WIIRE 009: Don't Make These 5 Property Management Mistakes with Amelia & Grace

09/05/22 • 18 min

1 Listener

Hi everyone, welcome back to the WIIRE podcast! In this week’s episode of the Women Invest In Real Estate podcast we’re going to talk about the five property management mistakes that you should not make. We’ve each learned some of these the hard way and want to help you avoid them at all costs too!

First and foremost, a reminder...Do as we SAY, not as we DO!

5 Property Management Mistakes

1. Not using a property management software!

Yes, they cost money but hear us out. This investment will not only save you time and energy but will streamline your processes, tenfold. We love TenantCloud and highly recommend checking it out. There are a few key things a property management software should do for your business:

Allow you to collect deposits, rental payments, fees, etc.
Submit maintenance requests
Sign rental agreements/leases
Communicate with clients
Bookkeeping (you’ll thank us come tax season!)

2. Not setting (and sticking to) regular business hours

What that means is don't train your tenants to think that you will reply instantly on Saturday and Sunday, or even instantly at all. We are huge proponents of setting business hours so our tenants know when they can reach us and what our rough turnaround for requests is, aside from emergency situations of course.

What does this look like? If you are on your computer at 7:30pm on a Sunday evening and you see a question come in (not an emergency), let it sit until Monday. Then on Monday, respond by letting them know you just received their request from the weekend and add the rest of the response to their request.

Unless you want property management to be an around-the-clock business, set your business hours, and stick to them. (There will be situations that are clearly emergencies or more urgent and this does not apply to those.)

3. Failing to properly onboard a tenant

Onboarding tenants is definitely more work on the front end of a move-in, but it is so beneficial in the long run. Setting ground rules and training your tenants on expectations from the start is going to help save you a lot of headaches down the road. After they sign the lease, provide them with a simple welcome packet. This could include:

Instructions on submitting maintenance requests
How to setup utilities (bonus points for adding websites or phone numbers)
Expectations for property/community

You should also include a move-in checklist where the tenant goes through the property in the first few days, notes anything that is broken/needs repairing/is damaged then turns it in so they are not held responsible for those upon move-out.

4. Not having an Estoppel Agreement in place for inherited tenants.

An estoppel agreement is a fancy way to describe a document that reiterates the terms of a lease for an inherited tenant. It includes anything that might be a verbal agreement between the tenant and the current landlord. With estoppel agreements, we also ask for all outstanding maintenance requests to ensure there are fewer surprises upon purchase of the property.

Key components of an estoppel agreement are:

How much their deposit was
What they pay in rent and any fees each month
Who is responsible for the utilities
Who lives at the residence
Any verbal agreements in place between landlord and tenant
Lease length

5. Last but certainly not least is doing quarterly, biannual, or annual walkthroughs of your units.

This is so important because it gives you a chance to get into your units and make sure they are being properly cared for but also allows you to look at general maintenance that needs done to keep the property in top shape and not degrade over time (looking at faucets for water leaks, checking for mold, pests, etc.). It will allow you to stay aware of any issues that may arise or what to expect when a tenant moves out and how much work you could expect to have to turn that unit over.

Avoiding these 5 things is simply about being a proactive landlord, rather than a reactive landlord. We too are guilty of (likely) all of these, and like everything in business, there is always room for improvement.

See you next week!

Resources:

Check out TenantCloud

First and foremost, a reminder...Do as we SAY, not as we DO!

5 Property Management Mistakes

1. Not using a property management software!

Allow you to collect deposits, rental payments, fees, etc.
Submit maintenance requests
Sign rental agreements/leases
Communicate with clients
Bookkeeping (you’ll thank us come tax season!)

2. Not setting (and sticking to) regular business hours

3. Failing to properly onboard a tenant

Instructions on submitting maintenance requests
How to setup utilities (bonus points for adding websites or phone numbers)
Expectations for property/community

4. Not having an Estoppel Agreement in place for inherited tenants.

Key components of an estoppel agreement are:

How much their deposit was
What they pay in rent and any fees each month
Who is responsible for the utilities
Who lives at the residence
Any verbal agreements in place between landlord and tenant
Lease length

5. Last but certainly not least is doing quarterly, biannual, or annual walkthroughs of your units.

See you next week!

Resources:

Check out TenantCloud

Previous Episode

WIIRE 008: BTS: Eviction, Seller financing & STR with Amelia & Grace

Welcome back to episode eight of the Women Invest in Real Estate podcast! In this episode, we’re giving you a behind-the-scenes look at what we are up to in our businesses, and we’re kicking it off with an eviction story from Amelia. Let’s get started!

Amelia’s Tenant Eviction Story

With what is Amelia's first (and also hopefully her last) eviction, she’s learning some excellent lessons on handling tenants and the process of an eviction. This particular tenant has been problematic for the past 9-10 months and it has escalated to his becoming verbally abusive towards her and physically destructive to her property.

While no property owner wants their property to sit vacant, it will serve her much better in the long run, to hire a lawyer and evict this tenant. She will be able to rehab this unit and be able to up the rent on the unit - so while evicting a tenant is never an ideal solution, in this case, it is the best choice. She has positive, regular cash flow from her mid-term rentals and can afford to let the unit sit vacant while she goes through the eviction process and rehabs this unit.

Hiring a Lawyer

Hiring a lawyer has been the absolute best decision to move through this process and has served Amelia well. Amelia paid her lawyer a retainer of $1,990 to essentially handle her entire eviction process. If the tenant leaves without having to go to court she will receive $900 of that back and feels it has been 100% worth it.

Best tips for the eviction process...

Communicate only in writing, not by phone
If you can afford to do so, hire a lawyer
Don’t accept a partial rent payment if you’re already in the eviction process
Send documents, or any deposit/checks, via certified mail
Put your human feelings aside and just like move forward from a business standpoint

Grace’s Updates

Grace is in the process of purchasing a single-family (nearly turn-key) home that is on the same street as her existing four-plexes. For this property, Grace negotiated a seller-financed deal that was a bit different than others she has done because this particular seller is an investor herself. It will be a quick turnover - a solid house, in a solid neighborhood - just needs a fresh coat of paint before listing. She has already reached out to some insurance agencies who are all interested in renting this property for their clients.

After this house is finished, Grace is excited to be done rehabbing and buying for a solid three months so she can do some traveling and just take a massive break. Grace has been rehabbing for nearly a year and a half straight and is excited to hit pause after this house is complete.

Also during this time, Grace is excited to get some much-needed systems upgraded and new systems in place to help her productivity and also take a good look at where she’s at and what direction she wants to take coming up.

In The Works...

Amelia currently still has 5 inherited tenants. Once they move out she plans to convert them into mid-term rentals, however, there are two tenants who might be hold-outs as long-term tenants. Frankly, she is fine with that. They have been there for 10 and 17 years and despite being under market value provide stability and the property functions well as it sits right now.

Amelia also has an Airbnb property in Clear Lake Iowa which reached over 80% occupancy for July and is set to make over $2,500 in cash flow on this property in July alone. This has given her the bug to keep her eyes peeled for vacation rental properties that makes sense for her.

Grace on the other hand doesn’t want to be all mid-term rental. She likes the consistency and stability that comes with her long-term rentals. Like Amelia, Grace also has her eyes peeled for an Airbnb-style property that is small, doesn’t require a ton of rehab work, and will serve her well. Another reason Grace is looking to add an Airbnb property to her portfolio is that she wants to be able to hire an internal property manager but right now it doesn’t make sense financially. But if she add an Airbnb to her portfolio that would add to her cash flow she would be in a better position to add this person to her team and take some work off of her own plate.

That’s all for this week, thank you so much for joining us and getting a little behind-the-scenes look at the happenings in our lives as real estate investors! We're so happy that you're listening and you can follow us over on Instagram for more updates!

We'll see you in the next episode!

Resources:

Stay connected with the WIIRE Community
Get the scoop on

Next Episode

WIIRE 010: How to Hire and Manage a Property Manager with Kayla Thorp

Hey friends, welcome back to episode 10 of the Women Invest In Real Estate Podcast! This week we are so excited to welcome Kayla Thorp, also known as thatlandlady on Instagram. Kayla is a residential real estate investor in upstate New York whose real estate portfolio currently sits at 40+ doors, mostly in the long-term rental market. Kayla is one of the smartest people we know in the REI biz and we are so honored to have her join us today on the podcast and dive into how she systemizes her business.

Kayla started out like the majority of investors, self-managing her rentals but since then she and her husband now have their own property management team they can rely on to keep their units and operations running like a well-oiled machine.

After purchasing their first couple of rental units, they started out using Cozy.co, and when Cozy merged with Apartments.com they realized the service was not serving them well, nor was it meeting their tenant needs. They pivoted and made the switch over to Buildium, and ultimately switched again to AppFolio, which is what they still use today.

One thing Kayla impresses on other investors is that if you buy a property and don’t factor in a management fee, you are not buying an investment. You are buying a full-time job. The reason for this is that eventually if you want this to become a more passive business, you will need to hire a manager (which hopefully you will see a good ROI with appreciation and rent growth).

For Kayla, that time came sooner than later and they were quickly glad they had factored in that management percentage from the beginning. Being able to keep that management percentage to fund their own business and lifestyle, while building their portfolio, became super valuable for them. At that point, they were already ready to put more systems in place to be able to hire out different pieces of their business.

Their first property management hire was an internal hire. Because Kayla had done her due diligence and created SOPs for each step of her business in the early stages, it made this transition much less painful. They could continuously point back to all of their documented systems and procedures for every detail of exactly how to screen a tenant, turn over a unit, review standards for rental criteria, and so much more.

Being in New York, a very tenant-friendly state, Kayla has had to adjust her management style in a much different fashion than most others operate. Because New York has a unique set of laws and regulations regarding things such as evictions, collecting pet fees, the inability to check previous eviction history, and so much more. They have developed a problem-solving style that has really helped them get through most of these situations, without having to go through the eviction route.

Kayla and her husband also started the Rochester Housing Coalition, which is a group of housing providers and also nonprofit organizations that deal with homelessness in their city to address some of the housing policy concerns and to help the city work through those things in a way that's beneficial to everyone.

Eventually, Kayla and her husband were able to pivot their business and hire their first external property manager, who was actually an old friend of their business partner. They began to hand it off piece by piece starting with maintenance ticket coordination. They began by introducing them to their maintenance team. Introduced them to their ticketing system, worked out all of those kinks, and handed off just that piece. Next, they handed over learning the rent collection system, collecting outstanding rental payments, and so on.

Ultimately Kayla’s goal for herself and her husband was to get down to only working in their business for a total of 10 hours per week before they would consider the stand-up complete. Finally, they were ready to really test their systems and booked an Airbnb, out of town, for a full month to allow their team to really run the show successfully with their hands off.

Kayla’s Tips for Property Management

1. Do not be afraid to reach out to your investing community.

For the most part, the real estate investing community is so welcoming and genuinely wants to help one other. We all want each other to succeed.

2. Visualize the absolute worst-case scenario and piece togethe...