702: What Makes a Great Property Manager
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Welcome to Episode Two of season seven of the growing Empire Show. Today we're going to talk about what makes a great property manager. So stay tuned.
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Welcome to Growing Empires hosted by real estate entrepreneur and trusted investment advisor, Jennifer de Jesus. Growing Empires provides insight to building wealth through passive income producing real estate investments for those who want to build and manage a more profitable real estate portfolio.
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So what makes a great property manager? Well, first, I think it starts from knowing exactly what your needs are, as an investor. What do you need your property manager to do? Some people like to be heavily involved in their assets that they've acquired and that means that they likely will be heavily involved in some aspects of the management of the property. So maybe you just need some Ala Carte services. And what I mean by Ala Carte services is maybe you need somebody to just lease and fill up your vacancies. Maybe you don't actually need somebody to look over the financials or handle the day to day operations. Or maybe you also don't need a property manager to handle any maintenance and repairs. Maybe you can handle all of that. Maybe you're local to the property. So if you're looking for somebody that just does Ala Carte services, know that they are going to be people that are just going to task for you. In other words, you give them direction. They do what you ask them to do. They're not going to think outside the box. They're not going to try to protect anything that has to do with your investment. You hired them to do a very specific job, they're going to do that specific job and that's all they're going to do. There's ultimately three really different types of property managers that you can find. You can find the Ala Carte option, which is what I just described. Which is you know, individual services that you hire just for. You can find the traditional property manager and this is when I say traditional, I mean the usual the average. So the average type of property management company out there will handle things like rent collection, evictions, maintenance, and repairs, vacancy filling, those are typical services. Now, again, when you have that type of management company, you've got to understand that you are going to be required to still be a very active investor. People have this misunderstanding or mis-notion that when you hire a property management company, that your job as the investor is lessened. And that is not at all really the case. Most property management companies are set up to do what you tell them to do. But you still have to be there to give them direction. So yes, you will have less work in the sense that you're not fielding calls for vacancies. You're not calling tenants about rent collection. You're not getting those phone calls for maintenance and repairs. But you are still going to have to be heavily involved in the day to day operations and making decisions on that property for it to be successful. And that is a typical structure. There's one more structure that exists. And quite honestly, it's the only structure that I've ever seen exists anywhere, at least local to where we are. And that's the way that we operate, which is a full service property management company, for passive investors passive, and I'll explain in a minute what that means and how that's different. But again, just going back to kind of recap, you've got your Ala Carte option where you just pick services specific services that you need. You've got your traditional property management company, which is the way that most are owned and operated. And in that environment, you are still going to need to be a very active investor and give clear direction. They are not going to think about your investment, they're not going to think about your money, they're going to just do what you tell them to do. And then you have the full service property management company that is going to create this environment where you can step out of the day to day operations and decision making, and just give them kind of boundaries to work within. And within those boundaries, this property management company will do everything that it takes to make sure that your profitability is positive, and that they are decreasing the expenses on your property day over day, year over year. So how do you know which one you need? Well, I think it goes back to number one, what do you want to be involved in specifically? Now I find that a lot of people get involved and they think, Oh, well, I'll do the marketing and I'll do the leasing. Because I'm really good on the internet. I'm really tech savvy, and I'll be able to source all the potential renters or applicants and maybe that's well and true. However, what happens when they start calling you. I think everybody has a misunderstanding of what it takes to operate these sorts of pieces of the puzzle to be successful. And on the surface, I think property management looks fairly easy. And partly, I think we've done that to ourselves, right. In this industry, we make things look easier than they are, because they're not easy. And they're very time consuming. But the perception of things like leasing and marketing is that it's a simple job, and anybody can do it. And maybe again, that is true. However, it's not as simple as maybe it's made to look. So for example, if I was leasing a property out, so I've got to go put up all the marketing, I've got to get it out on the internet, put it everywhere people want to be. And then I have to field hundreds, hundreds, literally hundreds of phone calls for every single unit. And then I have to show people the unit. Again, the difference between some management companies is as simple as how they actually handle that. And between those three options that I gave you, you could have three different ways to handle occupancy or vacancy in a property. The Ala Carte way, and the general property management way, likely is going to screen the tenants before they take them to see the property. Just like you would in traditional real estate, you would never let a buyer or an investor go into a property when they haven't been pre qualified. So a lot of times people transfer that knowledge and bring that into property management. So they will screen the applicants. So out of let's just say 100 applicants or 100, potential inquiries on the property, they screen them and they find maybe 10, that are decent, and out of those 10 they take them to see the property. Some like the property, some don't like the property. Now you're down to a very small handful of potential options. Any of those could have found another property to live in. During that time, any of them could have decided against the property during that time. And all of that background takes time, it takes a lot of time. It takes days upon weeks to actually do what I just described. So if it's gonna take them days and weeks to get through and screen all these potential people before they go see it, how quickly do you think that you're going to fill your vacancy. The way that we do it, because again, I'm looking at it from a different perspective. I'm looking at it from the sense of time is money. My job is to protect the assets, and to protect the financials of the people that we manage properties for. So I have to figure out what is the quickest and cleanest path to success for that investor. And what I have found after years of trial and error after years of analytics, after years of trying to quicken the amount of time from vacancy or move out to the time of occupancy, and trying to put processes in place where we are always beating the national average, I have found a different method to filling vacancies. And this is something that to this day, we still implement in our property management company. And it turns great results in a very quick amount of time. And if I can lease up your property in well under the national average. And by far beat out any other property management company in the area, I can assure you that you make more money because you have less days vacant. And that's ultimately the goal when we're talking about income. Vacancy is a killer for any investment property. So you've got to have a partner on your side that understands what that vacancy means and how much of a deficit every day costs you as that investor. And if you don't have somebody that understands that, again, you've got to be very active in the investment, because you're going to have to push them along and tell them to speed it up. And you're going to have to help them analyze what a great tenant would be for that particular unit. And that's going to be quite challenging for you, as an investor. If you're not even local to this market, you're not gonna have any idea what is common and not common. You're not going to have any idea what his market rates and what you should be asking for those units. And if you don't have that knowledge, and you're asking somebody who has a very task oriented setup, they're also not going to provide that knowledge and that insight, and that expertise to really make sure that your income is protected, and that you are capitalizing on every dollar that's available. And that alone will drastically impact your cash flow year over year. So what we've done in this situation, to fill vacancies is what we've understood, is that speed to lead matters, no different than the way that the real estate market is right now speed to lead matters. So what I want to do is I want to cut out all the pieces of the puzzle, to the best of my ability, that get in the way of me getting to the point of somebody submitting an application that cannot be approved or not approved on the unit. So what we've done over the years is this, I started to analyze how much time it took to respond just to the inquiries that we were getting on properties. And again, remember I said hundreds so think about how long it takes you to send hundreds of emails or text messages back and forth to answer questions about properties. To answer about your pet policies. To answer about what kind of security deposits can be required. To answer, really, anything that these potential applicants are going to ask of you. And when I started to analyze the amount of time that it was going to take to do so what I realized is that we were missing out on a great deal of time. So I had to find a way to speed up the process. I had to find a way to get the information to the tenant to reduce the amount of questions and the need to interact with them prior to them seeing the property and submitting an application. Most of the time, people don't want to submit an application before they see a property. Okay, so I can't really get to determining whether or not I've got good qualified applicants if I can't get to showing them the property, and I can't get to showing them the property if I can't get past all the questions. So the first thing that we did was we implemented a kind of like a no contact strategy where we would first of all, instead of putting out all the fluff, and speaking about how wonderful this apartment is, we cut out all the nonsense, and we gave the basic details. This is a three bedroom home with one bath, it's on the third floor. This is the pet policy, this is the security deposit policy, this is the minimum requirements to lease this apartment. So we started to put out all of the information. Then we would give them links to immediately schedule and apply. So if you found our rentals on say, Zillow, or our website, or for that matter, literally any source that's out there, you are going to always find two options. One is to apply now, and one is to book an appointment to see the unit. And in that ad, you're going to literally see all of the information that you could possibly wonder about that particular unit. And at the very end, it'll say, please schedule an appointment, or submit your application. And you'll be able to speak to somebody live about any additional questions that you have. So we get them from the point of looking at the advertisement online to booking that appointment or creating that application immediately. Right, those are the two ways that they can interact with us. Then we need to talk about the side of the showing right to visibly view the apartment. Again, one of the things that I started to realize is how much no shows are happening. So these applicants would book these appointments. And it's no different than if you're shopping for a job on Craigslist, right? Or you're looking for a new apartment or you're looking to buy something on Craigslist, right? This was something I was taught a long time ago in marketing, and especially in leasing. And it rings true even to today. You know, 10 years later, 15 years later, when people go to do those types of things, look for a job shop, buy something, whatever. They're not just calling one ad and waiting and holding their breath. They're calling multiple ads. So going back to what I said speed to lead matters, it absolutely matters when it comes to your potential occupant for your unit. So we have to get the most amount of people booked and in the apartments in the quickest amount of time for us to be the leader in this industry, right. The leader in the occupancy in the least amount of vacancy days available. So what we decided is now that we've gotten to the point of cutting out all the questions, and they've got the two options to book or submit an application, what I've realized is that I really needed two different teams of people to do that. Because, again, in the traditional model, the person that does all the marketing is also the one processing the application. Well, if I'm out showing apartments, I can't process applications. But how do I know which person that I'm dealing with is the better qualified applicant. I don't know that. Because somebody may have submitted an application before they saw the unit. The other person may see the unit before they submit the application. But if I'm out on the road, and I'm showing them apartments, and I'm also the one that processes the applications, I'm not going to be nearly as quick as an organization that separates the duties. So what I realized again in our organization is that we needed two separate sets of people. We needed people out in the field that were going to bang out showings to high volume amount of people. And we needed people in our office that were going to bang out all of those applications one by one all day long. To get us to the quickest application process to get us to the quickest showing process to get the people that love the units submitted the applications, and we're good qualified applicants. And by doing that, I was able to create really a system that was going to create less vacancy and create higher occupancy rates in the quickest amount of time.
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The episode will continue in just a moment.
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Building your dream team must start with trust which is the cornerstone of our approach and what allows us to deliver the results that we do. You need to trust your team so they're empowered to bring their best and deliver the results you need to be successful. Your team is your true partner in your growth strategy and trusting their contributions and capabilities is what will free you up to focus on sustaining your growth. Whether you're an active investor or a passive investor, your dream team should be compromised of not just experiencing capabilities, but people with heart you can trust as true partners. Wrong choices will cost you last time, money and most importantly, opportunities to capitalize and grow. I want to share my experiences with you and help you sidestep those risks when building your dream team. Let's get on a call and talk about your dream team so we can get you set up for success. Book a call with me today at growingempires.com, and I will help you clarify what you need to build the perfect team for you.
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So for the showings, one of the things that we do is we book people back to back. So again, what I realized is that there was a lot of no shows. So if I booked appointments, let's just say they were even 15 minutes apart, and half of the people didn't show up, I only got half of my ability in a day. And it's a really high volume of chance that your potential applicant is not going to show up because they've looked at other apartments. So they're going to go to the one that they think is going to be the best fit for them first. So they cancel the appointments, or they don't show. So I had to cut out number one, the no shows. So what we do is we booked 10 or 15 people for every unit at the same time slot for a couple of reasons. One, we're not wasting any time. So the people that don't show don't quite honestly matter. Because we've got twice as many people in their place also seeing the unit. In addition to that, having a bunch of people see the unit at the same time, creates a lot of interest and excitement about the unit. And it makes people think that they've got to move fast. Think about this marketplace currently and how active it is right? You see a property on the market, you want to bid on it immediately. You don't even have time to go see it in a lot of cases, we want that same excitement and motivation for people to apply on the properties. So when they see multiple people looking at it, what do you think that they think They think, Well, I better get on it, I better submit my application if I really want this unit. Now understand, too, that as we went through COVID, we had to adjust some of these processes. And we're slowly getting to the point where we can adjust them back and we still take proper protocol into mind, within the confines of what our restrictions are with COVID measures. But again, going back to that same point. We wanted to make sure that we had speed to lead, we want to make sure that we had the most amount of people to look at the unit submit applications see the unit in the quickest amount of time. I can tell you that as of today. and as of the last couple of years that we've been implementing this process as an organization, we have been able to run at less than a 2% vacancy across our entire portfolio of properties. And if you look at the national average in this area, it's like 6.5%. If you ask any other property management company out there what their vacancy rate is, they might not even be able to answer that question. But I can tell you that we historically run at a less than a 2% vacancy. And that as an organization, we are consistently making improvements to our processes to make sure that we are yielding the results that we need to yield for the simple fact that it is our obligation and our duty to protect the assets of the investors that we represent. That is a different type of management company. 100%, we are not right for everybody. And 100% each one of those options of management companies that I talked about with you are valid and vital to somebody's operation. There is a need for all three of those options, I get asked all the time, if I would just provide leasing services. And unfortunately, I have to turn that business down because I don't think that putting that into our process really makes sense. I want to keep our focus, you know, really on the investors that we're protecting their assets and their income. I don't really want to get my people in a sense distracted with other business. So as a business operation, we don't take on that type of business. But there is a need for Ala Carte services and for the people that need them, they are a great option that allow you to cut back on some of the costs of services that you don't need. There are people that really want to be heavily involved in the assets that they own. And if you have the time, go for it, be involved, learn. Learn from people that do this every day. Learn from people that have mastered this process. So for you, as an investor, you may want to take a discounted property management fee and take something lower than the average because you want to be heavily involved and if that option works for you go for it. Right, definitely, you know, give them the direction that you need them to give. But stay heavily involved and make sure that you are the one protecting your assets. And for the investors that truly want passive investing and really don't have the time or the energy to manage their properties after they've completed their day job, you know, you want to make sure that you have have somebody that has a mindset of being your business partner, and not just a management company. And if you can find that partner, and I'm not saying that really exists in every market. We were really creative with the way that we set this up. And I set this up after years of listening to investors and building a model of services around what the investors were specifically looking for. Which has allowed us to create a team of people that are literally experts in their field. So that we are able to make the decisions in a quicker process than any owner could ever make. We have the market knowledge, we have the expertise. And we built processes around the operations that impact the investors final dollar net income. Whichever you choose, though, make sure that you have really just analyze that. And it's not just about money, it's not about how much money can I save, or let me just be cheap on finding a great property manager. I assure you that if that's your method, you probably don't have enough assets to really start investing. You really got to take a step back. You've got to pay for the experts. And if you don't pay for the experts, I guarantee you it will be painful for you. And I don't want to be having to tell a story about your experience to another investor to teach them a lesson about why they have to have those experts, you know. Be the one that sets the stage. Be the one that does the right moves from the gate, find the experts in whatever you're trying to do. Find the experts and make sure that you align yourself with those partners, and those experts so that you can have success. You don't know what you don't know, until you need to know it. And by the time you figured out that you didn't know something that you needed to know, you've already lost money. Don't take that chance. Figure out what are the three options of property management companies makes the most sense for you. And then please do your due diligence, talk to multiple multiple companies. Get references, talk to their clients, and make sure that the path that you set out to take with property management makes sense not only for you, but they can back that path and that expertise with some really good references and proof that the services that they're saying that they provide, they can really provide. Ask them for the data behind the details. And that will help you make the most educated decision and find a great property manager if that will work for you. I hope you got a lot out of today's show and until next time, take care.
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For more information about how Jennifer can help you plan, develop and manage a strong real estate investment portfolio visit growingempires.com