Episode Transcript
[00:00:00] Speaker A: Welcome to AllView360 all things real Estate Podcast. With your hosts Daniel Gutierrez and Shannon Dempsey, we explore real estate from every angle, giving you insights, tools and confidence to make smart decisions that support your future. It's time for a new perspective on property. Welcome to AllView360.
Hello. Shannon here and Daniel with McRae. And we have McCrae. Daniel, first, do we want to acknowledge what is happening and why you're wearing your sunglasses inside the elephant in the room?
[00:00:31] Speaker B: Yeah, so I wear my sunglasses at night so I can be cool.
[00:00:35] Speaker A: That's new generations aren't even gonna know.
[00:00:37] Speaker B: Because I'm having some eye issues and just had a mini eye procedure. So my eyes are super light sensitive and in a significant amount of pain. But I did not want to delay the podcast. So we're pushing through can't stop, Won't stop, can't stop, Won't stop.
[00:00:53] Speaker A: Okay. And today we're going to be talking about the top 10 landlord mistakes and how to prevent them. And we have on our guest, McCrae Carden.
[00:01:04] Speaker B: Hi, good to be here.
[00:01:05] Speaker C: Thank you for having me.
[00:01:06] Speaker A: So McRae brings a rare combination of leadership, strategic insight and client focus. With a background in real estate development, investment and experience leading high performing teams, including serving as captain of the US Water polo team. He knows what it takes to lead with purpose and build meaningful relationships that deliver results. And he is actually here with us at all of you, helping build long term wealth for clients through real estate. And his role is pivotal in expanding that mission, connecting with property owners across Southern California and helping them experience value of full service platform that truly puts people first. So we are excited to have you and we feel like this topic is right in your wheelhouse.
[00:01:47] Speaker C: Yeah. Excited to be here and I, you know, going back to what you just said, I wish you could follow me around and introduce me like that.
[00:01:53] Speaker A: Everywhere I go I'm like, here's McCrae. Let me tell you a little about him.
Yes. Okay, so you obviously talk to a lot of potential landlords and kind of deal with all of that. So we've gone over what we feel are the top 10 landlord mistakes and kind of different ways to handle it. But Daniel, do you want to tell us why you feel like this is important?
[00:02:17] Speaker B: So every year we talk to clients and you know, some of them highly value property management professionals, consultants, advisors, while others don't. And unfortunately oftentimes the ones who don't are the ones who need it most.
So for a multitude of reasons, we thought it would be really important and valuable. For our listeners and the general audience to be able to really understand the value of a property manager and if making the conscious decision not to use one, at least understand what they need to do, where they need to level up, where they need to be focused on in order to not make, I think what is in the top 10 mistakes we do see clients making when self managing. And oftentimes we get the calls from those clients saying, hey, this happened, this is going on, can you help me? And we always want to help, but oftentimes it's too late, we're no longer helping them and now we're just trying to like salvage what's left. And that's not a good situation to be in for us, but especially for the clients. So we wanted to take this opportunity, especially going or finishing this year, going into the new year, to letting clients know kind of what to look out for, what are those top 10 mistakes, how to avoid them, and just being a value to, to the industry, to the clients, our listeners.
[00:03:31] Speaker A: Yeah. And if you're on the fence, like I'm sure there's people out there that are like, I don't want to deal with this anymore and kind of on the fence about hiring a property manager. Have someone professionally manage your property for you. Those are the same thing. This is also kind of good for them to listen to. And then side note, Daniel, I think that you oddly enjoy when you have to solve the problems that come your way, even though it sucks.
[00:03:52] Speaker B: Well, I like helping people. I like being of service, but I don't like seeing people in those positions. And oftentimes like within the first five minutes, I'm like, oh yeah, you totally did this wrong.
And you know, I like helping. We like helping.
But not, not a great situation to be in. And especially as time goes on, it gets more and more difficult. The liabilities get higher and higher, the penalt larger and larger. And we want to be there proactively letting clients know what the potential liability is.
And if they don't, you choose to work with us. Fine. But at least there we could be better educated on how they need to do it themselves to put themselves in the best position to succeed. And also too, what individual landlords, owner operators do hurts the entire industry. There's a lot of laws put in place to protect tenants against, against what smaller landlords do because they don't know the laws, they don't follow the laws. But even those laws put in place, they still don't follow those anyway because they don't know.
So it's you know, just trying to be a service to the industry in general and also making our lives easier over the long term.
[00:04:54] Speaker A: Okay, let's start with, number one, underestimating the time commitment.
[00:04:59] Speaker C: Yeah, that, that one overarches. I mean, every, every aspect that a landlord has with their property. I mean, whether it be showings, doing the leasing, rent collections, the accounting, even keeping up with the legal compliance of being a landlord is, you know, they don't truly understand the type of time commitment. And when you're dealing with your investment, you know, time is money. And the longer you have vacancies, the longer you take to deal with that maintenance issue or, you know, everyone has a life, they got kids, jobs, different things going on, and, you know, you let these things pile up and create delays within the properties is what I see on a daily basis with a lot of landlords.
So key metrics to prevent these are proper time, tracking within the property, delegating and allocating time towards these.
And this is where a key aspect of professional property management comes into play here. You know, we have a dedicated team tracking your counting, your bookkeeping, regimented screening process, and allowing a lot of owners and investors to take back that valuable time that they're dedicating to those types of dealings within their properties.
[00:06:14] Speaker B: McCray, I don't know if you've run into this, but I often see that the mistake or the issues of properties happen, the repairs emergency happen nights, weekends and holidays. Oftentimes when people are not answering, where vendors won't answer and where people really underestimate. So that's where having someone like us, that we do have the 247 team to be able to answer those, those vendors who will drop everything on 4th of July, on Christmas Day to go fix a property, fix an issue, really becomes super valuable.
[00:06:46] Speaker C: Yep, a hundred percent.
[00:06:47] Speaker A: And I think the time, like the amount of people we have dedicated to the entire process that are working around the clock to make these things happen, from the time that we take over a property to the time that a owner has a full screened application package in their email to review, so much happens to get to that point where you have the qualified applications to look over. And I don't think people realize how all of that goes. And that's with procedure systems. That's our primary focus. Right. So yeah, time is money. You, you might take a whole other month, two months to rent your property, and that's two months rent you're missing out on.
[00:07:26] Speaker B: Like, even beyond that. There's a book I love by Dan Martell. Called buy back your time. And I really leaned into it and really valuing my time and anything below what I value, then I help find someone else to do it for me and help me so I can maximize my time, my effort, my enjoyment, and let others do what I shouldn't and, and don't want to do. I mean, it's a different way of thinking from our general society, especially some of our, like, older clients, baby boomers who are taught to just do everything themselves. It requires different, you know, mind shift. But we like our, one of our attorneys, we manage his properties for him and he bills out at a significantly higher rate than, you know, than what our management costs him. And he goes, no, it's dumb. Like, I could be helping my clients and billing out at a higher rate versus talking to my tenants for an hour and losing out on all that money. But like my financial adviser, at least someone at the firm, he does it on his own. And he comes to me with questions, I'll answer them because I think he's a friend. Uh, but at the same time, I'm like, you're, you know, I think their firm just went over a billion dollars in assets under management. And he still does his own property management. I'm like, what are you doing?
[00:08:33] Speaker A: But he tell him to read buy back your time the same amount of times you've told me to. Yeah.
[00:08:38] Speaker B: He's like, well, no, I just, I want to save that money. And I'm like, okay. Like I'm not going to push on it. But for me, I've just, I think I've taken the next step in my life to not, not do things like that.
[00:08:49] Speaker A: Okay. Number two, treating it like a hobby.
[00:08:52] Speaker C: Yeah, I think this falls in line with the time commitment. But just overall, treating your investment as a hobby, whether that be poor record keeping, you know, lack of systems in place, you know, everyone has their, I'll do it later, I'll do it tomorrow. And you know, every time you do that, it falls in line. You know, these problems grow bigger and bigger. You got to have the business mindset. You have to have your systems in place for bookkeeping, a clear process.
Treat it like a business because it is. You know, a lot of people's investments, whether they be first time landlords or seasoned investors, you know, this is, this is a business and it should be treated like that. You know, a lot of the properties, you know, aren't keeping track of rent payments, maintenance issues, and it's not that they don't have the time, it's just they don't treat it properly.
[00:09:42] Speaker A: Yeah, I mean, a hobby is supposed to be fun. And we usually see people that self manage at the time that it no longer is a hobby and no longer fun. And now there's a really big, expensive, litigious situation on their hands, and that's not ideal for anybody.
[00:09:57] Speaker B: Well, breaking it down even to the reason why people have real estate investments, it's that passive income, that generational wealth. But if you look at it from that lens, do you go to work as a hobby? Like. No, you do. You do, Shannon. Okay. The majority of people go to work to make money. And you do this for the same reason. Why treat it as a hobby? But so many people do, as McCrae is mentioning.
[00:10:21] Speaker A: Maybe people just have weird hobbies.
Okay. Number three, this is my favorite one, and this would have been my number one if I was in control of everything.
Not staying current on rental laws.
[00:10:35] Speaker C: Yes.
[00:10:36] Speaker A: I did not realize how often they change every day.
[00:10:39] Speaker C: It seems like here in California, specifically with that new AB628 starting January, requiring landlords to provide working refrigerators and stoves, just keeping up with short laws like that is.
I just dealt with a client that we brought in last week that was actually getting sued for fair housing. You know, denying a service animal, it's just simple things like that can cause so many headaches. And you know, it's with these laws that are passing every day and you have to keep up with it, again, it goes into the time management. Allocating time to keep up with these is such a hassle for so many owners. And, you know, you don't realize until you're in the moment when you're dealing with a lawsuit or, you know, you're getting complaints from certain applicants and within these issues, or even keeping up and knowing that you have to provide that working fridge and stove with this new law coming out January 1st.
[00:11:30] Speaker B: Hey, Craig, could you go a little bit further into that? I wasn't aware of that. So what happened?
[00:11:35] Speaker A: Team meeting.
[00:11:35] Speaker C: Yeah. So we got a call 5 units down in San Diego and self manager for multiple years, lives out of state, and one of his tenants, he had a property vacant, was suing him for a service animal. And he's like, I obviously do not know what's going on with these laws. I don't know why I'm getting sued, what's going on. And it just made me realize with the headache that I'm dealing with now, constantly going to court, dealing with lawyers, that it's time to switch to professional management with someone that knows what they're doing, keeping up with laws and maximizing, you know, the income that I can get from these properties as opposed to just dealing out checks every day.
[00:12:12] Speaker B: Yeah, that's interesting.
[00:12:13] Speaker A: Yeah, I think too we've seen it's luckily not very common but when people, when tenants or people are aware of the laws, they'll come in with an agenda from the get go. Like they know what to ask, they know what they're looking for you to say and then they know when they can go in for the kill. And those seem to be the bigger scenarios that turn into really big lawsuits.
And it's not even just not knowing the laws, it's you don't know the laws and that person does and now they're using it against you.
[00:12:43] Speaker B: Yeah, they're totally getting set up. And there are those people out there unfortunately Connor, everywhere.
[00:12:48] Speaker C: Yeah.
[00:12:49] Speaker A: I think another important part about being current on the laws, like you might have a property in North County, San Diego and you're going to manage it because your brother in law is a property manager and you can give him a call but he's in la. They're going to be different laws. Like laws are wide and also very specific. And so you need to know the laws for your specific area and you can get yourself in hot water that way too. It's not a general thing, it's a very specific evolving situation.
[00:13:18] Speaker B: So on top of that, and something I don't think is that we've spoke about or will speak about is also too relying on a real estate agent to know all of the laws. And I see that a lot. It's like, oh well my real estate agent got this tenant and they've told me what to do and it's like, oh man, I know when we bring on properties that the real estate agent found the, the tenant 50 of the time, like they're going to be, it's gonna be a bad situation.
[00:13:41] Speaker A: I'm a real estate agent and I'm gonna say 80% of the time it's gonna be a bad situation. 50% generous.
[00:13:47] Speaker B: Well, if you look at it, real estate agents are meant to get deals done. They're meant to find someone, get a deal done, get across the finish line. But in real estate transactions for buying and selling, you generally have the mortgage company that pumps the brakes and makes sure everyone's qualified. If a real estate agent has to do that for a renter, they don't know how to and they won't. They're just trying to get the deal done and Then the landlord has to sit there with the consequences of this potentially terrible tenant in their home.
[00:14:12] Speaker A: Yeah. So if you're using a real estate agent to help you do that, make sure that they also have a property management background or team in place to really facilitate that because that, that can get you in hot water too.
What law do you think is currently in place that most people would be surprised to know?
[00:14:30] Speaker C: That one that I just spoke of is AB628.
Just reminding come the new year that's going to be taking effect is one that kind of surprises a lot of investors and clients that haven't been keeping up with it. Don't know that's a brand new one that's coming out.
[00:14:49] Speaker A: And what's that one?
[00:14:50] Speaker C: That should be AB 628.
[00:14:53] Speaker A: What is that?
[00:14:54] Speaker C: Oh, requiring a working fridge and a working stove at the properties.
[00:14:59] Speaker A: Oh, it is going to be new.
[00:15:00] Speaker B: Can you elaborate on what that actually means?
[00:15:02] Speaker A: This is a quiz.
[00:15:04] Speaker C: They, they added it to the habitability of the unit. So now it's required to provide that within. With every new lease and every rental property, you must, the owner must provide a working fridge and stove.
[00:15:20] Speaker B: Well, yeah, like even some of the consequences of the other laws, for instance, fair housing, you know, section eight. Right. There's, that's such a big topic in our country. But if you deny Section 8 unlawfully like those fines are massive. I think it's $25,000 on the first offense and a lot of owners don't even know that.
[00:15:40] Speaker C: Yeah, even service animals too. The amount of owners and clients that say, oh I don't want pets. And then we get a great applicant that checks every box but they have a service animal. Can't deny that.
You can't deny that. And you have to have constant conversations with clients and investors to tell them, you know, this is allowed. This is by law, you can't deny them.
[00:16:00] Speaker A: Okay. Mishandling security deposits, number four. This is a biggie.
[00:16:05] Speaker C: Yes, straightforward again. Kind of goes into treating it as a hobby, not taking it seriously. Commingling funds goes along with like missed deadlines, improper deductions, that new security deposit. Our team here, we take extensive photos of the move in process before a tenant moves in. Make sure we get a clear understanding of what the unit looks like at the move out period. We take pictures, we need to verify all the chargebacks with invoices in order to deduct the security deposit within the given time. Not a lot of owners know that. I speak with self managers all the time that have no process in place think they can deduct everything.
And when the tenant says no. It was like this when you showed it to me when I moved in a year or two ago.
They have no proof, they can't deduct it.
The way that the laws are set up here in California, they have no basis to do any chargebacks. So I feel like just understanding keeping that security deposit in a separate account, having proper documentation of that move in and move out period and having that checklist in place that you're covering and making sure that everything is in order is the way to prevent this.
[00:17:15] Speaker A: And the timelines of what you can charge back for based on how long the tenant was there.
Right. Because I remember being surprised at like what you couldn't charge back for after the first year. You know, it just kind of seemed a little crazy and it didn't seem like something I would have guessed.
[00:17:30] Speaker C: The wears and tears and.
Yeah. The use lives of different, you know, products and things within those units. Yeah.
[00:17:37] Speaker B: Even in addition to that, what landlord or how much you could actually charge as a landlord for a security deposit and, and what the new laws cap you out at according to how many properties and units you own, pet deposits, things like that.
And in addition on the security deposit chargebacks, actually having to provide photo evidence of all the repairs you make for any deduction that you, you take out of a deposit. Like hardly anyone knows that or even does it. At least not self managers. Of course the professional managers do okay.
[00:18:07] Speaker A: Number five, mishandling large repairs.
[00:18:11] Speaker C: Yeah, A lot of clients and investors, you know, they're afraid to put in that money to fix those issues that turn into huge issues down the road and end up overpaying. Whether it be roof leaks, plumbing. They see that bill and they don't truly understand what could come of those things. Specifically when you're talking about water. And they don't have a secure vendor list, so they're sending out, you know, have general contractors for specific niche instances of doing plumbing fixing roof. You need to send out the roofer, they end up getting overbooked, overcharged. They don't realize the time, the amount of time that it takes to whether it's. You need mold remediation in the specific property.
You know, there's so many instances of those large repairs slowing down the process of getting those fixed. If they don't get in within a certain amount of time, especially when you're dealing with water. I know that we recently had, you know, a couple roof leaks here in California. We don't get much rain but when it does come, you realize you and maybe your roof's leaking. You know, a lot of insurance companies here too as well. You know, you need to handle those immediately, no matter the cause. You know, it's hard to get those insurance claims through when you don't fix those larger repairs immediately. And a lot of clients try to say, oh, I'm going to have out multiple vendors come out. I'm going to, you know, take my time, figure out what's wrong with it. Oh, this is charging too much money and you know, you got to fix those things right away.
[00:19:33] Speaker B: Timeliness is a huge component of the whole solution.
[00:19:36] Speaker C: Yeah.
[00:19:37] Speaker A: And vendors that understand, like certain vendors will know how to handle a situation when it is a landlord tenant and how to properly document everything. And it's important not to just have your local handyman down the street that might not be properly doing it or documenting it properly because that's what comes back down the road if there's a bigger issue and you need to be able to protect yourself.
[00:20:00] Speaker B: Yeah.
[00:20:00] Speaker C: Money and time and preventing anything worse happening.
[00:20:03] Speaker A: Yeah, I feel like this one falls under just homeowners in general, but no proactive maintenance.
[00:20:11] Speaker C: Yes.
Another big one.
I know a lot of times, you know, our property management team speaks with leaks. A ton, which may seem like a small issue, turns into a large one.
You know, we've had owners that, you know, I'll have a small leak in a certain area of their kitchen, don't do anything to fix it, don't care about it. I've had different self managers that I've noticed that have said, oh, there's been a leak here. When I do a property walkthrough with a client and they say, oh, there's a leak there you go and peek in the coverage and you see some mold in there and you know you're going to have full remediation when it could have been the most minimal charge to fix that immediately and rectify it again, it kind of falls into that. It prevents larger issues from arising. It keeps the tenants happy. You know, you're not constantly going into fixing that toilet. You're not having to constantly fix that clogged drain.
You know, your water heater keeps going out, but you're doing the most minimal to fix it or really understand what the core issue is, whether it's you don't want to allocate the funds towards it or you're having the wrong, like you said, Shannon, you know, you're having your local vendor that doesn't truly know what's going on, come out and actually assess the problem and fix it.
[00:21:21] Speaker A: And I think when you have a property management company and a good team in place to be responsive to tenants and make them feel comfortable, you're going to be, you're going to have more success with that preventative maintenance and proactive maintenance because your tenants are going to be letting us know what's happening. Whereas if it's a self manager, they might not want to bug the owner or put anything on their radar and you know, just kind of facilitating that environment where you have better tracking of what's going on with your property so you can get ahead of stuff is.
[00:21:53] Speaker B: Very important something McCray. I don't know if you've dealt with it, but I've talked to clients in the past and we're like, oh, I don't need a manager. My tenant's been there for 10 years and they never call me, everything's great. And I'm like, oh man, you're screwed.
[00:22:06] Speaker A: Yeah.
[00:22:06] Speaker B: And then sure enough, they go and look at the property and everything's falling apart. They just, the tenants just don't want a rent increase, so they've never reported any of it.
[00:22:15] Speaker C: Yeah, I had one along similar lines from a few weeks ago where client reached out, total nightmare situation. She had a previous property management company managing her property, wasn't doing the proactive maintenance, wasn't listening to or receiving any emails from the tenants. Calls from the tenants, I think they didn't have hot water for multiple weeks. And these were tenants, like you said, they've been there for six to eight years, knew the owner and all of a sudden the owner's now getting calls from these tenants saying like, what is going on? You have upset tenants who have been great. Everyone wants a tenant that's been in there, pays on time, multiple years. And now, you know, those tenants are upset for good reason. And you know, just even from a property management standpoint, a bad property management company that doesn't truly take in the value that an owner is looking for. The types of service, you know, being on the phones, taking on top of these proactive maintenance requests can cause issues like that. Even from a poor management company.
[00:23:17] Speaker A: I was bad with that. I think I was younger and inexperienced and we had a rental that was brand new and I. And then the tenants were there for five years and I thought like, oh, it's a brand new property, how bad? And they literally like there was no carpet. There was half carpet there that had been completely destroyed. The other carpet had been cut and torn. Out so I don't even know what happened there and a ton of things going wrong and I just was dumb and thought I was a real estate agent that could do it and I regret it.
And yeah, not chase them down. Did what?
[00:23:46] Speaker B: Did you chase them down and get your money back?
[00:23:48] Speaker A: No, I didn't. I did keep their deposit though. Probably did that wrong, but I didn't.
[00:23:54] Speaker B: That's exactly what we're talking about, right? Like you're a real estate agent, you had a friend who does property management and has multiple rentals, but you're like, no, I could do this myself. And you work in the industry. Imagine those who don't and have those thoughts and are doing it even worse.
[00:24:10] Speaker A: It's not good.
[00:24:11] Speaker B: Not good?
[00:24:12] Speaker A: No. I think like did they murder someone on that carpet? Like why did they cut the carpet out? It's not good because the carpet they left was disgusting. So I just don't understand.
Anyways, moved on from that, Put some LVP in there. We're good. Application process.
[00:24:28] Speaker C: Yeah.
Kind of falls in line with all the other mistakes, you know, not allocating the time to go through all the verification processes, having weak references, not diving down to truly understand the type of applicants coming in, not doing credit score checks, background checks. I know that we reach out to previous landlords for applicants as well. Really understanding who's going to be in there, who's going to pay on time. Because it's pretty devastating when you get a poor tenant in there, whether it be non payment of rent, property damage, you know, having to deal with a possible foreseeable eviction. Just a nightmare situation all around for not truly putting an emphasis on that application process and really screening every applicant that comes through and ensuring that you're going to get a good quality tenant in there that's going to pay on time, treat the property with respect and yeah. Not having to deal with any of the poor outcomes that come from a bad application process and screening. Yeah.
[00:25:31] Speaker A: And then also being able to verify the documents. Like we've seen some pretty crafty Dr. Documents showing that they have a 720 credit score, they have this amount of money and it's completely false. And if you don't, if you're too trusting or you don't have the proper resources to dive deeper into that, you're putting yourself in a real bad spot.
[00:25:51] Speaker C: I know that we've had some applicants even, you know, changing bank statements with ChatGPT.
It's craziness. And we partner now with a third party company that screens it we get the statements directly from the bank. So we have a pretty regimented screening process here and we take pride on it, whether it be from our guarantees as well. And I know that it is time consuming for a self manager and a lot of these things can be skipped. But it is very essential for the health of your investments, making sure that you're getting those payments on time and most of all you're not getting that property damage. You want to know who's in there?
[00:26:30] Speaker A: Does that third party company, do they catch stuff for you guys?
[00:26:33] Speaker B: Yeah. So how the process works is we actually upload the documents that they provide us and it scans it through a software platform that could detect if anything has been manipulated through Photoshop or AI.
But beyond that, we actually go directly to the financial institution and pull the financial records directly from their banks through a service called Plaid.
So we're getting the, their essentially their bank statements directly from their bank, not from them. And over the years we've had so many people, they're like, oh, we thought this tenant would be wonderful. They came in, they provided their credit report, their bank statements, they provided all their references. They were so prepared. And it's like, oh man, you got set up and you didn't even like realize it.
And the majority of it's all fake.
[00:27:20] Speaker A: Fake. And if someone's doctoring their documents, they're going to have a story to back it up as well.
[00:27:26] Speaker B: Always.
[00:27:26] Speaker A: Yeah.
So not good. Yeah. The application process is a big one. Okay, number eight, a bad listing.
[00:27:35] Speaker C: Yes. Get this one all the time.
You know, you have owners that are overpricing their rental properties, you know, leads to longer vacancy. And a lot of conversations that I have are so minuscule in the amount that they want to rent for. Let's say I want to get over $4,000 for my unit. And we're recommending around the 353, 75 range based on what the market data is giving us. And all these owners just see that small price deviation and it sets them apart when they don't understand that time is money. Vacancy is the biggest key metric here. If you let your property sit for an extra month, that's a month's worth of rent that you're losing out on. When we're squabbling over 200, $250, you know, just understanding. Everyone likes to think that they have the shiniest car, the, you know, the best property on the street, the best breed, the best everything but really understanding and pricing that property and having that listing really showcase the amenities, whatever it May be to find that real sweet spot that we can fill that vacancy, get it occupied quickly and at the right price price. So you're not losing out on time, you're lowering that vacancy rate and you're maximizing the amount of cash flow that you'll get on a year to year basis. That is the biggest talking point that I have with a lot of clients ask me what can my property rent for? And you know, going through that talk of like here's what we think we can list it for, here's what you know, our timeline that we give for this property. Here's what we're up against. When you're a local market, we run through a full market comp, see what's out there. We have dedicated leasing agents in every specific region and really trying to let these owners, investors understand that you know, that that time of vacancy is a huge metric that gets overlooked a lot of times when you're seeing a number and it's like I don't really think that that's what I want to list it at.
[00:29:24] Speaker A: And when you, when it's overpriced and it sits well, there's a couple, those couple months, you miss out on those two months of income and then chances are you're lowering it anyways.
[00:29:32] Speaker B: Yeah.
[00:29:32] Speaker A: So you're going to end up in the same spot.
[00:29:34] Speaker C: Always end up lower, always just with.
[00:29:37] Speaker A: Less money in your pocket.
[00:29:39] Speaker C: Yeah.
[00:29:39] Speaker B: Well, if you think about it like I always use the round number of 3,000 just because it breaks down to 100 a day. If you're squabbling over a hundred dollars or two hundred in listing price and your property sits vacant for another month, it's a hundred dollars a day you're losing out on. That's $3,000 at the end of the year that you lost out on because you didn't want to price your properly accordingly. Not only that, but similar to a sales you list high and then your property sits on the market for a while now you're having, you're losing out on a lot of great tenants and now getting whatever is left over that are coming in, seeing blood in the water and offering even lower than what you would have gotten if you would have been competitive on the market in the first place. And there's so much data that shows that it's just hard for people to, to come to terms with it and do, do the smart move, make the right move.
[00:30:23] Speaker A: And then also with the listing, it's the presentation of the listing and that whole process, the listing prep, the getting the house rent ready, show ready.
[00:30:32] Speaker B: Professional photos.
[00:30:33] Speaker A: Yeah, Proper marketing, proper presentation. Everything the way that it's shown is the leasing agent making it where they're there and they're talking about all aspects of the home and everything like that. So yeah, bad listings get bad results. Yep. And your iPhone photos from three tenants ago with your dated house. That's a bad. It's a bad approach. Yeah, but see it all the time.
Okay, what about number nine, the actual lease agreement?
[00:31:03] Speaker C: Yeah, I mean, a lot of, you know, self managers get their generic lease agreements. I mean, chat GPT is all the rage right now. I feel like everyone uses it. You know, they'll type in print me out a generic lease agreement and you know, they'll use that for those foreseeable future. But it just leaves so much room for, you know, legal gaps.
Who's in charge of what maintenance on the property? You know, is the tenant changing out the H vac filters or am I in charge of it as an owner? There's no real, you know, it leads to not disputing at the end of the day. You know, have a general. Get a. Get an attorney in front of it, review the lease, have annual updates, a proper agenda that can really show. Show who's in charge of what. Everyone knows, the tenant knows, the owner knows, you're on the same page. There's no disputes at the end of the day. And I can tell you, I mean, I've seen a couple of these Elise agreements and it's. It honestly looks like they went to a local bar and wrote it on the back of a napkin and said, here you go. And that's about it.
How is this. How has this worked with you for no issues for the last four years? It's mindboggling.
[00:32:13] Speaker B: ChatGPT is not an attorney. It hallucinates. And I've tried it in the past just to test it. It does not give you good lease agreements. And if you want to hire an attorney to do one for you, you might as well hire a property manager because attorney's gonna charge you 10 times more than a property manager will to manage the whole process.
[00:32:29] Speaker A: Yeah, and the lease agreements, I mean, they just grow and grow and grow, especially in California.
[00:32:36] Speaker B: Our San Diego lease agreements are like 50 pages now because of all the disclosures, documents and packets we legally have to provide.
[00:32:43] Speaker A: Yep. Okay. And number 10, not enforcing lease terms.
[00:32:51] Speaker C: And going back to the previous own. Make sure there's lease terms in there outlined.
But yeah, it's so many different tenants take advantage of, you know, landlords that don't have the time, treat it like a hobby.
They'll bring in those pets, those unauthorized pets they'll take advantage of. Oh, they paid late, the owner didn't really notice. I'm going to keep doing it. Or even unapproved occupants, people living in the home that aren't on the lease.
It leads to legal trouble if someone gets injured on there that's on the lease or anything like that. It's total loss of control of your investment and your property and leads to so many future problems. You want to set clear expectations, you want to be consistent about the enforcement and most importantly you want to have routine property check ins making sure that everyone's following those lease terms and the health of your investment and your property is at that level.
[00:33:46] Speaker A: I think this is a great list.
I think anyone that's self managing should probably listen to this and pay attention.
What is your like when someone is considering hiring a professional? When should they do it and why? Like in a elevator pitch.
What would you say, Mac?
[00:34:04] Speaker C: Yeah, I would feel when you are starting to think and you that it is a huge time commitment. Whether it's, you know, your wife's kind of sitting there, your husband's sitting there saying like why are you always on the phone? Like Daniel said it's fourth of July, like why are you answering the phone right now? You know, you should be with us with the family and you know it's all the tenants calling because the garbage disposal is broken again, you know, just understanding how much free time it will separate when you hire a professional manager. You know, vacancy rate, if your property's been on the property for or on the market for a long time, you know, maybe it's time to seek a professional manager to really dive in, see what the market looks like or maintenance issues, the health of your property, like I said with that client that signed on or the property manager that wasn't really treating the property or aligning the goals between the two and, and the owner coming to us and realizing like, hey, like I need someone, I don't live close to this property. I need someone that's going to dedicate, align our goals together and have a true partnership in this I think is huge. Where you know, a lot of property managers have a bad rep because it's just fee here, fee there, fee there. You know, a lot of owners don't see that in the marketplace. And here at Allview we have one straight fee. We don't charge that fee if the property's vacant. We dedicate ourselves to the services.
And we really partner with all of our owners and clients to where we try to maximize their investment.
Something that's important to them, whether it's their childhood home that they grew up in and really align with that. And that's when I think it's really time to look over into the professional property management.
[00:35:42] Speaker A: I agree. Before you are calling for legal advice on a huge lawsuit or potential lawsuit that you have on your hands. That's not the time.
[00:35:50] Speaker C: Before. Yeah, before.
[00:35:52] Speaker A: Let's just eliminate that.
Okay. Are you ready for a lightning round?
[00:35:56] Speaker C: Oh, let's do it.
[00:35:58] Speaker A: Were you prepped with this?
[00:35:59] Speaker C: We'll see.
[00:36:00] Speaker A: We'll find out. Okay. We are gonna. I'm gonna shoot them at you. So best screening advice, allocate the time.
[00:36:06] Speaker C: And don't solely rely on one metric. Let's just say credit scores, like really understand the tenant or the applicant. How they even respond to calls and emails and really get an understanding from a personal standpoint.
[00:36:22] Speaker A: Lease clause.
[00:36:23] Speaker C: Every landlord needs clear maintenance responsibility.
[00:36:28] Speaker A: Most overlooked maintenance item, plumbing and drains. Biggest legal mistake to avoid fair housing laws. Yeah. One mindset shift for successful landlords treating.
[00:36:40] Speaker C: The property like a business.
And stop thinking of professional property management as an expense.
I would say start viewing professional management as a investment and peace of mind.
[00:36:53] Speaker A: You nailed the rapid round.
[00:36:55] Speaker C: Oh, thank you.
[00:36:57] Speaker A: Daniel, what are your kind of just key takeaways.
[00:37:00] Speaker B: I've been out of the business development role for a while, but still realizing that no matter how much time passes and how difficult things get, people still do it on their own, they still do it wrong. And that there's a lot of improvement that could be made in the industry and a lot of returns that can be generated if it's done right.
[00:37:17] Speaker A: And McCrae, if you. If anyone's kind of interested in talking to you more. How does that look? How do they do it?
[00:37:25] Speaker C: Of course, yeah. If, if. Even if it's just general questions, feel free to give me a call, shoot me an email.
Go to our website allviewrealestate.com youm can get a free market rent analysis there. We can dive deeper into your property. You know, here at allview we have transparent pricing. We'll find or we are full service.
We can dive into the details of whatever situation, really dive into those pain points that you're feeling. And I know that we'll be a great partner for you.
[00:37:55] Speaker A: I love it. Chances are you've heard it all before.
[00:37:58] Speaker C: So. Yes, unfortunately, yes, all of the things.
[00:38:03] Speaker A: Daniel, do you have any closing thoughts?
[00:38:06] Speaker B: It's getting harder and harder to be an independent landlord. The state and the cities are not making it any easier and that trend is just going to continue. So whether you want to manage it yourself or hire professional property manager, make sure that whoever is managing it really knows what they're doing. Otherwise your investment's going to turn from an investment to a liability very quickly. And by the time you realize that, it's going to be too late.
[00:38:29] Speaker A: I thought you were going to say it's getting harder and harder to see, but did you forget you just had a procedure?
[00:38:38] Speaker B: But, uh, yeah, that's not what my recommendation would be to our clients.
[00:38:43] Speaker A: Yeah. No.
Okay. Well, I loved this episode. I'm appreciative of everyone that has listened and made it with us to the end. And I hope you guys are subscribing and following and sending any questions over our way. If there's any follow up questions after this episode, feel free to put them in the comments. I will not answer them, But I'm sure McCrae will be happy to.
[00:39:04] Speaker B: You don't want another thing? We are not attorneys, but we do know the laws. But we're not attorneys. So also consult with your attorney because if you're listening to this, a year from now, I guarantee you the laws are going to be very different. And depending on what county, state, county and city you're in, the laws can be very different across the board.
[00:39:22] Speaker A: Yep, we're somewhere in between ChatGPT and an attorney. Or the middle ground in that.
[00:39:27] Speaker B: Yeah.
[00:39:28] Speaker C: Good place to be.
[00:39:29] Speaker A: Good place to be.
[00:39:30] Speaker C: Okay.
[00:39:31] Speaker A: Goodbye my friends.
[00:39:32] Speaker C: Thank you. Bye.
[00:39:34] Speaker A: Thank you. You're the best.
That's a wrap on this episode of AllView 360, all things real estate. If you found this helpful, don't forget to subscribe, leave a review and share it with someone navigating their own real estate journey. Connect with us anytime on Instagram @AllView360 and on LinkedIn @AllView Real Estate. Until next time, stay curious and keep your perspective. 360.
