To start the show, Gary Pinkerton talks about self-management and his goal to set up a family office concept. Afterward, Jason Hartman, Fernando, and Oliver take over where they discuss disintermediation and self-management options for income properties. They also talk about companies that use technology to save time and money through automating tedious tasks and the best practices to improve home interiors without spending a fortune.
Announcer 0:04
Welcome to the heroic investing show. As first responders we risk our lives every day our financial security is under attack. Our pensions are in a state of emergency. A single on duty incident can alter or erase our earning potential instantly and forever. We are the heroes of society. We are self reliant, and we need to take care of our own financial future. The heroic investing show is our toolkit of business and investing tactics on our mission to financial freedom.
Gary Pinkerton 0:39
Hello, and welcome to Episode 121 of the heroic investing show, a podcast for first responders, members of the military, veterans, and anyone looking to improve their financial future and gain some freedom with their time. We teach America’s heroes how to build passive income, build their startup business and safely grow wealth through real estate, and other alternative investments. We help current and prior first responders put protections and systems in place to enable them to build a life where they can focus on their passion, the service or product that they are uniquely gifted to share with the world, I call that unique genius. And we try to help people get there we help them put in place passive income, step away from the W two job when the timing is right, master their craft and share it with the world. My name is Gary Pinkerton co hosting this show with Jason Hartman. So in 121, I go back to Jason and a discussion about self management. So as you know, this is right up my alley, it’s right in line with the discussion that I’ve been having on a couple of previous episodes. As I’ve mentioned, it’s my goal to part ways with some property managers who I just don’t click very well with they are interests are not aligned, they are not interested in providing quality service to their customer. In fact, often, as I’ve mentioned in previous episodes, they don’t know who their customer is. And so it’s been extremely frustrating for me, I’ve let this go on for way too long. And so I’m deeply involved in trying to figure out a way to improve this, my mission is to model the family office concept. And if you’re not familiar, that’s a concept that has been used by the wealthy in America for generations. Specifically, though, for property management in this case, but the family office is a concept where wealthy families surround themselves with experts in different fields. So an investment expert, an insurance expert, fitness and health expert, a property expert to CPA and they put them on their staff, and they actually become employees, and they have only one customer to service. And that makes them specialists, it makes them very focused. And it keeps the families efforts all going in the same direction by having different advisors. So what I want to do is I want to take that and model it on a scale of property of managing a portfolio of properties, I’m going to call this person the portfolio manager. And my goal is that it’s an individual who has a little bit of project management experience, may not huge project management experience, but some, you know, managing people getting tasks done, being able to report, you know, results and do a little bit of analysis of how things are going, you know, I’d like to have someone who can keep the books, and has the ability to say, you know, in this market, your performance is better, you know, your return on investment is better than in this market. And what I’ve seen as the reason is because your properties need rehab, or you there’s not as good a quality of tenant, or maybe our rents are too high for the area, you know, whatever it is, I want somebody who can step back just a little bit and kind of do you know, some analysis, but I don’t think I want property managers that have been performing the way many of mine have. But at the same time, I don’t want to take over their job, right? I don’t want to become a remote property manager, but I want to hire someone who can be a remote property manager. And can you kind of standardize things across the markets for me, so that I can expect what’s happening at each property, regardless of what town it’s in. So that’s the vision. Jason bought me a book recently about an individual who has done quite a bit of studying on this and has put some systems in place. I look very much forward to diving into that here soon. So on today’s episode, though, to clip from a seminar Jason did a few months ago, where he specifically educated on software tools for his company or that his company offers to help manage your portfolio and I use that software. It’s called property tracker, and it is certainly helpful. But the discussion in this podcast though, was a q&a session where They’re talking about and, and specifically it’s him and Fernando, who at the time was a pretty involved investment counselor and also a partner of his in the in that software company. And then Oliver, another investment counselor, and they’re talking about pros and cons of self management lessons that Fernando has learned in his numerous properties having attempted to self manage, and a few different markets. So I think you will learn quite a bit from this, I think it will be a value. And listen, I really, really appreciate it when you leave us a rating at iTunes. And if you can know, shoot me some quick feedback, you can send it to Gary at Gary Pinkerton Comm. Or you can leave us some feedback there at heroic investing. So greatly appreciate any thoughts you have. I have some great loyal listeners that continually provide some feedback. And I listened to every bit of it. And I adjust as often and as soon as I can, to some really good comments. So thank you so much for being loyal listeners for providing the feedback. And I hope you get great value out of today’s discussion between Jason Fernando and Oliver about property management.
Jason Hartman 6:09
Let’s talk a little bit about managing your property manager versus self management. We’ve got Oliver and Fernando here to talk about this. You’ve got 70 units. Now, you said a very interesting thing to me at I think it was the last week the Masters maybe the one before possibly. And what you said is you said some of your self managed properties are easier than your property manager properties. Really? Tell us about that.
Fernando 6:36
So there’s different aspects of it, one of them is just because you have a property manager, it doesn’t mean necessarily that the properties are on cruise control, you have to look at the statements, you have to approve items, you have to be on top of items that look suspicious on the on the statement, there’s time involved in talking to your property managers. And if you add all of that up compared to self management, it does play a role into which one is easiest.
Jason Hartman 7:07
So how many units are self managed in your portfolio? And how many are property managed by managers?
Fernando 7:12
So actually, I have, I have two new things that you don’t know about that’s gonna be pretty interesting.
Jason Hartman 7:16
I can’t wait to hear.
Fernando 7:20
So I, prior to in the last meet the Masters, I had about 10 properties that were self managed. And most of them were in Austin, Texas, Austin was a good choice is a good choice for self management. Because the tenant pool in Austin is the B plus, there’s a lot of tech industry in Austin. And the properties that are that I own, there are BB plus properties. And therefore, those those tenants are easier to deal with a lot of them. They are tech savvy, if there is issues, they can do some of the research, they sometimes can fix the properties themselves. They use email, you know, they, they can communicate well, they’re, they’re easier to deal with
Jason Hartman 8:00
The basic concept there is a more sophisticated tenant is easier to deal with. As long as they’re not a lawyer. I had a lawyer call me up, he said, my wife and I want to rent a property and we have two dogs. And we’re both lawyers. I’m sure you don’t want to rent two lawyers and two dogs, right? He said that, not me. I didn’t say anything. But he does. Yeah.
Fernando 8:22
But the most interesting aspect of it is that the dynamics, when you’re self managing in this sort of B to A type, tenant pool, the dynamics are just different in that the tenants tend to ask for a lot less things, and they tend to be self reliant, which means that you have less issues. A lot of times the tenant will say, oh, send an email, because they use email and like some other transit tenant. And they’ll say, you know, there’s a problem with the AC, what would you like me to do? I already checked, and there’s a local guy here, if you don’t have anybody available, maybe I can call the local guy.
Jason Hartman 9:00
That’s how my Houston tenant was self managed property. Just he did all the work. It’s amazing. Yeah.
Fernando 9:04
So I smiled, and I said, Oh, please contact the guy and let me know, you know, reimburse you, whatever is needed. There was another case where there was a leak and the flooring got wet. And the tenant, you know, that took out the part of the carpet that was wet and called somebody to see if that could be addressed and was, not just telling me what the problem was, but also provide suggestion.
Jason Hartman 9:25
They were being proactive.
Fernando 9:27
Which is just possible.
Jason Hartman 9:29
Okay, so here’s the thing that happens with self management. So first, let me just tell you what happened to me and on the road to self management. I had a Texas property property manager wrote a letter on getting out of the business and not going to be doing property management anymore. And so I had Karen, my operations manager at the time researching other property managers. It was a market that we weren’t very active in. Okay, at the time, she started researching other properties manager, she found a couple of them said, you know, made some suggestions. I was just busy and I Did not get around to actually hiring a property manager. following month, I get a check in the mail with a nice note. Hi, Jason, I heard that I should send the checks to you right now, this is your tenant on so and so straight. And he wrote me a nice note, right. And he says, If you need anything, he says this to me if you need anything, here’s my number and email address, right. And he stayed there for about, I think, three and a half years. And he was awesome. I couldn’t believe that I just after receiving checks from the tenant directly for get this property I’ve never seen a tenant I’ve never met. Right? I just thought it was a phenomenal experience. And what I kind of realized, and I know a lot of you are thinking, well, I can’t self manage properties from a distance. Well, two things about that. Number one is, in the vast majority of cases, except for maybe annual inspections. How do you think your property manager knows if there’s something wrong with the property? The tenant tells them? No, right? If the tenant is the monitor of the property, okay, not the manager, the manager doesn’t live there. Obviously,
Oliver 11:04
I think ultimately, what it comes down to is really setting the expectation up front as much as you can with that tenant. So in terms of, you know, setting the expectation of when something does go wrong, these are the steps to take, whether it be send me a text right away, or if not, send me an email have some sort of correspondence. And if you even if you want, you can even set the expectation of if it’s under a certain amount, for example, like 100, or $200, you can go ahead and do so if you know, and if we have any issues with it, thereafter, they will take care of it. And there’s very easy ways to actually credit the tenants with certain programs that
Jason Hartman 11:39
We can make a deal with a tenant saying that they have to do the repairs under a certain dollar amount. I mean, I know landlords to do that all the time. See, here’s what the other thing that happens with self management is that the tenant has the social pressure of maintaining a relationship with you, and you’re going your test to this I now. Okay, so the tenant needs to maintain this good relationship with you as the owner. And with a property management company, ABC property management, they just sort of act like they asked for everything, oh, I saw an ant in the kitchen, you better send an exterminator over, you know, a label burnt out, I’ll come and fix it. You know, and, and when it’s when it’s a person that they’re dealing with, and they know you’re an owner, you’re the owner of the property, and they have that social pressure of needing to maintain that relationship with you. They literally, at least in my experience, they just don’t ask for that much.
Fernando 12:33
It’s similar concept when you go on vacation, and you stay in a large hotel, any little thing that goes wrong, you feel at least I don’t feel
Jason Hartman 12:41
You don’t feel bad about asking
Fernando 12:42
for them to come fix. But if I’m staying, if I am doing a home exchange or staying in somebody’s home. You know, you have a different relationship with a person almost embarrassed to say certain things and he just fix it. So that is that is definitely true. You are a tenant and so am I
Jason Hartman 13:01
Interestingly,
Fernando 13:02
At the moment, we both rent.
Jason Hartman 13:03
I love renting because well, we have to touch on why right? Okay. So you know, when you rent a high end property, it’s such a good deal, because the rent to value ratio just gets all out of whack. And the delta between these two are just mind boggling, right? You rent if your property is under $200,000, you should probably own it. If it’s over $200,000, that delta gets bigger and bigger. And if it’s $2 million, you’re definitely better off being a renter. But what about that? were you gonna say about repairs? Right?
Fernando 13:37
I can, I can see that dynamic playing with myself as a tenant. If I have an issue with the house. And I’ve met the owners and I know them, you know, I fix it myself before thinking of asking them. It’s almost embarrassing.
Jason Hartman 13:52
If you lived in some big institutional apartment or you had a property management company managing that property. Not you would no hesitation or hesitation. Yeah, it’s interesting. Interesting. Yeah.
Fernando 14:01
Yeah. Alright, so the two updates that I wanted to talk to you about? I think it was either last meet the masses or two years ago where we, we talked about that flat fee concept. You remember that?
Jason Hartman 14:13
Two years ago
Fernando 14:14
Two years ago
Jason Hartman 14:15
A year and a half.
Fernando 14:15
Right. So I actually have that in place with my property manager in St. Louis.
Jason Hartman 14:20
Ah, so what’s tell us what the deal is. What percentage did you rate it?
Fernando 14:25
So I have eight buildings in St. Louis for plexes, two fourplexes, and the rest of duplexes and I was paying a negotiated about 8% monthly fee for property management plus the lease the normal lease-up fees and you know, some percentage of maintenance that they charge on top of the regular repairs.
Jason Hartman 14:40
So this is the old deal,
Fernando 14:42
Old deal. You know, that’s what most property managers do. I wasn’t too happy with this property management company. And I decided to switch over to some other property managers that I had a relationship with. Previous to the to the one that I have in St. Louis and I negotiated with the property Manager a flat fee, that includes the regular monthly fee. That property managers charge. In my case, 8% includes all the lease up fees, the renewal fees in any other of the nickel and diming type of fees that you might see in a regular property management. And we negotiated a rate of 12% that would cover the entire
Jason Hartman 15:24
Everything.
Fernando 15:25
Yeah, the whole thing.
Jason Hartman 15:26
What about the late fees, everything. So in other words, they get 12% of the late fee, and you get the rest instead of them keeping it all.
Fernando 15:34
Exactly.
Jason Hartman 15:35
Okay. Interesting.
Fernando 15:36
So it’s a very simple equation. And we just started about three months ago. And the deal is that as I add more properties, so what I’ve done is I’ve tried this model with one building. And if it works, well, I’ll be moving over some of the buildings from my traditional property management agreement to this new model.
Jason Hartman 15:59
So this is what I had suggested at Meet the Masters 2015. That the property management fees, and we talked about it with our local market specialist meeting on Friday before this event, I suggested that it’d be a flat concept, where instead of having clients feel nickel and dimed that they actually pay a higher percentage, I didn’t name what that percentage was, it’s just whatever people agree to these are not fixed by law, you know, there’s a competitive market, obviously, but actually pay a higher percentage, but no, what I call garbage fees, no lease up fees when a late fee is collected from the tenant because we want to have the interest be aligned between the tenant and the manager when a late fee is collected. The manager doesn’t keep it all, as they mostly do, it is split on that percentage. So if it’s 12%, then 12% of every dollar that comes in goes to the property manager, but nothing else. No renewal fees, no lease up fees, no late fees, in the sense that they keep it all which it doesn’t feel like that’s a charge to you, the owner, but guess what, your tenant is your customer, we got to remember that our tenant is actually the one paying the money, right? They’re our customer, you know, you don’t want to make the manager predatory on the tenant. In that example, you don’t want to give them too high a motivation to be collecting late fees, because then your tenants gonna be unhappy, and you’re gonna have higher turnover rate. And that’s not going to be good, right? You want your tenants to stay a long time.
Oliver 17:28
My opinion, this works even better with multiplexes because now instead of having
Jason Hartman 17:32
Where you see the movies?
Oliver 17:34
Yeah, exactly. What you see
Jason Hartman 17:35
Canadian.
Oliver 17:36
We go to the cinema. Anyways, it works even better with for plexes, duplexes, etc. Just because you’re now having that one set rate, instead of having to essentially manage and look after each expense for every one of those units, like Tell us a bit more about how much time and how much less stressful it is when you’re reviewing those statements.
Fernando 17:54
Right. And also in the same vein, because these are the most the transient tenants and the ones that have the highest turnover, there’s a lot more lease hub type costs, either release or new tenants turnover. So having a flat rate works in my favor for those sorts of properties. So
Jason Hartman 18:14
So you’re saying, for the lower rate like C plus properties C properties. It’s better, you don’t think that would work on the A’s. I mean, where you have managers in the B properties.
Fernando 18:26
I mean, I haven’t tried to put too much thought into it. But as Oliver mentioned, the amount of decisions that you have to make and how much of those charges you have to watch out for it just it’s increases with the lower quality tenant, right? So having a flat fee works in the in the landlord favor.
Jason Hartman 18:43
Yeah, good, good. And I think it aligns your interest with the property manager, one of the real problems that may not have occurred to you yet. And it took a while for it to really occur to me is that there’s a concept in business and in in law, that you can’t serve two masters, for example, if you hire an attorney, they can’t work for you. And the other side, too, even though sometimes it might feel that way. Technically, they can’t be working for the other side and for you at the same time, because it’s a conflict of what a conflict of interest, right? The property manager sort of has this inherent conflict of interests. They’re really serving two masters, because they have to serve the investor owner of the property, but they also have to serve the tenant in a way. Why do they feel like they have to serve the tenant? You might think, well, they do. Because the tenants, they get angry, and they go online and they start writing stuff on Yelp, okay, or wherever. The property manager does not want that to happen. And they don’t want complaints with the Better Business Bureau and whatever. Even though the Better Business Bureau is a bit of a joke. If you ask me. They don’t want it. So they have to serve two masters, the investor and the tenant. And I find that a lot of times the property managers they’re reluctant to take legitimate fees out of the tenant security deposit? Do you find this to be true at all?
Fernando 20:05
Not so much that but I can see, I can see where that would have.
Jason Hartman 20:09
Yeah,
Oliver 20:10
Yeah, I definitely agree. I mean, there are a lot of tenants out there, or property management, especially whenever. And if you have any type of make ready, watch what they put into that scope of work, because you could essentially dispute some of those items so that they actually be withdrawn from that security deposit. as Jason mentioned, they want to stay in the good favor of the tenant. So that way, they don’t get bad reviews. Some of the best property management companies I’ve worked with have horrible reviews on Yelp, and some other outlets out there. But ultimately, just bear that in mind whenever you’re doing your due diligence and your research online.
Jason Hartman 20:41
And interestingly, you say some of the best you’ve worked with have horrible Yelp reviews, because they’re fighting for the owner. Exactly. And those reviews are probably from tenants, right? I mean, they may not be owners could review them, too, of course,
Oliver 20:52
Exactly. Just meet with them as if you can. Otherwise, just do your due diligence in terms of interviewing them asking the right questions.
Fernando 20:59
Jason talks about this all the time, if you if you have a property manager, and you have good chemistry with them, if they’re doing a good job, you don’t have issues, keep them. Yeah, you know, they are worth their weight. And I do have one one property manager in particular that goes on cruise control, very few interactions with them. They work very well. So not touching that at all.
Jason Hartman 21:19
In other words, it’s cruise control for you, not them. Because they’re doing their job. Yeah, right.
Fernando 21:25
On the other side of the spec, so we talked about self-management. So the next update that I wanted to bring up is in Atlanta, I had a property management company that was managing about 25 of my properties. And I was paying traditional type of arrangement with them, I was paying them a negotiated think down to 7% monthly fees, but they had all kinds of other fees and stuff, it was actually closer to eight or probably more, at least on the fees, not counting the lease right on that side, that sort of stuff. But they weren’t doing a good job. Be very careful with quote unquote, property managers that are nothing more than dispatchers, they should be solving problems, not just passing the problem on to you. Yeah, right. And it really it, it got to a point that there were there in this case, there were two people that working in this property management company, one of them was terrible at this issue, where the initial would come up from from the tenant, and the property manager would not provide any solutions when the communication would come to me simply pass the problem. Yeah, please advise. Yeah, right. My immediate reply, Okay, tell me more about it, how much is it going to cost are there different, it was always the same type of conversation, it got really old very quickly, in I looked at the amount of money I was paying to them. I mean, there’s 25 properties at a standard type of property management, roughly 40 $500 a month.
Jason Hartman 22:51
Well, 25 properties. You were a nice account for them.
Fernando 22:53
Very nice account. As I mentioned, there were two people working in this property management company. And I got along pretty well with one of them, which I had a relationship with in the past through through another property manager company. And I wanted to know, if there was a better way to do this, could I self manage these properties? In what, what I decided to do is to give an ultimatum to the property management company. And I told them that they had to cut their fees by 50%.
Jason Hartman 23:23
Wow, to $2250 Yeah, exactly. You can’t say that when you’re only paying the manager $90 a month, just so you know. It’s just not gonna have more leverage. Okay.
Fernando 23:33
Yeah, in the, you know, would, you would, I will be willing to stay, you know, working with you, if you cut your fees by 50%. And if you don’t, what I’m going to do is I’m going to self manage the properties, I’m gonna transfer the properties under the LLC, that that own stayed on the properties. And I’m not going to hire an assistant to help me with the issues of property management
Jason Hartman 23:59
For $2250 a month. For $4500 a month, you could pay someone 60 grand a year almost.
Fernando 24:06
Well, it gets better than that. When I do the math with how much time they actually spend, I asked the property manager, how many hours a week do you actually spend on these 25 properties? Wow, you know, so so spends five hours I spent about, you know, five hours, maybe 10 hours a week. So I did the math. So I mean, I mean, if I pay this guy, you know, 30, or I don’t remember what the what the exact rate was, I would actually pay 15 $100 a month for property management services through through a system Sure, compared to 4500 that I was paying to the, to the traditional group. Well, I got the guy’s attention. It was a small property management company. So he called me the next day and, you know, he I think I have 50% margin in my business, you know, what do you think you’re doing and blah, blah, blah, blah, blah. And I was very calm. And I said, Look, you might have the wrong business model. Yeah. You just might not realize that the industry is changing right under your feet.
Jason Hartman 25:03
Yeah, they don’t it’s really old fashioned. Unfortunately,
Fernando 25:06
He was, you know telling me that he could not hold the account. And you know there was no way that he could make this work and would have to to to end the agreement. That, the conversation lasted about five minutes. Yeah.
Jason Hartman 25:19
So now you’re self managing?
Fernando 25:20
Yeah. So we started this, three months ago, three months ago, there was a clause, a termination clause that was in a contract that required me to stay with them for 60 days. So the 60 days expired, and we transferred over the properties. And now we use that folio as part of the communication with the tenants and track of
Jason Hartman 25:42
So you bought a subscription to AppFolio?
Fernando 25:44
Yeah.
Jason Hartman 25:45
How much was that?
Fernando 25:46
I’d say 250 a month.
Jason Hartman 25:47
$250 a month. So. So if you want to really build a good sized portfolio and self manage it, you can just use that yourself. Okay, for example, you don’t need to be in the property management business, but you can take advantage of the software they use. That’s what property managers use at folio, a lot of them
Fernando 26:05
The the checks get directly deposited into my own bank account, as opposed to staying a few days with the property manager.
Jason Hartman 26:12
You using Cozy for that?
Fernando 26:14
So Cozy I use for 10 other properties. And that’s, Cozy’s another company that we
Jason Hartman 26:21
We love
Fernando 26:22
We love and we had them in Meet the Masters before. They do rent collection really well. And they set up accounts with the tenants and in that have direct deposits coming into your account days after the payment is done and works really well.
Oliver 26:36
They can actually also screen the tenants too, which helps immensely because your credit score will show up, their employment history. Also any type of criminal record will also show up on some of these reports that you’ll just go to cozy.co. It’s not.com.co and it happens seamlessly and only takes about four or five days to actually get your checks deposited. So for anyone self managing that’s definitely key.
Jason Hartman 26:57
So when you self manage you get your rent faster a lot my mother the extreme do it yourselfer. Okay, and I disagree with her extreme do it yourselfer philosophy, but a little bit of do yourself for is okay. She’s like a hawk. I mean, I remember I was at the Cleveland Clinic with her. And this might be a little overkill, I was trying to take the phone away from her. And she’s literally in the recovery room. Coco and I are there visiting her Yep, that’s you, Coco. Were there visiting, you know, they let the dog in the recovery room, which was kind of cool. And all the nurses fell over the dog just loved her. It’s the first of the month, and she’s looking to make sure her rents are in her bank account, because she makes the tenants responsibility to go to she’s with a national bank, okay. And the tenants responsibility is go put the money in her account on first. And if it’s not there, she’s on it. So versus having a property manager, you might not get paid till the 20th of that month, because they’ve got to collect and do their process. And the check has to clear and then they send the check to you or they deposit direct deposit. Hopefully in your account. If you’ve got a good property manager, they’re worth their weight in gold, I mean, an income property. Because gold isn’t that great, as we’ve discovered. But, but if you’ve got one that’s just not that good. You know, you might try self managing. Sometimes when you do things directly. It’s actually more efficient than having someone else do it. Like if you look at two US presidents right, and one that I kind of consider to be a pretty bad president, one that I consider to be pretty great President Jimmy Carter versus Ronald Reagan. Now, this was way before my time I wasn’t even born yet. But I hear about them and watch some documentaries. And so you know, Carter was like this. He did everything himself, supposedly, which wasn’t really true. But that’s the image he liked to portray the common man thing, right. And Reagan was like an executive, he was more like a delegator, right? In some things, it’s just easier to do them yourself. And if people try to tell you, oh, Jason, you got to delegate this. They say to me, right, you sent this to me. And sometimes it’s true, it should be delegated. But sometimes it’s literally just easier to do yourself. And with technology that we have nowadays, a lot of times it’s easier. I mean, look at the example of you go into some usually older executives office, and occasionally you’ll go into their office and there’s no computer on their desk. It’s kind of shocking. Why have a secretary for that? Are you kidding me? Like, you know, to type an email. I mean, just that’s just so inefficient. It’s just easier to do yourself than have a third party. So sometimes it’s easier you take out the middleman and go direct, but I think you really hit on it. It depends on the type of tenant. If it’s a and b tenant, probably much easier. If it’s a C tenant, you know, it’s not as easy to self manage.
Fernando 29:44
I know most of you listen to the podcasts. There are a ton of companies that you bring up in the interview the executives of these companies and the owners, and they tell you about the services that were traditionally done by property managers,
Jason Hartman 30:01
Like ala carte type services
Fernando 30:03
Cozy, we just mentioned that. or Rently.com, which does the lockbox and stuff, we have the national eviction podcast that you had the other day. All of these pieces that were under the umbrella of a property manager can be done more efficiently with all of these companies. You know, directly. And that’s what essentially self management is, is the ability to be able to create accounts and have these companies work directly with the property in this case or with me or with the, with the bank for direct deposits and that sort of thing, and make it happen for you, instead of having a property manager be the minimum
Jason Hartman 30:39
In the beginning of the internet era, that first.com bubble that happened shortly after. But you know, late 90s, early 2000s, the big word in the tech world in the internet world was disintermediation, right, getting rid of the middleman. And you know what, you can deconstruct a lot of this stuff, and it’s sort of all a cart now that you really can do it more easily yourself. And one of the visions that Fernando and I have with real estate tools, is to create this platform that in my dogs moves like a cow, it’s hilarious. Did you hear that boy back there, Coco? What do you think? Yeah, there he is. He’s behind Fernando there. So one of the visions we have is to create this platform that empowers investors to self manage, and if they have a manager empowers them to work better with their manager, you know, they get the choice of how they want to do it. One thing I wanted to say about Oliver’s comment, and it’s really related to cozy is that there is a big sea change happening in the world of renting a property and you need to know about it, because it matters to you as investors probably matters more to the tenants. But it’s just important to think about this and how it’s going to play out over the years cozy just did a big deal with the National Association of Realtors, there are other companies doing big deals to work on this type of stuff. And the concept used to be and still is largely where when a tenant because remember we’ve got understand their experience, have the tenant experience, not just our own experiences the landlord when the tenant goes to look at different properties. And they see one that they like to rent, they fill out an application with that individual owner, and they pay them an application fee, you know, that’ll cover the cost of the credit report plus, frankly, make the owner a lot of money. Usually a lot of owners make a bunch of money screening tenants, frankly.
Fernando 32:34
That’s how Cozy makes money because their collection is free. But they make money on the report.
Jason Hartman 32:39
Yeah. And on the float. How much they charge for the reports for the tenant, do you know?
Oliver 32:43
I think it was like 35, maybe $50
Jason Hartman 32:44
That’s pretty pretty cheap compared to some which are 250. It’s absurd. Really kind of ridiculous. One of the sea changes is happening is instead of tenants applying for individual properties, they now go to one centralized place like cozy, and they create a tenant profile. And I did this myself as a tenant on Zillow, where I basically went in filled out a profile put in, you know, here’s my income, here’s my whole scenario. And then if I get these alerts for properties, I it just says send, you know, send your report to the manager or the landlord or the owner, right. And I just click a button, and they get my report. And they call me right back because I say, hey, this looks like a pretty great tenant. Thank you. And, and so that’s the way it really should be. So what does this mean to us? Well, we don’t know yet, frankly. But one of the predictions I would make is that this is becoming a much more fluid liquid frictionless market with landlord tenant relationship. That means that it will be easier for tenants to search for new properties and find new properties. And that’s the same way with things like jobs. In the old days, people’s resumes weren’t perpetually online, but now they are with LinkedIn. Everybody’s always available for job. And if you’re married, everybody’s always available for an affair on Ashley Madison. Okay, you know, it’s like, no one ever. The deal is never solid anymore. It’s kind of a terrible thing, in a way, right? So it’s much more fluid and dynamic. And that’s what’s gonna happen with tenants. I think it’s gonna be a lot easier for them to shot. Oh, yeah. And that’s gonna work for us sometimes and against us. Other times. Yeah. But certainly, if we want it to work for us, we have to be using the modern technology, because that’s where the tenants will find us. versus if they’ve got to go they call up about a property and they see an ad on Craigslist or something. And, you know, they say, well come by take a look fill out an application payment application fee versus ours. They’ve just done a cozy profile and we’re using cozy and they can just easily apply to us, right? We make it easier for the tenant. Make it easy for our customers to do business with us
Fernando 34:59
And even viewing properties. I mean, did you talk to Rently? On your podcast or no?
Jason Hartman 35:04
Yeah, I’m pretty sure
Fernando 35:05
They’re the ones with the lockbox where you can give her credit card.
Jason Hartman 35:07
That’s the one where I sent you that I think I sent you a voxer message from the IMF conference.
Fernando 35:12
Yeah. Yeah. Yeah. So we are using rent money in one property in Austin. And actually,
Jason Hartman 35:19
Wait til you hear this. This is awesome. Okay, explain to them how it works. It’s so awesome. It’s an amazing time to be alive.
Fernando 35:26
So recently Renly essentially puts lock boxes into homes, and you have access to the home by providing your credit card information. As a tenant, you can go view the home on your own, you don’t need a property manager, you know, you just sign up online. And you can go and check out if you’d like the property or not, you know, who was there because they had to give their credit card in order to to get there. In its very convenient to get these reports that come online, and you can see what the activity is you can see if your showings are going well. It’s a very interesting model. The piece I think that Renly still needs to work on is that the boxes can be placed in the home, but they don’t physically deliver the boxes to where you have properties.
Jason Hartman 36:20
So you can’t really do it yourself. You couldn’t use TaskRabbit
Fernando 36:24
TaskRabbit. Or you can use a tenant. The previous tenant. We say, can you put this lockbox there?
Jason Hartman 36:31
And what do you ship it to them? You have them in your house? Or do you ship it directly?
Fernando 36:35
Rently sends it to them?
Jason Hartman 36:37
Isn’t? Isn’t this amazing? Do you see how empowered you are nowadays? I mean, once you have that, folks, are you awake? You shouldn’t be amazed by this. Do you know how difficult it was to do all this stuff before and need more logistics that you could just couldn’t do it? Yeah, if you had enough coffee, coffee is a superfood. Okay,
Fernando 37:00
This coffee is great, because it’s
Jason Hartman 37:01
This coffee is pretty good here. Usually hotel coffee is actually like this coffee pretty well. Usually it sucks.
Fernando 37:08
But But the key thing so it You’re right, this is awesome. Because once you have a lockbox that is controlled remotely, you can have people that the contractors go out there and do a vows on your property or do make readies or move out or move ins, you now have control. And that’s what the like the property managers that that’s where I had the argument with that guy in Atlanta is that he does a lot of changing. Yeah, you know, it’s it’s not that hard to put a lockbox and they control via, you know, via a mobile or mobile device. It’s
Oliver 37:44
just to give you an example for that as to how easy it can be. We got we had a completely remodel with the take some carpet out and put laminate floors. And we actually had the entire job done without a tenant or anyone actually being present at the house. We coordinated everything via email.
Jason Hartman 38:04
So there’s no, no property manager. Nobody let him in this thing.
Oliver 38:08
Nothing.
Jason Hartman 38:09
Amazing.
Oliver 38:10
It was absolutely, um, it was unbelievable. The first time we had really done that seamlessly. And you know, the the person that was there just called me up, took pictures of the place and have the job done. Also, you know, before and after pictures, it was quite easy. Ultimately, I think what we’re all getting to here is there are so many different mediums out there to really self manage. And it can be quite easy no matter where you are in the world. Up in the Canadian, Arctic or down over here in California, Canada. We do have internet up there. We actually do, yes. But ultimately I, you know, get into yes back to some of this is that you really can do it. For some of you that are getting into this for the first time. self management is not really something I would recommend. That’s my personal recommendation, I would definitely suggest getting in getting a property management lease for the first year maybe to seeing how it’s really done, seeing what type of expenses typically come up with your property. And then if you decide to take the plunge, go forward and try it out with one property, and then add on more as you feel more comfortable.
Fernando 39:19
Yeah, I second that I did not start with self-management. I thought it was much it would be much easier to just learn first with existing providers. So when you you guys purchase a property in there’s a provider of property management that comes along with the provider, it’s probably a good idea to start out with those. And you can always change property managers I’ve done that over the years in self management and different property
Jason Hartman 39:45
And you haven’t been that many years in this. You’re four years in. Four years. Yeah, over the years. He says you got a lot of properties. So if it’s like dog years
Fernando 39:59
The more mistakes you making the videos, the more they are doggy,
Jason Hartman 40:02
Which is a great point, fail fast. Don’t be afraid to fail, but fail forward and just learn from a quick so when you have these experiences, like if you’re newer and you’re not into this self management idea and you think we’re crazy up here, right? Which we might be crazy, okay? It’s not perfect there are some real pitfalls that can happen with self management to assume that the experience you have with your property manager is them teaching you to be a manager. Okay, view it like that they are your free tutor.
Thank you so much for listening. Please be sure to subscribe so that you don’t miss any episodes. Be sure to check out this shows specific website and our general website heart and Mediacom for appropriate disclaimers and Terms of Service. Remember that guest opinions are their own. And if you require specific legal or tax advice, or advice and any other specialized area, please consult an appropriate professional. And we also very much appreciate you reviewing the show. Please go to iTunes or Stitcher Radio or whatever platform you’re using and write a review for the show we would very much appreciate that. And be sure to make it official and subscribe so you do not miss any episodes. We look forward to seeing you on the next episode.
