Epic Real Estate Investing - Questions to Ask a Property Manager | HTH 020 | 557

Episode Date: January 2, 2019

Hiring a good property manager can save you a lot of trouble. Therefore, we are talking about the questions you should ask a property manager as you interview them for the job. Stay with us and learn why you should look for a manager who has different processes in place, on what you should pay attention to as the candidate responds to your questions, and why you should pick an emotionally strong interviewee. Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terrio 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, that's us. Hello, welcome.

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. Inconceivable. Inconceivable. And before we begin, we've got a free gift for you, just for you.

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A little too big for my britches. That's right. This is real. This is real. This is real radio. This is real radio. Yes. Absolutely.

So what are we talking about today, Maddie? today we are talking about questions that you should ask your property manager or a property manager before you hire them, before they become your property manager. These are the questions. So you should talk to them before you hire them? It's probably a good idea to talk to them. Maybe have a conversation. Got it.

Maybe two. Maybe even, you know, ask some probing questions. Yes, exactly. All right. So, you know, I'm not going to talk about the obvious stuff, guys. I'm going to talk about, you know, well, maybe some of the stuff is obvious. but I'm going to talk about really three main questions that I ask a property manager before I'm going to hire them to do anything for me, right? Matt, you've got a ton of experience with this.

You're in 10 different markets. You have, as we learned on a previous podcast, you have multiple property managers in each of those markets. In each market, right? Because you have to have those understudies because you learned a valuable lesson there. So you've done a lot of this. You've sat down with a lot of property managers. I have. Talk to a lot.

You've asked a lot of questions. So chime in here and definitely tell you. I'll be someone you're asking as we do this. How many do you have over there? I mean, I just really have kind of three main questions. Very good. Now, you can ask all kinds of questions. And, you know, I sit down to interview somebody to get a sense of them a lot of times, you know.

So I ask questions that sometimes I don't even need the answers to, but I'm just trying to get a feel for them and how they operate. That's a really good strategy. And I'll talk about that in a second. Cool. Let's go with your three questions. Cool. Cool. Cool.

So the first question, not always the first question I asked, but a question I always make sure I know at the end of that conversation is, you know, you know, Mr. Property Manager, do you own properties yourself? Are you a real estate investor? Fantastic question. I mean, that's one of the first things I want to know. And sometimes, you know, if I don't get the answer I want to that question, I won't even really set up a real interview. I might do that over the phone before I even sit down with them face to face, right?

So I want to know, you know, do they have an ownership mentality? That's what I want to understand. Is this just a job for them? Are they providing a service and they don't have an ownership mentality? because to me, that makes all the difference in the world. You know, somebody who owns properties, who understands cash flow, who understands what it takes to make a property cash flow

and knows that from an ownership side, not just a service side, you really can't put a value on that, right? I mean, that is invaluable if you can hire a property manager that owns properties. So, you know, my manager in Florida and my backup manager, and, you know, my managers in Michigan and some of these other markets I'm in,

they are all investors themselves, right? Now, it's not their primary income. They don't do it like you and I do it, you know, and they haven't amassed the portfolios that we have and, you know, aren't able to have that kind of freedom because they're still working that day-to-day job, but they're building something for themselves. And most importantly, they understand their ownership mentality.

That's just key. You know, I really can't say enough about that. So that's one of the key questions I make sure I always ask. Another question I ask is, I ask specific questions about their processes. And I ask that question not because I'm so concerned with what the process actually is, as much as I'm concerned that they have a process. Right. So, you know, I ask about, great, so tell me your tenant screening process.

That's all I ask. And if they don't immediately come to me with, okay, here's what we do, step one, we do this, step two, we do this, step three, we do that. If they can't immediately succinctly, quickly tell me that, it makes me think that they either don't do it or they haven't done it enough to know how to tell me. Right. That's a red flag, right? If I ask them, you know, okay, great, what is, you know, somebody stops paying rent,

they tell you they're never going to pay again. What's the process for eviction? You know, what I want to hear is, what I don't want to hear is, well, you know, we try to work with the people and, you know, if you ask that question to my manager in Florida, what's the process for eviction? The day they're late, we pushed a three-day notice. And three days, if we don't hear from them, this happens. And five days after that, if that doesn't,

doesn't happen, this happens. And on this day, this happens. That's how it works. Then they're out. Right. That's what you want to hear. That's what you want to hear. Step by step process. Boom, here it is. And the confidence in their voice is what I'm really looking for. Of, yeah, I know this process, because I've done this a few times. You know, I do this.

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Turnkey allies. One of my managers in St. Louis, he's like, I am there at noon on the day after. Yes. Is that they're late? There you go. Like he's there at the time. Like he's waiting out by the door. Sure.

Here's the notice. Yep. And, you know, that notice doesn't come down until I get paid. Absolutely. Absolutely. So, I mean, especially with the eviction process. You want to know that they know. But all the processes, tenant screening, eviction, what their process is for re-renting, you know,

what their process is for maintenance. You know, hey, what is your process for maintenance? I have two maintenance providers that I use for this type of work. And then I have a maintenance provider that does this. And then a backup that does this. And I want to know exactly what that is. And I don't care what it is. I just want to know that they know.

Right. I want to hear the confidence in their voice, hey, I got this. And I love it when they're also investors themselves because they say, yeah. And it's the same people I use for my properties. It's the same way I manage my properties. All this stuff is lumped in here together. Your properties, my properties, they're all treated the same way.

That's what I want to hear. So more so than the actual process. I'm not sitting there writing down every step of the process. I want to hear the confidence in their voice. I want to know there's a process for that. And then the other thing I asked for is, and this is from experience because I don't know if you've ever hired a property manager only to get a report from them about the income or whatever. And you just can't read the statement. You can't make any sense out of it.

It's like you have to have an advanced accounting degree to make sense of it. And maybe that's the system they're using, whatever. If you can't tell me, if you manage 10 or 20 properties for me and I get a statement from you and I can't make heads or tails of it, hey, I'm not the smartest guy in the world. I mean, you guys know from listening to this podcast, I can't even calculate cap rates in my head, right? So I can barely use a calculator. But, I mean, if I can't understand the statement, there's an issue, there's a problem. So I'm going to ask for an example statement. I'm going to ask for, I'm going to ask for a real statement.

I'm going to ask, you know, give me one of your clients that have 10 properties or whatever like I do with you. And, you know, mark out their names. I don't need to know their names. I just need to see it. I need to understand how you're reporting, and I need to understand what you're reporting and what your process is. because if that communication is not right, then what you're looking at is a phone call every time I get a statement.

Right. You know, and we're going to have to have a conversation for you to decipher that expense statement for me or that maintenance statement or whatever it is. So I want to see a simple, easy to understand statement each month. And those are the three things I ask for. Now there's lots of other questions I ask.

There's lots of other procedural type of questions, but those are the ones I really want the answers to. And it's, like I said, it's more just seeing the confidence that they've done this over and over and over again, and that they've got it. You know, that's what I want to see. And that kind of confidence is still confidence in me, and then that person is going to get to that second phase of the interview or maybe I'll hire them.

Right. You know, so that's kind of what I want to see. Now, I know you've had probably even more conversations with property managers than I have. So what are some of your kind of tips of the trade there? My questions are somewhat the same. I've got a few more. And you can go Google, like, top five questions to ask a property manager, top 10 questions

to ask a property manager. and if you do a little bit of research, all of those questions were written by property managers. The top 10 questions property managers want you to ask. Exactly. And you download that from their website. And so here, bring these questions to me while you interview me. So I like your approach where it doesn't really matter the questions that you ask,

not to the importance that most people would think. Certainly they are important. And it's more the character or the way that they, answer those questions is a bigger thing. And you want to see certainty. You want to see confidence. The one question I always ask those, is your first question. Do you own investment property yourself? I want them to be able to sympathize and empathize and understand me as their client. Sure. That owns multiple properties. Also, another thing to keep in mind and why I don't think the questions are that important. People might be thinking, what do you mean the questions aren't that important? No, no, no, no, no, you've got to get the answers.

Well, when you're interviewing somebody, everyone shows up to an interview on their best behavior. They show up and is their best self. But not until, you know, you're actually doing business. Do you really get to see who they are and what they're all about and handle the business and what their character is? And, you know, their disposition and their, you know, competency. You don't get to see that until you actually are working with them. So the sad part about the whole thing is to find good property. A lot of times you might end up and you probably will working with some bad ones.

Sure. So one of my tenants is I am slow to hire, quick to fire. And that's really important. And I'm at a fault. Sometimes I'm a little bit over considerate. I'm a little bit more of an empathizer than I would like to be. I don't like that about myself. But you need to be more mean, Matt.

I do. I do. I've got people for that. I've got the bad cop. You hire mean people. The bad cops works upstairs. Sure, sure. And they make the calls for me when I need them.

I wouldn't cross her. Right, no, I wouldn't either. I wouldn't either. But I'm getting better, and I'm very quick to pull the trigger. And so, you know, more and more, we were talking a very several episodes ago when someone's money from you, you see that, well, they're not necessarily taking money from me. They're taking that money from my daughter. They're taking that money from my daughter's education.

Personalize it. And that is definitely that mindset since we've talked and since we've met, that's empowered me to build a little bit more forceful. And it's much easier. Sure. You know? So that's one thing. And just keep in mind that they're always on their best behavior.

So the questions that you ask aren't the most important. But the questions that you do ask, you want to watch for their character and how they answer that the confidence and the confidence in which they answer. And keep in mind that you might make a bad decision. You might hire a bad one. Don't beat yourself up over it. We've all done it. And sometimes it's just a necessary evil of the business to find the good one. Sure.

You know, it's like looking for a good mechanic or looking for a good dentist. You might have to go to a couple battles before you're like, ah. I like this one. Sure. When I moved into the Michigan market, it wasn't until my third try that I found somebody. Right. And, you know, sadly, and it probably says something about me, I interviewed that one first, the one that I eventually circled back and hired.

I thought they were too much or I thought they were just, you know, too big of a company or something like that. I wanted somebody more personal. Well, I did. I got somebody more personal and then I fired them. Then I got someone again, and then I fired them. And then I went back to that first person. Got it.

So it happens to all of us. Yeah. I was 12 years in the business when that happened. Right. Right. So, I mean, even with all that experience, you just don't know. I mean, sometimes we don't all have the greatest of lie detectors or the BS detectors, you know. But here's one thing that works really well for me.

And this is one strategy is regardless of what questions I'm asking, I always save one question. I save a question that I do not ask. And I call back afterwards, after hours, and leave that question on the voicemail or with the answering service. and I wait to see how long it takes for them to get back to me. I like that. I want them to get back to me the next day, and that's a good indicator of when they're going to get back to you if you have an issue or a challenge or a very important question

while they're working for you. That's really good. So you've interviewed them that day, maybe, but then you save, you hold one question back. You call after hours, and then you see how long it takes for them to respond to you the next day. Exactly. Okay.

And unfortunately, I lose a lot of people that I really thought I like. with that one test. You save yourself a lot of trouble too. Absolutely. Absolutely. A lot easier to not hire somebody than to fire somebody, right? For sure.

Yeah. That's really good, man. But a couple of my questions I like to ask, what's the number one cause for turn over in your properties? I also like to ask about a system. Do you have a client retention system or a tenant retention system?

So those are two other questions I like to know and I like to get some, you know, confidence in their response. Absolutely. With those two questions. But yeah, that's my approach to interviewing a property manager, finding good ones, and, you know, you don't always get it right. You don't. And, you know, a lot of times, too, with property managers, you have to get a sense of,

can they, do they have the emotional fortitude to handle property management, you know? Some property managers, you know, they'll burn out because they don't have the right mentality. You know, it's a tough business. It is. And I was a property manager, you know, about 300 units at one point, you know, some of my properties and a bunch of other people's properties. And I can tell you, it drove me nuts. I mean, it drove me absolutely crazy because it's emotionally a tough job and it takes a certain personality to handle it, right?

And I don't mean harsh or uncaring or unfeeling. I just mean kind of a resilience to just dealing with tough personalities and tough situations. You know, after a while, it will drive some personality types crazy. Right. The right property manager takes all that in stride. They never get too high. They never get too low. They're even keel.

They treat everybody the same. and it's kind of like, hey, it doesn't matter who you are, what you are, what the deal is, you don't pay rent, here's what happens. And this is the way it goes. Nothing personal. Right. But this is what's happening. It's happening now.

Yep. Yep. And they do it. For sure. For sure. Fair but firm. I like it. And that's a good lesson, actually, for all of your team members that you go ahead and

interview and that you eventually hire is that just remember that you are you, they are they. And what you don't like to do, there are people out there that. find play in that. Exactly. And so that's a good thing to look for. Some people love it. Right. Yeah.

Absolutely. I don't understand them, but they do. But I'm glad they do. And I'm glad we can hire them. Exactly. All righty. So that's it for today. Questions to ask a property manager when you're hiring, when you're interviewing,

how to properly interview a project or a property manager. All right. So flipping houses, that can make you rich. Holding them will make you wealthy. We'll be back next week. Until then, remember, don't worry. wait to buy real estate, buy real estate and wait. Hold that house!

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