Epic Real Estate Investing - How to Find the Perfect Tenant | 516

Episode Date: November 7, 2018

Who is the perfect tenant, and how can you find them? Learn how old-school marketing can help you find the ideal tenant, how to reach them through online marketing with zero budget, and why you should create a "tenant pool." Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terio Media. Don't wait for appreciation to buy real estate. Buy for cash flow and wait. In other words, Hold That House! Your host's Matt Andrews and Matt Terrio. Yes, hello. Flipping houses, it can make you rich.

Holding them will make you wealthy. This is the Hold That House show. I am Matt Terrio and over there is Mr. Matt Andrews. Boom, Shakalaka. And before we begin, we've got a free gift for you, just for you. Go to hold that house.com and download the four-hour work month, the Ten Commandments to Managing Property Managers. It really is the key ingredient to financial independence through real estate that they're not telling you about. No one's telling you about this.

No one is talking about this. No one will ever tell you about this because it lacks sizzle. It lacks sizzle. And the only people who can talk about it are the people who've been in the trenches doing it. Exactly. And we're few and far between. Right. Right. So it lacks sizzle on the surface, but it is the stake beneath the surface that's really

going to deliver you to financial freedom's front doorstep. It'll increase that cash flow, and that's got some sizzle. Yeah, shoot, that's what drives me every day. Big checks, baby. Big checks. Nothing like that automated income. And you can get that for free at hold that house.com. That's yours for free.

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All righty. So today we are going to talk about something that really makes the cash flow come in. It's probably second only to the property manager. And that would be the tenant, finding the perfect tenant, the one that is going to pay you, pay you consistently, and, you know, bother you as little as possible. Exactly. Right?

Never call you. That's the perfect tenant. So there are approaches to finding the perfect tenant. Sure. And I know Matt has a list over there because he's done a lot of this stuff on the ground. He's been in the trenches and he's implemented all these practices. But there's one thing that kind of the essence of what you need to kind of keep your, I guess your focus on. And this has to go with selling a property too.

The same principle works for finding the perfect tenant. tenant. And that is, just think of yourself in an auction house. And they've got this famous painting up on the auction house. They're going to start the bidding at $1. And there are 10,000 people in the auction room. Right. So that bidding starts. It's $1.00 over here, $2 over here, $5, $10, $10, $100,000, $1,000. We get up to $10,000, a million bucks, depending on what that painting is. But can you do like an auction thing? Like, how? Well, that was my attempt. So obviously it was, I was not successful. Have you been to a tax lien auction? I have.

They do that, just like the selling cows and pigs. I'm like, wow. Look at them. It's like storage wars up in that. Exactly. Exactly. And so keep that reference that if you want a deal, you want as few people in the auction house as possible, right?

But if you want to sell something, you want as many people in the auction house as possible. Yeah. So in this scenario, that painting is your house, right? That's your rental property. So you want as many people in the auction house as possible. And you do that through exposure because exposure drives value and value drives demand. And so what we're going to talk about today is maximizing the exposure of your rental property that will have which that exposure is going to drive the value of your rental property.

And the higher that value goes up, the more demand you'll have, the more people that will come to your auction house. Absolutely. You want to cast a wide net. I mean, that's the whole, that's the whole thing in real estate. No matter what side of it you're on. If it's real estate investing, it's a numbers game, right? You look at a lot of properties to find that one perfect property. You look at and you bring in a lot of prospective tenants to find that one good one that you want for your house, right? And then, you know, we're not going to talk about how you qualify those tenants and how you screen those tenants. We've talked about that in past episodes. We'll talk about it again. But specifically, we're talking about how do you fill that net?

How do you cast that wide net? And how do you market to bring in, you know, all kinds of eyeballs, you know, to your properties and how do you bring people into your tenant pipeline? So that's what we're going to talk about. And there's a lot of ways to do it in there. Sure. I mean, there are so many different ways that you can market a property. So, you know, I kind of split this up into a couple different, you know, sections.

The first thing I was thinking was, you know, kind of the old school methods of getting a property tenant, right? So we're going to talk about it. Still work. Absolutely. Absolutely. Old school works and it works for lead generation in a lot of different ways. So when I talk about old school, I'll talk about the stuff that has been working for a long time. So when I think old school marketing, old school marketing for a rental, the first thing I think about is bandit signs. Right. Right. I mean, you've used those in your business, I'm sure. I've used them a ton in mine. And I know a lot of people out there, that's probably the first stop when you want to attract tenants or maybe when you're looking for distress sellers, if you're doing that to acquire properties, bandit signs are that first. stop. So we use those in a number of different ways. We talked in the Section 8 podcast about how we strategically place those signs around the Section 8 office so that we get those calls. And, you know, bandit signs are different everywhere. Maybe they could kind of be placed somewhere around big

apartment buildings, something like that. Pretty smart. Sure. Absolutely. Absolutely. And, you know, especially at areas where someone's got to stop and look at it for a second. So you always want those busy intersections. And I'm not going to go into the theory of how you place Bandit signs. and where you do it. Every city, every state is different. You know, it's one of those kind of things where they call them bandit signs for a reason. They are in a legal gray area in most areas, right? But certain areas, tolerance and acceptance of that is different. You know, so there are certain cities, you know, in central Florida that I could put them everywhere. And there are certain cities where if I even put one out, I'm going to, they're going to pull it up. I'm going to get fined, you know.

So you have to kind of know what your area is and what's par for the course in your area. but there really is no better low-cost option starting out than to put a good sign, you know, even handwritten, you know, in fact, sometimes those are even better, handwritten signs that say, you know, let's say you've got a three-bedroom house for rent, you know, three-bedroom home for rent, you know, maybe something like brand new renovation, and then your phone number, you know, I usually like to put something about what the house is on the very top line, three-bed, two-bath, one-car garage or something like that. And then that middle line, you know, I kind of look at every bandit sign, 18 by 24 is like three lines.

So that's the top line. That second line, I want to put something there that separates it from others. Sure. You know, so if we're running a special and we're not charging deposit, I'm going to put no deposit required. You know, or if I'm doing like a no background check thing, which I don't think we'd do that, but if that was like the thing we were doing or if that was the way to get the phone ring and you put that in there. And then you put your phone number at the bottom. New appliances is a good one. New appliances.

Yeah. You know, one time we gave away a free TV when we were, you know, renting an apartment or renting a bunch of apartments, you know, because we had these TVs that we could get for like $200. And that was great. So we said, you know, free TV upon sign lease or something like that, you know. So hot parts of the country are during the hot months. Central AC is a big.

Central AC. Much of the Midwest, much of the South, especially rental units, still operate with wall units. Yep. So Central AC is a great attractor of tenants, and it's a great retention item as well. Absolutely, absolutely. You know, move in special. And that can mean anything, right? But I like to put that in there a lot of times.

Move in special. I've even put, we'll move you in, you know, and we've offered incentives for qualified tenants to actually, we get a rider truck, and, you know, we send a guy, and we help them load up and we help them unload. Right. You know, it's just something that gets them, you know, a little bit more inclined to do business with you.

But bandit signs are a great way to do that. So it's definitely way I use. Put a bandit sign that's totally illegal. is in front of the property. That's about as old school as it gets. That is about as old school as it gets. That is about as basic and as old school it gets. Exactly. Make sure you put one in the front yard of the property.

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and accelerate its arrival. Go to turnkey allies.com. More building, less waiting. Turnkeyallies.com. However, there is something to consider depending on your market. A lot of different markets, especially the higher cash flow markets,

you might not want to include the property address. True. Just because it tells people that the property is vacant and you're open to nastiness. You're advertising. Come squat at my house. Come squat in my house, come steal my copper, come get my fixtures, come vandalize. Come take my AC.

Yes, exactly. And that's something we dealt with a lot, especially in Central Florida, during the foreclosure crisis. I mean, I don't think I bought a bank on home for two or three years that had a Central AC still there. You know, I mean, they would rip them out. And a lot of times people would know that because of signs out there or a Craigslist ad with the address on it, that type of thing. So you've got to be careful about that kind of stuff. But signs are definitely a good old-school way to generate leads. Another way, similarly old school, is flyers in the neighborhood.

Or flyers, you know, flyers, you know, I've had my property managers go to laundromats, go to, you know, community centers, you know, anywhere you can think of where people in that community would congregate and see, you know, a home for rent or a apartment for rent or whatever. Very much a guerrilla tactic would be apartment buildings as well. Putting them on the apartment. They live in an apartment moving up. up to a house without any real extraordinary effort can be very appealing to apartment dwellers, for sure.

Absolutely. And we've also, and it's all about- Just don't do it at my apartment buildings. Right, exactly. And what are the addresses on those? No, yes. So we've even had property managers, because it's all about getting out of the box sometimes

to get people in, right? And to get, to get people looking at your house or apartment. So we've even had property managers go out in the neighborhood where the property is and post flyers on the doors around other people's houses. Why would they want that? Well, you give them an incentive to bring you a renter. So you say, hey, we pay referral fees.

Bring us a renter for our house here, and we'll pay you fees. That works like a charm in the right type of neighborhoods. If you're giving somebody a $200 cash on the barrelhead for bringing you a good qualified renter, they're going to talk to their friends about it. Hey, we've got a house. They may not even tell their friends why they're doing it. We've got a great house here. You can rent.

They make $200. Right? Absolutely. Another incentive, though, that can be just as appealing as a referral fee is choose your neighbor. Here's your opportunity to choose your neighbor. That's good. Yes. That's really good. I'm going to use that one too. Well, there you go. You can have it. All right. Cool. I'm taking it. We use that one. And I used to use that as a real estate agent all the time. Yeah. When a house would go up for sale, like here's your opportunity to choose your neighbor. And have you ever thought there goes the neighborhood? Well, don't let that be your neighborhood. Exactly. Give you the opportunity to choose your neighborhood. Show a picture of the guy you might move in if they don't choose a good one, you know, or something like that.

This is the guy I just pre-qualified for this property. Do you really? You better find me a buyer quickly. That's pretty good, yeah. So flyers and just being creative with that and where people will see it, that's another good way. And then, you know, and this kind of goes with that, with what we just talked about, their referrals. You know, just letting people know that there's a place for rent and that you'll give them some kind of referral fee for doing it. Or telling your current tenants and letting the know all the time, hey, we give, you know, we will chop up.

off $100 in your rent if you refer someone to us, then ends up moving into one of our properties. That's a great way to get tenants, you know? So as you're moving somebody in and they're happy and everything and they're moved in and they're ready to go, you let them know, hey, we also have this program where you can, you know, get some money off your rent. For sure. So, hey, bring me 10 qualified people, $100 a pop, you won't pay rent for a month or two, you know, or whatever it is. So that can really incentivize people and those are good, warm leads, you know. You still have to qualify them. You still have to screen them. You still do all the things that you use. do or that your property manager does, but we want to get, we want to cast that net,

we want to get people in that door, right? So those are kind of the main old school methods, you know, that I've used. Churches are another good place to make sure your message is out. Churches, yeah. They do a lot for helping people get settled. Absolutely. Getting relocated, getting resituated. A lot of rehabilitation, a lot of stuff like that to where they're just giving someone

a helping hand. And a lot of times the churches pick up those moving fees and they pick up the, they do. Pick a supplement their rent and everything like that for sure. Catholic Charities is one that we've, have referred a lot of properties to us in Florida and in Michigan, you know, and that's a big charity that, you know, helps people relocate. Right. And a lot of times they pay those deposits and those moving fees and that type of thing. So, yeah, that's a great one.

That's a great one. So really, I mean, there's no bad place to get a tenant referral. Right. There are bad tenants, you know, and you screen and make sure you get those out. But there's, you know, there's no bad referral. The worst that can happen is you don't rent the place to them because they're not qualified. Right. You know, so that's the worst that can happen.

So take those referrals. and incentivize people to bring them to you. Now, another way that you can market your property for rent, and there's a plethora of ways, you like that word? I like it. There's a plethora of ways you can advertise and market your property on the internet, right? And so you and I, Matt, use a lot of these. You know, there's so many different ones.

So we'll just, you know, we'll just run down a couple of them real quick. Craigslist, okay? Fantastic. I mean, it's the bulletin board of the internet, basically, right? It's amazing how effective that still is. It really is. It's such like, tell me something I don't know. No, no, Craigslist, that's enough.

A lot of times you don't need to know anymore. Many times it is. A lot of times that's enough. Sure. And I buy properties from, you know, sellers on Craigslist, and I'll sell properties on Craigslist too sometimes, you know. But really, really good place for attracting tenants, you know. And you don't need to put up the property address necessarily,

but you can put up great pictures of that property. And one of the tools we told you about in one of the previous episodes was V-Flier and Postlets. that can import right into Craigslist. So if you put all your information into Craigslist or into V-Flyer, you can import it right in there. It looks beautiful, great pictures. And pictures are what's going to sell the rental, right? So you want a good picture of the outside.

You want a good picture of that kitchen, you know? And I like Craigslist because unlike signs or some of these other methods, people can really take a look at the house. You know, I think that's really, really strong. So Craigslist, Backpage is kind of the Craigslist of certain areas. You know, I know some are, you know, Craigslist is bigger in certain areas and backpages bigger in certain areas. So, you know, you can use either one of those.

And then there are some of these real estate sites like Zillow and Trulia and I think even active rain. You can do some rental advertising there. So, you know, that's not as effective as, you know, some other paid means of advertising, obviously, but for free, that can give you some great exposure. And I've certainly rented, and my property managers have rented properties that they've created a V-flyer or a postlet on. and then they've, you know, what they call syndicated it by pressing a button on V-Flyar to Zillow and to Trulia.

And if somebody's looking for rentals and they type in what their amount is they're looking for and what the area is, then you're going to be one of those rentals that show up, right? And then you can pay for additional placement. You can pay for additional views, but you'll get a lot of views just posting it like a bulletin board on those sites. Zillow has an actual app, Zillow rents where all the rents go. And I'm on there all the time because I'm always looking for that perfect beachfront property that I couldn't steal. Nice. A nice rental price. Nice.

So I'm always on there. And I know I'm not the only person on there. So it's a great service. Yeah, people. And that's, you know, Zillow is starting to be kind of the first stop for a lot of people, for a lot of real estate needs. Just to do a quick check there before they move on to something else. Right. Just to see if they can find what they want there.

So renters are definitely checking that out. And then another place is, you know, Facebook and LinkedIn. Now, I'm not going to go into all the different ways. you could market there but you know if you are in a certain area where you are you know you're in a target market and you're renting properties there on a regular basis it's not a bad idea to create a Facebook page for your rental efforts there right sure and you can always post you know pictures there you can then use that you know and email as you send out and direct people back to Facebook pages and then

LinkedIn man there's probably a hundred ways you could use LinkedIn but I I would join groups of, you know, property managers in the area that you're at. So find property managers or find real estate investing groups in your local market. And then you could actually send them the information on your rentals that you have because they might have referrals for you. You know, so again, that's just high-level internet networking, you know. And those are all, everything I just mentioned there, you can choose some options that are paid. But every one of those options are free.

Right. You know, so Craigslist, Backpage, Zillow, Trulia. Facebook, LinkedIn, you can get a lot of attention to a rental property for zero budget. So that's really good. So why wouldn't you do all those? Just like band. You want to leave no stone unturned when you're looking for the perfect tenant. And so you want to attract as many as possible.

So you have your choice. Exactly. Exactly. We want the masses in and then we want to choose the top percentage of those people that come in. It's a numbers game. So another way would be realtors, obviously. You could always, you know, hire a realtor to list your property. property on the MLS, you know, and either maybe it's your manager that has the ability to list on the MLS,

or maybe it's just a realtor that you can pay and give them a commission once they rent it and then you manage it or whatever it is. But people are definitely checking on MLS listings to see, and that shows up on Zillow on some other places too. So that's obviously a way to do it. That's not a free way, but that's a good way to get more exposure. And then, of course, property managers. So a good property manager if they're working for you and they're managing your property on an ongoing basis, they should be doing all this stuff. Absolutely. And probably more.

You know, and there's a lot of ways they can market their properties. And a good property manager has a process for this, right? Right. And when you ask a property manager, okay, so tell me the, you know, the best sources of tenants for you. What's the best source of tenant leads for you? If that property manager can't immediately come to you and say probably this one, this one and this one, you know, and list two or three because they know where those leads

are coming from, they can't tell you that, you better think about that property manager. Absolutely. If they don't know where their leads are coming from and they don't know what their primary lead sources are, they may not have the system that they need to really adequately manage that property for you. We have Rochelle that works here at Cashflow Savvy. She's, she manages the property managers.

And so she's making sure that they complete the rehabs on time. She's a manager manager. Yes. And she's, she always runs her checks and balances through the rent rolls that we receive every month. And another one of her things is she augments their promotional efforts to find tenants. And so that's so important that, you know, we actually help our property managers find tenants because we want them to have the selection.

And they appreciate it so much because we will typically get the best tenant because there's five other people that did not get the property that they have other properties for that they're managing for other people. And it's just a way of, you know, we scratch their back. they scratch ours. That's great. And the more people you have working on a project like that, I mean, the better tenant you're going to have. The wider than net. The wider than net, the more people in, the more people you have to choose from. Right. So yeah, you want that tenant pool to be big, you know, so you can choose the best possible ones out of it. So that's great.

You know, not just your property manager, but perhaps the manager of your property manager, right? Which in many cases, like for me, that's me. You know, I'm the manager of the property managers for my company. So, you know, I could definitely give them additional help, not up on their toes, not try to do their job, but do things like Rochelle does for you that really, you know, help them with their job and just beef up the efforts, really. So, I mean, again, I mean, we're talking about this over and over again. This is your investment. It's, it's up to you to manage that investment. Right. You know, you can be uninvolved on a daily basis, but it still requires your attention.

It's yours. Why shouldn't it? Right. You know, you don't want to relinquish everything to somebody else and put your entire future into somebody else's hands, you know, and if you, if it's going to help you find a better tenant, a longer term tenant, a better paying tenant to go ahead and help your property manager market for tenants, why wouldn't you? Absolutely. You know, you can sit there and you can be, well, why should I have to? It's his job. This is true. But you can be right about it, or you can find a better tenant. Right. You know what I mean? And I just, that mentality of, you know, well, that's what they do or why should I have to do it. And maybe they shouldn't.

Yeah, technically you might be right. Yeah, exactly. And that will make you zero dollars being right. But if you have the ability or the resources or maybe a few, a little extra time to help, this is your investment. And, you know, that investment is going to pay you. And that should be very important to you. Absolutely. Yep.

Absolutely. And then the only other thing that I had that I wanted to mention was, you know, if you don't have a property manager who's giving new ongoing service, if you are a landlord and you're managing the properties yourself, you can at least outsource the tenant acquisition piece of that if you want to because many property managers, I'm sure not everyone, but many property managers will offer a one-time placement kind of option. So maybe, you know, if you used them for ongoing service, they charge you 10% and then, you know, what's pretty typical? Half of one month's rent. Is that pretty typical now, right? So that's what we pay most of our property managers. They get half of one month's rent.

when they rent that apartment and then they get 10% after that, right? Or rent that house, 10% after. Standard. Standard, yeah. So some property managers will do a one-time placement fee. And what I've seen is standard for that from the markets I'm in is they usually charge a full month's rent.

Is that pretty typical of what you're seeing in your markets or different? I see a balance between it's half months or first month rent and then between 8 to 12%. And those things kind of move up and down in correlation, I guess. they're closely correlated. Okay. So it just depends. Somewhere in that neighborhood.

Yeah. Yeah. So, I mean, I gladly would pay if I was managing the properties myself. And when I did, sometimes I would have, you know, too many vacant units at once when I was managing a ton of properties, you know, my own and other peoples. And I would just, you know, I quite frankly needed some help. I needed to outsource some of that, you know, tenant placement, you know. So I would gladly pay one month's rent to have them find the tenant, spend the money or the

or the time for marketing, qualify that tenant. bring them to me, move them in, get the lease signed, and then hand it over to me. Right. You know, that's a no-brainer for me. So for those of you who are, you know, the do-it-yourself landlords, who are the ones doing your own maintenance and, you know, investing in your backyard and, you know, driving by those properties and everything, just realize you can outsource, even though you're handling that, even though you're your own property manager, you can outsource pieces of that.

And that's really, really good to do sometimes. Because if your goal, like we keep talking about, is to acquire more properties and, you and find good distressed properties and fix them up and rent them for profit, you're trying to build your long-term buy-and-hold portfolio, then anything that you're doing that takes you away from that is slowing down your progress there. And so outsource it. Outsource that to a good property manager that'll just take that and handle that for you. Why wouldn't you outsource that headache if it's something that you're not good at

or something that's just taking too much time? Right. That's a really good thing. Right. And let's see. There's two things I want to really drive home here before. in this episode. First is, and we kind of skipped over this, was

make sure the property is something that people want to move into. Right. So if you go back two episodes, back to episode 11, I think it was, when we talked about best rehab practices to maximize your rental income. Go listen to that. What was it? No, it was episode 10, I believe. Go back

and check that out to make sure that your property first is something somebody wants to move into. And second, cast as wide as net as possible. Create the biggest auction house you can, and attract as many people in that auction house as you can. And that's how you find the perfect tenant is you have choices. You have options. That's where the perfect tenant comes from. If you got one person in your auction house, statistically, that's probably not going to be the best

person for your property. And you're just going to take what you can get and you're not going to like it most of the time. Exactly. Exactly. Very true. All righty. So that's it for today. Flipping houses can make you rich. Holding them will make you wealthy. We'll be back. Next week again. we'll be here. Until then, remember, don't wait to buy real estate, buy real estate, and wait. Hold that house! Contrary to popular belief, a lack of funding is not the biggest barrier to starting a business. It's excuses. But don't let a lack of funding be your excuse. We are epic fast funding, and we'd like to fund your business with up to $150,000 in revolving credit lines.

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