Property Management – The Key to Profitable Investing

Buying a property is one thing. Operating it is another.

Many investors buy property but fail to think about where their money will really be coming from … the tenants.

If you can’t take care of your property or your tenants, your income stream will be in big trouble. That’s where a property manager comes in.

In this episode, we invite a special guest to discuss the finer points of developing your property management philosophy.

He’ll offer tips on how to find a stellar property manager, what to expect from your property management company, how to manage a team, and MORE.

You’ll hear from:

  • Your philosophical host, Robert Helms
  • His phil-o-what? co-host, Russell Gray
  • Property management professional, Ken McElroy

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Why do real estate investors need a property manager?

We want to make it really clear … property managers are the unsung heroes of the real estate business.

As a real estate investor, your money is coming from your tenants.

Property managers interact directly with tenants. A good property manager will maximize the return on your investment by finding … and retaining … paying tenants.

If you’re a new investor, you may be fulfilling the role of property manager yourself. As your investments increase, however, you’ll soon find it necessary to outsource property management tasks to someone else.

Every real estate investor is running a business. If you want to grow your business, you need to make sure that every vital function is scalable as you move up the ladder and acquire new investments.

Overall, scalability means two things:

  1. Making sure that every aspect of the business you handle personally is either scalable (you can handle more of it as you get more properties) or can be delegated
  2. Making sure the people you rely on are also scalable

Make sure the system you set up has redundant life support systems. In other words, if one part of the system fails, you have a back-up plan to ensure everything is running smoothly and your cash flow won’t be interrupted.

And make sure your property manager has a back-up plan too and won’t be overwhelmed when you add to their workload.

Your property manager is essential to your process.

We’d caution you to consult with property managers BEFORE you even purchase a property … they have their fingers on the current state of the market and know what’s happening now.

And make sure you are not only thinking about how your property manager can help YOU, but also how you can help your property manager.

What does a property manager do, exactly?

Property managers are responsible for two essential tasks:

  1. Finding, vetting, and placing tenants
  2. Providing ongoing support for the tenants and property

Different property managers have different philosophies on how to fulfill these tasks.

You can approach working with your property manager in several different ways:

  1. Establish your own policies and require the manager implement them
  2. Pick the right person and let them do their job, using their own established policies
  3. Work with your property manager to establish a routine that’s somewhere in between.

Whichever route you choose, you want to keep your main goals in mind … to keep your property manager happy, to keep your tenants happy so they stick around, and to keep your property in good shape … and, just as important, to make sure your cash flow is stable.

Sometimes, the best option can be trusting your manager’s experience and letting them decide maintenance and marketing strategy.

Picking a property manager can be tricky, but the VERY LAST criteria you want to use when shopping for a good manager is price.

DON’T pick the cheapest property manager.

If your property manager is poorly paid, they’ll be unmotivated to do a good job, and you’ll end up losing more than you save.

Don’t begrudge your property manager the money they get for doing the easy jobs, like handling long-term tenants.

You want your property manager to be happy … it’s a win-win for both of you.

The bottom line is that real estate is a people business, not a property business.

Your managers and tenants aren’t widgets. Value them, and they’ll value you.

Want to help your property manager without giving them a raise? Consider referring them to other investors in the market for a manager.

Referring a good person or company is a win-win-win for you, your investor friend, AND your property manager.

Pro tips for property management

Ken McElroy started managing properties as a college kid who wanted a free place to stay.

Today, he runs a 250-person property management company that manages properties in Washington, Oregon, and California.

We asked him what he’s learned about property management over the years. Here are some key questions and answers:

What are the basics of finding a good property manager?

First, look for experience. Collecting rent is harder than you think.

Second, look for people who can hold down the rules without being too confrontational.

What should investors expect from good property management?

Two things:

  1. The return you budgeted for
  2. No issues

Ideally, Ken says, there should be no reason for you to call your property manager … in other words, your property manager should be responsible and responsive enough to handle issues as they arise and get you your return.

How do you manage a large team?

Ken’s company employs 250 people who work at the corporate office or on the ground at the properties.

“The key to everything is communication,” Ken told us.

One of his strategies is to have on-site managers hold daily meetings with all staff members, including workers responsible for maintenance, landscaping, and leasing.

Is it better to outsource maintenance and repair services or hire in-house teams?

This comes down to what the residents need.

Retention comes first, says Ken, and to retain tenants, managers want to handle any issues immediately.

A tenant will not want to stick around if you don’t handle a broken heater or jammed plumbing as quickly as possible.

Whether in-house vs. outsourced is better ultimately comes down to what strategy will allow your property manager to solve problems immediately.

What’s your client retention strategy?

Ken implements a policy of making sure one of his employees reaches out to every resident, every month.

He also hired a relationship manager to contact new tenants about the move-in process right away.

And he has his team reach out to tenants well before their lease is up … six months before, in fact … to check in and get tenants thinking about renewing their lease.

He shoots for a 50 to 60 percent retention rate.

What kind of tenant screening do you do?

Ken runs a criminal background check and a sex offender check. Someone with terrible credit and multiple evictions is obviously not the ideal tenant.

What advice do you have for new investors?

Going into property management as a new investor with no prior knowledge can be a recipe for disaster.

If you really, truly, have the time and can show up, you could successfully be both owner and property manager, says Ken.

But if you’re just doing it to save money or don’t have time to have your boots on the ground, disaster is a certainty, not a possibility.

The golden rule of property management

We love talking to Ken because he has a “No BS” policy. He has a ton of experience, and he’s not afraid to share it.

He’s also always looking to learn. For example, he’s been incorporating social media into his marketing strategies over the past few years and is always looking to learn how to use new technology.

If you want to read a whole book of tips and tricks, we highly recommend you check out his book, The ABCs of Property Management.

Looking for more property management advice? Check out Terry’s Tips for Happy Tenants, a report compiled by business owner Terry Kerr that you can find on our website.

Want to know our golden rule for flawless property management? Treat each tenant like they’re gold.


More From The Real Estate Guys™…

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training and resources to help real estate investors succeed.

Kiyosaki, Griffin and Black on Paying Attention and Choosing Wisely

Our latest show was recorded with you in mind – it’s a special one, unlike anything we’ve ever shared before! It takes place while cruising the open seas during our 15th annual Summit at Sea™.

You get to be a fly on the wall during an organic, non-scripted conversation with three of the world’s smartest experts in real estate and investing. (Lucky you!)

The way we see it, life is a buffet. And it’s up to you to choose wisely about what to put on your metaphorical plate. Our guests are here to help you choose the right portions. They will be dishing out juicy tips about how to get ahead of the game … and stay ahead.

In our latest show you will hear from:

  • Your bold Master and Commander, Robert Helms
  • His co-captain, Russell Gray
  • Mega bestselling author and investing expert, Robert Kiyosaki
  • Legendary author and film producer, Edward Griffin
  • International entrepreneur and founder of “Sovereign Man,” Simon Black

Listen




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Broadcasting since 1997 with over 300 episodes on iTunes!

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The buffet is open

Every year at the Summit at Sea™, we witness an interesting paradox. Some of the brightest people gather onboard a beautiful cruise ship and we spend our time sharing wisdom and learning from each other.

But when we come out of our classes and go on deck, we see the other side of the coin. We see people lined up at the buffets and bars who are just waiting for things to happen to them.

“I call these people the victims,” Simon Black says. “The world is changing so fast. Demographics are changing. We have to make decisions on a daily basis about how to create capital. When you have uncertain times, there is something to be said about getting together with the tribe at an event like Summit.”

That’s is something we can all agree on: property sharing at its finest. Intellectual property, that is.

“The truth of the matter is all the great shifts in history have been driven by 1-2% of the population,” G. Edward Griffin says. “The rest were just followers.”

Look who’s talking

We all want to affect real change. Events like Summit at Sea™ are a catalyst for change. The power is palpable.

Ed, Simon, and Robert are three of our outstanding faculty members who use their life experiences to engage the minds of millions by creating valuable educational tools.

Ed’s work is astounding. His books, such as The Creature from Jekyll Island and The Fearful Master have changed how we think about the world around us.

Simon’s international entrepreneurship training teaches others how to make more money and keep that money, which ultimately increases personal freedom.

Robert is best known for his little purple book that continues to cause a financial revolution. Rich Dad, Poor Dad has been motivating people around the world to reshape their financial goals for 20 years.

History repeats itself

The best way to prepare for the future, whatever that may be, is to look to the past for answers to today’s economic and geopolitical questions.

“Everything that is happening has happened before to some extent,” explains Simon. “If we think about the Ottoman Empire, we see that the people existed to support the Empire rather than the other way around. I hope this isn’t our future, but we have seen similar instances in our own lives.”

Civilizations have come and gone. Ancient Rome. Babylon. Greece. Once thriving metropolises left in shambles because people weren’t willing to read the signs.

What are the signs to look for?

“We need to watch for the corruption of money,” says Robert.

As a kid, Robert would collect dimes, quarters, and half dollars because he had a suspicion money wasn’t exactly as it once was. Turns out, he was right.

“In Roman times they would steal silver by filing it off coins,” Robert says. “In 1964, the U.S. did a similar thing by using cheaper metals to plate the coins. And as a kid, I knew what was happening just by the looking at my money.”

Like Robert, we know human beings are intuitively smart about their money. Sometimes their education just needs a little fine-tuning.

“We are smart enough to read the signs,” Robert adds. “We know that when bad money comes into circulation, good money goes into hiding.”

Taxation without representation

What about the new hot-button topic? Taxes.

We want people to start thinking differently about taxes and their income in general. Once people can see innovative answers to basic questions about taxes, debt, capital gain, and investing, we’ll have a nation armed with the keys to success.

“Tax is one of my favorite topics,” says Simon. “Many people still believe the idea of paying taxes is moral. That we are somehow morally obligated to pay. But if we look, we’ll see an overwhelming level of waste and fraud.”

Robert has also been thinking unconventionally about taxes for years. And his financial journey ultimately turned his investments, savings, and other capital — maybe even the coins he collected as a kid — into millions of dollars.

“My whole game is to make millions of dollars while not paying taxes — legally, of course,” Robert says. “The reason the rich are getting richer is because they have no debt and they don’t pay taxes.”

Outsourcing our problems

Ultimately, what we want our listeners to gain from hearing these experts is they have the power to choose. With education and proactivity, they can earn millions, find true success, and make the world a better place.

Today’s problems might reflect our past, but they don’t have to be our future. We CAN’T sit back and let the changes just happen. We CAN’T outsource. We have to be it all — the manager, CEO, and owner of our destiny.

We have to think differently. Past generations may have faced similar issues to our current wealth gaps, stock inflation, and housing bubble, but it’s our job to discover new answers.

At the end of the day, we’d say humanity is something you can always bet on …

… and take straight to the bank.

“I think all the trends point out that we are on the verge of a financial emergency,” Ed explains. “But the root word of emergency is emerge … and those who plan and think will emerge from the rubble better than before.”

The sweetest reward

The buffet of life is spread across the table and you get to choose your reward. So will you take the Jell-O or go for the crème brûlée? There is no better time than now to take control of your life. And there is no better way than joining us and other field experts at our next annual Summit at Sea™ event.

To learn more about upcoming registration, please visit our website for information about the advance notice list.


 More From The Real Estate Guys™…

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training and resources to help real estate investors succeed.