What Every Landlords Need To Know About Property Management

Alright let’s go and talk about what
every landlord needs to know about property management! Hey what’s going on
everyone this is Sam Kwak one of the Kwak Brothers: real estate investor and in
this video we’re gonna go and talk about what every landlords need to know about
property management! now before we do be sure to hit the subscribe button as well
as the bell icon so that you guys get notified for our future videos now my
brother and I we were very blessed and fortunate to have 70 rental units today
at one point we have 82 and we sold couple units along the way for
profitability reasons and that means we have 72 tenants now we have to look out
for now fortunately today we do have a successful property management team
handling most of the operation and the the in and outs every day but in the
beginning we have to manage all the property ourselves and sort of figure
out the process along the way so I’m gonna give you my perspective as well as
my expertise in an opinion on what makes a property management successful and
what makes property management a complete disaster and a nightmare
especially if you’re just getting started as a new landlord so the first
thing you have to decide is do you want to hire property management or do you
want to do the property management yourself and what I found out to be true
is that there are certain personalities as well as traits that make property
management really successful and a couple of those traits are your
detail-oriented your process oriented and you are relationship oriented so you
can’t just be detailed in process oriented and complete and got the the
human side of things and what I like to say is property management when it comes
down to people management if you know how to manage the right people your
vendors so you’re if you know how to manage your contractors handyman or
handy woman you know you know how to manage your roofers then you’re gonna do
a good job as well as you know managing tenants of course you know which are
people real people living in your property so if you can handle the
management the people your detail-oriented your process oriented
you know you’re organized and everything’s in a sequential order then
you’re gonna do just fine in property management all you need to do is have
some structure and policy in place to make things automated as well as smooth
now if you’re not that type of person if you either have a
partner that could play that role great or if you don’t have a partner and if
you know for a fact that you’re not very detail-oriented then I think it’s it’s
best that you hire a property management for your own sake because trust me if
you if property management doesn’t go in order and if the property management
doesn’t go the way you plan you’re gonna pull your hair out so you’re better off
hiring a property management management company if you’re not that type of
person we’re not detailer and said you’re not process oriented and you
don’t like deal new people then property management is not for you all right so
once you’ve decided that you want to manage your own property you have to
decide which neighborhood as well as tenant makeup you want to go this is
super important because there are different types of tenants from
different types of neighborhood and you may want to go into thinking about this
before buying your own property or your first property so before buying your
first property understand that there is there are different types of class of
neighborhoods as well as different types of tenants if you go into the luxury you
know class a some of the more higher quality rental property you may have to
pay more for the property but at the same time there’s gonna be different
sets of problems and challenges when it comes to dealing with those types of
tenant just because you’re in the luxury market or you’re the ayk you know a
class market doesn’t mean that you’re gonna have completely zero problem when
it comes to your tenants you will have different you know sets of problems and
challenges when it comes to those types of tenants now a couple example maybe
they might be picky on you know the garage door is not opening the faucet is
not working properly so they may have little things that they may complain on
or may ask you to fix things which again no matter which type of tennis you
decide to manage you are gonna deal with some you know level challenge no matter
what now on the vice versa on the opposite end of the spectrum if you
decide to go with the C Class or D class type of neighborhood more of the cheaper
homes cheaper rental rates you may deal with a different type of problems or
challenges such as your tenants completely driving through the garage
door and breaking down the walls or or tearing up holes or tearing up carpet
you’re gonna have a different type of challenges and problems and
depends on what types of challenges you’re gonna be comfortable with now
again I’m making a general statement may or may not apply to every situation but
this is generally my opinion based on looking at c-class types of property as
well as a class types of property again you’re gonna deal with problems just
depends on what type of problem I’m gonna deal with so you have to choose
you have to pick your battle okay do you want to go with the a class battle the
luxury market battle or do you want to go with the C Class D class where the
tenants have different types of behavior to have different background different
job and so on so you have to decide that early on before you even buy your first
property even after you buy your first property you may have to decide what
type of tenants are you looking for it’s very similar to any business what type
of customers will you be wanting to serve so you have to decide that and
really make that prompt early on and if you prepared too if you prepare for the
tenants in the type of tenants that you’re gonna bring in you’re gonna have
a much much more successful experience in property management okay so a lot of
people believe that property management starts after you buy the property which
is actually is not true property management starts at the due diligence
it starts way before you buy the property so a couple things you want to
look out as far as the due diligence within the lens of property management
is you want to do your due diligence as far as the demographics who are the
employers in the area that you are looking to buy the property so his
example is I have a property down in a southern suburbs of Chicago and the
major employer over there is Amazon Fulfillment Center in fact there’s about
500 and 600 cars at a time that I see in their parking lot if Amazon would have
packed up their bag bags and left then I would have less of tenant-based that I
can get my tenants from so it’s really important that you do your due diligence
as to understanding who are the employers in the area what are the
market rent that’s huge you need to determine what the market is charging
rent in that area and you also have to understand what
type of tenants live in that area so those are part of the due diligence
process even before you buy your first property or your next property
the next thing is put your team together first before actual closing I see way
too many landlords trying to put together their maintenance team their
vendors after they closed the property by the time you closed the property you
have a tenant in there it’s early too late you got to get your team of
maintenance contractors handyman lawyers any other professionals that may be in
place for your property management so start looking now so if you’re looking
at closing a property let’s say 30 days from now start shopping for talents and
vendors today okay start calling your handyman start calling a plumber start
calling your roofers and start interviewing them even though you may
not have a task or a job for them to do start interviewing them today and start
getting an idea whether that vendor is a good fit for you or not and start
putting them in a team right create a list okay of all the talents that you
decide to put in your team and have their contact information so that soon
as you close the property and there’s an issue there’s an as a problem the next
day you can go ahead and call up those those vendors right away and you get
those problems taken care of okay because I see way too many landlords
close the deal get their tenants in there and they don’t have a team and
then their tenants are obviously calling it hey you don’t have a leaky faucet or
my my sink doesn’t work then it may take you two three weeks just to figure out
who’s gonna come and fix it or it may take you two three weeks just to call
and figure out which plumbers to go with that’s not the best time to do it so you
got to do this before you buy the property get all the people lined up all
the maintenance people all the vendors before you close the first deal or the
next thing is something that most landlords fail to prepare for which is
the local law very important there’s laws such as landlord tenant Act Fair
Housing Act Fair Credit Reporting Act these are you know alphabet soup
acronyms that I’m spelling out for you guys but probably the most important
part is the Fair Housing Act and the landlord tenant act the landlord tenant
act there are local specific and there’s also state specific if you live in a big
city like Chicago San Francisco New York City chances are your city is gonna have
their own version of the landlord tenant Act more so as an extension
to the state’s version of landlord-tenant act so if you live in a
large city be very prepared because there’s gonna be a lot of extra things
that are gonna be on the landlord-tenant act on top of what the state demands
from the landlord so an example is here in Illinois we have the Illinois
landlord tenant Act which applies to the you know the state overall overall but
if you go and buy property in Chicago and you decide to manage a property in
Chicago Chicago has their own version of your landlord tenant act sort of as a on
you know bonus on top of the state’s landlord tenant act so you’re gonna have
more rules to follow when it comes to if you know Chicago if we’re poor in this
example so if you live in these large metropolitan areas check out for the
landlord tenant Act there’s gonna be a lot of specific rules that you need to
pay attention to the main little tenant Act dictates what notices you need to
give to your tenants before you you know walk into the property what notices you
need to give before evicting a property or victim a tenant what sort of repairs
you need to do how many days do you need to complete the repair by all these
rules you need to be you need to pay attention because if you don’t know
these rules but your tenants know these rules more than you – well guess what
okay if your tenant is a better landlord than you are then you are not in the
good United a good position to win you know eviction cases or you’re not in a
good position to protect yourself from other potential liabilities so pay
attention to the landlord tenant act that’s your homework for today okay KO
reads your landlord tenant act the other law that you need to get familiar with
is the Fair Housing Act Fair Housing Act is fairly simple don’t discriminate
against certain race color gender religious belief creed handicap status
familles familial status which means if you’re
married if you have kids you shouldn’t be discriminating against those types of
people so I think most of us you know aren’t we’re all fair people but it’s
really important that you can eat you can violate this law on by accident just
by what words you use on your marketing your advertising your fliers I know most
people don’t use flyers anymore but let’s say you list your property on
Zillow or you list your property on apartments.com and you add
certain words that could potentially violate the the Fair Housing Act then
you can get in some trouble so make sure you understand what words you can use
what sort of phrases you’re allowed to use on your marketing piece a good
example is let’s say you have a property you know two miles away from the st.
Andrew’s Cathedral okay and on your marketing piece your rental listing you
put down hey this apartment is two miles away from the st. Andrew’s Cathedral
whether it’s factual or not you just violated the Fair Housing Act mainly
because you have now you have a religious preference all right you you
highlight it highlighted the fact that hey there’s a you know a Catholic Church
here but the question is what about the other religion right the other Creed so
if you even if it’s factual leaving out in obviously religious preferences as
well as other preference gender whatever you don’t want to discriminate and you
want to make sure you were careful with the words that you use when you’re
marketing your rental property all right so the next thing that you need to
prepare for is to become eviction proof this mainly comes down to the lease that
you use and guys please don’t go out there and download these free lease from
websites okay don’t do that go to a professional real estate
attorney and get it lease created and made done by professional and the reason
why is when you go in when you go through an eviction and yes it will
happen okay I hear so many landlords that say Sam it’s not gonna happen to me
I’m not gonna have an eviction trust me you all have an eviction some
point in your career as a real estate investor you all have it you have to
prepare for it if you don’t prepare for you’re gonna fail you’re gonna prepare
to fail so go to a professional turning licensed incompetent roasty attorney
that practices law within the real estate realm and get a lease made and
you want this had to happen because when you go through an eviction guess what
you may want to go through an attorney and the attorney as they take your
tenant eviction they want certain clause in your lease so that they can make the
eviction easier so ask the attorney hey listen I’m a landlord I’m brand-new
I need a lease can you create a lease for me for this
given state and different for this given city because remember different cities
have their own landlord-tenant act and ask the attorney to create a lease for
you now another thing you should ask your attorney is hey could you make this
lease so that it’s easy for you to vicked the tenant just in case that
tenant doesn’t pay their rent in the future so you’re making sure that the
the attorney has a better experience better than normal experience when
evicting your tenants when they don’t pay rent so work with your attorney guys
don’t just go out there and create your own lease think of that oh my gosh I’m a
legal expert look at me right you don’t want to do that okay trust me don’t go
off to these free sites or don’t pay 30 bucks for a template go to a
professional attorney and tell me I’ll tell you guys right now you may pay a
little bit more than the internet or free but it’s gonna save you so much
more money down the road when going through an eviction or whenever you have
a problem with the tenant okay it’s got it’s going to protect you and it’s gonna
be a great way to keep you revision proof as well as liability proof when
dealing with your tenant in the future all right so before we put in a tenant
make sure you understand the tenant screening process in fact we have a
whole video just on how we screen our tenants that video or the card is gonna
be right here it’s gonna appear right there so click on that video if you want
to go check out how we screen for our tenants it’s really important that this
is sort of like getting married okay I know it’s a weird example but when you
select your 10 it’s kind of like it’s kind of like selecting the spouse
because when you select a tenant they’re gonna be in there for a long time even
if you give them a 12-month lease okay even after the lease expires and if they
don’t want to move you have to evict them and that an eviction process that
takes time we can take from 2 weeks all the way to 3 months so when selecting a
tenant be extra picky but be fair right because we talked about Fair Housing Act
use a consistent screening process to make sure you don’t you know
discriminate or violate any Fair Housing Act but be be strict check their credit
check their criminal background look to see what type of job they have the
income and to give you more of a general outline what we look for is that the
tenant has at least three times of rent for
their income so they need to be making three times the rent so if they’re if
the rent is $1,200 we want them to at least make $3,600 a month that sort of
ensures that they pay rent and also there are other bills that they may have
but when it comes to credit and criminal background check again go and check out
the full video up top and in the card up there just click on that but when it
comes to credit in criminal I’m looking for general things that most things are
gonna look at obviously I don’t want any abuse or assault battery charges within
the last two years I don’t want any bankruptcy in the last three years right
any of that again I’m not gonna go into the full details but be sure to do a
criminal and background criminal and credit background check make sure you
guys do this don’t go just off to do a gut feeling or pick them by their looks
okay not gonna work so go on and do criminal and credit
background check before you put in a tenant and screen your tenants wisely
but also be strict in your screening criteria as well so this next point is
something that most landlords have tough time doing and of course we’re all nice
people good heart and being that we have nice you know and good heart it’s
sometimes hard for us to stick to our gun now for those who don’t have that
problem obviously or how you’re off the hook but for us nice people we need to
stick to our policy we need to create a policy and stick to the guns so if
there’s no pet policy guys stick to the no pet policy okay or charge them a fee
or if you’re like super strict about no pets then give them a notice right serve
a notice is saying hey mr. and mrs. tenant there is no pet allowed
here’s a 10 day notice five day notice again guided by the landlord tenant acts
you need to give them certain days give them a notice saying listen if you don’t
get rid of this pet we’re gonna have two unfortunate evict yeah okay or if you’re
living to loose on that policy say you know what originally there’s no pet but
if you want pets we’re gonna have to charge you four hundred dollars pet fee
okay so whatever your policy is stick to it okay stick to the policy because if
you don’t sit to the policy your tenants are gonna notice and your tenants are
gonna start to think you know what if this this landlord doesn’t follow their
own rules and okay well I guess anything goes so
don’t let your tenants train you to their rules okay because if you don’t
train your tenants to your rules it’s gonna happen the opposite opposite it’s
gonna happen your tenants are gonna have their own rules in your head and they’re
gonna try to train you in their own ways okay they’re gonna pay you on the the
18th day of the month right generally you want tenants to pay on the first day
of the month the moment that they realize that you can be bent and you
were flexible they will be flexible too and they’ll try to you know create more
room in every you know every moment that every chant every chance that they can
get so don’t let your tenants train you make sure you train your tenants on the
policy that you create and stick to it and make sure you have a fair policy
across the board with all of your tenants okay so the next thing we’re
talk about is how to properly market your property for rent this is super
huge I know this may sound like a no big deal but this is a big deal when it
comes to influencing the type of tenants you’re gonna get what I’ve noticed is
that if you create a solid listing you advertise your mark your property
properly you’ll also tend to get better tenants overall so one of the first few
tips I want to give you guys and this session is use good pictures okay good
lighting okay no garbage in the picture okay don’t have you know rubbish around
the floor make sure you clean the unit make it look make it look nice have good
lighting preferably natural lighting such as you
know Sun lighting and take good pictures okay what I’ve noticed is that if you
take terrible pictures with garbage bad lighting it looks dark you’re gonna
attract some some tenants I think oh this landlord must not care this
landlord must not be a professional therefore I can walk all over the
landlord I’m gonna apply for this unit okay but if you have a solid picture it
looks nice looks clean you’re gonna get good tenants it’s that you know I’m
looking for a good quality housing this you know rental property seems to have
good quality I’m gonna apply for that unit I’m gonna apply for that property
see the difference so use good pictures you use good lighting my ro thumb is
take anywhere between 25 to 30 pictures specifically the kitchen the bathroom
the bedrooms you know these key areas that you want to take pictures of and if
you’re terrible taking pictures okay I have someone else
do it for you or your partner or you may even go as far as hiring a professional
photographer in taking pictures of your unit which director whichever direction
you go with and make sure it’s appropriate to your market as well as
making sure make sure that it looks professional it looks nice and looks
clean another thing is that disclose your screw deposit as well as other
features of the rental property I see this a lot with a lot of amateur
landlords they just list it with the rent and nothing really you know no
other description includes some description guys tell how awesome your
rental property is tell awesome your rental unit is you know this is this is
marketing right you’re selling your rental unit to a potential tenant so
tell it how it is okay another thing I see when it comes to marketing a rental
property is the amount of rent to charge and I see this time and time again where
landlords are so stuck at charging a certain amount of rent where it’s not
the appropriate rent to charge so one thing that you need to understand how to
do is how to properly set your rent where it’s comparable to what the market
is charging so a good source a resource that you can use is rental meter com
I don’t get paid by this side I’m not being sponsored by the side at all I’m a
huge fan of this tool it helps you a lot to determine what the market rent is the
more accurate way to determine your rent is by working with a real estate agent
or a leasing agent that has access to the MLS multi Multiple Listing system so
work with a leasing agent or a real estate agent who has access to an MLS
they’ll have information as to the properties as well as the rental units
that’s been rented in your area and you also see how much have they been rented
for gives you an idea what people are actually paying for their rent so that
you can sort of you know match the price with what everyone else is charging for
their rent but what I’ve noticed is that $25 makes a huge difference if everyone
else in the market is charging $800 a month and you decide to charge 8 825 and
your rental property is you know comparable it’s similar then
you’re gonna have a hard time renting your rental unit just for that
difference of $25 so you may want to lower your rental rate from 825 to 800
to make it comparable with what all the other similar type of unit is charging
that’s probably the best way to go another thing that I see with landlords
is that you get finicky and they get stuck with their price and what I mean
by that is I see landlords that have the rental unit stay vacant for three to
four months all because their rent the rental rate is just twenty five dollars
more than everybody else so what you want to do is after you determine what
the comparable rent is in your market stick to that comparable market okay I
see way too many landlord I said you know what they’re charging 800 bucks I’m
gonna go and charge 825 I’m gonna see if I can get extra $25 more out of this
rental unit guys it makes a huge difference okay don’t let your property
go vacant for three to four months for the sake of twenty five dollars okay
you’re sacrificing a lot of money just for you know this tiny amount of $25.00
so what I tend to do is when I first list my rental unit I start high and
every week that’s not rented I lowered the price by twenty-five dollars all the
way to the point where I’m getting good amount activity emails and phone calls
about the rental unit so obviously you don’t want to keep on going you know
twenty-five dollars every week you’re gonna stop at certain point where okay
this is the point where I’m getting a lot of calls I’m getting a lot of emails
this is a comfortable price for the market so be sure you market your
property properly because if you don’t you’re gonna attract bad tenants and bad
tenants may mean more cost in the future liability eviction and emotional
nightmare we don’t want any of that so the last point I want to talk about is
automating your property management after all we got into this business
because we want to have more time freedom more financial freedom and spend
more time with their family take control over our lives really just to have more
freedom in our lives we don’t want to spend all of our time managing our
property so what you want to have is you want to have certain procedures and
policies depend you know when something happens boom you have instance procedure
and policy they’re gonna follow through you don’t have to think twice about it
follow through what the policy says pushed a part of automating your
property may involve hiring a secretary or hiring an assistant or hiring out a
bookkeeper whatever the process may look like you may have to start hiring people
not another way to automate your property is using a software and a lot
of times there are free software’s out there that’s gonna help you automate a
portion of your property management just to give you a little shameless plug my
brother and I are working on building a free property management software that’s
fully automated it’s gonna send out automatic emails it’s gonna send out
automatic text it’s gonna have a lot of automated features so that we can live
our life as financially free property managers and landlords so that’s
something that we’re building it’s called puma property user management
automation we’re set to launch sometime at the end of this end of this year so
if you guys want to join our waiting list on that property management
software I’m gonna go and leave the link down below in the link description
section where you can go and sign up to be part of the waiting list and get more
information on how our free property management software is gonna work so I
hope that this video helped you a lot as far as becoming a successful landlord
and managing your own property I mean if you made it this far congratulations I
applaud for your hard work and audacity in becoming a landlord and I hope that
this really helped you guys understand the property management process overall
now be sure to subscribe to our youtube channel as well as hit the bell icon to
get notified in our future videos on property management
real estate investing in entrepreneurship general the next video
that you guys should watch is how to properly screen your tenants in case you
haven’t clicked that button ready that video is gonna be right here go and
click that video and watch as to how we screen for our tenants how to avoid bad
tenants and how to avoid the nightmare by choosing the bad tenants so I’ll see
you guys in that next video

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