Ep019: The Interview, the Property Management Agreement, and the Onboarding Process

Chris McAllister: Hello everyone and welcome back to the Landlord Profitability Playbook podcast. I’m Chris McAllister and it’s my job to create and coach business opportunities and strategies that support and add value to the lives of residential real estate investors. I’m here today with my podcast partners, Laci LeBlanc and Gretchen Mitchell.

Good morning, ladies. 

Laci LeBlanc: Good morning. Good morning. 

Chris McAllister: This is episode 11 of our 12 part series, What To Expect From Your Property Manager? We’re nearing the finish line. So today we’re gonna dive into the most important step in the process, actually hiring the right property manager. We’re gonna break down the key questions to ask when interviewing a prospective property manager.

We’re going to talk a little bit about what to look for in a property management agreement and how to ensure a smooth onboarding experience. I. Plus we’re gonna share our internal ideal ROOST owner framework. So this is our reference document for building the best possible client manager relationship we can.

So if you’re serious about finding the right property manager, this episode is a must listen. So let’s get started. So let’s start off with Gretchen meeting with a perspective. Property manager, I guess, you know, as you and I have talked about, this is not only their chance to, uh, interview, well, we’re gonna probably talk as if it’s us, because that’s what we know.

Right. So this is your, this is your chance as a listener, not only to interview a prospective property manager in some cases to interview us, but it’s also our chance to interview a prospective owner, correct? 

Gretchen Mitchell: Absolutely, yes. 

Chris McAllister: Yeah, I mean, I think it’s safe to say that one of the. Uh, struggles that we’ve had over the years was being so excited when somebody raised their hand to, to have us work with them.

That, that we, we just signed everybody up and in several cases, those were not the best fits and it wasn’t good for us, and it wasn’t good for the owner. And we want to try to, uh, avoid that situation in the future. But by the same token, it’s sort of like when we’re, we’re looking for tenants. We wanna, we wanna screen in the very best possible owners, right?

That’s right. That’s our goal, but we also wanna make sure that they’re happy with us and they’re happy with them. So here’s my, um, here’s my favorite question for, for an owner to ask themselves when they’re considering a property management. So, if we were having this discussion one year from today, and you were to look back over this year, what has ha, what has to have happened with your properties and y and their management for you to feel happy with your progress?

Now, I know that’s a mouthful, but what I want the listener to be able to do is to put themselves in a place where they’re a few months ahead. You know, maybe it’s nine months, maybe it’s uh, three months, maybe it’s a year or whatever it is. But I want you to think back, uh, look, think back over that year and start to make a list of all the things that, um.

That, that you want to have changed that, that want, that you want to be better, that you want to have happened, and this is, what are some 

Laci LeBlanc: examples of that? What might that be? What have you heard before this 

Chris McAllister: that Gretchen asks, right. When you first speak to somebody. So why don’t you tell us how that goes, Gretchen?

Gretchen Mitchell: Yeah. I asked them kind of, what is your goal with this, um, and why are you talking about switching management companies? What’s your struggles now that you want help fixing? What is your. Your goal, I guess, with these, um, a lot of them just say they’re all rented and I’m making money. Yes. Great. Um, but a lot of it is I don’t wanna spend as much money on maintenance because, you know, right now I feel obligated to fix every little thing when I know it’s not really my responsibility to, so they wanna spend less money doing things.

Um. And they don’t wanna be the bad guy. A lot of times, um, you know, I, I have to file this eviction, but I, I can’t bring myself to do it. It’s, it’s those kinds of things, but um, they really just wanna be hands off. 

Chris McAllister: Yeah. They want more of their time back, I think, in a lot of situations. Yes, 

Gretchen Mitchell: absolutely. 

Chris McAllister: You say hands off, but we still seems like, we talk to a lot of people who, I guess what percentage of owners do we talk to that want to do their own maintenance or that want to be more involved than others?

Is that a lot or is it just a small percentage these days? 

Gretchen Mitchell: Yeah, it’s not, it’s not that many. Um, a lot times it’s like we just hire or we just, um. Signed a contract with someone that has six units and he’s just so used to doing them and has relationships with his contractors that he would just like to keep them busy.

So he’s gonna take on the maintenance, but he doesn’t wanna speak with residents. He doesn’t want to, um, you know, sign the leases, advertise ’em, show ’em. But he just wants to keep his contractors busy ’cause he has personal relationships with them. 

Chris McAllister: So that makes sense. But whatever it is, you, you can basically write a prescription for him.

Gretchen Mitchell: Yeah. We can set it up that he gets all of the mail requests. Um, I usually tell owners, you know, you can be as hands-on as you want. We’re not gonna bother you with a terrible application that someone’s been evicted yesterday. We probably won’t bother you with a slam dunk application. But you know, if it’s somebody that could use a second chance or we’re kind of on the fence, then we’re gonna reach out to you owner and, and get your opinion.

It’s ultimately your decision. The key is 

Chris McAllister: that you’re, you’re asking questions upfront at the beginning to get the ball rolling and find out basically what, what’s on their minds, what are they thinking, what, what do, what are the outcomes they want? Right. My second favorite question that I, I hopefully, that we’re asking owners is I.

You know, we’re always interested in how people discovered us. How did you find out about Roos Real Estate Company? 

Gretchen Mitchell: Mm-hmm. 

Chris McAllister: I don’t know that we’ve been asking that question regularly, but I know you have in the past few months, and that’s pretty critical where when you, when you do ask that question, where, where is most of our business coming from?

Gretchen Mitchell: Um, they, they know an other owner that we work for. That’s a referral most of the time. 

Chris McAllister: So the vast majority of the business comes from referrals, which I feel great about. And I think that’s something that you wanna, if you’re interviewing a property management company, ask them that same question. You know, where, where, where does your business coming from?

Because I think the ability to earn referrals from existing owners is great. And thank goodness, Laci, that you know, over the past few months you’ve really updated. Our website so that when we do get a referral and they want to check out ROOST, and they Google it, now they’re seeing some great information that we didn’t have a year ago.

So thanks again for that. And then some of the other things that you might ask them, um. You know, I, like I, the, the list I have is how do you wanna be communicated with, how are you managing now? Or you do it yourself, et cetera. Are there any other things that you like to ask them when you first get them on the phone?

Gretchen Mitchell: Um, I like to ask them if they’ve ever been to Ohio. Sometimes have, have you seen what you own? And a lot of times they haven’t. So, um. It is interesting to know those things. Um, when it’s someone who is in contract on a home and they haven’t, they haven’t quite closed yet, but they had the inspection report.

I do like to see the inspection report and then we talk about it. You know, I see this, this, and this. Are you prepared to upgrade this? You know, we can help you with that, but are you prepared to flat out or are you prepared to put money into the property when it needs it? 

Chris McAllister: Yeah, that that’s critical. ’cause we have worked with folks who just don’t have the wherewithal to maintain a property, or they assume that they bought a property that was rent ready and then once we get it in there, it’s not so better.

We ask those questions upfront so we don’t disappoint each other later on down the road. So I wanna talk now about here’s, and we’re gonna include these in the show notes too, but here are 10 interview questions for you to ask your prospective property manager. So we’ll run through these pretty quickly, but I think the first question anybody wants to ask is, how do you screen tenants to ensure quality applicants?

You know, what is your process for verifying income, credit, rental history, criminal background, and, and how do you balance, you know, protecting my investment, but while making sure that, you know, I as an owner don’t, don’t run a foul of fair housing laws? So that, that’s a great question. Next question is, how do you handle maintenance and repair requests?

You know, do you have an in-house maintenance team or do you use third party vendors? How do you determine when to repair things versus replace things? You know, do you mark up maintenance costs? And if so, how much do you mark up maintenance costs? Do you have a, a published, uh, you know, set of, uh, services and costs?

Another question is, how do you ensure my property remains legally compliant? So this goes back to fair housing to some degree, but it also. Revolves around landlord tenant laws and local ordinances. You know, like in Springfield we had the, uh, property registration requirement that went into effect last year, which we still haven’t, uh, actually been billed for those, have we?

Gretchen Mitchell: No, we have not actually. 

Chris McAllister: And that was a whole nother podcast that we worked through. But is your property manager well versed and, and understanding and involved in what’s going on with local ordinances? What are the fees? Are there any hidden costs? You know, do you charge leasing, renewal, or vacancy Fees are are, are there maintenance coordination fees?

How do you handle evictions? Who pays for that? Fifth question is, how do you communicate with owners and what reports do you provide? You know, how frequently will I get my reports? Do I have a portal? Do I have to log in to get stuff, or does it just show up at my doorstep? Right. You know, who, who do I get to talk to going forward?

You know, am I gonna talk to you? Which is sometimes a sales person that they’re speaking to. Do I, do I talk to a manager? Can I meet that manager? Is there a broker owner involved? You know, who’s on the team? And, and who can they expect to be actually working with once they sign that PMA? How do you handle late payments and evictions?

What’s your process for rent collection? How do you make sure we get the rent when, you know, how long do you wait before you file an eviction? And, and how does that work? And, and what percentage of your tenants have been evicted in the past year? I’m not sure we know that to the penny, do we? 

Gretchen Mitchell: No, I was, I was thinking about this and I thought maybe one or two a month.

Chris McAllister: Right. That seems right to me. Yeah. So it’s basically 1%. 

Laci LeBlanc (2): Mm-hmm. 

Gretchen Mitchell: One to 

Chris McAllister: 2% max. And it may fluctuate from month to month. Can you provide references from current investors you manage for, you know, do you have clients with portfolios similar to mine? You know, how long have your longest clients been with you?

Can I talk to a current owner? I know you’ve got, uh, owners that are more than happy to, uh, you know, get on the phone with a prospective owner and, and sort of give us a referral or let ’em know what to expect, so, oh, yeah, that’s a great thing to ask. How do you maximize rental income and minimize vacancy?

That’s kind of a broad question, but, you know, how do you determine Optim optimal pricing? You know, how do you, how do you come up with the rent rate? How quickly do you rent and re-rent properties? You know, what, what’s your marketing strategy for vacancies? You know, our metric is days on market and basically if we don’t have a, a property.

That’s rent ready and advertised within 21 days. You know, bells go off, whistles, sound and flags and everything. I mean, it’s all hands on deck to figure out why we haven’t gotten that rented yet. How do you handle security deposits and tenant move outs? That’s a great question. What’s your process for returning or withholding security deposits to tenants?

How do you document property conditions before the tenant moves in? You know, how do we ensure, how do you ensure a quick turnaround between tenants? You know, all these things can, can cost you money ultimately. But these are all great questions and if you are currently managing for yourself, ask yourself these questions as well.

So number 10, why should I hire you instead of managing the property myself? That’s, that’s really the crux of the argument. I think you do talk to a lot of folks who are disgruntled with their current, um. Property management company, and honestly, that’s probably an easier sale for us, especially if they came to us by a referral.

Then the tougher sale for us is, is somebody who has always managed their properties themselves, their entire lives, basically, and now it’s time for whatever reason, to get some help. And that’s a tougher sale because it becomes about control, it becomes about involvement, it becomes. You know, trust issues.

So that’s, that’s probably my favorite question out of the 10 is why should I hire you instead of managing the property myself? What value do you bring that justifies your fees? How do you help investors grow their portfolios? If, if that’s something that’s on your mind, or how do you help investors, um, harvest the equity in their portfolios, and how do you, what makes you different?

So, Gretchen, I might ask you, I mean, why should I hire you instead of managing the property myself? 

Gretchen Mitchell: Hmm. Um, a lot of time, I, I actually haven’t gotten this question ever, but, um. I think, I think a big part of it is when I ask that question of what are your goals? They wanna hear from someone else, what’s important to them.

And I think that’s, that’s a lot when they’re trying to find someone else, why they’re trying to make me feel good, they’re trying to make me comfortable and it’s all about them. Um, and then we do. You know, kind of cater to owners if they wanna be involved. If they don’t, they really have the control as much as they want.

And I think that makes them feel a little bit more secure. 

Chris McAllister: And a lot of times, you know, we have to earn their trust. And that’s why it’s so critical that that first 30 days, the first 90 days, that, you know, we make sure as best we can, that everything goes smoothly and, and part of that is setting the right.

Expectations. I mean, I, I, I know you’ve had conversations with owners where you’ve been very blunt with them and say, look, this is, this situation is gonna get worse before it gets better. Yes. 

Laci LeBlanc: Yeah. There’s a lot, this is Nana’s question, right? This is why Nana manages her properties herself still, but she would never ask you that, Gretchen.

She would, she would be thinking it the whole time, like, why should I do this? But she’s, most people I think, are too polite to ask that question. Um, that’s on their mind, but I think that you talking about how it’s, it’s customized, right? Right. This is not a one size fits all package, uh, because different people.

Have different concerns. One of Nana’s concerns is, you know, just maintaining her properties. Um, you know, she’s been burned in the past and she’s had some really great, like long-term tenants that, that have, you know, stayed for honestly like 30 years in some cases. But then she’s had some short-term ones that have, you know, kind of ruined everything and left a lot of work for her when it comes to rehab and maintenance.

So that would be something, you know, being able to kind of check in and. You know, send her own folks over every once in a while and would, would be probably something she would love to hear. So, you know, I think that if, if your property manager, if you’re in this situation and you’re interviewing a property manager and they don’t address why you should hire someone instead of doing it yourself, it’s okay to ask.

I, I just want people to understand it’s not rude, right? 

Chris McAllister: No. Like you guys wanna hear, 

Laci LeBlanc: right? 

Chris McAllister: Yeah. 

Laci LeBlanc: Yeah. 

Chris McAllister: And you know, part of this on both our parts and on our part when we have an interview with an owner, it’s about setting property expectations. You know, I would say more often than not when, when somebody comes to us and they’re unhappy with their current manager, it’s usually a pretty bad situation once we get it.

And yeah, it. It’s a, it’s a different set of problems than we sometimes have when an owner is hiring a manager for the first time. So, Gretchen, just correct me if I’m wrong, but I, I, I think one of the problems that we have with people who have managed, done their own management for a long time is, you know, we, and we’re gonna go through this real quickly here in a few minutes, but when you start asking for things like leases and.

Uh, phone numbers and, and so forth for tenants. Many times somebody who’s been doing it themselves for years, they just don’t have those documents, right? They’ve, they’ve run it by the seat of their pants, so to speak, and, and some of the things that we need to, to, you know, do a professional job and, and to, you know, stay within the law and everything else is we need some information and sometimes from.

It’s hard to get that from people who have been doing it themselves for years and years. 

Gretchen Mitchell: Yeah, it goes both ways, honestly. Either they have. No idea who’s living in what unit. Maybe I have half a lease, but I know they pay this, this, and this. Or it’s an owner that has everything to a t and knows everything about everything about their properties.

Yeah. Um, and then that makes it hard for them to let go sometimes. But building that trust is what’s most important. 

Chris McAllister: But the key thing is if somebody comes to us and they’re in pretty good shape, you know, our goal is to make it better. But when somebody comes to us and things are clearly not in great shape.

We, we owe it to them. We owe it to ourselves to, to try to under commit, nowhere to deliver, right? We’ve gotta set proper expectations. And there have been many times when, I know when you’ve signed up owners that have people who haven’t paid rent for sometimes months at a time, and they need to be evicted, and for whatever reason they didn’t do it.

And now we have to do it. And maybe they were used to getting a couple of hundred dollars a month, but they never got a full month’s rent. And then suddenly they’re losing the top of the, you know, the first couple of hundred. And then there’s. Bees and stuff. I, I do think it’s, it’s critical that we are very honest and very transparent about the fact that yes, things are gonna get worse before they get better, but I promise you, I guarantee we get through this first 9,020 days and, and get these non-payers out of there and get some, get some new well screened people in that you’re gonna see a lot more money and your life is gonna be that much better.

So. You know, these questions, this interview, you know, it’s designed to help an investor. You want to be, you know, trying to gauge the professionalism of the person you’re interviewing. You wanna make sure they’re absolutely transparent about their business. You wanna make sure they’re aligned with your investment goals and, and that they’re gonna basically treat, treat your property as if they owned it.

Gretchen Mitchell: Mm-hmm. 

Chris McAllister: You really wanna get fancy. Go ahead and send them these questions ahead of time and ask them to email the answers back. I’d love to hear what you, what you hear back.

Let’s, let’s, uh, anything else on that topic of, of what to ask when you actually sit down or get on the phone with a property manager? 

Laci LeBlanc (2): I don’t think so. 

Chris McAllister: Okay. I wanna talk a little about this, uh, idea of the ideal. ROOST owner. So again, I wanna keep in mind that this interview is a two-way street. A good property manager wants to know if you are a client they can work with.

And here are our great, our criteria is for a great owner. So we sort of have these, um, clustered. We have them clustered by under performance results being a hero. And then my favorite drives us crazy. Under results we have, we have four things, right? So faster we need somebody who responds promptly to our questions, right?

And helps us get to, or somebody who. Answers are questions, but, and if they’re involved in the decision making or we need them to be involved in the decision making, we need somebody to respond quickly, easier. You know, somebody who is, is easy to work with, they collaborate smoothly with the, with the team.

They get the documents we need to do our jobs, they give us the approvals we need to, to get things done. And, and they don’t force us to have to keep asking over and over again for things that, that we’re, you know, they’re paying us to do. Uh, under and then cheaper. So we got faster, easier, cheaper, better, you know, maintains the property proactively.

Right? To minimize emergency repairs and unexpected costs. Appreciating roof’s, maintenance standards. You know, we talked about this in an earlier episode. There are, there are certain properties that we will not take on, that we will not associate with. You know, they have to be clean. They have to be safe.

We’re not saying everything has to be a $2,000 a montage. Mahal. Whatever it is that we choose to bring on, they have to be safe, they have to be inhabitable, um, and they have to be, you know, a base level of maintained and the, and it’s always, always cheaper. In the long run when an owner is ready and willing to make those repairs as they come up, instead of having a whole bunch of deferred maintenance later better.

An owner that achieves high tenant satisfaction through well-maintained properties, they support tenant retention and reducing turnover being a hero. So this is our, this is where we get into, I think Gretchen, you’ll agree what makes our favorite owners, they trust us. 

Gretchen Mitchell: Yes, yes. I actually just sent out a handful, maybe, probably 20 emails to different owners yesterday about lease renewals, and I gave my.

Suggestions of what we should do. And I’m telling you, 98% of them completely agreed with me. And it just felt so good that they trusted us and we raised up the rent, we’re offering new lease renewals, and one of them we’re asking to leave. So it’s, it’s different each time, but it felt so good that they agreed with me and we have a plan moving forward.

Chris McAllister: Yeah. And sometimes they just, you know, just staying in contact and hearing from you is, is. It just makes ’em feel so much better. So somebody who trusts us, they demonstrate competent and rec ability to make informed strategic decisions that align with their goals. A hero owner to us is they respect, respect tenant’s rights.

They understand the importance of the legal and ethical tenant interactions, and it, and, and they support our, our goal of maintaining exceptional tenant relations. They invest in long-term success. The, and again, this goes back to maintaining the properties, but. They’re committed to maintaining and even enhancing their property standards over time.

Because that’s the key to, to maximizing results. You know, it, there are certain, especially in this market where we still have not only property appreciation, but we also still have some room to raise the rents if the property is maintained to the neighborhood standard. And there are many times where.

You know, you have to tell an owner that, Hey, look, I know money’s tight, but if you do this, this, and this, which is gonna cost you, you know, maybe a thousand bucks. You know, I think we can maintain the rent that you’re currently getting. But here’s what I want you to think about. If we go through, we go ahead and paint it.

We clean up those broken cabinets, you know, we replace this carpet, get some plank flooring in, you know, that might cost you six, $7,000. But I think if you do that based on the rents in the neighborhood, we can probably increase the rents at least a hundred bucks a month. Now you’re talking about a conversation where, you know, you’ve got somebody spending, say, $7,000, but they’re gonna get a $1,200 return on that the first year.

Right? So they’re putting money back into the property that’s gonna maintain the value, increase the value, and also increase the rent. That’s, that’s a whole different, um, conversation that I think a lot of owners are, are used to having.

That’s being, uh oh. I skipped performance, Gretchen. I’m gonna go back to performance before it drives us crazy. Okay. So being a hero, trust us, respects tenants, rice, and Vince invests in long-term success and is receptive to improvement suggestions. So they’re open to your recommendations for enhancements, market positioning, and.

Things to do to keep tenants happy, et cetera. So going back to the performance of a great owner, a great owner is alert. They stay informed about property updates and market trends. They’re curious. They engage with, you know, all the information we provide. They show interest in understanding what we do.

They’re responsive, they make timely decisions. They’re resourceful, you know, they, they have an ability to budget for upkeep. They’re, they’re able to, you know, have a set up reserves so that funds are available when, when properties, I. Uh, uh, when something needs to be fixed and so forth. So, performance, alert, curious, responsive, resourceful results, faster, easier, cheaper, better.

Being a hero, they trust us, respect tenants rights, invest in long-term success, and they’re receptive to the improvement suggestions we offer. And that’s not just about managing the property. That’s about, you know, maybe it’s time to sell. Maybe we can give them some, um, some solid reasons why it might make sense at this point in the lifecycle of that property and harvest that equity and, and maybe move it into a new property or do a 10 31 exchange.

So do you want to, uh, you want to take the drives us crazy. 

Gretchen Mitchell: Sure. Um, drives us crazy micromanaging, um, you know, asking questions. That we, you know, we kind of already talked about things like that. Um, micromanaging is a big thing, and that just goes back to not trusting us. But, um, another one is delayed decisions.

I’m actually dealing with this right now. I’ve got somebody moving in. Um, I. Tomorrow. And the front tenant moved out and left trash everywhere. And I told this owner, we need to get this trash picked up, you know, before somebody moves in. And I’ve got 24 hours now, and I, I don’t have an answer on the trash.

So that’s, that’s pretty frustrating. Um, being financially unprepared, um, you know, Hey, I, I don’t have money for it. I, I’m just not gonna replace that furnace. Well, that’s, that’s not really an option. And then, um, unrealistic expectations, you know. As an example of this one, we, um, told an owner, you know, it’s going to, this turn’s gonna take three weeks total.

And he is really pushing me to bump it up to two weeks or a week and a half, and I’m, it’s just unrealistic. I have to get different contractors in there. And then it kind of slows down the process when we’re, we’re discussing this again. But, um, yeah, micromanaging, unrealistic expectations, delayed decisions, and not being prepared financially.

Yeah, there’s a point where you could have 

Chris McAllister: had it done if we would’ve just taken the three week contractor that we know and trust. It could have been done by now instead of waiting around for somebody who’s faster, you know, they’re still gonna, you know, every day that goes by, they run the risk of, of missing, at this point, Mays rent, 

Laci LeBlanc: so 

Gretchen Mitchell: right.

Chris McAllister: All right, let’s talk a little bit about, now. 

Laci LeBlanc: Think, don’t make it worthwhile, right? Like you, if you’re gonna do all these things, if you’re gonna, you know, go back and forth about your, you know, decisions and not follow recommendations. If you’re gonna, you know, kind of skirt around expecta, like expectations to try and get your own contractor, if you’re micromanaging on a daily basis, then it really makes it less profitable for everybody, right?

If you’re partnering with a property management company. Or property manager, then that expertise is part of what you’re paying for. Um, the efficiency is part of what you’re paying for, the ability for other people to do some of the work for you, um, is what you’re paying for. So, you know, the question might be, at this point, do you really want a property manager 

Laci LeBlanc (2): Yeah.

Right. 

Laci LeBlanc: At all, or 

Laci LeBlanc (2): Right, 

Laci LeBlanc: right. So ask yourself that. Just, you know, are you gonna have trouble. With these areas. And it’s not from the perspective of the pro you’re driving the property manager crazy as much as it is, you know, do you really wanna give up this, this control or do you really right. Trust the people that you’re working with enough to let them kind of lead your decision making.

Because in the end it is, you still, it is the property owner’s decision, um, all the time. Right? Sure. Um, so yeah, I think that’s an interesting. Again, thinking about Nana and how, I don’t think that she wants to give up any of this, and so just a property manager is not the right thing for her in general.

So it’s just not the right fit for everybody. And you know, you mentioned some things about, you know, the neighborhood standard and making sure that you, you know, respect tenant rights. And so if you’re looking for, you know, if you wanna be a slumlord, this is not the right. Right. Like, right, like you’re going in a, in the wrong direction here.

Chris McAllister: Well, if you’re looking for a slumlord, you, you probably shouldn’t interview us. 

Laci LeBlanc: Yeah. Correct. Correct. Yeah. 

Chris McAllister: But that goes back, s back to SLO is really like a 

Laci LeBlanc: personal thing. If you, you’ve really gotta own that and embrace it if you, 

Chris McAllister: well, but maybe we approach it from a, maybe a slightly more positive standpoint is, here are my properties.

Do you manage properties like this? You know? Yeah. I don’t, I don’t want to sit here and pass. Judgment. And I, I really hate that term, slumlord, because there is a property for everybody. There’s a price point for everybody. You know, where we struggle with people is who they have properties in a given condition, and maybe it doesn’t make sense to put any more money into it, but they’re also realistic about what that property’s worth in the marketplace.

And it’s still safe right there. It’s, it’s, it’s, that’s the, that’s the real 

Gretchen Mitchell: thing, is, is it still safe? That’s, 

Chris McAllister: and it’s priced appropriately for the location and condition. So some people mistake, you know, uh, uh. Being a capitalist, basically, right? And offering a service to people who can afford that service with being a slumlord.

And sometimes that’s not fair, but I’ll get off my soapbox. Alright, so I wanna just talk a little bit about PMA. I’m not gonna dig deep into this, I just want to hit some high points that you should look for, and we will include a sample copy of our property management agreement in the show notes. So if you want to print one of those up and compare it against a property management agreement, um, you know that, that, that somebody presents to you, you are more than welcome to do that.

So, a property management agreement or a PMA outlines a comprehensive set of property management services that are tailored to maximize your property’s potential. And while ensuring compliance with all local, state and federal laws, your property management agreement should allocate, illustrate the property management company’s attention to detail and their commitment to a long and profitable relationship for you and them.

So, again, sample copies are in there, but you should find in this, you know, some simple stuff. Boilerplate property, you know, parties involved. Property manager, what’s their legal name, what’s their LLC, the property owner, legal name, LLC. Uh, the de, the details of the properties that you’re managing. If it’s just one, that’s great.

If it’s more than run, you know, you need information for. All of that, and every one of those properties needs to be specified in the agreement. A contract is only a contract if it’s dated, so there should be an effective date as of the date of signing. There should be, uh, you know, duration, whether it’s a one year commitment or if it’s a month to month commitment, whatever.

But determine duration has to be specified. You should also outline in detail services provided, you know, leasing, marketing, screening, executing lease agreements, maintenance, you know, repairs. I. Collecting the rent, paying the, the expenses, you know, ensuring that, again, compliance with local, state, and federal regulations.

All of that should be outlined in that property management agreement. The other thing that’s gonna be in there is fees and expenses. There’s gonna be a management fee, whether it’s a flat fee or a monthly, or a monthly percentage. There’s generally gonna be a leasing fee on top of that, and there’s gonna be some cost for maintenance.

All of those should be outlined in there. Um, we, we currently have ours outlined in there, but we’ve also for the first time put together a, a fee sheet by market. So, um, we, we make it easier for people to see our costs at a glance. 

Gretchen Mitchell: What I like about ours too is that it’s highlighted, all the fees are highlighted on the PMA, the sample PMA, so they don’t have to go searching for things.

Chris McAllister: Right. And then we’re gonna start giving them the, the, the fee sheet also, so they can go ahead if they want to go shop us, go ahead and shop us. But, uh. You know, this is, this, this, well, I’d like to think they’re not gonna find anybody better than us, but if you wanna shop us, go ahead and shop us. Good. But honestly, if it’s only about that fee, then maybe you’re not a good fit for us.

Because this is a long-term two-way relationship. It’s, it’s really not about for us. Let’s put it this way, if you’re looking for the lowest cost provider in the market, then you will find them, but it probably won’t be us. All right. Again, another tangent. Sorry. Fees and expenses. Okay. Those will be outlined under responsibilities, provide necessary insurance and and ensuring the property is rent ready.

Reimbursing the property manager for approved expenses. Things like that will be outlined. Legal and compliance liability will be outlined, you know, the protections for both the property manager, the situations, the limits, protections for the owner. You know, a commitment by the property manager to adhere to all applicable laws and regulations.

Some other things that you’re probably gonna find in there. Details on rec, record keeping, dispute resolution, and, and some state specific clauses you’re gonna find about the, the responsibilities of both parties that contract termination, or if there is an option for an early termination. You know, giving notice, closing out the books, getting the utilities paid, any outstanding bills due to the property manager.

Um, all that stuff should be outlined in the property management agreement, so I really want you to study that agreement before signing it. I want you to mark it up, ask questions, talk to your attorney, whatever you need to do, but you wanna make sure that, that PMA at a minimum includes everything on this list.

So check whatever you get against the one that we’re, we’re gonna include in the show notes. So then we get into the meat of the, uh, of, of the, of the situation, right? So you’ve, you’ve, you’ve interviewed the person, you feel good about it, you’re gonna sign the PMA, and then we get into the onboarding process.

And I, I think at this point we’ve learned Gretchen, that the onboarding, how that goes on both sides really makes, sets the tone for the relationship going forward. So if the proposed PMA meets with your approval, the next step. I want you to ask for a detailed outline of the manager’s onboarding plans for you as a new owner, not only on onboarding yourself as an owner, but onboarding your properties and onboarding your tenants, because those are really three separate tasks projects.

Honestly, if you have multiple addresses that have to be performed. So depending on the size of your portfolio, the manager will need to obtain some assistance or make some special arrangements to make sure your portfolio is integrated into their system so that there’s no interruptions for you or your tenants.

Uh. No surprises. So Gretchen, you want to run us through some of these, uh, this is pretty comprehensive, but why don’t you run us through some of the things that, that you need from a new owner before you can get started. 

Gretchen Mitchell: Well, I have a whole checklist of things that I need of. Forms I need signed and just things like leases and things.

But you know, we have A-A-P-M-A, we have owner contact information, lead-based paint forms for each property that we’re gonna manage. Um, your W nine that, 

Chris McAllister: that kind of threw you yesterday, right? You’re working with a guy with like 26 units and uh, yeah, you got a request for 26 lead-based paint forms. 

Gretchen Mitchell: Yes, he has, yes, it’s like 15 properties.

And I said, okay. I sent everything over. He said, well, I just got 15 emails from you, so I’ll work on it. But we need one for each property, so you know, you know, we need it. Um, so we have to collect leases, copies of the keys, rent rolls. Is anyone behind? Um, we complete a greetings letter and post it for the tenant’s door.

Um, we enter the owner into AppFolio. Uh, we make sure that they can log into their portal, um, enter the property, enter the tenants, enter the units, make sure their leases are in there, their late fees are set up because it’s not our lease that they’re on. Um, you know, we might have to contact section eight.

If it’s mowing season and it’s a multi-unit, maybe we have to put ’em on the mowing list or a heat checklist, snow removal. Um, does the owner want to do any rent increases? What’s the plan for these tenants going forward? Maybe we have to switch gas and electric water into our name. Um, are there any vacant units and get a plan for those.

Um, let’s see. Are there laundry areas to make notes? Do they wanna do their own maintenance? Set it up in property meld and then, you know, email the team, Hey, we got a new property. So there’s a lot that goes into it. Um, but, you know, I love my checklist. It keeps us organized and we do a great job with onboarding ‘

Chris McAllister: cause we are so organized and we’re gonna put those checklists in the show notes also, and, and, and more fun things there.

You know, there’s a, there’s a W nine in there that needs. Filled out. We need to get your direct deposit information because mailbox money is electronic now. 

Gretchen Mitchell: Right? 

Chris McAllister: So when you go through all these things that have to happen in the onboarding. Then you start to understand why many property management companies charge onboarding fees, right?

Because the, the, the time and the effort it takes and the cost, quite frankly, not just in in time, but in getting the system set up. And, and there’s cost, uh, per door for every system that we use. It explains why many property management companies charge an onboarding fee to new owners to cover the administrative burden and the actual costs of the various software and accounting tools.

So if you do have a property manager that you’re interviewing and they’re saying that these are our onboarding fees, I want you to know that this is entirely. Acceptable. And I’ve seen those fees, you know, be from $50 a door to, you know, a flat fee depending on the number of doors. You know, maybe it’s a max of $500 or something.

But it is not unacceptable to find a, uh, to, to expect a proper, a manager to ask for some, uh, money, onboarding money. And, and honestly, it’s kind of a good faith, uh, um. Contribution on your part is the own, own the owner as well. So currently we are waiving onboarding fees for new owners. Um, however. Um, and Gretchen, you, you can probably give us more detail on this.

We will ask for an owner contribution upfront to cover any upcoming, you know, renovations that we know about utilities, you know, so we have money to pay the utility bills. Yeah. Any other fees that, or, or costs that we may have to front money for? That’ll happen before we actually start. Collecting rent.

So how, how, how do you handle that part? 

Gretchen Mitchell: So if it’s, you know, one property and it’s vacant, we do ask for about $500 just so we have money to pay those gas, electric bills, mowing bills, things like that. Um, if it’s a larger portfolio, we will talk about setting a reserve to make sure that we have money coming in to pay those other bills as they come.

Um, and making sure owners still get rent, but maybe a reserve is set. 

Chris McAllister: That makes sense. 

Laci LeBlanc: What I’m hearing throughout this whole thing is, um, something you said early on when we started working together, Chris, that I’ve, I just can’t forget, and that is that when it comes to real estate investing, there’s no such thing as passive income.

True. That this is a, I mean, what you’re, I don’t know. When you’re outside of the industry, I feel like you. Think about, okay, if you own a property, you either manage yourself or you have a property manager and you, and you think of those as two very separate things. Hands off, hands on, right? Like we talked about earlier.

But really and truly, there’s no such thing as hands off. Like you said earlier, I. And this whole thing is, is the definition of a partnership. Uh, because it requires communication. It requires working together. It requires, you know, that trust not only with just like making decisions, but also, you know, with managing money.

Um, so that’s, that’s really the thing that stood out to me is if you’re not having these conversations in this first. Interview kind of process, then you’re gonna have to have ’em at some point because all these things require both parties to truly be successful. And that’s why when you say, you know, like your owners are not successful.

If you’re not successful, this is if you’re doing property management, right? You’re not, you owners aren’t not making money and you are right. Like everybody has to be kind of happy and profitable in order for one party to be happy and profitable in this, it sounds like. And that includes the tenant in a lot of cases.

Chris McAllister: Yeah, there’s no question about it. If your property manager is not profitable, they’re not gonna be in a position to, to help you be profitable either. So, all right, Gretchen, any other words of wisdom before we wrap this up? 

Gretchen Mitchell: I don’t think so. We covered, we covered it really well today on this one. 

Chris McAllister: We got a lot there.

Laci, anything else? 

Laci LeBlanc: No, I just, I encourage folks to go and look at the agreement and look at the onboarding checklist and, and really dig deep into this, this decision. Because even, even not doing this day in and day out like you guys do, it’s clear to me that, you know, this is not an area where you wanna make a mistake and pick the wrong property manager or the wrong owner, or the wrong tenant.

So think this is, and you know, if that were to 

Gretchen Mitchell: happen, then just protect yourself and maybe get out early. That’s, that’s a lot of things that we see is, you know, owners that come to us that are struggling and they wanna leave, but they’ve been experiencing. You know, unpleasant conversations or lots of fees for a long time, and that just digs the hole even deeper.

Laci LeBlanc: Yeah. Yeah. I mean, I think that’s a, a conversation about how I’ve, I’ve seen reviews and I’ve, I’ve heard a lot of owners talk about how ROOST makes it so easy for them. Um, and I think that in some cases that could be alarming, right? Especially if you’re coming off of a really challenging relationship with a property manager.

But I think that speaks to. Your true professionalism and experience in doing this, and you know that’s really what you’re looking for is a property management company that knows what they’re doing that has a history they can prove of doing it well, and that will do the same for you. 

Chris McAllister: Yeah, I, I often think about this, this series is called What to Expect from Your Property Manager, and the subtitle of the series really should be what to Expect from Your Property Manager, even if that Property manager happens to be you.

Gretchen Mitchell: Right? 

Chris McAllister: And when, when you go through one of these episodes like this, and it happens almost in every episode, and you’re thinking, oh my God, I have to do all this myself, right? I don’t. If you don’t currently have a property manager, you are doing all these things, whether you’re conscious of it or, or not.

Right? 

Laci LeBlanc (2): Nana, Nana. Nana. Yeah. At some point all you can think about is Nana. 

Chris McAllister: It, it is so much bandwidth, it’s headspace, it’s time that is, is you’re taking away from something else, whether it’s your. Primary career, whether it’s your family, your hobbies, or whatever. So that’s what always amazes me is, you know, we should probably go back and what to expect from your property manager, even if that property manager happens to be you.

So let’s wrap this up. So bringing on a property manager is a huge step. But like any relationship, the first 90 days will be a learning experience for both of you. There will be some adjustments, there’ll be questions, and maybe a few surprises, but at the end of that 90 days, you should find that you have a solid system in place.

Your property manager will understand your expectations. They’ll know your tenants. Your tenants will know what to expect, and you’ll be on your way to automating your rent collection and getting on with your life. If you’re thinking about hiring a property manager, start by asking the right questions.

Review the property management agreement. Make sure the onboarding process sets you up for long-term success. At least at this point, if, if your, uh, property manager doesn’t ask for everything in Gretchen’s checklist, you can go ahead and get all that together, because eventually they’re going to need it.

If you wanna learn more about how we do things at ROOST Real Estate Company, check out the links in the show notes, or you can reach out to us directly. And don’t forget next time we’re wrapping up this series with episode 12 of 12 where we’ll bring everything we’ve talked about this past year together in one place.

Stay tuned and if you found this episode valuable, please give us a five star review and tell your friends Until then, thanks for listening. Bye ladies. 

Laci LeBlanc: Bye-bye. See you next time.