The Self-Managing Landlord’s Guide to MORE Cash Flow in 2024

this is real estate rookie episode 41 how can you increase your cash flow in 2024 reducing expenses is one key way and it may not be as time intensive as you think my name is Ashley care and I am here with Tony J Robinson and welcome to the real estate Ricky podcast where every week three times a week we're bring you the inspiration motivation and stories you need to hear to kick start your investing journey and today we're bringing back to real estate Ricky alums we have Emilia McGee who was on episode 111 and we have Grace gof who was on episode 161 and these two ladies are the newest authors for Bigger Pockets so if you guys have to biggerpockets.com managing book you can see their new book that just launched but we're excited to talk to them both and really the premise of today's conversation is why investors get it wrong with handing off their properties and also what are some of the risks of self-managing what goes into onboarding tenants and so much more so ladies Amilia Grace thank you so much for coming back Welcome to the Real Estate rookie podcast for the second time thank you so much we're super excited to be here thank you okay so Amelia let's start with you what is one big misconception that people have that maybe keeps them up at night as to a reason they don't want to be a self-managing landlord yeah I hear this reason over and over again it is that they're going to get that 3:00 a.m. leaky toilet phone call a tenant having an absolute panic attack over some sort of a maintenance request and honestly the only landlord that I know that's ever received one of these calls is Grace so maybe Grace can share her story on that but she's actually the only person I know of that's had to go through that yeah it's the infamous leaky toilet call I've only had it once we can dive into that story if we want but in general I think people are overly freaked out about all the things that could happen instead of focusing on all the great things and the things that they can do to prevent anything bad happening so what is the kind of ratio of the chance of that happening do you just have one property that you've owned for a week and you already got that nightmare call kind of give us a overall view of how slim of a chance that is happening I mean between the two of us we have I think 65 properties and we've had one of the leaking toilet in the middle of the night call so the odds are less than 2% I would say and also like Amelia said I don't know anybody else who's had it I don't know why this example is the one that is so popular but in general not very likely I recently went to self-managing I self-managed and then I outsourced to a property management company for three years and now I've come back and I related so much to the book you guys have written because you talk about there's three options there's you know to self-manage where you're doing everything there's hiring a third-party property management team and then there's also you know hiring your own property manager that works for you and kind of building your own team and that's what I've done the last year and I really want you to touch on those three different things and to how they actually compare and how they are different yeah so the first one that everyone thinks of is self-managing and you're running around like a chicken with your head cut off you're constantly fighting fires you're doing things the old school way the mom and pop way of accepting rent in any way shape per form um you're getting phone calls and text messages you have really no system so that's the first option that a lot of people think of the second is property management companies and just to be blunt I think I've heard probably 95% uh property management company horror stories over successful stories a lot of people don't love property management companies and that's just because they have to have so many properties under management to actually make a profit it's hard for them to provide good quality service to all of them and the in between option is being an organized and systemized property manager that hires an internal person to be on your team whether that's part-time or full-time that does a lot of the brunt of the work for you I love that middle ground and you know just like ash we've kind of built out our own management team internally as well and I I do think there's a lot of benefits to that and personally I'm super excited for this episode to hear more about the systems and processes you set up on the long-term rental side to see if there are anything things that I can maybe kind of steal for our short-term rentals because it it is a slightly different approach you know when you when you're dealing with guests versus tenets but I hope some of those foundations are still the same I I think maybe zooming out um just for our our listeners to to maybe get a good foundation here but when we talk about the word landlord what exactly are the responsibilities of a landlord and Grace let's start with you a landlord is a lot more than a lot of people realize first of all you're going to be managing the tenant and Leasing and advertising collecting rent maintenance requests but there's the second part A lot of people forget about and that's being the business owner that's the bookkeeping and any of the marketing and any of the tax work or legal work so when people think about doing this job I we really want people to think about hey you're a business owner not just somebody who leases a property that's so true it's not just oh you're getting a rent check and you're paying the mortgage and you own a rental property and you're getting a text once in a while to you know have a maintenance guy out there's so much more involved in that so what are some of the actual risks of being a landlord sure the first one is the tenants um it's really important for you to onboard great tenants that's one of the hardest parts of the job um and just the interaction that comes with having tenants in your properties is a risk another is managing contractors I think that's another rookie fear that a lot of people have is well how am I going to get a handyman in the property or how are how am I going to manage projects another is the middle of the night leaky toilet call so those emergency maintenance requests how do you handle those people are always thinking about the wha ifs and we're big fans of proactive Property Management so we already have plans in place for when emergencies may come up and another huge one is the emotion emotional side of the business so this is very much personto person type of business there's a lot of emotions involved tenants are going to have things that come up in their life you're going to have things in your life and so just being able to balance that and then the last one that we think of is the legal risks associated with you know anything that has to do with owning a property so leasing you know tenant complaints any of the laws and regulations that surround rental properties those are all factors that come into play what are some ways that you can actually mitigate these risks you kind of mentioned you have the processes the systems in place can you maybe go into a little more detail of how someone can mitigate the risk honestly the biggest thing is being proactive when you're running around in the daytoday and you haven't thought through how you want to handle things or run your business you're making emotional on the-fly decisions and you're letting things slip through the cracks and that's what creates risk when you're able to look at things like a business owner and preempt ly think about okay what is my tax strategy what is my legal plan how do I make sure that I get great tenants into this next unit you're already preventing most of the risk and real estate is always going to have risk it is a risky business but there's so many things that you can do to prevent that if you just take a second to get organized think ahead and have a plan before we get into tenant onboarding we're going to be talking about some of the benefits of actually being a landlord so Amelia what are some of the benefits as to why someone would want to be a landlord yeah I think the first benefit of choosing to self-manage your properties is definitely the monetary aspect of it typically when you hire a property manager you're paying anywhere from 10% of gross monthly rental income plus lots of additional fees there's movein fees lease signing fees setup fees Etc so that's obviously a huge benefit Grace and I both self-managed our portfol FiOS up to over 50 units and that's because we both wanted to quit our full-time jobs as soon as possible so we needed every single last penny in our pocket so that's definitely the first one Tony when you uh did your first long-term a rental did you have a lot of these fees that Amelia is talking about and were there any that maybe you didn't expect that came up and kind of hurt your cash flow from your property manager yeah we we definitely we had a lease up fee for sure which I think was like like 50% of one month's rent or I think it might have been even like a full first it was a crazy amount I was like holy crap um so there was a lease up fee but what really hurt us was all of the the maintenance fees that they charged so in addition to having the property management company they also had their own uh maintenance company and the only quotes they would give us was from their own maintenance company so if I wanted to Source from someone else I had to do that work myself and I had you know wasn't really I was new I didn't really know what I was doing I I usually just went with their management company and honestly I paid more to their maintenance company than I did to the management company how much do you think your cash flow would have increased if you would have self-managed like how much do you think on average you were paying out a month I don't know I think when I when I did the math I was averaging like 150 bucks of cash flow in that first single family home and had I brought back like the you know the management fee and maybe reduced some of those maintenance expenses I mean it easily would have doubled you know over the course of a year Grace what about you have you ever kind of shopped around to see how much you're actually saving by self-managing to increase your cash flow yeah and the other thing you have to remember is a lot of management companies will charge you whether they collected rent or not I just heard somebody talking about this so don't forget that even if your tenants aren't paying a lot of times you're still going to be charged for it which is never fun but Amelia and I did the math the other day on exactly what we would be paying currently if we had a PM for our entire portfolio and it was for Amelia she's saving like $60,000 a year if she was paying 10% for long-term and Midterm 15% for me I would be paying I think it was like $30,000 a year for 10% longterm and 15% midterm and internally we pay a mil pays $500 a month and I pay $1,200 a month which is a a fraction of what my full-time person's entire job description is but in Iowa that is more than a nice salary especially for Amelia port portfolio that you can really stretch a long ways if you can keep that in house and you're going to double the quality for your own portfolio and for your tenants yeah that's such a crazy difference and I think right there that price point is someone looking into considering taking the time to build out the system and processes to actually make that happen because that I'm sure that didn't happen overnight and we're going to get into that as to how you guys built out these well oiled machines so Amelia please continue what are some of the the other but benefits of being a landlord yeah the second is just the quality of service that you can provide to your tenants owning rental properties is very much a customer service-based business whether that's long-term midterm or shortterm and your goal as a landlord is to provide the best Services possible so that you keep your tenants happy and in turn they stay for as long as possible because the number one cash flow killer in real estate is vacancy if you have a property that's sitting vac it for a long time because you just can't find a good tenant or you can't keep your tenants happy that's really going to affect your bottom line and the third is that you're going to need to learn how to property manage anyways because when people hire out Property Management they think that it's set it and forget it they're never going to have to do anything ever again and that's just not the case you're still going to have to manage the property management company you need to hold their hand a little bit tell them how you want things run so it really isn't as hands off as people think it is I have to 100% agree I did not realize I would have to be an asset manager when I turned it over to a property management company I thought like oh my God this feels great just a weight off my shoulders but I did not realize there is a full job that comes along with Outsourcing it still you still have to be the asset manager no one is going to notify you and say like hey you know your insurance went up a little bit you should probably shop around I'm going to shop around for you get you a better quote or you know what your water bill went up the toilet might be leaking or you know something like that or running um but that's a great Point yeah and all those little things really add up and that's another part of being a business owner is looking monthly at all of the things that you're spending money on those utility fees your insurance your property taxes and analyzing them from a business perspective and are you even making money on these rental properties anymore so asset management is huge yeah just one point on that um you know we we have a a meeting with my team maybe once every month where we review like all the pnls for our portfolio and we it had been like a couple months it was like right after our our last daughter was born so like we didn't have this meeting for like three months so we have the first meeting of the year and we're looking back like the past four months and we see one property just has like super high um energy cost and we're like what the heck is going on with this we end up like digging into it and because we have so many properties in one city um like we have one account for all the properties with separate billing we found out that one property was billing another property for their energy cost there was no energy cost on one property double on the other one and we wouldn't have figured that out how we not dug into the finances so just sign into what you're saying as if like even if you have a property manager no one's going to be doing that level of digging for you to to catch those kind of things yeah so Grace tell us a little bit about the actual onboarding process of getting these tenants in place and once you have your property how important is that and you guys touched a little bit on the the customer service piece that you know having a vacancy is going to kill you so please go ahead and explain that process that you guys have put into place when we first started our mindset was do as little as possible just get them in don't spend a ton of time going over everything so that they can just get in and and not be annoying and now we've completely shifted 180 to where we want to have in-person signings where we can go through everything that's in the lease with the tenant so there are no surprises so when they do move in their random Uncle Sam they know exactly that they cannot have somebody in the house that's not on the lease longer than x amount of days or when we go to do a maintenance request and it turns out a to it was a tenant cause issue they know exactly that they're going to be paying for it because we want everybody's expectations to be the same we want our tenants to be happy and stay there for a long time like Amelia said so that we can cut down on our turnover and make more money and that they can have a home but I think the biggest thing to realize with property management is the onboarding is so so important we've had a lot Lessons Learned and don't skip it Amelia is that similar to how you have experienced the onboarding process yes absolutely and I think even before onboarding starts it just having a really comprehensive screening process and knowing your requirements ahead of time and sticking to those when you onboard a tenant this is not an emotional decision you should have a credit score requirement a background check requirement landlord references Etc and we actually talk about all of that in the book so I'm not going to go through all of it but it's really important to stick to the guidelines you already have laid out so you know you're getting a really highquality tenant in your property and then you continue to set expectations after that during the actual onboarding process I want to know a little bit more about the actual onboarding process that you guys have laid out because I you know like you said I think a lot of people myself included leverage you know virtual assistance and automation to do a lot of the the heavy lifting when it comes to managing your properties but there there probably is some benefit in a little bit of like face-to-face connection and kind of walking people through things so at a high level and grace we'll start with you what what does that onboarding checklist actually look like two key things that I do that I didn't do before is one I have them do a practice maintenance request in the software so they know exactly how to do it and they don't try to call or text or email they know exactly what the process is with lots of pictures and videos and descriptions so we can solve it right the first time and the second thing I do differently is I used to give them a movein inspection report and just say like if you have something to report let me know and so 99% of the time nobody would report anything so there wasn't actually any proof of what the moving condition was now I make sure when they move in we are there doing that move and inspection together so we're all on the exact same page with pictures and videos and ass signed report of exactly what the condition of the property is because as much as we want people to stay for a long time the longer people stay the harder it is to prove what the condition was at the very beginning so my checklist just looks like all the things that I need to do to make sure that the landlord tenant relationship is going to be very smooth we know how our working relationship is going to go the property management software all of that good stuff I love the idea of like making them do the the like test maintenance request with you uh because you know the worst thing is calling you like you said in the middle of the night for a leaky toilet when all they have to do is put in the maintenance request so I I guess I'm I'm curious right like um when when you guys are dealing with tenant who's been there for a while like you said Grace sometimes it's hard to know if it was like like that when the guest moved in or if it was a tenant related issue how do you guys and Amelia maybe you can answer this question for us but how do you guys deal with when maybe there's like a disconnect and the tenants like hey you as the landlord need to fix this versus you thinking that the tenant might be responsible for that that maintenance issue that's a good question it's a fine line right and I feel like as landlords we have to air on the side of caution unless you have clear evidence that whatever the you know issue was was caused by the tenant you probably are going to be on the hook for paying for it I would rather keep a tenant happy pay for it myself unless I can really concrete prove that it was their fault I think one thing we both do well is making the lease the bad guy and always pointing back to the source of Truth of hey it's not me saying you need to pay this late fee or that you have to pay for this broken window it's actually the 10 sheet long piece of contract that you signed and I have to treat all of my tenants fairly so no I can't make an emotional one-off decision for you I'm sorry it's not me it's the lease I I want to touch on something real quick to kind of get everybody listening excited about what you guys are talking about as far as taking the time to build out this system because I'm going to take a guess and I'm going to say at this point point in your business none of your tenants have your cell phone number no no yes and that's why I want to like highlight that is to that's a really exciting point to get to as a rookie investor where you are not actually the one physically communicating on your phone or texting them that there are other ways to navigate that whether it's through property management software or it's through using a VA all these different things so just as you guys were talking I was thinking about that as you're saying you the systems you've implemented and how you handle things that you're not even having to be the bad guy anymore it's not you physically saying it on the phone to the person so let's go into the importance of the lease agreement um I'm currently underwriting this property right now that is a five unit and four of the people don't even have lease agreements in place so tell us how important is it that I get lease agreement in there right away okay so I'm actually going through a situation with inherited tenants right now that did have lease agreements but oh my gosh even up to this point I have 41 doors and Ashley you have quite a portfolio too I'm still learning new things and the lease is so important it is protects you it protects the tenant we recommend that you use a local attorney that knows the local laws in your area and that knows your property specifically so we do a lot of midterm and long-term so we have different leases for our midterm and a our longterm and we have attorneys that help us draft those and I know it's another expense man owning real estate is expensive there's all these little fees that add up and add up but I would totally recommend if you're going to spend that extra $500 make it your lease and also just another quick note if you're inheriting tenants sign a month-to-month lease with them for the first 6 months run background checks on them run credit checks on them make them go through the whole process that you would any other tenant because I'm currently going through something that is biting me in the butt because I did not follow my procedures on that actually didn't even have procedures now I do but inherited tenants you got to you got to put them through the ringer too yeah that is a great point I never thought about adding in that step of actually making them go through basically the application process as they're becoming my tenant so yeah that's a a a great Point um the only other things I've done in the the past is do an a stopple agreement where I'm verifying what the landlord is saying and what they are saying and I think adding in that piece of you know having them go through the application process and then also I really like just doing a month-to-month leas to start and to kind of give them that trial basis to to see how they work out and then where are some places that someone could would find lease agreements I think that's like a it's a freebie it's a freebie with your guys' books yeah so if you order our book you get access to State specific leases and a whole bunch of other landlord specific things in our lovely landlord packet and it's got a ton of information in there for you but take that lease and then have an attorney just double check it to make sure that it we're not missing anything one one followup before we move on from this topic of like you know leases and screening rescreening existing tenant so say Ashley with this property that she's looking at there's no leases in place and she does the background check the normal application process and maybe this person doesn't pass I guess Amilia Grace and maybe Grace will start with you like what would your process be if that person didn't pass are you giving them notice that they have to vacate or or what do you do if they don't pass well first of all you need to Define what is pass and that's something I've not done for myself but exactly the credit score and the income requirement and the land Lord verification and for me yeah I always post a notice no matter what even if it's a situation where attendant's telling me hey I'm going to be late I let them know I have to post a notice according to the lease and to keep everything Fair as long as you pay within that time don't worry about it it's just paperwork thanks for letting me know but that way you've already started the procedure of an eviction if you have to which try to avoid that at all cost but that's what I would do with um any of the tenants who are inherited is let them know from the beginning what it's going to look like and be clear with them so that's not a surprise of these are my requirements if you don't pass it you're going to have to have a notice obviously you can work with them a little bit if they need some extra time or um to move out I would do that but I would post the notice right away Amilia same for you or any any difference is there yeah so again this comes back to taking the emotion out of owning rental properties so you have to have your systems and processes that you abide by and if you inherit a tenant that doesn't meet your requirements it's tough but I would say you have to serve them that notice and get them out um I will tell you from experience that you will save money in the long run by onboarding tenants that meet all of your requirements rather than just taking the easy route and keeping those inherited tenants that are maybe paying their rent every month maybe late some month Etc but have other baggage that comes with them and I'm not ragging on inherited tenants but I mean it there's just things that come with them if we can talk about that just a little bit right like maybe the tenants who they're pain but they're just kind of like a pain in the butt to manage have you guys found maybe a creative way to deal with those type of tenants like what's working for you there Amelia and I always call this the happiness Clause if you are dealing with somebody who it's like no matter what you do you cannot make them happy we tell them hey it seems like you're not happy we're happy to fix X Y and Z but if you want to move elsewhere we're happy to break this lease because we want tenants who are happy and like living in this unit and probably majority of the time they stopped complaining because they're like I don't want to move I actually love it here I just was bored and had all these complaints and I have had one person move and actually two between all of my long terms and midterms and it was a blessing that they moved so Grace I'm intrigued please tell us about this very expensive cost of $88,000 that you had to uh pay yes it was a bookkeeping expense because when I first started all of my rental properties and my burrs I forgot that it's also a business and you have to keep up with all the business aspects that we talked about earlier so I had probably 15 to 20 rentals tons of rehabs refinances and I let my bookkeeping slide to the Wayside so when I finally was ready to get it all caught up and get everything systemized it took me three different bookkeepers over a year and $88,500 to get my books up to Snuff and I know that exact number cuz now my books are fantastic and I can literally pull that exact number from my Quickbooks but it just illustrates to those who are starting real estate I'm not saying that you need to go hire a bookkeeper but you do need a bookkeeping system from your very first property maybe it's once a year maybe it's once a quarter but you have to do it Grace when you found like you decided it was time to actually Implement that how much did it slow down your acquisition piece at all because now you had to really really focus on that bookkeeping portion and get that cleaned up before you could even go and acquire more properties absolutely it took all my mental energy it took a big chunk of my money $8,500 it took so much of my time because I had no systems of where my utilities were or which LLC owned what property or which tenants were where so my bookkeeper had to almost pull this information out of me now I have a beautiful system where everything's in all these nice quick guides and really filed in a nice way and in fact I filed my taxes on time this year which is crazy and my CPA said wow that was a really nice LLC overview you gave me and I thought that was the best compliment ever I thought about it all day um but I was absolutely not like that two years ago everything was in my head or on a sticky note or maybe I had to scroll back in my text messages or find an archived email there was no system I just want everyone listening right now to if this is you if Grace is describing you right now you need to admit that you need help right now when you need to go and and find some help with this because it can stop you from growing and scaling but not only that you can also get into Legal Financial you have the IRS coming after you there's so many different things that can affect your bookkeeping even though it seems like such a small piece it really is so important to your overall business and it sounds like the biggest change that you guys have been able to make is just implementing the right systems and processes which is so important as you start to build your business we had some of those similar Growing Pains as we scaled up our portfolio as well because we went from you know three airbnbs to like 15 over the course of 12 months right so we added a lot of property store portfolio and when you're scaling that fast sometimes those underlying systems don't don't necessarily scale with you so we went through some of that growing pain as well but I'm curious what what are the Sops or the standard operating procedures look like in your business today and if for our rookies that are listening maybe where should they start when it comes to building out those Sops and ailia we'll start with you on that one yeah so we have Sops for everything in our business and if you're a rookie investor I know a lot of this seems very daunting and it seems like man why would anyone ever self-manage this sounds terrible but honestly it doesn't have to be that way it really isn't but we have an sop for tenant onboarding we have anop for listing our properties we have an sop for what happens during the closing process don't forget to get insurance and turn your utilities on we are so guilty of forgetting that every single closing until the day of but we would recommend starting these Sops from the very beginning that is one thing Grace and I both did wrong and for me personally I grew very quickly I had 26 doors after one year and I actually didn't buy a single property in 2023 because I was so disorganized I had to spend a whole year just getting caught up creating those Sops just getting organized and so if you're listening and you're about to buy a property or maybe you just have one or two properties get organized right now start documenting everything you're doing and if an sop sounds daunting call it a checklist just start writing things down it doesn't have to be a whole big you know sheet of paper that has every little step but start just documenting the process as you're going through it the first time what are some different softwares or tools that someone could use to help them build out an sop there are a few different things you could use Loom to record videos and maybe have a VA Break Down the video of what you're doing and put it in a Google doc when it comes to actually executing what's in our sop we both love monday.com for example my acquisition checklist as it relates to anything tax time because it's tax time whenever I buy something I have to go put that closing statement in that Year's folder of closing statements I have to go add all those utility numbers to my utility numbers quick guide all these different things so Monday has that checklist all broken down so that I can assign it a due date and assign it a person and make sure each nitty-gritty thing happens every single time the same way the same person so that you don't have to really think about it you just do it you mentioned a quick guide what is that yeah so I was talking about earlier how you know my Wi-Fi passwords might be in my phone on my notes in my email written down somewhere a quick guide is just a really concise way to write out all of your property information so I have cck guides for insurance policy door codes Wi-Fi passwords utility shut offs where are those all located so that there if there's an emergency you know exactly where to tell your tenant um another quick guide just today I decided to implement is writing all of our appliances and whether they're gas or electric so that way when I go to sell a property my realtor can look at that quick guide as she makes her description and does all the disclosures and just knocks it all off cuz she has all the information right in one spot yeah I absolutely love Monday I know Ashley use Monday as well and it's it's a really cool tool to kind of capture all the different information you need for your different properties and much like what you guys have outlined uh we have checklist inside of Monday as well and there's a you know the top level of like hey here's the results right here's the end result that needs to happen and all the steps below and then we actually link to the Loom videos for each step so each loom video is like I don't know 2 minutes long but they can kind of break it up into digestible pieces and then there's any like supporting documentation or files and you will add that in another column as well so now every time someone on my team does something there's a loom video it's step by step showing them what they need to do and we found that a really easy way to train people as they're coming into our business and doing different things I just wanted to add that one other really important piece of software that Grace and I both use which isn't an sop related software is our property management software and I know we haven't really touched on that too much here but I hear a lot of newbies that even have three four five properties and they still don't have a property management software you need to get that set up with your very first property it makes you look more professional it saves you time yeah it might cost you $15 a month and but I think Bigger Pockets Pro membership you get rent ready with that so you could use rent ready for free it just makes your business run a lot more smoothly and you really need a property management software that's how you don't do it as a job a job is when you have no systems no resources so you're collecting rent by hand driving around town chasing down your tenants calling them texting them emailing them like just think about what is the way I put that in air quotes that you're going to do something and stick to it and that's how you systemize something during this time that you guys have built these systems to not give yourself a full-time job have you relied on team members at all and as a rookie investor who are the first team members I should be bringing on to this self-management property management company and building yeah we've both brought on team members at this point the first person that I hired out was my bookkeeping because it just doesn't bring me joy at all I'm the type of person that has s months worth of receipts sitting on my desk that I'm going to get to next week I'm gonna get to next week and so that was the first person I hired out Grace we we all know that she also hired that out at this point after spending a lot of money on one um and the second is the internal property manager that we haven't really talked too much about we talked about it at the beginning but Grace and I both got systemized we organized our businesses and then we were able to hand it off to someone else that runs our businesses the way we documented it and the way we want it run yeah another thing is if you are trying to train your property manager or anybody on your team on what's in your head that's never going to work because they're always going to have to come back to you to figure out how to do something whereas if you have a checklist that you can say what does the checklist say or actually we're going to do it differently this time I'm going to update the checklist or the SOP that's how you figure out how to run a business and actually be hands off let me ask how did you go about finding your property manager are they virtual do they live where your properties are kind of explain that process for somebody who wants to take action on that I found my first internal property manager for 10 hours a week at 20 bucks an hour through a real estate Facebook group that was local she wanted to learn real estate so she did my property management for 10 hours a week all the virtual stuff for about a year after that year I flipped that into a full-time position with a project management to do my flips and now that person is full-time salaried he's also there physically but he also had property management experience and was already in the industry let me I want to ask one follow to that Grace because uh when I think about property management I feel like it's hard to kind of Corral those responsibilities and to like 10 perfect hours so were they not doing anything guest facing or like what happened if something happened during the other you know 30 hours of a typical working week how would you handle that great question it wasn't a perfect 10 hours of week she did know before accepting the job that it's going to be 7 hours one week and 13 the other and you're just going to have to keep track of your time but I know Amelia ran into this with her PM and and had a good solution for it yeah so I found my property manager through a local Facebook group as well of local investors so she lives where I live and she was a newer investor looking to not only learn but get paid to learn I think we call that job hacking around here she's getting paid to learn she also gets access to me so I act as a mentor for her which I think is a great benefit um I started paying her hourly I thought that she would work between 5 and 10 hours a week and she can work whenever she wants during those hours it wasn't like she needs to be on call Monday 1 to 5 or whatever the case may be so it was very flexible I was paying her hourly after a couple months she came back to me and said hey I'm having a really hard time tracking hours because when I respond to a maintenance request or a tenant message I may be spending five minutes here 5 minutes there I'm having a hard time tracking those hours so she said can you just pay me a lump sum every month and some days it'll you know some weeks it might be more than 10 some might be less it all evens out and so I said sure what do you think you're worth she told me $500 I said that sounds great sold and so that's how we landed on that but find somebody that's looking to learn from you and that has a little bit of experience in real estate yeah and I I feel like I align with that approach as well Amilia where you have a little bit more flexibility so it's not like necessarily okay here's how many hours but it's almost like a salaried position right where some weeks are going to be more some weeks are going to be less and you know sometimes it might be at 9:00 in the morning other times it's 10 o'clock at night but you have that flexibility um Ash I know you've obviously been building out your internal management team as well how does your kind of compensation structure compared to what gray milia laid out yeah so my roles are actually different where I don't have a property manager that's boots on the ground um all of the leasing all anything that can be done on a computer is done by a virtual assistant um so she never leaves her desk she's on salary so we do pay her for a set amount of hours we pay her 40 hours for the week and that's also the time she's on call so our tenants know they can call her anytime between these hours she'll be there to answer the phone um the boots on the ground is actually our maintenance guy so he actually does the physical showings of the property too and he does anything that needs somebody there so like tomorrow morning he's meeting the roofer there to get a quote things like that but um he started out because he wanted to learn about real estate investing so it was very similar in that nature and he did construction he got laid off in the winter so for a full winter he just worked alongside me for free doing whatever I needed just to learn and then when it was time for him to go back to work he ended up coming on to to work full-time and to take care of all the properties so similar in in that circumstance for sure yeah and I'd say our setup is actually pretty similar on the short-term rental side as well more so to yours actually where we have um we have five EAS on our team right now but they basically cover I think 20 hours of the day there's like a 4 Hour window like early in the morning where no one's working and uh we just pay them hourly but they're working specific shifts but that coverage gets us pretty much 247 so that's how we've handled in our business as well but they do pretty much everything virtually right like our cleaners and our m maintenance crews are the people who are the boots on the ground for us but our vas they're like you know they're ordering all the stuff on Amazon they're responding to guest messages they're you know coordinating with the plumber with the agac person so for us a lot of it can be done virtually for those vas as well well Grayson Amelia thank you so much for joining us on this episode and congratulations on your new book you guys are also guests on the Bigger Pockets real estate podcast number 938 with Dave and Henry so if you want to learn more about their new book self-managing landlord go check out that episode number 938 you can also go to biggerpockets.com managing book Grace and Amelia thank you so much we really enjoyed having you guys back on the show Amelia was on episode 111 and Grace was on episode 161 so you can also go back and check out their origin stories of their real estate investing Journey make sure you follow us on your favorite podcast platform you give us a like And subscribe on YouTube and make sure you join the real estate rookie Facebook group I'm Ashley and he's Tony thank you so much for joining us on this week's real estate rookie we'll see you guys next time so cover up your games nobody see all this time it ain't nothing change [Music]

Channel: Real Estate Rookie

Views: 3,995

Keywords: cash flow, landlord, self management, property management, real estate investing, invest in real estate, how to invest in real estate, cash flow real estate, real estate cash flow, rental property, income property, biggerpockets, how to manage rentals, managing rental property, property manager, property management company, real estate portfolio, rental property portfolio, landlording, rental property investing, tenants, real estate rookie, real estate rookie podcast, podcast

Id: ZPzS-x4y4wE

Length: 42min 4sec (2524 seconds)

Published: Fri May 03 2024