In this episode of the Rental Property Café™ Video Podcast hosts Cynthia Meyer and Veronica Woods discuss the last three of seven key areas where a property management professional can help you scale your real estate portfolio.
Finding good vendors and contractors [00:01:13]
Local regulations knowledge and relationships [00:03:28]
Processes and procedures [00:04:29]
Do you have the personality to deal with tenants? [00:06:29]
Running the numbers both ways [00:12:58]
“You don't want to micromanage a property manager.” - Cynthia Meyer
“A true professional property manager is a strategic partner, they make money when you make money – Veronica Woods
About the Rental Property Café™
The Rental Property Café™ podcast offers a real estate tool kit for busy professionals who are building a real estate portfolio. In each episode, co-hosts Cynthia Meyer & Veronica Woods explore ways to grow a successful real estate business while growing your career.
About Cynthia Meyer
Cynthia Meyer is a financial mentor, CERTIFIED FINANCIAL PLANNER™, CFA® Charterholder, real estate investor, blogger, and the founder of Real Life Planning. She offers unbiased financial planning and learning resources to real estate investors. Cynthia is a first-generation rental property owner, who built a rental property portfolio with her husband, Steve, while they were both building their careers. She lives in NJ, where she balances teenagers, her financial planning practice, and a rental property business.
About Veronica Woods
Veronica Woods of Daniel Woods Real Estate, real estate advisor and investor, is passionate about helping her clients create wealth, legacy, and lifestyle through real estate. She works with people to buy, sell, rent, and develop residential and small commercial real estate in Delaware County and Philadelphia, PA. An MBA in finance from the Wharton School, Veronica also shares her real estate wisdom with new investors on her YouTube channel.
Transcript - Rental Property Café™ - Episode 10
7 Reasons To Hire A Property Manager- Part 2
[00:00:00] Cynthia Meyer: Is your property manager a strategic partner in your real estate business? Hi, I'm Cynthia Myer with Real Life Planning.
[00:00:07] Veronica Woods: And Veronica Woods with Daniel Woods Real Estate.
[00:00:10] Cynthia Meyer: And this is the Rental Property Cafe. It's episode 10, where we're continuing our conversation about seven reasons to hire a professional property manager.
[00:00:25] Cynthia Meyer: In our last conversation, we got into such a great discussion about these seven reasons that it went really long. So we decided to break it up into two podcasts. And this is section two.
How does your property manager have workflows and processes to deal with things like that?
What would you say?
[00:00:44] Veronica Woods: Yeah, so that's segue into the fifth one about teams. It's a combination of people and processes and systems. The short answer is experience. So when you do something once a year versus do something 20 times a month, you're going to gain more experience. You're going to collectively put a team together to do it better each time.
And we're focused on really just producing better systems to have better results. There's a vendor management system. That means getting good contractors that you have built a relationship with that when you call, they will come. Hopefully, you'll be first in line when you call. That really only comes with time working together and really building relationships with them. The make ready turnover process- for a property management company, those are like huge processes that people put multiple steps in place to streamline from a cost perspective and all the protect the owners legally from doing any missteps and having issues with security deposits. Even if you were really organized and had some time, you a one off, or maybe have two or three properties, you're not going to have the same conversation with a vendor as dealing with hundred properties. And then it goes up as scale as far is the power that the property manager can have in terms of managing the relationships with vendors to get better outcomes.
[00:02:11] Cynthia Meyer: It's almost managing the purchasing power or leveraging work availability for those contractors. And I want to link that back to how having a professional property manager can save you money and time in part because of this network of skilled trade people and professionals that can come in and help at on very short notice.
I think for all of us, let's say we're homeowners, and we wanted to get rooms painted in our house. We might look through and identify and get referrals from neighbors of different painting contractors. Then maybe we might identify the top three and then we get quotes and then we pick amongst those quotes. Then we have to schedule the work and then be home when it's done. So it's the same thing with a rental property. If you've got a property manager who has already identified the best available trades people for that particular job, then it gets it much easier to get scheduled.
The price might be better and you haven't lost that time trying to make decision about who to use.
[00:03:12] Veronica Woods: The other relationship with the local city officials are important. In my area where I manage, a lot of the municipalities have to do inspections or there's a rental license process that must be followed and having personal relationships with the staff at different offices really helps grease the wheels to get things done. If you're outta state, like how easy is that going to be for you to be on the first name basis with the person who writes up the UNO certificates? It's harder.
So when you're getting in deep in property management, there's grey areas that come up that you don't want to Google. You want to call a trusted advisor that's going to take your call. I have the relationships that they're not going to charge me a consultation because I give them enough business and they'll answer simple questions for me.
[00:04:03] Cynthia Meyer: That's really an excellent point. And I will say as somebody who is a rental property owner, another advantage within this discussion of point number five here is property manager has systems to handle the hard stuff. For as long as we've been friends and been talking, Veronica, a lot of times you do have to handle the hard stuff for the rental property owner and complaints, and late rents, and the occasional eviction under difficult circumstances.
You have processes and procedures to handle all this in a way that is fair and complies with the law and and serves the interest of everyone. How would you describe that? In terms of the property manager relationship?
[00:04:41] Veronica Woods: So you are trusting someone else to be on top of those compliance issues to allow you to navigate difficult situations. What needs 15 day notice versus 30 days notice and you have a letter template ready to go and who can hand deliver or post it to someone's door? I [00:05:00] don't have to think about it. I don't have to worry about me getting in my car. I'm not personally doing that. I have a team of people that we know it's go, we're proceeding for evicting someone. There's a team of people who are in involved in each leg of the process to the point of locks changed at the end if it gets to that point.
[00:05:20] Cynthia Meyer: A property manager really has scalable systems and processes to make all those things happen. Both the more mundane, everyday operations and the more difficult legal and compliance issues.
[00:05:30] Veronica Woods: Yes, you want to understand how much experience people have in those different areas and feel comfortable that they do have a system in place and I would add they probably don't want to use your system exactly. That's why I say it's a trust that you are trusting that the system that they have in place works and that you feel confident that you're going to get optimal results.
[00:05:54] Cynthia Meyer: You don't want to micromanage a property manager. You have to have great communication. They should be communicating with you frequently. You should have a system where, they're not spending money without any guardrails or approval system that you've put into place. Everybody agrees on what the budget and the process is going to be. They're a professional, just like you are a professional. If there's a high level of trust, then you have to be able to let go a little bit on the day to day stuff.
For some people who are using a property manager for the first time, if they've been used to doing it themselves, they may not see the true value of the relationship until they step back and let go.
Which I think brings us to reason number six, which is, you may not have the personality to deal with tenants or you may not enjoy it. Property management requires different personalities for different situations, right? Some folks may find that they are too kind to deal directly with a non-paying or a very disruptive tenant. That could be especially a problem if you inherit a property or you buy a property that already has a tenant in it that hasn't been screened by you or your manager directly. Alternatively, if you don't have good conflict management skills or you get defensive every time an tenant complains about something, you might unnecessarily expose yourself to more complaints or litigation because you haven't been able to handle a situation deftly and solve the problem for the tenant.
So how is a property manager like a buffer between the landlord and the tenants?
[00:07:24] Veronica Woods: I think a property manager kind of keeps the professional relationship in intact between the tenant and the owner. Because ultimately, as a owner, you're providing a service to the tenant as a place to live and exchange for that they're paying rent.
It's exchange of value. Some people really think it's more of like a social service. I've heard some owners say, oh, it's my ministry to help out people who need a place to stay. You just have to figure out, like, are you running a social service or are you providing housing as a service for folks?
Having someone to say, "Oh, I have to check with the owner."
Even that buffer that I have as the property manager saying, "I can't make that decision. I have to check with the owner." Making sure that we make the right decisions together. That just kind of gives you some arms length to not get caught up in everybody's sob story. There's a lot of sob stories, especially on the front end. People really selling themselves as, "Give me a chance. I just need a place to start." I've heard it all at this point. I'm like, "Sorry, I wish you the best of luck. We have our criteria for this apartment and that's what all I can do."
I don't get sucked into the sob stories. I'm a kind heart in general, but to do this job, I can cut off their story effectively. I've learned that over time. If you think that you can't handle that and react as a business person, then probably leaving the resident management to someone else makes the most sense.
[00:08:58] Cynthia Meyer: Another thing that using a professional property manager can be helpful is privacy, right? Especially if you own your property in a corporate structure, then you can have a neutral third party that's going to be communicating between you and tenants. If you were a private person or in some cases, if you were a public figure, you may not necessarily want your personal contact information available. For those people to whom privacy is very important, using a manager is going to be very helpful.
What would you say is the most important personality characteristic that somebody should have if they're interested in a career in property management?
[00:09:31] Veronica Woods: Career or doing it themselves?
[00:09:33] Cynthia Meyer: Of either.
[00:09:33] Veronica Woods: Looking at the rental process as a business. I think it's really important and being I guess, efficient minded. There's the people part, and then there's the property part. Aligning on the people part of just really sticking to standards and being consistent. I think it's really important to have consistent standards.
If you get into fair housing and compliance, if it's a 600 credit scores required, everybody has to be subject to that same criteria. It can't be loose goosey because somebody can come back and accuse you of discriminating against them for whatever reason.
Consistently use criteria is really, really important. Sometimes, like you said, the stories are involved, but you kind of have to cut past that and just really stick to what's our criteria.
[00:10:21] Cynthia Meyer: That is a super important point, which leads us to number seven, right. The seventh reason to use a professional property manager is compliance with fair housing laws and municipal regulations. I have heard many stories from first time rental property owners who have inadvertently run a foul of this point. They don't understand the fair housing laws.
They don't have a process and a workflow for leasing that is completely fair and make sure as it falls all the non-discrimination laws. And they don't have a good handle on municipal regulations. Maybe they didn't know they needed a landlord license. So using a professional in this situation, they should be telling you, here's what you need. Here's what we're going to do. Here's our leasing process. And they're putting together something that is fair for the tenant, for the rental property owner and make sure that they're doting all the "I"s and crossing all the "T"s.
[00:11:13] Veronica Woods: Right. And you may even get pushed back. In terms of, my system versus your system. An owner was fighting me on that and she wanted to make the final decision. She wanted to reject someone based on where she grew up.
And I'm like...
[00:11:29] Cynthia Meyer: Oh, no.
[00:11:30] Veronica Woods: I can't do that. I can't tell this woman who's qualified by the criteria we had established. We can't just say no to her for some flippant reason. You have to be careful of even documenting that you're even thinking that way in chat forums with other investors.
I see it all the time of people getting themselves in trouble and thinking like they really need a professional to step in and help them with the leasing process. Cause you don't want to inadvertently say something that could be used against you. And you don't want to discriminate. You definitely don't want to put yourself at risk and the professional may help you.
[00:12:07] Cynthia Meyer: So the property manager can help you be neutral and fair and systematic in the leasing process and dealing with tenants.
Before we finish up here, is there anything else that you wanted to add about our seven reasons to use a professional property manager?
[00:12:22] Veronica Woods: I know that in some forums, people say, "Oh, no one will manage my property like myself." And that really leads people to thinking that they have to do it on their own. I really don't think that's true because I think that because a true professional property manager is a strategic partner, we make money when you make money. So it's not really in their interest to have your investment go in the ground. The interests are really aligned that both parties want a successful investment experience.
[00:12:52] Cynthia Meyer: I agree. And I encourage clients who are self managing but who might consider using a professional property manager in the future, is when they're looking at their property or a new property acquisition is to run the numbers both ways, right?
Because you might want to do it yourself now, but in the future, you might have a situation where you don't want it to do it yourself anymore. It's very hard to scale a real estate portfolio if you have another profession or career at the same time. Because the more doors you have, the more complicated it gets. The more phone calls. The more repairs. The more vacancies. At a certain point, it's so time consuming that you cannot scale beyond a certain number of doors unless you have partners on your team. Real estate is a team sport. It's not something that you do all by yourself. A good property manager can be a really important strategic partner on that team.
Just wrapping up here, what are some good places to find a professional property manager? Obviously, you can look online where you can ask for referrals from other investors in your area.
What are some other ideas about how somebody could find a great property manager?
[00:13:59] Veronica Woods: Yeah, I think you hit on the best ones. A lot of people find their property manager through referrals of other investors. A lot of times, realtors, the person who helps you buy the property, could also help you find a good property manager.
Your attorney may have references to other property managers as well.
[00:14:17] Cynthia Meyer: Veronica, once again, thank you for meeting me here in the Rental Property Cafe, to talk about great reasons to hire a professional property manager. It's been a really interesting and illuminating discussion, and I can't wait till our next conversation.
For those of you who are listening at home, please check out, the first part of this conversation which is episode nine.
Also think about checking out episode eight, which is, are you really ready to scale your real estate portfolio? I think these three episodes go really well together.
Please tell us what you think about the video podcast today. Leave us your comments and connect with us on social. The details are in the show notes. Thank you so much and we'll see you in our next Rental Property Cafe.
☕ See more financial planning guidance for real estate investors from Cynthia Meyer on the Real Life Planning blog: https://reallifeplanning.com/blog
☕ Connect with Veronica Woods of Daniel Woods Real Estate: dwoodsrealestate.com/letsconnect
☕ Do you have a topic suggestion or want to be a guest on future episodes? Email your ideas to firstname.lastname@example.org.