How To Manage Your Properties Better Than A Property Manager

Speaker 1: [0:02] Welcome to the Collecting Keys Real Estate Investing Podcast with your host, Mike DeHaan and Dan Austin. From wins, losses, horror stories, and tactics for optimizing your business, Mike and Dan take a real uncensored deep dive into the ins and outs of running a full time real estate investment and wholesaling business.

Dan Austin: [0:26] Hey there. Welcome back to another episode of the Collecting Keys Friday Focus. And today, I wanna talk about something that is near and dear to my heart, and that is how you can self manage your rental properties better than a professional property manager and for vastly less cost. It does take a teensy little bit of effort to get the systems in place, but once you do it, it's so much more efficient from a time standpoint and from just just a dollars and cents standpoint as well. It just takes a whole bunch of weight off your shoulders as you grow your portfolio. And if you're like me, you know, you wait till the last minute to grab all of your income and expense information, you know, by the end of the month or, you know, sometimes by the end of the year, if that's how long you wait, you can't even remember what half of the receipts are for, where the income came from. It just turns into a jumbled mess, and on top of that, as you start adding more units, you're adding more people to your system, and people have needs, like maintenance requests, lease renewals, move out notices, so on and so forth, right? And so it just starts to become a mess if you don't have a good system. You know, one property itself can be pretty dang hard to manage if you just kind of are doing it willy nilly, but as you grow your portfolio, it just really begins to compound in complexity, and a lot of stuff, it's just so easy for it to fall off the table, and that's honestly why a lot of people just go right to a professional property manager and say, hey, I don't wanna deal with this. This seems like a lot of work.

Dan Austin: [1:49] And honestly, it's a lot of work that you shouldn't be doing as a business owner, as somebody that's managing their portfolio. It is below your level. That's why we just say, hey, property manager, you you take it. I don't wanna deal with it. I don't even wanna talk to my tenants. But, and it's a big but, unless you can find the unicorn of property managers, you are more likely to be completely dissatisfied with their performance than you're going to be ecstatic about their performance. You know, they don't seem to do it the way you would do it, and there's always these little headaches, and you're still getting involved in the conversation. You're still going back and forth with your property manager. So it's not, like, all off of your plate. The reason why I set the bar so high for professional property managers is because my rental properties are large expensive assets that I have a lot of time and money invested in, and they're doing one of the riskiest things you can do as a real estate investor, and that is place tenants in these large expensive assets you have a lot of time and money invested into. Tenants can either be awesome, or they can be a total drag on your business, on your portfolio. And let's be honest, property managers aren't incentivized to place good tenants. Tell me when and where they get extended incentivized. If you look at their cost structure, you're gonna pay a flat, usually, eight, nine, 10% of your gross monthly rents, and then you're going to pay a half a month to a full month's rent every time they have to lease the unit. So if they have high turnover, that's actually more money for them.

Dan Austin: [3:15] They're gonna mark up their handyman fees, they're gonna mark up their cleaning fees, their turn fees, all that sort of stuff. I'm not against that. That's their business model. That's how they make money, but we just have to realize they are not incentivized to pick the best tenants. They're incentivized to find somebody and cram them in there, and again, tenant placement is risky, because you get a bad tenant, especially if you're in a tenant friendly state, that can cost you way more than it's worth to even own the property. And one last point before we jump into my systems, I have never evicted or had issues with tenants that I have personally placed, but I hate that's a little strong. I dislike 100% of the tenants my property managers have placed for us. They're naggy. They come with rent, they don't pay rent on time, they come with other issues and baggage, they just always seem to be problematic. Now, will say, I do have two property managers that do work for me, two professional property management companies, and they are managing our C class multi families, because there's just more tenants in, you know, an eight unit or six unit, and they tend to be just a little bit harder tenants to manage anyways.

Dan Austin: [4:16] So on that part of our portfolio, I do use professional property managers. Am I ecstatic about them? No. Do they do a good job? Yes. They're doing good enough. Good enough for what I would expect them to do. Okay. So let's dive in. And first, I'll talk about the different phases of property ownership based on your size. You have phase one. You're a small time landlord. You probably have 10 units or less, you're able to manage them yourself. You don't need a lot of systems, but you figured it out. It's kinda stressful, but it's not over you're not overstressed. You might if you're really a go getter, you might have 20 units that you're just whipping out, and it's not a problem for you. But then you graduate to to phase two, and that is where you own enough units that you just can't manage yourself without robust systems, but you also don't have enough to pay for a full time in house property manager. I call this the messy middle. This is where Mike and I have been for years. It's a really challenging it's probably the most challenging phase to be at when you're a landlord. Super tough. Then you graduate to that phase three where you're a professional landlord. You've got enough units to pay for a full time in house property manager. You've got 75, a 100 units, you have a property manager that reports directly to you, they are getting paid like $80 a year, they've got a company truck, they're running around doing leasing for you, they're coordinating contractors and unit turns, they are managing your properties as you would, and they get paid to do so, but you have enough units to cover those costs. The systems I'm going to be talking about are not for those of you that are in the phase three of your investing career.

Dan Austin: [5:47] These are for those of you that are like Mike and I, you're in phase two or you're in phase one. You're starting out. You have a small portfolio. These systems are really gonna help take the stress off of you and make it so much more efficient for you. And because I like groups of three, I have this set up in a three level system, and each level builds on itself. The first level is very simple. It's a property management software. Now, can go online and find a ton. Mike and I have tried a handful, and we're not sponsored by anybody. We don't have anybody. I don't recommend anybody, We've used Hemlane before. We've used AppFolio. We've used RentReady. We're currently using DoorLoop, and that seems to be doing pretty good for us. But the three absolute basic things it needs to do for you to start out with are, one, auto draft ACH rent collection. You should not be going around collecting rent any other way than having it automatically pull out of your tenant's bank accounts. If you have to give them a $5 a month rent reduction to get them to do auto pay, do that. I don't like it when they sign up to to where they have to go in and actually pay it every month. I I like it on auto draft. It just reduces the chances of them making a mistake, makes it easier for you when a rent check is missing.

Dan Austin: [6:59] You know exactly what to do next. The next thing it needs to be doing is it needs to have tenant communication. You should not be communicating directly with your tenants. You shouldn't They should not have your personal cell phone. Then you can never disconnect from it because they have it. Once they have it, they will always do it. Sometimes I get tenants that aren't even tenants anymore a year or two later asking me if if I have other units available for them on my cell phone. So I've made that mistake. Don't do it. Communicate through your tenants. Enforce them. Just they'll they'll get used to it just like anybody. Say, hey. If you have a maintenance request, you know, you gotta use the platform. You have an app, you have a website you can go to, that's how we do it, and so push them that direction. Anytime they have maintenance requests, anytime they have lease questions, anything goes through there. Now, on my lease, in case of emergencies, I do have a Google Voice phone number that they can call that will go to my in house team in case of an emergency where we have to have some sort of communication, so it's not like it's not there, but it is like the last resort for communication. The last thing that this software absolutely needs to do is have leasing ability to either lease through the software, at least upload your leases to the software so that you can see them and your tenants can see them through the portal. DoorLoop, like we use, has e signature built in, so you can actually have them sign, you can send your leases to tenants there, they can sign it, they get used to using DoorLoop, and it's all sitting there, all your addendum, all your leases, and with that, it will give you warnings when your leases are up. Here in Washington State, we have to give tenants a sixty day notice before the lease is up that they're going to have a rent increase or that you're not going to renew their lease, so these deadlines are very important to us.

Dan Austin: [8:38] We have to be on top of them. They should be for you as well. That's how you manage your units efficiently and know when to do rent increases and all that stuff. So the PM software, it's gonna cost you a little bit of money. It'll cost you $40.50 bucks a month. It's not terrible, though. 100% should have ACH, auto rent collection ability. It needs to have tenant communication ability, a platform on there to communicate with tenants, and three, it needs to have leasing information and the ability to store leases on that platform. Bayern Bermanum, now they do a lot of other stuff, but I want that to be your basic platform from there. Next, level two of your system. Now, this level two is really important to getting ready for level three, but it also, if you're a solopreneur, it's just you right now, it'll help, and this level is all about task management. What I use for task management, my main source, the main piece of this is Asana, A S A N A. I use a software, they have a free version of it, and what I do is I go in there, and I set up a property management channel, a property management tab, or project, whatever they call it on Asana, and in there I have monthly, and I have quarterly, and I have semi annually and annual tasks, all built in to automatically generate a notification when I need to do the task, or when somebody on my team needs to do the task, and I can assign it to people via their email, all that. They can log in. They can see their task management board.

Dan Austin: [9:57] Everybody knows what needs to be done, and the cool thing about it is within those tasks, I have step by step how to. How do you do it? I have a Loom video recording on how to, and then I have the steps below that and links to anywhere on our Google Drive where we need to store things or upload things, links to websites, passwords, all that sort of stuff right there. Once that auto generates, so say, for example, on January 6, we're going to go in there, a task is gonna be auto generated, there's gonna be the step by step on how to do it, we're going to go into our rental property software, and we're going to pull down our profit and loss, basically our rent rolls, and we're also going to review to make sure all tenants paid, and once that's done, it gets emailed to me in my inbox, and it's sent to me in Slack. That's one task that we use in Asana, and then if there's just simple one off tasks, they get created and dropped in there. They can also connect to our property management software, which we haven't done yet, we're kinda keeping our task management and our property management software separate for now, but eventually those will integrate. Now, I just listed off two other programs that I use. One is Slack, free communication, download it. When you have other team members on your team, you can communicate with them through that, it can sit on your cell phone, your desktop, all that, it's great. Multiple people can have access to it and see what's going on and communicate.

Dan Austin: [11:12] It's amazing software if you haven't used it, and then Loom, I use that. I think they have a free version, but there's also a paid version that's like $10 a month, it's pretty cheap, and I use that to do screen sharing where I'm recording how to's. So if I wanna show somebody how to go to the city of Spokane and download our water sewer garbage statements for our rental properties, show them how to do it, then how to upload them on Google Drive, which is a task on my Asana. And then those right there are my basic, like, task management systems. That sets you up for the level three, which is hire a virtual property manager. I have an executive assistant who dedicates probably about at least half of her time to property management and bookkeeping, and so I hired her, I used Wing Assistant when I did it, I've pulled her out of Wing since she quit working for Wing and works directly for me now. Wing is a staffing firm that you work directly with them to hire people, but we've hired virtuals from The Philippines, we've hired them from all over the world using Upwork, using Reddit, using tons of platforms. There's a ton out there, you know, hit me up if you wanna know more of them, but anyhow, she's she's in The Philippines, and yes, she kicks butt, and I communicate with her on Slack. I do use Zoom as well for video calls, and we do a weekly call, and then she dives into Asana. Every day she has daily tasks, she also has her weekly, her monthly, all those tasks that are auto generated, she knows exactly what to do, and there's no misstep in how to do it, because I have the exact step by steps for it, and that's the part of the system that it takes a little bit of effort to set up, but once you have it, it just goes on autopilot, and once you hire that virtual, it's going to take so much work off your plate, and it's not a big commitment.

Dan Austin: [12:54] I mean, you can get them for as cheap as $3, I pay $5 an hour, you don't need them probably for forty hours a week, I have mine for forty hours a week, but she's doing other stuff for me, maybe it's ten hours a week, forty hours total a month, so tops, say, $200 a month to literally have an in house property manager that calls your handyman for you when there is a tenant communication on your property management software saying, hey, my baseboard heater went out. Boom, call the handyman, or boom, call the electrician. You have all those people you're going to call. Have them do it, and you don't have to do it. They're not gonna be able to go and do showings and anything in person for you, but that is actually a pretty small part about property management. One thing Mike and I are gonna start doing as our units become vacant, we will be putting digital locks with codes that can expire on them, so that when we have a vacant unit, we need to show it, boom, give them a code that lasts for an hour, it expires when they leave, and auto locks, boom. Now you don't have to go do showings, which you a lot of times pay property managers for. So you can start seeing these systems and how you can build them out to make it so that property management is efficient and it's on autopilot. Anyhow, I gave you a lot of information today. If you wanna know more, hit me up on Instagram, investormandan.

Dan Austin: [14:05] If you have any comments, if you have any ideas or advice for me to help grow my systems, I'd love to hear it. I love doing this type of stuff for our business because it just makes my job a lot easier. Other than that, this is also stuff we talk about in our instant investor program. So if you're curious to learn about property management, about how to learn how to get your own off market deals to grow your portfolio so property management becomes an issue for you, go to instantinvestorprogram.com. Check us out there. Other than that, talk to you all next week.

Speaker 1: [14:31] Thanks for listening. Please leave us a review on iTunes or wherever you get your podcasts, and check us out at collectingkeyspodcast.com for tips and guides on starting your own real estate investment and wholesaling business.