What is going on YouTube? Welcome to Mentorship Monday Program. This is an awesome, awesome
episode. You guys are really going to enjoy it. But before you guys get into the episode,
while you're watching smash that subscribe button, so you can hear about all the great stuff that
we're up to at the Derosa Group. Justin, tell us what they're going to learn in today's episode.
What a great episode today. We talk property management. How do you find a good property
manager? What questions should you be asking? How do you go about this entire process?
And when do you even need one? What is going on YouTube? It's Matt
Faircloth. Welcome to the Mentorship Monday Program. Come on in Justin. How are you?
Well, hello. Happy Monday. How's it going? Happy, happy Monday, brother. How are you?
I am great. Take it away. What do we got?
I am so excited about this question from Josh. Josh wants to know... Going to start investing
in multi-family properties and he's wondering, how do you hire a full-time property manager onsite?
What should he be looking for? Just what is that entire process like? I love this question because
I deal with property managers every day. My thought Josh is that when you're hiring a
property manager, I would be super clear on what their job description is because property manager,
that monocle, that name of a job gets spread around among a lot of different duties. Are
we talking about somebody who's going to do leasing? Are we talking about somebody who can do
rent collection? Somebody that's going to keep your books and do your finances and enter cash
receivable, accounts payable, that kind of thing, are they going to do that? Are they going to
handle maintenance calls? Are they going to handle lease renewals? Are they going to handle upkeep
on your grounds and preventative maintenance? So first and foremost, I would say... And then
I'm going to hand it over to Justin is I would come up with a very, very good job description
for that person using everything I just said, plus whatever else you can think of. Justin,
what do you got beyond what I just said? I have a few more clues that Josh did not
exactly tell me the size of the property he's looking for, but he does say he has $300,000
to invest. So let's assume that's maybe a million dollar type property. So let's call it a 20 unit
property, right, that Josh is looking for. This size property you're kind of stuck between too
small and too big. So you're going to have to do third-party. Josh mentioned hiring full-time
staff. So let's break down when and how. But first at the end of the day... Actually beginning of the
day, before you get started, we need to make sure a property management company is going to do
what you want it to do as Matt said, and that they have the experience doing that.
So you want to look at companies that are managing the same type assets in the same type location.
So if you're looking for that 20 unit property and you are interviewing management companies that
manage single family houses only, they're probably not going to be a great fit.
Or if you're interviewing companies that are used to having full-time staff and manage, one, 200,
300 unit type properties, they're probably not going to be a good fit either. So you've got to
find the right property manager for the right size property. They're not all the same. Some
will tell you they are, but they're not going to do it very well because they manage differently.
Typically you can do onsite or offsite management, third-party management. And so on the larger
deals, like what we do is we have full-time staff, our properties have anywhere between
two and seven employees that are paid for by the property itself. We hire the management company,
the management company hires the staff. So those guys are our full-time employees because
they're multi hundred unit properties. If we're talking about a 20 unit, 10 unit type property,
you're going to have a third-party manager. That manager probably has seven or eight or more
owners just like you, right. They might have a hundred units they're managing across eight or
10 different properties. So you want to find out how they manage, how many properties they manage,
how you get billed, what your fees are, do you have fees for leasing up units? Do you have just
a flat management fee? Are they going to mark up your maintenance? You just need answers to
everything. How the money flows in, how the money flows out? Where they get a cut and what services
they're providing for you for all of that? A lot of data, you got to collect a lot of
interviewing you got to do. If you're considering a property management company, everything from how
many units they have under management also to how many properties of the same similar caliber that
you're buying. And then regions of management. I believe that Justin and I have given a lot of
data here. And I think the best thing to do is to listen to this and develop a checklist. There are
some great things, great elements, I can think of at least like probably four to five videos
on our YouTube channel that are around property management. Great stuff, videos seem to do really
well with the people. There's a lot you, so I guess people thought something of them, right.
Develop a hiring checklist for either the company or the person that you're hiring
and collect data to fill in that checklist. So everything Justin and I just said, videos that
we have on YouTube, go into bigger pockets, put posts on the forums and collect data that will
enable you to develop like this ironclad checklist to make sure like, "Okay, do
they own property themselves? How many users they manage? How many years they've been in business?"
Like either a checklist or a questionnaire sheet that you're going to kind of fill
out as you interview them and get to know them. Justin, what do you think about that?
I love it. I love that idea. And we have- And once you build that, send it to us.
We have a Google sheet that we use. Essentially the first column is the checklist. And then every
row is the different property management company. So I might interview a dozen management companies
for our next project. And so I will line them all up and I'll put, where did I hear from them?
Did I just Google them? Was I referred by a broker or a lender or someone else?
And everything Matt said, but also even like, well, what's their Google review rating? How big
are they? Where do they manage? How many units do they manage in the town you're looking to buy in
and nationally or regionally as well? So you've got to break down all the different of facets
and then decide what is going to work for you. And if you don't have any experience,
then I would say, go with the manager that has the most similar type asset size experience as
close as possible to your asset location. What you got, yeah. Yeah, absolutely. So that's
some great stuff. There's a lot to property management. There's a lot to selecting. Maybe
that's a video series that Justin could do eventually with you guys. As you can tell, he
knows a ton about it. We're not beating this thing into the ground. What we're doing is just trying
to underscore how important property managers are. But Justin and I have had the same property,
right. Property did not change, did not transform, did not have a bunch of different things happen.
All that happened was a different property manager ran the property and this property went from
very low performance to running off the page performance. And that was just by the change of
personnel and the change of management protocol from the PM company those folks reported to.
Without the person implementing on the ground, it's such an imperative position for success
in real estate. You have to have someone that's implementing your vision and holding the tenants
accountable and running the day to day and without it, you'll likely fail in this business.
And so it's very hard to know, even with everything they're telling you, they're putting
on a great sales presentation, are they going to be a good fit for you? The last section of our
sort of questionnaire is for references and I want them to provide references, but usually you
can find what properties they manage. They usually list them on their website. If you can find some
owners that they don't provide a list of, you want to talk to who they provide you. But then if you
can find some owners that you found through their website, get a phone number. You definitely want
to talk to them. And you want to ask them- Ask the local [inaudible 00:07:40] club. Like
if you're investing in Lexington, we've got the Blue Grass Real Estate Club
ask them. If you've got other [inaudible 00:07:49] or whatever ask,
"Has anybody heard of ABC company or whatever?" They'll give you good feedback too.
Right. And so when you call them, you want to ask what they do well and what you wish that
they would improve on. And would you hire them again? And it doesn't have to be super
complicated. You can do this in a five minute phone conversation. You don't want to be a burden,
but really you want to know is what do you love about them and what do you wish they could do.
Get down to brass [inaudible 00:08:15] man. I have not pulled any punches for people that have called
me about PM companies that I work with. I'm never going be like, "Oh yeah, they're amazing. It's
great. Everything's perfect." It's not like that. No PM company have we worked with have I said,
"Yes, everything's absolutely perfect." No, I'll say, "This is what they're great at. This is what
you got to watch them for." Two things and that's every PM company we work with. And I think that
we work with four of them now. Well, good stuff, Justin. Great answer. A great question. Thank you,
Josh. Don't forget to send your questions guys into helpme@derosagroup.com. We'll answer them
right on the air. We'll read them off and answer them for you. But if you guys want three months
worth of insiders for free then just be a guest on our show. Come on in and we'll chat with you.
Thanks for watching guys and have a great profitable week.