sean feel free to reach out if I can be of any assistance on your RE journey.  As a 40 year Idaho resident and  over 25 years in the development and construction game there is not much I have not built or seen in our valley.  Let me know if there is anything I can help you with.

Dolf and Trina,

Have you guys looked at participating int a syndication in the area?  With syndications you guys get to be a part of a bigger party and while it takes away a bit of the drive your own ship independence, it also puts you in partnership with some experienced market players.  And while you might struggle with making some of the numbers for these markets make sense with an experienced syndicator you can look at the way they are positioned in the market to uniquely take advantage of income opportunities. 

Its definitely a way to win in a hot market!

Josh,

We are a multifamily and industrial developer, contractor syndicator and property manager all rolled up into one. I have lived in Boise for 40 years and been building for 25. My brother is a SFH builder and developer in McCall and I would love to chat with you about what we could do to assist you in your relocation education.

Anyone looking for syndication and OZ deals in Boise lets connect and continue the conversation.  With over 40 years in the area and 25 years in real estate in Idaho, I can definitely provide insight and resources for anyone interested.

@Anthony Terrones,

I would echo @Jim Paulson's advice.  For example, we also just had a provision thrown in by the courts allowing the tenants to ask for a jury trial if not specifically dealt with this could be  a big problem as all jury trials have been halted until October.  On top of that you are likely to cost yourself more than the fees associated with property management and while I understand you want to learn, from another state, as a first time property owner is a tall order for even a seasoned professional. 

Property management has a lot more to do with getting a tenant in the property, trust me on this.  After that there is rent collections, drive by inspections, potential complaints and repairs for which networking and accomplishing in Idaho right now with our workforce stretched very thin will not be a pretty sight.  What about a broken water pipe?  dishwasher on the fritz or an unruly party that makes all the neighbors your biggest fans? 

I appreciate your optimism and have had more than my fair share of hard knocks from my own choices to advise you seriously rethink this while you reside in another state.  Once you move to Idaho then you bet by all means deal with the 2am phone calls for emergencies.  Just remember real estate is a long game, no sense burning your self out too soon.

One final thought, would you not agree with me that as someone from out of town you might not know the actual rents available in your neighborhood as well as someone that has a business here in town?  If you cost yourself even $50 are you really money ahead and truly learning the market to do it yourself?

Anthony,

I would echo Jim Paulson's advice.  For example, we also just had a provision thrown in by the courts allowing the tenants to ask for a jury trial if not specifically dealt with this could be  a big problem as all jury trials have been halted until October.  On top of that you are likely to cost yourself more than the fees associated with property management and while I understand you want to learn, from another state, as a first time property owner is a tall order for even a seasoned professional. 

Property management has a lot more to do with getting a tenant in the property, trust me on this.  After that there is rent collections, drive by inspections, potential complaints and repairs for which networking and accomplishing in Idaho right now with our workforce stretched very thin will not be a pretty sight.  What about a broken water pipe?  dishwasher on the fritz or an unruly party that makes all the neighbors your biggest fans? 

I appreciate your optimism and have had more than my fair share of hard knocks from my own choices to advise you seriously rethink this while you reside in another state.  Once you move to Idaho then you bet by all means deal with the 2am phone calls for emergencies.  Just remember real estate is a long game, no sense burning your self out too soon.

One final thought, would you not agree with me that as someone from out of town you might not know the actual rents available in your neighborhood as well as someone that has a business here in town?  If you cost yourself even $50 are you really money ahead and truly learning the market to do it yourself?

We should talk further Mike.  I have several going in both Meridian and Nampa.  How would be the best way to connect further?

We should talk further Mike.  I have several going in both Meridian and Nampa.  How would be the best way to connect further?

Absolutely right @Alexandre Marques dos Santos, some property managers will do what ever it takes to "make the sale" at the cost of the owner.  That is why proper team alignment of goals and communication is very important.

Property managers are all over the board on this, but let me tell you from my experience, you get what you pay for!  And believe it or not most property owners and property managers are not aligned in their business models.  Now before you shoot the messenger let me explain.

Most people get into rental property ownership to acquire assets, create wealth and grow their cash flow.  To do this owners buy a property with this in mind.  So they finance it, maintain it, rent it and eventually sell it for a profit.  Often times the sale of these properties is directly derived from the rents minus the expenses.  They repeat this model again and again making them wealthy.  So look at what the incentive is for owners.

Most property managers create a business that collects fees from clients for services provided.  So they have fees structures that reward them for leasing units, maintaining occupied units, repairing and cleaning units after tenant move out and turning over units to a new tenant.  They will often charge a leasing fee, a percentage of rent fee for management while full and mark up the services that they provide along the way.  Additionally many property managers self perform routine maintenance and repairs and see further incentive to do the work.  So they are incentivized to lease them keep them maintained and then clean them and return them to market.

So how could these not be aligned you ask?  I will give you 2 quick general examples.

If a property manager is incentivized by a leasing commission, often times they can become more interested in getting it leased at any price rather than getting it leased at the best price. sometimes even giving unnecessary concessions to achieve that goal.  While the owner is also wanting to get it leased maybe with a bit more work on advertising they may be able to get another $50 a month which is all upside as nothing needed to be added to get there.  Run $50 by the number of doors you have in your portfolio then figure what effect that could have to the value of your portfolio when figured by the prevailing cap rate in the area.  And while most owners are buying to hold long term, shouldn't one position ones self in the best spot at all time should opportunity come knocking?

Instead of focusing on tenant renewal property managers may be inclined to turn over the unit for another leasing commission (typically leasing commissions are larger than renewal fees) and most make a mark up on repairs and cleaning, and if they are self performing this can be especially tricky.  A property manager may look at the security deposit as their own personal rehab budget regardless of the condition and find charges to "fit the deposit".  While the owner would prefer to keep the tenant in the unit so they are not experiencing 15-30 days of vacancy during turn over.  And often times tenants are willing to keep renting with minimal upkeep if they just don't have to move.

Now before the property managers in the group come rushing for my head let me just say in addition to being a developer and builder of multi family I have a property management company for the above mentioned reasons.  And while property managers may say they are extreme examples they are things that every owner who has more than 50 doors will have experienced if they use property management. So lets go back to the alignment part.

Alignment is important between owners and property managers.  And in order to achieve that there are simple steps you can take to make sure your property manager is aligned with your real estate goals.

1. Ask for a list of the last 5 properties they leased and check the comps to see that they know the market.

2. Ask how they deal with repairs and maintenance and make sure you are comfortable with their protocol.

3. Check their reviews on line for customer service as well as the BBB

4. Ask for a list of references who have been with them for over 3 years and actually call them.

While you can never put everyone into one category based on the actions of a few, you should always make sure you have checked out and properly vetted your team mates in the real estate game.