Managing rental propertiesHey rookies, if you’re looking to buy your first or next long-term rental property, this episode could save you thousands of dollars and so many headaches.Today is a mini masterclass in buying and managing your long-term rental. If you’ve never considered that, there are ways you could save yourself money before you even close, you’re going to want to listen to this entire episode.I am Ashley Kehr,And I’m Tony j Robinson.Okay, so Tony, I thought we’d kind of start off with some things you can do before you actually close on your rental. So if you’re listening and you want to get started in real estate investing and have a long-term rental, there’s a lot of things you can do before you actually close on your property. So Tony, when you purchased, what was it, two long-term rentals you had in Shreveport, Louisiana? I still dunno what it is. Freeport. And did they have tenants in place when you purchased them?They did not. Both of them were delivered vacant.Okay. So that’s easier to start with I think in a sense because you can start fresh, you can select who you want in your unit, but let’s start on the reverse side. If you do have tenants that are in place when you purchase a property, you want to send out an estoppel agreement. So Tony, you’ve become amazing at spelling this word estoppel, but an estoppel agreement is where you are going to send this to the tenants with the owner’s permission of course, and it’s going to ask them all the information that should be in their lease agreement, but you want to verify with the tenant that what the seller or the landlord is saying is true. So you’re just going to get basic information that would be in the lease agreement and you can Google different estoppel agreement samples. Maybe we’ll even upload one into a Ricky resource and do a YouTube video specifically on a stoppel agreement. But that’s something you need to do if you’re inheriting tenants when you purchase the property. Okay, so now let’s say that you are purchasing a vacant property, whether you’re going to rehab it or not rehab it, you’re going to need to list the unit for rent at some point in time. Tony, what was this process like for you when you rented out those long-term rentals?For me, at the time I was a rookie investor, working a day job, had a family at home. I wasn’t confident yet in my ability to self-manage. So as I was sourcing and looking for that first rental, I was also interviewing property managers. So for me it was really my PM who handled that entire process pretty much start to finish. They did send me the candidates that they were considering just to kind of see if I personally saw any red flags, but given that I’d never done ’em before, I didn’t really know what I was looking for. I was like, yeah, they looked solid and the PM really took care of getting the properties leased up for meSo they can cover their tracks and when something bad goes wrong, they can say, oh, well Tony, you picked them. You said yes.They’re like, no, you picked this person. You said, yeah. Now I will say, and this is just one of those hidden costs that you want to make sure that you think about if you do have a PM placed for you is that a lot of times oftentimes they’ll charge a fee for doing that. Sometimes it’s one month’s rent, sometimes it could be a percentage of the first month’s rent. Sometimes it’s a fixed kind of flat fee. But just make sure for the Ricks that are out there that are listening, if you want to have a PM, do this for you, get clarity in addition to your property management fees, what do you charge for leasing up the unit?And that can be a huge percentage of your cashflow one month’s rent gone too. So when you are analyzing your deals, make sure when you are putting in a percentage for vacancy, if you are using a property management company, make sure that percentage would cover leasing the apartment for that time period. Because even if you have the property vacant for a month, that’s one month’s rent and then you have to pay them to get someone in there the next month that’s two months rent is gone. So make sure your vacancy percentage is accurate. Okay, so what I do for each unit is I create a unit information sheet. So you want to do this before you list the unit out if you have any rentals. Now this is great to catch this up the next time that the unit is vacant, but you’re going to go through and write out everything that you need to know or a vendor or maintenance person would need to know about your property.
So this could be what the square footage is. This could be what type of flooring is in each room, what is the paint color that is on the walls for touchup paint. Also, we’re going to get into the mechanics of the property too. Where is the hot water tank located? When was it last replaced appliances? What is the make and model of the fridge that’s in that unit? All of these things are things that I’ve had experience that may come up. So for example, if I call to have a dishwasher looked at, the appliance company is going to want to know the make and model so they can come prepared with parts that they may need or sometimes say to me, I’m sorry, but we don’t work on that type of dishwasher, that brand. So having the unit information sheet, you can go to biggerpockets.com/rookie resources and we’ve uploaded that template for you, for you to get a start. Make it easy. You can add your own things into there, but this will be at least a guide for you for your rental. A lot of this information you can use for your listing too. So for example, do you allow pets in this unit? So it’s not only factual information about the physical aspects of the property, but also it’s about your policies for that unit too. And this can really help you guide to create your listing and also to create your lease agreement.And I want to get into the lease agreement, but just a couple points on your unit information sheet. It’s funny that you and I are both, even though we’ve never talked about this. We have a tool that serves a similar purpose. So you call it your unit information sheet. I call it my property tracker, but it houses a lot of that same information. So all the detail, I like the paint color and the floor selections. We don’t put that in there, but it is helpful because sometimes we do have to repair those things. But we also include information like you said, like the make and model of your dishwasher, your refrigerator, your toaster, all those different appliances you have inside your units. We’ll put the parcel number. We’ll also put our settlement statements, our short-term rental permits, go into that same property tracker the trash day, just any information that someone would need to effectively manage that property. Now we use monday.com as our software, our tool to house all this information. We started off using a Google sheet, but Monday is what we evolved to. What software are you using for your unit information sheet?So we’re just using Google sheets and it’s a template. So then for each property it’s getting filled out and usually oftentimes it’s just pen and paper that the maintenance person is going through and filling these out and then uploads it into the property management software and it’s saved to the actual property page in the property management software. And then just an extra copy is saved in the Google Drive property folder too.I like that. One of the reasons that we like using Monday, and you could probably do this with Google actually, they have the Google forms, but you can set up that our property tracker as an input field, it looks like a Google sheet, but you can all set up as a form. If I send it to my cleaner and I say, Hey, I need you to go grab an exterior video walkthrough or an interior video walkthrough, she can just upload it through that form. So you can probably do the same thing with Google sheets as well though.Okay, so onto lease agreements, I guess on BiggerPockets, if you have a pro membership, you could access to these or there is an additional fee if you want to purchase one, but having a lease agreement that is specific to your state is really important. You want to make sure that you’re following all the laws and regulations. So we’re going to go into that further into this episode towards the end. But when you create your lease agreement, you’re going to want to use the unit information sheet to kind of guide you as to what are things that are important to put into your lease agreement. So for example, utilities, who is responsible for what? So anything that has some kind of cost, price payment attached to it, you are going to clarify who is paying that bill. So the landscaping, who is taking care of the landscaping?
Is it you paying a landscaper? Are you actually, is the landlord cutting the grass or is the tenant responsible for maintaining the grass? So then it leads into common areas. So if you have a duplex and there’s a yard, are you taking care of the grass? Is one tenant taking care of it? Are each tenant taking care of half of it split down the middle, but these are all things that you need to outline. If there is a common area entrance where they use the same door and then they go in and maybe it’s a small mud room and then they go into their separate doors, these little tiny rooms will get trashed so fast because nobody wants to clean up after somebody else. So putting in there as to who is responsible, are they both responsible for cleaning up their own mess? What does that kind of look like?
And yes, it is hard to kind of oversee these things, but having at least something in the lease agreement can really help when problems do evolve or there’s disagreements between tenants, you can look at, okay, this person is responsible for this, you’re responsible for that side, or whatever it may be. Right now we basically, anytime there’s a common area, it’s just we are hiring a cleaner to go in and clean the common area because there’s been so many disagreements between residents or it just gets so disgusting and gross in there that we end up having to deal with it anyways after the tenants move out. So just keep in mind different things like that. Parking is a big one. Where can everyone park? Is it a shared driveway? Does someone have the right of way storage? Who has access to the storage places? So try and get as detailed and specific.
Really take the time to read other people’s lease agreements. You can find a million online. Go into the BiggerPockets forums, ask if anyone has a sample. What I would not do is I would not take someone else’s lease and use it word for word. I would tailor it to your specific property, definitely make sure it’s for your state, but then compare it to an actual lease agreement that’s specific to your state and then have an attorney review it. If you have it all written out and you have it how you want it, just sending it to an attorney can be really cost effective. It’s not that expensive for them to look through it for a couple months or for a couple of minutes, even if it ends up being $200, that $200 will be worth it if it saves you a lot of agony and pain from not being clear and following laws and regulations in your lease agreement.Yeah, lease agreement is definitely important. Ashley, I guess let me ask you, what is your process for making sure the tenants actually read and understand what’s all inside of the lease agreement?Yeah, that’s a great question. And so there’s the actual lease agreement and then attached is kind of a summary of here’s the important things, and that’s where you kind of get into the bullet points as in landlord is responsible for these things, tenant is responsible. So it’s like a quick overview where it’s a one pager that these are the highlights of the lease agreement.And I guess one follow-up question to that then Ashley, how often do you find that tenants are in violation of their lease? Is it something that’s a very rare occurrence or is it like you can expect a least once a month across your portfolio? Someone’s going to be doing something to kind of violate a portion of their lease.The two biggest violations are putting their clutter and stuff on their patios or in common areas. I just saw something where somebody, it was a work order that was put into the property manager to have a notification sent that this one family had three racks of boots in the hallway, just racks and racks of boots up there. Not, it was like there was four shelves for each rack and everybody that walked through the hallway had to go through and pass those. So just clutter outside or garbage outsideAnd then, well let me ask, in New York, I know eviction is difficult, but what about non-renewal of a lease?Yeah, so non-renewal is also difficult to do. You can take them, but we haven’t done it. We did give a non-renewal to someone last year that was causing problems with other tenants, had lots of junk outside too, and they ended up not fighting it and they ended up leaving. We got very lucky. We haven’t actually tried to go through the court, but my attorney has said that he probably wouldn’t even take it to court to do a non-renewal because he doesn’t believe that it would be worth it, that it would happen. So we actually haven’t tried it.Well, good to know mean, but the lease is there to kind be that backdrop for your relationship with your tenant and regardless of what state you’re in, you still want to make sure you have all of those carve outs in it to ensure that you’re protecting yourself as the owner, that you’re protecting your other tenants and that everyone’s, I think, happy with the people that they’re living next door to. Alright, so we’re going to take a quick break, but when we get back, Ashley is going to break down how to handle communication with your tenants and what other policies you need to implement so you know exactly how to handle situations when they arise. And also Ashley’s going to talk about a time a judge made her cry. So be sure to stick around until after this break.Okay, we are back from our short break. Before we dive in, I do want to make sure you have had a chance to learn about the Momentum Virtual Summit that we are hosting every Tuesday from February 11th until April 8th. There will be live sessions with us and other investors to talk about different relevant topics plus live q and a. So if you need accountability and want to mastermind like setting, then go to biggerpockets.com/summit 25. Tony, what is the topic that you are most excited about during these eight weeks?I think the building teams and partnering session is what I’m most excited about. Obviously building a team has really helped me with my investing journey and I’m super happy to share that with everyone else who’s going to join the call. So I hope to see all of you rookies on that call with us. Now, Ashley, let’s get back to the long-term rental management piece. I still have a lot to learn in case I decide to pivot back into long-term rental. So for the LTR listeners, my first Shreveport deal was a long-term rental, didn’t really work out the way that I wanted to. Actually the first one did, it was the second one that was a bit of a pain in the butt. But Ashley, what are some things that someone needs to think about besides creating a lease agreement when it comes to your long-term rentals?I think a lot of people’s fear as to getting into long-term rentals is having to deal with those 3:00 AM calls that the toilets not flushing or it’s overflowing all of these maintenance issues, but also how the communication is happening. So for me, I sleep very good at night. I am not getting 3:00 AM calls and that doesn’t mean that things aren’t happening, but there’s different ways to kind of handle the communication between you and the resident where I don’t actually speak to any of the residents and starting out as a rookie investor you may have to, but in the longterm you don’t. But there’s lots of resources that you can use to kind of set up your procedures so it’s not as painful and you don’t feel like you’re on call 24 7 and kind of having to navigate your whole life around communicating with residents. So one thing I really like to set up is a separate phone number.
So the best resource I found for this is using Google Voice. You can download the app onto your phone, you get a separate phone number so the tenants don’t have your personal cell phone number and they can communicate through that. You can set up your own personal voicemail for that. So it’s actually not your personal voicemail and it’s something along like if you need a maintenance request, please submit it through your online portal. If something else, please leave a message, whatever you want it to be. But also too, if you’re not going to be available, you can transfer that Google Voice number to somebody else’s phone. So you could have someone else download the app and log into your account and they can have it on their phone too, so that way you have a backup if you’re not available, which I think is extremely beneficial to not having to be available 24 7, but also setting the expectations of how your tenant should communicate their needs and wants to you.
So setting forth when you do the lease agreement and you do set your policies as to this is how maintenance requests are received, you go into your app for your property management software and you submit the maintenance request online. So that is how maintenance is received. It is not texting and capital letters. My roof is leaking exclamation point times five. Okay, it is in the app, you’re submitting an actual maintenance request or maybe you would prefer them to communicate with you through email, maybe it’s text, maybe it is a phone call. You would rather just get a phone call from them. So setting the expectation of how your tenant communicate is really important as to kind of giving yourself some good balance and not feeling overwhelmed that you need to check your email, you need to check the tenant portal, you need to check your Google voice number, you need to check your voicemail, all these different things that there is one direct method for communication and these are your preferred methods of communication when a tenant is working with you. And I think setting up a separate email too that you can link to anything that you’re doing for the property management also,I have so many great points and a lot of that still echoes with what we do on the short-term rental side as well where we’ve got separate phone numbers. And honestly a lot of it comes down to just setting the right expectations for the people that are inside of your property. And I think when people get upset is when their expectations aren’t met. It’s not necessarily because they have to do something, it’s when they expect one result and they get a different result. So if your tenants know when they sign their lease that hey, these are the protocols that we follow. If something’s wrong in your unit, then there’s no hard feelings when they have to follow that process when something happens. But it’s when you don’t set those expectations clearly upfront that you get yourself into trouble. We interviewed Amelia McGee and Grace Guten Cough, they authored the book, the Self-Managing Landlord for BiggerPockets. And a lot of strategies like this are also present in that book. So if you guys are looking for more ways to not, I mean I won’t say automate, but just reduce the amount of friction that you have between you and your tenants so you can sleep at night and not worry about the 3:00 AM calls. It’s another great book to pick up. But anyway, back to your story, Ash just wanted to plug that in really quickly.And when we get into kind of the software of things too, there’s a couple of cool software that help with being able to sleep at night and not getting 3:00 AM calls too. But I think another huge part of keeping your operation smooth and your tenant happy is really setting your system or process for a move-in and to move out. So knowing exactly how you’re going to handle that. So you lease the apartment, you do the application screening, you’ve approved the person, you’ve sent them the lease to sign electronically, you’ve collected their payment online, now it’s time to actually meet them and give them the keys to their property. So at that point in time you want to make sure all the documents are signed that you had sent them and all payments were received that they did pay their security deposit, that they did pay their first month’s rent or whatever your state law allows you to collect at move-in, then you’re going to make sure that you do a move-in inspection.
So there is some different software that you can actually do. The move-in inspection reports, we do it through AppFolio right now is the software that we use, but there’s a ton of different ones out there and you can do the inspection report and you’re going to follow the same procedure each time so it’s consistent. So we do it room by room. So you go into the room and you’re looking at the walls, you’re looking at the floor, you’re looking at the windows. If you’re in the kitchen, you’re looking at the cabinets, you’re checking the appliances, things like that. So during the move-in, this is the time for the tenant to point out anything that they don’t want to be charged for. So for example, if there is a ding in the cabinet, it’s really not cost effective for you as the landlord to replace a whole cabinet just because there’s a scratch in it.
But if the tenant is worried they don’t want to be charged for that, put it down. So we take a picture of it and we mark it down. So they go through anything that they want marked down in the inspection report and then it is signed off by the maintenance person, which could be you doing the move in and then it’s also signed off by the tenant that’s moving into the property. So this is really great to have for down the road if you actually do an eviction and the person does damage or if you go to small claims court because they did destroy your apartment. But the main thing is when you are giving them back their security deposit, when you do the move out, you can compare the move in and the move out inspection and see what are the differences. So what is new here, this hole in the wall was not there when they moved in.
You have the proof of it in the inspection report. So definitely have been times where tenants have said no. It was always like that. There was this one time there was carpet cut out of a corner of the closet and then it was replaced by one of the doorways and the tenant tried to tell us that it was always like that and we had to go back and go through pictures and you could clearly see that no, that was not the case from the original inspection report. So you want to do these and the move in and the move out. Then when you’re doing the move out, you need to have a procedure for actually returning the security deposit and what you’re going to keep. So we keep a full list of this is what we charge for a cleaning fee if you didn’t clean the apartment, this is what we charge for a drywall repair. This is what we charge for the carpet to be replaced per square footage, whatever that may be. And that is also given at the time of leasing so they are aware at the time of leasing this apartment, if it is not in that same condition, this is what we will take out of their security deposit.Let me ask Ashley a couple of questions or follow up questions there. So first on the move out, how do you differentiate between normal wear and tear of a unit and actual damage from a guest? Now obviously some things are going to be very black and white if there’s a big hole in the wall because someone punched a hole there clearly, but there’s some other things that I feel like are in a bit of a gray area. So how do you determine normal wear and tear versus actual tenant damage?I think if you’re in a gray area about it refund their security deposit because if it’s that like you are not sure and it’s not significant, if they end up taking you to small claims court because you didn’t refund all of their security deposit, the judge most likely isn’t going to be on your side for something that isn’t a huge expense or a huge deal. So I think definitely looking at it case by case, but you have to be so careful that you are kind of following the same rules that apply to everyone else with fair housing laws. But I think a big thing is really looking at the inspection report as to you could compare as to this is what it looked like. Now if they lived there for 10 years and the carpet is starting to wear down and you know that your unit has had the cheapest carpet that you could buy in there and everything else is taken care of and nice, but now you need to replace the carpet, I would not charge the person for a new carpet in that scenario at all.
So I think you really have to think about how much the tenant would actually fight you back on that and if it’s worth it, but also some kind of having some morals and being ethical that you’re not trying to rip someone off because they did live there for so long and there was normal wear and tear on the property. If they’ve only lived there a year and there’s a lot of wear and tear or if there’s already a lot of other damage you can clearly see the apartment was not taken care of, then it’s a lot easier to justify from the photos showing the before and after photos.Yeah, one of the first apartment complex that I ever lived in as an adult, I was there for maybe six years and they offered this thing where every five years that you were a tenant they would either replace your carpet for you or repaint the interior of your house like you got to choose. And I of a thought that was pretty cool because it’s something they’re going to have to do anyway. So for them they’re just protecting their asset but then also it’s just a really good show of goodwill with your tenant to make them want to stay a little bit longer. One last question actually, and this is a little bit more tactical, but how do you keep track of all of your security deposits? Do you set up a separate deposit account for each property? Do you just have one big account that you hold all your security deposits and how do you know which amount aligned to which property? What is your process for actually collecting and then redistributing those security deposits?So it actually depends on what your state law is. So some states if you have so many units in the building or on the property, then you have to hold the security deposits in an escrow account. So that’s what ours are all just because also it’s easier to keep it separate and they’re set aside. We do keep ’em all in a, even if it is just for a duplex, we have them into an interest bearing account so that we can accumulate interest on the security deposits.Do you have just one for your entire portfolio? One escrow account per property?Actually we have it so that it’s all in one account, but you can create little sub accounts off of it,Sub buckets.So we do it by tenant actually. So not really by property, it’s broken out by tenant because the security deposit is more tied to the person than the actual unit or property.Alright, well let’s talk a little bit about the software piece, Ashley. There’s a lot from a software perspective that I think has made managing long-term rentals easier. So I guess walk me through what does maybe your tech stack look like right now?Yeah, so the first thing is property management software. If you are not using this, this will change your life and there’s becoming more and more options. So if your BiggerPockets Pro member Rent ready is a great option. It’s a lot of the features are included in your BiggerPockets Pro membership. There’s also Turbo Tenant, there’s a Val, Zillow has one now. So lots of different options for property management software then asset management. So SSA is a great one for kind of your bookkeeping tracking, your net worth of your properties, keeping your insurance documents, things like that. So ESSA is kind of I think transitioning to property management. They have rent collection now. I see. But there’s also some kind of program with BiggerPockets too where you can get some of their features for free of your pro member bookkeeping. So you need some kind of bookkeeping software or you need a bookkeeper.
I just really like QuickBooks because it is what I’ve always used for any business, but there’s a lot of different software that is specific to real estate investors like ESSA has it integrated. A lot of the property management software has add-on software that you can get, like Turbo Tenant has REI Hub, which is another one. Then you need something to kind of store your files, store your lease agreement that’s outside of the property management software, store receipts, things like that. Your deeds for your property is a scan of them. So some kind of cloud filing system. I use Google Suite, but there’s a ton of different ones Dropbox that you could use. Then I kind of mentioned this earlier is to a maintenance dispatch service. So some of the property management softwares offer this as an add-on too, but one is Lula and basically they’ll take your calls in.
We’ve used the one through AppFolio before where it’s basically a call center. The tenants have a specific number to call. They call that number, it takes ’em to the dispatch center. They know that it’s someone from your property calling because of the number they dialed and then you are giving them information as to what should they do when they receive a maintenance request from somebody as to this is who you call. These are our preferred vendors. They also help tenants troubleshoot things. So an outlet isn’t working, did you check the breaker? Things like that to maybe even avoid sending somebody out to fix the problem. So that’s a great resource if you really don’t want to take those 3:00 AM phone calls at all.What’s the cost on Lula? Do they charge per minute that they’re on the phone or is it a flat fee? What’s the payment structure?I don’t know. I haven’t used the Lula that was just a separate one that wasn’t included in a property management software that you could buy separately. But AppFolio has their own that’s integrated and AppFolio is very much not rookie software. I will say that. So I like a lot of the other property management software. They have a really high minimum spend that you have to hit every month and I think just for the call center to use it was $200 a month. I think it was last time I looked, but that might have changed. And then just like you should have somewhere for LLC filings, I like to use USA Corps for any kind of legal document I need to file or update, especially with the government. And then mailings, if you want to send your tenants letters, you can do that with letter stream or something similar where you actually just upload the document and they will mail it on your behalf.
So you don’t actually have to print out all the letters, step them into envelopes, write out everybody’s information on the envelopes, they’ll do that for you. Obviously a cost per envelope for that. And then for all your mail, I like a virtual mailbox so you’re not under piles of mail like I used to be and getting paper cuts opening it all. So I use post scan mail. There’s anytime mail, there’s I think just virtual mailbox is one. There’s lots of different options to actually have somebody else scan your mail in and then you can do what you need to do with it. Just viewing it on the computer.Wait, by the way, I’ve never heard of letter stream before, so you’ve been holding out Omni Me as for the last five years. That one seems like a game changer also.Yeah, so there’s a couple tenants that don’t check their email ever or don’t even have a login for their portal, just refuse to do it. So most of our communication is sent to everybody by email, but for those few we do send them letters. And so anytime my VA creates a letter that’s going out to everybody, she sends those or uploads those five to letter stream. We have their information saved in the contacts for that and you just click a couple buttons and they’re mailing it out for you, printing it, stuffing into the envelope and mailing it.Lots of awesome software options for all of our Ricky’s out there that are thinking about getting into the long-term rental management space. Now we’re going to take one more short break and we’re going to finish out the episode by going over some resources to help you learn about how to be a better landlord in your specific market. So we’ll be right back afterward from our show sponsors. Alright guys, let’s jump back in. So Ashley, every state and sometimes every city has its own laws and regulations when it comes to tenants and their landlords and rentals. How can someone actually learn what those are and how to correctly follow the landlord tenant laws?There’s actually a lot more for resources than you would think on this topic. I mean you walk into your local library, your local town hall, they usually have pamphlets or a little mini guidebook on tenant landlord laws. There’s usually one for the tenants and one for the landlords. We also have a [email protected] and the resource hub, I’m going to link it for you guys in the show description and you can check it out, but it’s a map of the US and you can click on your city and it will take you to the actual state website that says what the tenant and landlord laws are, a avail.co, which is a property management software. They also have a great resource for this by selecting your state and they give you more of a summary such as if you’re doing eviction, this is the procedure or you have to wait this many days before sending a lease renewal or increasing rent, things like that.
But as far as actual classes that you want to take, we all know there’s so many different investing courses you can take. But as far as learning laws and regulations specific to your state, if you go to local housing organizations in your market, so just Google, Buffalo Housing Organization, you can even search Section eight, Buffalo, New York or whatever your market is. So we have two really good ones. Belmont is a section eight provider. They do a training every single month for landlords. Then there’s also homes NY and they also do training all the time and they sometimes do specific topics like emotional support animals, what are the rules and regulations based on fair housing for that. So there’s lots of different options. Sometimes there’s a cost included like 10 or 20 bucks, but it’s very inexpensive. So I would recommend looking into any of those classes if you are going to self-manage.
And I think the last thing I would add is if you’re not confident in doing an eviction or even writing up the lease agreement, hire an attorney. It is worth it. So when I started out as a property manager working for someone else, they told me, you can do it, you can do the eviction, look up the process, you can do it. We don’t need to hire an attorney. So I was like, yeah, I can do it. And so I had two evictions. My very first two evictions were together, the court date set together and I walked into the first one and the tenant was there and it was just us two in the courtroom and the judge, and she looks at me and she goes, this was filed wrong, this was not served on the right date. All these things. And she’s like, I cannot do this case, I’m sorry, but you’re, it’s dismissed.
You did everything. You filed everything wrong. And she was very mean about it and strict about it, which I’m sure I was obviously wasted her time. But the tenant of course was super happy, whatever walks out. So then she says to me, I see that you also had the next case. I am not going to embarrass you further. So I am just going to say the case is dismissed and I’m not going to give a reason why. And at this point I am just so embarrassed, I’m so upset that I failed. I am holding back tears because she was yelling at me being mean to me and I just could not handle that emotionally. So I was very upset and distraught. So I had called the owner and I told him what happened and I said, please, can we just hire an attorney? So we ended up hiring an attorney.
We went around the next time and we ended up getting the evictions through. And I have to say this attorney was way meaner to the judge than I have ever been. And I think that they actually, he was no longer allowed to after so many cases because he didn’t handle himself well in his emotions of anger and things that he couldn’t do cases anymore in that court. But yeah, it was a very drastic turn from me crying to me standing behind the guy that was actually being mean to the judge. So it all ended up working out. But I would say that is one place where money is well spent is hiring an attorney to handle things like that.One thing I will say, we haven’t had to evict anyone ever, but we did have a recent kind of potential issue at our hotel. So I’ve mentioned on the podcast that part of our challenge has been finding good labor in that market and we have an onsite manager who lives at the property. So part of their employment is their free housing. And when we signed, when we brought this employee on, we have them sign an employment contract, but we didn’t also have them sign a lease. And because the employment contract didn’t necessarily stipulate what happens if they were to be terminated with their housing, we were in this weird situation where he could have potentially stayed and we would’ve had to evict him. So anyway, we ended up offering him cash for keys in addition. So we fired him and then we had to pay him to leave the apartment to make sure we could get our next management crew in. So just a super weird thing, but just also know that cash for keys is an option as well if you want to maybe potentially avoid the time, the investment, the energy that goes into trying to evict someone.Yeah, that’s a great point and a great lesson learned. We had to learn that lesson the hard way too as far as giving a tenant a discount because they mowed the lawn. Well, we had this incident where it didn’t go well and we’re like, we’re not going to do this anymore. And they’re like, no, sorry, you already gave us a discount. We’re not paying more. And we had to learn if we were at to ever do that again. We had to specify in the lease that we could give them 30 days notice that we would no longer be giving this discount and the rent would increase to this amount or whatever. So we did have to learn that the hard way too.Lessons learned. Well actually you did a phenomenal job breaking down all the ins and outs of long-term rental management. And I think for all the rookies that are listening, the goal of today’s episode is really just to give you the foundation and maybe even give you the inspiration that it is possible to self-manage your own long-term rentals. There are a lot of people who opt for property management, which is fine, but there’s also a lot of people who have kind of figured this process out for doing it themselves even if they have a full-time job, even if they have family commitment. So hopefully you can take what Ashley talked about today and leverage that to give you the confidence if you do choose to self-manage.Yeah, and I think that even if you do have a property management company, you should still have some idea of the processes and what they should actually be doing for you too. Well, thank you guys so much for joining us on this episode of Long-Term Rentals on Net Realestate Rookie. If you haven’t already, make sure you check out the momentum virtual summit biggerpockets.com/summit 25. Tony and I will be there a bunch of the days answering questions for you guys and we hope to see you there. I’m Ashley. And he’s Tony. And we’ll see you guys on the next episode of Real Estate Ricky.
Help us reach new listeners on iTunes by leaving us a rating and review! It takes just 30 seconds and instructions can be found here. Thanks! We really appreciate it!
Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email [email protected].
