As a real estate investor who focuses on income properties, you may be managing your investments yourself, or perhaps you’ve hired someone to help keep watch over your properties for you.
Either way, knowing or keeping up to date on effective property management techniques is vital to your business. Both real estate investing expert Jason Hartman and Bryan Chavis, author of a best-selling book on managing rental properties, this week presented such techniques for you during the latest episode of Hartman’s “Creating Wealth” podcast show.
Chavis appears as the featured guest on the podcast and is well-versed in property management techniques. The owner of 60 apartment units in Florida, he’s also the founder of The Landlord Property Management Academy, which offers property management coaching and has helped certify more than 50,000 people in property management in all 50 states.
He is the author of a best-selling book, too: “Buy It, Rent It, Profit!: Make Money as a Landlord in ANY Real Estate Market.” More recently, he wrote “The Landlord Entrepreneur: Double Your Profits with Real Estate Property Management.”
During the podcast, co-produced by Hartman and his Platinum Properties Investors Network, you’ll learn effective property management techniques and tips in such areas as: attracting tenants, terms of leases, how you should treat your investments like a business, handling maintenance and inspections, and, some of the latest tools in technology that will help you as a landlord.
Attracting Tenants to Your Rental Units
Though Chavis’ landlord history is mostly concentrated in small apartment units, as opposed to the Platinum network’s preferred single-family home as an income-property investment, Hartman in opening the podcast reiterates this:
“Even if our listeners aren’t doing this stuff themselves, if they’re kind of managing a property manager, it’s good to know what the property manager should be doing to be a good property manager. There’s no shortage of bad ones out there, is there, Bryan?”
Though there are occasional instances of property managers who intently mismanage assets, there are others who, Chavis says, he wouldn’t call “bad”—they just simply don’t know what they’re doing.
“The idea is that you want to work with a property manager who has some proper certification or training,” he says. “In fact, those who may own and operate properties themselves.”
Chavis tells Hartman that the fundamentals of attracting tenants start with the acquisition of property itself.
“My tenant selection actually happens before I actually even purchase a property, because I study the demographics and the psychographics of an area before I make an acquisition,” he says. (Often used in market research, psychographics is the study and classification of people according to their attitudes, aspirations, and other psychological criteria.)
It’s with such studies that Chavis can gather “a very strong position on who the targeted demographic and psychographic is, what they like, where they work, their income, their employment, their drive time to work, etcetera, etcetera.”
He calls these studies “a strategic evaluation of a targeted area.” Once he enters into a deal on a property, he already knows to whom he should cater his units, “which is considered my product.”
“So, that reduces the vacancies on my end, because I really know more about the individuals than I do anything else. Once I buy the property, I buy the property based on the needs of the individuals in that particular targeted area. That drastically reduces for me the evictions. And it drastically reduces units sitting on the market for an extended period of time and me not really understanding what these individuals need.”
“You’re identifying the target tenant, and then looking for the property to match that target tenant, is that what I’m understanding?” Hartman asks in the podcast.
“You hit it right on the head,” Chavis says.
“The idea is to understand the demographic first. The demographic tells you who they are, and the psychographic tells you the ‘why.’ Why they choose this versus that, this color versus that, whether they like tile floor, stainless steel. What is it they’re looking for? Then, when I understand them, then I stock my shelves with the products they need.”
“It’s no different than a Walmart or other major retail provider.”
Some Basics You Should Know About Leases
Some of the basic components of leases already are known, such as including the amount of rent and when the lease begins and ends, Hartman notes, but “tell us about some other components that are important to think about.”
“For me, some of the mistakes I feel a lot of individuals make is they stack their rules and regulations within the lease,” Chavis replies.
“I like for my lease to be short and sweet. It also helps if there is an eviction, so there’s no ‘well, I didn’t understand’ coming from the tenant. So, I try to tell you some basic rules (in the lease), but the majority of the rules are on another document, and then I have those individuals sign that document.”
You want to make sure a lot of your fundamentals, including rules and regulations, are taken care of during the move-in process, or the day the new tenant takes possession of the rental unit.
“A lot of people hand them the keys, accept the money and then it’s like, ‘Call me if you need me,’” Chavis says.
“You have to set the rules, and you have to set the foundation on the day that the tenant actually moves (in), and that’s why we have what we call ‘a move-in meeting.’ We’re going over the rules and regulations, and we’re going over the expectations of the tenant and the property manager at that time.”
Hartman asks Chavis for some tips on ending a lease.
“Anytime there’s something major, moving them in or moving them out, you want to make sure that you’re following your system,” Chavis says.
“When it comes to a move-out, I want to make sure that the tenant is fully moved out and they’ve put in writing that they’ve moved out. And none of this is verbal—‘let me text you or email you’—because right now, most state laws do not recognize emails or text messages as of yet. If your state does, awesome, you’re ahead of the game. But most do not, so you want to make sure that you get something in writing that the tenant has vacated.”
When tenants do vacate a rental, they sometimes leave possessions behind.
“You’ve got to be really careful about just grabbing those possessions and throwing them away and getting the unit ready for another rental,” Chavis tells Hartman. Instead, make sure you’re following your state law on how to proceed when a tenant leaves something behind, he says.
“I’ve been sued personally because my guys have been a little bit, you know, hands-y, in grabbing things during or after an eviction … you want to make sure that you fully have possession of the rental unit before you go in and start taking things. Or, that the tenant has actually signed in writing that they vacated, and anything they leave behind, they’re basically considering it trash.”
In Chavis’ first book, “Buy It, Rent It, Profit!,” which has been called both a guide and a workbook, you can get “an idea of a clean and solid lease to use and find a template.” But, he advises, you still should have that lease checked by a local landlord, tenant and eviction attorney in your area.
You Should Treat Your Investments as a Business
“The main thing I see is where landlords or investors are not treating their investments like a business,” Chavis says. “And that, to me, is the biggest mistake I see all the way across the board, no matter where I’m speaking, no matter what state or what country I’m in or where I’m on the job as a consultant.”
“I see a lot of individuals who just do not really take the time to understand how to treat their properties like a business model.”
“I always approach every project as if I was going to franchise that business, which means I can duplicate it. But your business cannot be duplicated if you cannot step outside your business for more than two or three days without you coming back to a nightmare. Then you don’t really have a business, so you want to make sure that you’re running your properties like a business, meaning you have the operating systems in place.”
Technologically, there are two main operating systems that you need to focus on, Chavis says: property management software and “the hard systems,” which are the day to day operating systems … “those direct the user on what needs to be done and then tells the user how to go about performing that work.”
“There lies the key,” Chavis adds. “When you have those systems in place, it relieves a lot of stress, and you cannot … it’s very difficult for anyone to pull the wools over my eye when it comes to my properties, if I have a manager onsite, when I know the systems are in place, and the checklists.”
Some Tips on Handling Maintenance and Inspections
In Chavis’ first book, he has an entire section called Inspect What You Expect.
“When it comes down to maintenance, it’s pretty simple, you inspect what you expect,” he says. “For me, I try to get into our rental units on a monthly basis for a filter clean in the air conditioning. I live in Florida. Most of my properties are in Florida. It’s a great market. We’re looking at Houston and areas like that, but even in the Texas area, you need to change your AC filters.”
“So, I’m in there changing filters, making sure that our coils are cleaned, and then we kind of just do a routine check every quarter.”
Chavis says you cannot just move a tenant in and then when that tenant moves out, then handle any maintenance issues—or, only handle maintenance issues when a tenant calls. “Most tenants are not going to call you when there’s a leak under the faucet or the vanity, and then when they move out, there’s a hole under the vanity or whatever. There’s water damage.”
“I hear a lot of property managers complain, and my thing is ‘well, did you inspect the unit?’ You can’t necessarily depend on these tenants to tell you everything. These are your investments, your livelihood we’re talking about. You need to make sure again that you inspect what you expect.”
Some Technology That Will Help You as a Landlord
Chavis equips his property managers with a newer iPhone, a tablet and a computer. For desktop applications, he likes such websites as REonomy.com for finding properties and RealPage.com for property management software. For the smartphone, he likes such apps as SignEasy, DocuSign, Dropbox, CamScanner and Notability.
“Notability is for the smaller and start-up investor. Notabily allows you to have the camera, the video, the note-taking, the recorder all in one place. That’s really good to move in and move out tenants and to be able to present in court.”
You also can go to Chavis’ Landlord Academy website and click on “Tools” to find some of these applications, as well as others he likes to use in his business.
“Of course, the new iPhone is replacing a lot of these apps where you can scan and do things,” Chavis notes. “If you have the new iPhone (with the newer iOS 11 software), it actually has in your ‘notes’ a built-in scanner.”
He adds: “I’m documenting this entire acquisition process, and I’m going to show people how I’m implementing the systems and the technology that I’m actually using after we acquire this new property in downtown St. Pete. So, you’ll be able to see it first-hand on YouTube videos and our Facebook channels.”
Overall for effective property management techniques, Chavis concludes, “It keeps falling back on your systems.”
“At the end of the day,” he says, “if you have your systems in place, they’re going to help keep you organized and keep you consistent. Because, at the end of the day, consistency is key.”