Welcome to The Accelerated Investor Podcast with Josh Cantwell, if you love entrepreneurship and investing in real estate then you are in the right place. Josh is the CEO of Freeland Ventures Real Estate Private Equity and has personally invested in well over 500 properties all across the country. He’s also made hundreds of private lender loans and owns over 1,000 units of apartments. Josh is an expert at raising private money for deals and he prides himself on never having had a boss in his entire adult life. Josh and his team also mentor investors and entrepreneurs from all over the world. He doesn’t dream about doing deals, he actually does them and so do his listeners and students. Now sit back, listen, learn, and accelerate your business, your life, and your investing with The Accelerated Investor Podcast.
Hey, guys, what’s going on? Welcome back to Accelerated Investor. This is Josh Cantwell. Thanks so much for hopping on. I appreciate you listening to the podcast and sharing with me and sharing this on social media. I’m really grateful and feel blessed that you’re engaging with me and listening to all the amazing guests and solo casts that I’ve been doing. Today’s episode is, and today’s training, is around managing of your multifamily and apartment buildings. I did a great call last week with my good friend Jack Petrik. We own an organization called the Ohio Landlord Association. O.L.A. And the Ohio Landlord Association was really kind of just getting going, getting kicked off in the early part of 2020. And we got slammed with the Corona virus and we had a first couple of meetings, had a big turnout, roughly 75 to 100 people at each one of those events. And then, of course, the virus happened and nobody’s leaving their homes. And so we did a virtual training last week, the Ohio Landlord Association, but we did it on a virtual webinar Zoom call.
And Jack and I were talking about things to do and things not to do to be an effective manager of your apartment buildings and multi-family units and your rental portfolio. And we shared that with our older members and saw what I wanted to do was hop on and share this with all of our members today in Accelerated Investor. And so checking out, we’re talking about what are the six things that you should do when you’re, you know, effectively managing your rental properties. And the first thing is always knowing what your occupancy is. So on a daily or a weekly basis, getting a report from your property manager, whether it’s an in-house team or an out of house team, what is your occupancy of all your units? Number two, what are your collections? Because occupancy doesn’t mean anybody paid. And of course, for us, the rents are due on the first of the month. They have until the fifth of the month, basically a grace period. Then on the sixth of the month, they incur a late fee. So the best time to really check your collections is really on the 6th of each month.
Then if they don’t pay on the 10th of the month, we post notices and then on the 15th of the month we start eviction. And so that’s our process. So the question is, is what’s your collections on the sixth, the 10th, the 15th and the 30th of each month? Another thing to do is constantly be adjusting your eviction policies. So, again, we like to be a fairly hardcore landlord. We have very little room for giving people breaks unless they’ve been a long-term tenant. They’ve been a long-term tenant for a long time and they just happened to bump into a tough, tough time. Maybe they lost their job, maybe going through an issue, but they’re otherwise a very reliable tenant. Then we’re willing to work with them. But again, we’re still going to post the notice. We’re still going to charge a late fee on the six, still post the notice on the 10th. The question then just becomes, do we file the eviction on the 15th?
For the most part, we’re still going to file the eviction on the 15th, because when people have problems, you know, we can still file the eviction. Then they can always get caught up later. But the more people know that we’re a serious landlord, that we manage our properties very actively and aggressively the more they’re going to pay on time. The next question that we’d like to understand is what’s the marketing process for leasing units? What websites are we marketing the properties on? Do we have signs in the front yard is still very effective to put signs in the yard of all of our units, whether it’s an apartment, whether it’s a multi-family property, a big apartment, small apartment, whether it’s a single family home, signs in the front yard still work. Probably one of the most effective ways to market for properties are simple signs. People drive by there in the neighborhood. You know, if they’re driving through the neighborhood, they might want to live in the neighborhood. And a simple sign that says for lease or for rent, that works.
But again, you have to be on Facebook. You have to be on the Facebook marketplace. You have to be on Craigslist, you have to be on Web sites, those kinds of things, in order to constantly drive in new inquiries and new applications. The sixth thing that we worry about, I’m sorry the fifth thing out of six is do we have enough and the correct crews? And again, when you own 700 units like Jack does or two thousand six hundred units like we do, then you look at. Do we have enough crews to manage turnovers? Like, do we have one team that can just manage people moving out and moving in, moving out, moving in. People move out. We want to improve the unit.
And then people move in and we want to be able to not worry about improving that unit again for the next five years. You know, paint, LV P flooring, maybe backsplash remnant. Granite’s updating the fixtures and the finishes. Do we have enough crews just to handle turnovers? And then secondly, do we have enough crews for capital improvements if we’re doing significant capital improvements to the entire building, whether it’s driveways, landscaping, snow shoveling, whether it’s windows, roofs, whether it’s point of sale violations. And then finally, the sixth thing is really evaluating the effectiveness of each team member.
You know, some team members are only good at really handyman work. Maybe hauling things and really unskilled labor. Other guys are going to be paid a lot more money, but they’re very effective at skilled labor and doing lots of electrical, plumbing, backsplash, laying tile. So you have to understand. And what’s the effectiveness of each person on your team?
Now, six things not to do to be an effective manager of your cash flowing portfolio. First of all, don’t be clueless about your operations. You don’t show up on sight. Watch your team work. Stay onsite for the whole day. Find out who’s doing what. Don’t be just fearful. Don’t be clueless about what’s going on. You know, I used to say how proud I was that I didn’t go to my properties. Well, that just proved that I was a fairly clueless and ineffective manager. Number two, don’t fully rely on third party management without verifying the information. So we have third party managers for a number of our buildings and our properties. But we also have an in-house manager, his name is Tim Roth. And Tim will go verify what the property manager is saying. We recently had a plumbing stack that was leaking. They wanted to rip out the entire plumbing stack. Well, Tim was able to replace that for pennies on the dollar and not having to rip out the entire plumbing stack.
So don’t just rely on your third party for all their information. Number three, do not have, you know, and no one available to do spontaneous site visits. OK, you want to have someone available that can show up unannounced and verify operations, cleanliness, landscaping, snowplowing, you know, whether the garbage is being taken out. You know, whether if you have a large enough building, the management office is clean and welcoming. You want to just show up out of the blue. And, you know, for me, I like to be sort of an emotionless manager, meaning when I show up on site, I’m not going to get super chummy with my employees when I walk in. Have a pretty straight face. Make them show me that the operations, cleanliness, landscaping, the property management is going well and I’m going to leave. They need to know that I’m a serious owner. I remember when I said I used to deliver pizzas for Papa John’s when I was in college and the owner of our shop, he owned like 26 Papa John’s franchises.
Well, he popped in one day. Sight unseen. And, you know, there was a uniform, khaki pants, red shirt, red hat. I had to put a sign on my car while I showed up for work in cargo shorts, red golf shirt, no hat, tennis shoes, no sign on my car. And the man, the owner was furious. Now, he didn’t take that out on me, but he absolutely blistered the restaurant manager that, you know, Papa John’s calls them restaurants. So he blistered the manager and then the manager turned and blistered me. Right. Because he did a spontaneous site visit and was not happy that I was not following protocol. Okay. Number four, things not to do. Don’t lose track of controlling your costs. OK. If you’re gonna own big buildings, apartments, multifamily, you’ve got to understand what the costs of things are. This is definitely one of my weak spots that I’ve always been working on is understand the costs of renovations. Because for me, when a contractor would say, hey, we need to do this, I’m like, okay, go ahead and do it.
As I got more mature in the business, I realized I better double check this guy. I once had a guy call me five thousand dollars to paint one of my single-family rentals. And his name was Willie. I’ll never forget Willie as a guest. Forty-eight hundred dollars to paint the entire place. Is that OK? I said, Willie. So I got his quote. Then Willie needed work like two weeks later, says that he wants to come out to the property. And I’ll have you do a bunch of different handyman work. So he started laying some LV flooring in the kitchen. He improved the bathroom. He did a bunch of stuff. And I realized that, you know, Willie was working for twenty-five dollars an hour, so he’d work all day for 200 bucks. And I asked Willie, I said, how much, Willie, would it cost? How much time would it take you to paint this entire house? He said about a week.
I’m like, OK, so think about that, Willie’s working for twenty-five dollars an hour. That’s two hundred dollars a day. Two hundred dollars a day for five days for a week. He would be willing to work for a thousand bucks. So then I asked Willie, separately, I said Willie, how much you think the material is to paint this house. He said, Probably seven hundred bucks. So he just boxed himself into a corner. He said, I’m willing to work for twenty-five dollars an hour, which I thought was fair because he’s sort of a skilled labor. He can do electrical plumbing and do backsplash OVP flooring, do stuff like that. And then the material was seven hundred bucks. Sothe true cost to do that job was one thousand seven hundred dollars. And Willie tried to charge me five thousand dollars to do the same job.
So we like to flat rate a lot of our work, meaning we find out the cost to improve a unit. We have a checklist of everything we want to do from flooring to paint, backsplash, the toilet, the vanity, the shower, you know, the run, the granite countertops, you know, swapping out some of the fixtures. What is that cost per unit?
And then we just flat rate it and say, turn over this entire unit. And this is what we’re gonna pay for that. Okay. Number five, don’t have broken down relationships between your property managers and your tenants. You know, I’ve heard horror stories from some of my friends who’ve bought apartment buildings, and it’s a perfectly good apartment. It’s a perfect, perfectly good tenants. But the property manager was sort of a pompous jerk and the property manager was turning off all the tenants. So the problem was a broken down relationship with the property manager. OK. And finally, number six, don’t have ineffective marketing or stop marketing at any time, including during the coronavirus, OK?
People are still moving in and out of units. People are still showing up. People still are changing jobs. People still want to move out of the unit. They’re in into a different property or a different unit. So make sure you continue marketing, because if you have a really nice unit. Think about it. Jack and I were talking during this presentation. We talked about, hey, if you have somebody who’s a potential tenant and they’re walking down a vacant hallway into a vacant unit, what’s the risk of showing that property? There really isn’t any risk. OK. So just one of the pass along these tips to all of our members for six things to do to be an effective manager of your portfolio in six things not to do to be an ineffective manager of your portfolio.
I hope you enjoyed this episode of Accelerated Investor in this training. If you have any questions, just leave them right in the comments live right on this page, wherever you find it. And also make sure if you’re looking for tips and tricks to raise more capital and find more deals to build your apartment and multi-family portfolio, visit us at JoshCantwellCoaching.com to get one-on-one coaching the build your portfolio.
Also, if you haven’t heard, I released my newest book called The Flip System, which teaches some of the strategies that you learned today on today’s podcast. You can get a free copy of that book shipped to your home. Just pay the shipping and handling. You can get a free copy that book at GetFlipSystem.com. Thanks so much for being here at Accelerated Investor. Let us know we can do for you. Leave us a rating and review. We appreciate all your feedback in sharing this all-over social media. Talk to you soon. Take care.
You’ve been listening to Josh Cantwell and the Accelerated Investor Podcast. Leave a comment on our iTunes channel and let us know what you want to learn next, or who you’d like Josh to interview. While you’re there, give us some five-star rating and make sure to subscribe so you can be the first to hear new episodes. Follow Josh Cantwell and his companies, the Strategic Real Estate Coach and Freeland Ventures on all social media platforms now and stay up to date on new training and investment opportunities to start your journey toward the lifestyle you’ve always dreamed of. Apply for coaching at JoshCantwellCoaching.com.
I used to brag about never visiting my apartments because I thought that that made me an awesome hands-off owner. Actually, it made me an ineffective manager. Don’t be surprised by tenant and apartment manager problems, or by projects that didn’t go as planned. If you want to be an effective portfolio manager, pay attention to these 6 Dos and 6 Don’ts to protect your assets.
Occupancy rate is one way to measure success, but it doesn’t tell the whole picture. Not everyone pays the rent, so keeping an eye on the collection rate is a better way of figuring out your property’s financial health. I share the dates that I check collection rates, and why I don’t look at them on the first of the month.
I don’t want to get taken advantage of, so I try to come across as a firm landlord. Whether this means adjusting my eviction policy for long-term tenants, or checking up on my crews, I’m not there to be their friend.
One of the lessons I’ve learned as I’ve managed apartments is how to better estimate how much a job costs. Willie, my handyman, taught me a valuable lesson on the difference between paying by job or paying per hour. Crews that are more skilled can and should demand better pay, so evaluating the effectiveness of each team member is an important part of your job.
People are still moving in and out during the pandemic, so there’s still work to be done. Show up and do some spontaneous site visits to keep everyone honest.
- How we treat long-term tenants a little differently.
- When the best time to check your collection rate is.
- Stay on site more often and pay attention to what your crews are doing.
- Why we prefer to pay a flat rate for a lot of our improvements.