What's going on YouTube? It's Matt Faircloth, thank you for watching this YouTube channel.
Welcome Justin, how are you, man?
I'm great, man. How are you?
I'm great, man. Who do we got today, man? Who's joining us?
Today we have Robyn joining us. Robyn, come on in. Hey Robyn, how are you?
Robyn.
Hi. Thanks Justin, thanks Matt.
Robyn, tell me, tell me, tell me my friend, what can I do for you?
Well, my question was that I own 31 doors.
Okay, high five.
And currently, thank you, I am having all of my tenants deposit their rent into a LLC
bank account.
Personally? Like they're going to the bank and they're I want to put this rent into ABC
LLC account.
That's right.
Okay, all right. Okay, I already hate this but go ahead.
I have a regional bank and properties are in a couple of different counties and a couple
of different local, but a couple of different counties. So this bank has locations all over.
So I use the one bank and then from the LLC, I immediately move that money into either
one of three accounts. One is my personal savings, two, my personal checking account
and three, DBA, doing business as, and use that as an operating count to pay everything.
The handyman, charge card, et cetera.
Got it.
So searching online and I was listening to a group and I was told that that was the wrong
thing to do. Started searching more and thankfully I found you.
And I got your back, man. I got your back Robyn. Don't be doing that no more, man. Okay,
so have you come across... Justin, come on in because this'll be a good conversation.
Have you come across issues, Robyn where a tenant was like, "I deposited my rent, miss
landlord." And you're like, "I don't see it come into into my account." Have you come
into discrepancy issues on, on payments into the account yet?
I have not, because my bank's portal, I can see their deposit slips and on their deposit
slips, I have them put the address, 123, on the check. So if 123 comes in, I don't see
it by the fourth day, I'm like, "Hello?"
Okay, right. Where you at? Right. How do you own the properties? Do you own them under
the LLC? 123 LLC. Let's just call it, for this conversation I shall dub this LLC, 123
LLC, all right?
Not Batman and Robin.
No, I'd love that though. Oh, we could have some fun with that. Okay. So 123 LLC, let's
just say that's it. Is 123 LLC the owner of all these properties or are you personally
the owner of all these properties.
Neither. I have them all in a land trust, different land trusts.
Man, that is a complicated structure, but it's good. Land trusts are awesome. Land trusts
are great, but I never got into it because they can be complex. For those of you guys
watching, what's great about a land trust, it is darn near impossible to figure out who's
behind it if you don't want to, because it's not a publicly filed document, correct Robyn?
Correct.
I mean you've got a trust agreement that says through the trustee and the beneficiary are,
but it's not publicly filed to where somebody could discover who the owner is behind it.
That's number one. Number two, you... this is talking legal talk now, but you celebrate
what's called beneficial interest from what's called equitable interest. Right? So trusts
are amazing. I know nothing about it, you guys just call Batman and Robin here if you
want to learn more about it. It's not something that I know much about.
555-1212.
Right, there you go. Right, she'll tell you more. A hundred dollars an hour for Robyn's
consulting fee. Okay, you own them all in one land trust?
No, in separate land trusts.
Individually?
Mm-hmm (affirmative).
Okay. Do you have partners on these properties or are you and a spouse or anybody like that,
is anybody outside of a spouse of yours owners of these properties, that's what I want to
ask.
There is no one other than myself and spouse.
Okay. Got it. Okay. What you're doing is not a bad thing. If you're okay with depositing
that money into the bank like that, that would give me [inaudible 00:04:32] and sleep deprivation,
I think. But if you're okay with that, you can keep doing that because you're giving
automation to the tenant. You can call them, and if you're able to do that, that's fine.
There are other systems out there that can go and pull the money out of tenant's bank
account, or they can pay online onto a portal in that they can pay electronically through
a system. Now, how are you doing your accounting? QuickBooks or?
Wave.
Okay, so tell me. I'm waving, tell me how to it.
Wave is a free accounting tool.
I thought she's saying wave at me and I'll tell you no, okay.
Raise your hand Matt, okay?
Yeah, right. I've never heard of that, but is that like a QuickBooks kind of thing.
It is. It's online, app and computer and it's no charge and I'm really liking it. I've used
a couple of them and it's very easy. I can categorize every expense. It doesn't calculate
my income just because I'm not pulling it in, I'm just doing that separate. But all
my expenses is coming right out of using Wave.
Okay.
So let me ask Matt, if you can explain a little further what you don't like about the tenants
depositing into that bank account, what is it that-
I had not, I think that it's more work than what you're... I think that you figured out
how to hack it and then make it easy enough for yourself but if you scale and I assume
you want to scale and do more doors or whatnot, right? If you scale, at some point going through
bank statements and looking at those deposit tickets to see, did 123 Main Street pay? Did
134 2nd Street pay? Did this place, did this pay, did this place pay? Is going to cause
you more of an accounting nightmare than a lot of these online systems that can do it
that will automatically print you delinquency reports like that because the tenants no longer
have to go to the bank, the tenants can set up a online access to just pay their rent
and the system will tell you who paid, who didn't pay. It'll automatically calculate
fees for you. It'll automatically charge out those things and it'll make it less, my guess
is you having to go through those bank statements.
You've probably figured out a way to do it really fast, but it's still sounds like that
would be a lot of work as you scale. And I was trying to think about where I want to
go in my business and I try and run things as if they were that way. And if you've got
yourself up to a hundred doors, it sounds like that would be somebody's gig between
the third and the eighth of each month, going through all those bank tickets to make sure
that each individual person paid. So what do you think?
The only issue I have, and this might be not apropos to your group, but I do have a lot
of people that just pay in cash, deposit in cash and that-
You can let them do that. We've got away from that.
Service type jobs that they have, construction and things.
Fair enough.
They're paid in cash, they deposit in cash.
Fair enough. You can do that. You can do that. Another thing I don't like about what you're
doing is the way that you're breaking up the cash flow when it comes in the door but I
can get over that and then we can just speak to that in a second. At the end of the day,
it's all your property so you can do what you want with the rent once it comes in, but
we can get to that in a minute. The people paying cash thing in that, I mean, you could
let them keep walking into your bank and then you would minimize the amount of receipt checking
you have to do. If you wanted to get completely away from that cash receipt option all together,
there are online portal systems that let people pay their rent online, that people can walk
into a CVS or Walgreens, a check cashing spot or whatever, and they can put their rent into
your account for a $10 fee.
That's good to know, I didn't know that.
Look at it, so here are the services. Cozy is one, PayLease is another one. AppFolio
is a fully integrated accounting system and sitting at the 30 doors, you're probably get
into the point where AppFolio might make sense. AppFolio is going to cautious somewhere around
300 to 400 bucks a month, but it is a fully integrated accounting system. It has a work
order function so if tenants have work order issues, they can issue their work orders online
and then AppFolio will disperse who does what for you and everything like that.
What I hear here Robyn is that you are, and first of all, man, you've hit the promised
land. A lot of folks would like to get 31 doors and you've been able to work at your
way up to get there. What I think is that you are operating in some ways as if, there
are people that have five to 10 doors, you're still operating like that. So you've hit the
level where, I mean, let me ask you, what's what's next for Robyn? Do you want to get
to a hundred or do you want to keep cashflow on the 31 you got and live life, or are you
looking to grow?
I'm actually going in a different direction so it's kind of off topic, but looking at
doing some construction development and setting up [inaudible 00:09:32] company, so.
You need to automate what you got. You got to automate that portfolio. If you want to
get into a new thing, which is great. If you can take that real estate portfolio you got
and compress the time that it takes to manage it, an online portal will likely help you
quite a bit with that.
Is there any legal reason why I can't go from my 123 LLC, and then just disperse that money
into say my own personal checking and should I change my DBA account? My operating account
to an LLC? Is there pros and cons?
Well, I would do it to an LLC. Here's what I would do. I would set up a management company,
LLC. Call that 123 Robyn's management company, LLC, and call it whatever property management,
okay?
Okay.
So it's clear, this is a PM company. Now you don't have to have a broker, a real estate
broker's license, because it's only managing your stuff. Do not go start managing other
people's real estate for them, okay? Because if you do, you've got to have a real estate
broker's license, okay. Only manage your stuff. Then that rent comes into that PM account
LLC, and because you and your spouse own it, you can take that money that comes in and
do what you want with it, man. Pay to your sub LLC, pay to the operating account and
everything like that.
I just think that the whole thing of a third, a third, a third, if you're left at the end
of the month with enough cash in that DBA operating account, if you're left with enough
money sitting in there that you got some rainy day money and some padding and everything
like that, then I'm fine with it. But a third, a third, a third sounds like more than I would
be okay pulling down because I would want to start operating that PM company LLC business
to where it should have its own coffers, its own savings and be its own entity and to where
it's okay to have a big chunk of cash sitting in that LLC account and then view your personal
account is over here. You know what I'm saying? So I wouldn't bleed it all the way down. And
if you're not bleeding it down at a third, a third, a third, then great. But if you are
taking most of the cash out of that account then I probably would-
I am, I'm taking it all out because I'm concerned with anybody having a bank account and the
bank account number, it's easy to pull money out of there also.
See, now there you go. Somebody would have to break the law. I don't want to go there,
but somebody would have to break the law if they wanted to go... if one of your tenants
now has your ABA number and your bank account number, now they could go in there and they'd
have to forge your signature and pretty much pretend to be you.
Correct.
But with a fake ID and the willingness to forge your signature, they could take the
money out of that account. That'll put them behind bars for three to ten years. Three
hots and a cot for three to 10 years right there, right? And their rent would go to zero.
They wouldn't have to pay rent anymore. I do think that you are exposing yourself with
that many people having your banking information on a regular basis. So that's why I would
consider an online system that would automatically draw the money out. They can automatically
submit work orders, especially if you want to get to a new thing.
Okay.
Justin, what do you think?
I think he covered it, man. I will say I've used Cozy. I used that for my rentals.
How'd you like it? I've never used it.
I still use it on our smaller deals and it works great. Money comes in and it hits the
bank account and honestly, I don't ever have to log into it and it just works. And I think
you can get your money faster. You pay like $2-3 a month to get your money faster, otherwise
it's a week delay or something, but it's nice because everything is organized and you can
export that out... I'm sure it integrates with Wave or it comes down to a CSV that you
can upload into Wave and that might help you out as well.
Okay.
But Cozy is great. You can also do tenant screening through it as well. So I'm not sure
what you're doing for that, but it's more integrated in the rest of the process?
How are you doing that? How are you doing tenant screening? That's a great point, Justin.
I do have a company that I worked through and have been using for about three years
now.
What are you paying?
You're going to be surprised, only 15 bucks a piece and I have a [crosstalk 00:13:56].
Right, but that's about what the other services are. I want to make sure you weren't going
to pay more.
I'm not paying. I have the tenant pay and it's all online so I like the ease of, they
apply online, they get authorization online, they debit their card online. I just get the
results.
So the the other systems are that way too but let me paint a scenario. With AppFolio,
when they apply for your apartment, it's going to make them put in their name, their social,
their stuff, right? If they get approve you just click approve and AppFolio will take
that data, pull it and drop it into their lease for you and then they can DocuSign the
lease, you know?
Oh that's real nice.
Yeah. So you don't have to go and manually move that data from here to here. It's a [inaudible
00:14:47] and it just creates the lease for them and everything.
It's kind of an off question what you just said. So if you have someone DocuSign, are
you saying that you never meet your tenant?
Yeah, we've got to that point. Yes.
And now how do you get comfortable with that? Not seeing someone face to face and reading
them so to speak, not judging.
Justin and I have a property management company that deals with our rentals in that. So we
just can't. We've been able to graduate to the level where we're just not hands on with
tenants anymore, per se, but the PM will likely do that. But when it comes down to the fundamentals
that really determine whether or not a tenant will pay their rent on time, there are factors.
It's employment, you really can't, and I know you're not saying this, but you can't be like,
"Well, how many kids do you have?" Okay, discrimination. Can't ask that you. "Where do you go to church
again?" Nope, can't ask that either. "What color are you?" Right, right, right. It's
all stuff you can't ask anyway, right? But with a good rental application that they have
to fill out, with good job stuff with checking a criminal background check and good research
on their rental application, you should be able to get yourself to a yes or a no in that.
So Justin and I have been able to develop good rental standards with our property managers
that, with that we're comfortable. I see you as about, you went from here to here and you're
about to go to here and to do that, you need to take some of the systems that worked when
you were this big. You're this big now, right? But you were this big and you're still doing
some things like you were when you were this big, right? And you got to act like you're
this big now as a company, because you're about to get this big. And I don't want to
see you get this big, still doing stuff like this. You follow me?
Yeah. It takes too much time.
What's that?
It takes too much time.
It will. You're not going to scale out and you're going to to be left dealing with $15
an hour BS when you should be dealing with $2,000 an hour stuff this big.
Yeah.
You follow me?
You know, Robyn, you may be getting to the point where you want to look into a local
management company, even though I know your rentals are nearby, it might be worth it as
you start to scale, if that will allow you the time and energy to leave this stuff behind
and focus on the next property and the next property. And you've got a system that works
obviously for acquiring properties, so why not focus on that? You might want to start
transitioning property management out of your to do list.
I went a different direction, but that's a good idea. I hired in house. I did exactly.
I did the LLC thing, management company and then, 30 doors, not to get into your stuff
there, but you could probably peel off a few bucks to pay someone part time to do some
of the stuff you don't like to do anymore like bookkeeping or property management, meeting
tenants. Whatever you think that like, "Man, I hate doing that side of the business," there's
somebody out there, whatever you hate doing, there's somebody out there that loves doing
it. What's that?
Bookkeeping. Hate it.
Me too, me too. It takes one to know one, right? But there are people out there that
believe that these are Looney Tunes people, but they love it and they love numbers, right?
And so for not that much money, you could pay them to keep your books and that comes
off your plate and then that's what I did, I started to sub out the things I hated and
then before you knew it, I was able to do the things I liked only and then I was able
to scale that much faster. So consider either hiring a third party PM, like Justin said,
and then relinquishing most control over to them or bringing somebody in to help.
That's a great idea. Yeah, I like both of them.
There you go.
Yeah, I really appreciate you taking the time to answer my question. It really helped.
That's what we got guys. Thank you for watching here.
See ya later.
What do you think Justin, ready, one, two, three, go. Have a great profitable week.
Have a great profitable week.
See ya.