Strategy for Renting Rentals
In this episode, we discuss the different strategies and the why behind those actions that would help obtain the ultimate goal of "consistent rent". Finding the right person and match it to the right rental for the right price is key to having consistent rent payments and therefore PROFIT.
Kassandra Taggart / Dave Stohr
Jan 10, 2020
The Landlord's Almanac
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Real Property Management Last Frontier
Getting into the details of finding tenants
Get your home rented quickly
What is a property management top priority?
Consistently receiving the rent.
When renting your home quickly how important is consistency?
A landlord must have discipline or things will slide.
Who determines the rent price?
The market expects the wall to be painted, they don’t care how much work it took you.
What are circumstances in the market that would change the rental market?
Supply and Demand will change
Does timing play into pricing?
Timing Lease renewals based on property type
Where do you go to find quality tenants vs just tenants?
Today we are in a different world which is digital
Zillow now charges
Middle market tenants care about speed, convenience
The C,D, tenants tend to be on billboards.
What are the tendencies of quality tenants?
Many tenants have lower credit scores.
Watching the behaviors of how money is spent is the key.
The truth of today’s reality with rentals
Are people surprised that you check the credit?
5-10 years ago it was difficult to run background checks but now we have the technology
Most DIY landlord – 80% don’t run background checks
Do you have to be a “tough” person to run background checks?
We are human and want everything to be great.
Do you respond saying why you accepted or declined a person?
There are federal rules on how you process background and credit checks.
You can’t use “feeling” to approve a person because we all need to follow Fair Housing Rules
What are you an expert at when you are trying to max rent price and keep costs down?
Being trained, using facts, and have experience makes the difference.
RPM completed over 950 applications, as a result you can see trends.
What happens when the rental rate is to high?
What If your qualifications are to low?
Everything will cost more
What is your overall experience with high risk tenants?
There is many problems, and there are tenants that went through rough patch and their background shows it. So they might be worth the risk.
Eviction costs $400-$2000 all day and 30 days no renSupport the show
blame lords. Whether you own one rental property or hundreds, you want to run a profitable business because your future depends on it. Education is the key to opening doors. Your success depends heavily unknowing and complying with dozens of rules while balancing the need of the business for profit. This show lets you listen in on conversations that various landlords have regarding riel stories that are posted on our forums. Now come join in on the conversation and happy land lording
Good morning and welcome right now. Are you thinking about making a major decision concerning your finances? Is it time to grow and build a lasting legacy? Well, if today is that day, when you've decided to invest in real estate rental properties, that let me introduce you to someone who'd like to join you on the journey. Every step of the way to success. Cassandra Taggart is the president of Real Property Management Last Frontier, a property management company here in Anchorage. She is also the president of the Landlord's Almanac, one of the largest landlord clubs in the country dedicated to networking, supporting and training professional landlords. And she is the author of the popular book pain or profit secrets of profitable rental property investors. She is here with us in the studio. Good morning and welcome. Thank you. I have come to learn that you pull absolutely no punches. So we are not wasting anyone's time and are talking the truth today about getting your home rented quickly. And while it may seem very simple, there are definite ways one can go about it successfully toe win in the long run of your investment center. What is a property managers? Absolute top priority when it comes to their clients investment
consistently receiving the rent.
Their bottom line?
Yes, and it is actually much harder than it sounds, because a lot of people just think property managers all the only job we do is collect a rent check, but basically you're in a situation where the tenants want a want to sit there and say all these stories situations or may lose her job, whatever had a car wreck or whatever, and they don't pay the rent, so you have to follow screening to be able to make sure they can pay the rent. You have to follow what's going on in their day world, right now to see what they could do to pay their rank. You have to be able to have systems in place for late collections and provide many ways for tenants to pay rent theirs. Basically, that's the hardest part, even though it sounds like the easiest part, because yeah, if you just have to take a check to the bank, that's obviously the easy part. But actually having the heart conversations of what the rules are and getting the money, that's the hardest part.
And I know you're not afraid to have those conversations when renting your home quickly and turning a profit is the number one go. How important is consistency? Use? Talk about it in your book.
Consistency is huge because what happens is if you let things slide. And if you don't have enough discipline and sticking to the regimen of the rules that you've said in your how you're going to perform as a property manager, our landlord things will start to slide. Ah, great examples. I was talking to a landlord about two weeks ago, and the rent kept sliding. The right come sliding and the rent went from Well, they were paying the first now they're paying on the Fed. Now they're paying on the time now they're paying on the 15 notice. That's typically around a Friday. So they were probably getting paid on a weekly basis. But because the landlord never posted notices and gave him the rules and charge the late fee and actually enforced the rules and held the tenant accountable every single time they were late, the tenant just thought they could get away with it. And then it became a trend of always playing on the 15th. Well, your mortgage is due on the first.
So, you know, I've heard this many times. I think I've even said it. This house is my baby. It really is. Does a property owner who believes that their home is unique and special have to let it go to the rental market and that the price will ultimately be paid there?
The market determines the rent price. You it sucks because you're sitting there going. I remember when I painted that wall, you know, and you're very proud of your wall where you touched your date and you had to learn how to fix a hole. And I mean, you put you're sweating and you're sweating your energy and your weekend. Well, I'm sorry. The market just expects the wall to be painted. They don't expect to pay for your sweat and your tears while you're painting the wall.
It's what are some of the circumstances in a market that will make rental prices fluctuate.
Circumstances could be like right now in Anchorage, we'll talk about that number we have. Ah, the Anchorage job market dropped, like 3% right sense since this last turnover of like
saw that in the paper this morning.
And when that happens, it's changing what the number of people that are rental property. Therefore, your supply and demand has change, which then will change the type attendants you're going to get. It's gonna change the number of tenants that qualify. It's gonna change the the price because the supply and demand has now changed. So therefore, you might have to re look at your, um, strategy of requirements before a person can rent the property.
Let's talk about tongue this time. Play any role at all as to how you price the property for rental.
Yeah, a great example of that one is timing around the snowfall.
Oh, you've never thought about that?
So something that we do at our company is that we we have a lot of stats in inner stance will determine what type of property is best to rent at what time of the year. So that way we can max the rent because obviously we're paid on commission. I wanna Max, that rental was like you. D'oh! Um so we want to time when those lease renewals will happen so that when you are maxing the rent for the least Reynolds or a maxing the capability of getting it rented at the fastest time. So, for example, if you're a person who has ah town Homer house that came vacant around Thanksgiving, you might still be vacant right now, especially if you didn't price it right, because people don't like moving in negative 20 temps
mill they don't,
especially when it's a house. That means it's probably, you know, a few people, not not just, you know, a guy with a truck. So you may be attracted towards a family in that particular house, for example, and they don't want to move in the winter and negative 20 kids what the truck might want to move in the winter. So that might be the kind of tenant that might get placed into the property. Um, and their rent that once willing to pay versus another, is going to be different. So therefore, you want to price it or make it to where it will always be rentable during peak season, and you have to decide what that peak season is for your property.
Where do you go to find quality tenants, as opposed to just tenants?
Today we're in a digital world. Words different, right? So we have upper class properties, which will you would call a properties. Then we have B. C and then the D properties. Every tenant in those brackets shop a different way. Right now, rentals isn't a place where you could just goto one website and get all the details. You have to go to many different websites, many different avenues to try to grab that tenet where they're shopping for your type of property. So, for example, the A properties will tend to be on Zillow, and Zillow is coming out where you now have to pay to advertise their really it's coming across the country. It's already in several states now, so it's gonna It's a matter of days, months before it's gonna be here, too.
So if you place an ad on Zillow, you're gonna have to pay for They're
gonna have to pay now that's coming up. Whereas with us, because we're already got volume, we already have it within our system. You don't have to pay extra for it. Then, like the middle market tenants, they care about speed because they're working. They're nine to fives and then some of them are working second jobs. They're very, very busy. They can't just leave at lunchtime to go do a rental, right? So those guys care very much about speed. So having technology where they can look at the property clique of video to see the property and be able to click a button to schedule an appointment without having to call you is a big deal to them. Um, so those guys will advertise or gravel from, like Facebook, Google hot pads, all these other various random syndicated websites or whatever app there aren't. A lot of those guys run through various apse, so you got to be on those weapons, and then the CD tenants tend to still be on the Craigslist. ETI n or flyers at Freddy's and Stuff
have seen those. What are some of the tendencies of quality tenants that stand out regularly? You have dealt with thousands of people over the last decade.
What a lot of people don't understand is in the leasing world versus Let's Say, you're working with people that qualify for houses. People that qualify for houses to know better credit, very stable, very. They can qualify all day long for homes, right, people in the tenant world, depending on the type of property you have, you're gonna get a lot of people that have lower credit score. But what you don't understand is watching the behaviors of the credit score and understanding the differentiators between good tenants and by tenants based on how they do their collections, how what they decide to pay and not pay Isa big indicator of if they're going to be able to pay their rent or not great example. I hate to say this, but it's the truth of today's reality,
and we're talking the truth.
Yeah, lots of tenants, um, have student debt lots of them, and you'd be surprised how many don't pay them because the payments on them are so high now and they're just starting. Their lives are starting their leasing. They're starting their cars there. You mean they're building up their their life right after college or whatever, and that stage of life happens at any age. By the way, those guys have poor credit because they're not paying their student loans, but they pay everything else. So you might have to make sure that when you're making your credit right criteria or your tenant screening criteria for you as a landlord to decide which collections allowed or not, because some collections, like recently payments on a car show that they may not pay for shelter. But people who have low credit because they didn't pay their student loans will probably pay their shelter in their car. So how they spend their money is more of an indicator of if they're going to pay rent, and their trends of who they are is a tenant than what their credit score is.
Our people generally surprised that you actually check a credit score just to rent a house.
It's a huge surprise.
You're gonna what? You're gonna look at my credit just to rent this apartment.
So what's interesting is five years ago, 10 years ago Ah, lot of landlords had hard time just having access to being able to run those things Now their software, technology and access to be able to actually run the background checks and the credit checks and figure out the full story to to prove that they are who they say they are, um, in with our company because of us being in a franchise nation. Why were able to pull reports for nationwide to grab those that air travelers, whereas the landlord who's just using on one off program may not have access to that. So technology is a huge part of actually how much information we're going to get, but it's also a huge indicator of if you're even using it at all. Um, here's a story is that most do it yourself landlords, which is about 80% of this town. The bad tenants will go towards the do you do it yourself landlords, because most do it yourself. Landlords do not actually run the background check or anything. Ah, we did a survey in the latest Lynn Lawrence Almanac class, and we asked in the room who does background checks on Lee. Half the room answered, raised their hand. Then we asked him again. And we said All of the ones that say they do their background check. Do you just do cor Phew! Or do you do a full background check? And it went all the way down to only three hands, did the full background check, and because of that trend, all the bad tenants go to you, whereas with us we hardly get the bad tenants because they know we're going to confirm
I was gonna ask, Does a property owner need to be stringent or even tough when it comes to picking quality tenants? Are you known as a tough person? When you try to match a tenant with the property,
you have to be. You have to have set rules and you have to be comfortable with saying yes and no two people were human, right? We all want to say yes, and we all want to be a community we all want to, like, shake hands and dance and have a good time, right But the reality is is when you're trying to protect your investment, you have to make decisions and you have to make the right decisions to not lose money. So if you were to know me outside of work, I'm this awesome fun person and can hang out over dinner. But in work, I have to say yes, I have to say no. And I have Thio create rules and I have to look, um, stringent. Hard core, uh, cold sometimes. But the reality is you have to set criterias to make profit and you have to follow business.
You know, when somebody doesn't qualify for a property, do you tell them the truth? This is why you didn't get in?
No, actually, I can't completely say everything. What? I'm So there's federal requirements, actually regarding doing background checks and credit checks on people, and you have a certain requirement of how you tell them yes and no. For example, when we were doing background checks of tenants, sometimes Lynn Lawrence want to have a copy of the background check. We actually can't provide it because of privacy laws. So we have to protect their social. We have to protect their data birth. We have to protect the information and simply say they got points for this. This is so they qualify for your property. We can't use a whole lot of other criterias of Well, I feel this because their housing over their text protected classes and you can't make your rules look like you are persuading one class protected class over another class. So where I'm getting thio is that, um yes, you do have a requirement of saying approved or decline in under decline. You have a few ways to articulate your claim for income ratio or your declined for background check. You don't have to go into the fine, fine details of why, um and you better have rules in place to say and support if they file an audit against you.
You have made professional property management your life. What are you an expert at when you're trying to maximize your rental rate and then minimize your vacancy time?
The I like to say I'm a connector dots, um, and I always go back to my little story of your making a pot of soup and you gotta mix all these things together to make a decision and what? One person's decision is going to be a different from a different person's decision. But what I can say is experience And um, no. How insane trends and fax and how trained we are makes the difference. I'll give you an example. Did you know in 2020 19 were ran over 9 950 applications?
I did not know that
because of that, you can see trends very clearly, Um, in the 950 applications we can see. Oh, this this trends coming through or this trends leaving. But when you were only doing one application or two applications every two years, you were not going to see the trends. Ah, great trend. I'll give you some stories that are going on right now is tenants will put down a phone number saying, That's my Prior Landler column for a reference check. You call him in there, not a landlord. It's just a friend's cell phone number saying, Oh, yeah, Johnny's great. They're gonna say, Johnny's great, it's your friend s. So you have two. Combination it with the whole bunch of other stuff to make the decisions, and from
your experience when you're trying to rent a property quickly. What happens when that rental rate, let's say, is just too high?
If it's too high, you're going to get the wrong crowd. Actually, um, how do you say this correctly? Ah, when you have too high of a range, you're gonna have the wrong type of people wanting to apply because the bad tending to know that if we over pay for a rent ah, you'll look the other way on their background, right? We have a story on. And this was kind of an interesting story. Uh, there's a There's a landlord who called me up and said, I want you to rent to these people. He said, Okay, well, we're not renting unless we do a background check, he goes, No, no, no green today. You're just trying to hold it up to where I don't get my rent check. I said, I don't let any tenants move in any of our properties that we manage list. We do a background check. We did a background check and found six evictions, one pending. We called him up and said, Well, we would never approve this particular tenant based on the criteria. Well, you're just trying to be difficult. You're not trying to get it rented. So? So I want you to prevail many ways. I said, Sir, I need you to put it in writing that you're OK to rent to attendant. That has six evictions. One pending. And know that the likelihood of you getting $400 over the market rent price for your place Probably not going to get it. You're gonna move him and give him key store property, and they're not gonna be able to pay rent. The risk is high. If you want to sign off on it, Here's a letter. You're gonna sign it. Not me. Um and then he didn't sign. So we were able to put it back, keep it on the market. And we found a good tenant that's still there today. And they paid market rent not over price.
And what if the tenant qualifications are just too low?
If they're too low, your infection rates are going to start increasing in your property. Your number, the dollar amounts of damages and your property is gonna go up and your maintenance bills are actually going to go up because bad, bad worst tenants that don't care. For example, they don't report that the water with the wash machine is leaking water underneath. The good tenants that care about building their future, building their lives, they're going to report everything and anything. Sometimes it might be a little annoying because they're reporting everything and anything. Ah, but they will report so you can make a decision of how to keep your property maintain. But bad tenants, everything goes up.
I was going to say What's been your overall experience with high risk tenants? Is it just ah, problem?
It is just a problem. There is ways to work with tenants that went through a rough patch like, for example, they just went through a divorce and their background shows the result of a divorce because divorce, everyone destroys everyone right. But there are other bad tennis that's just not a fit for them. Eso When you have a bad tenant going into a property, it's just expensive. Do you realize that an eviction just on the legal fees typically costs anywhere from $400 to $2000 all day long? That's amazing, and you're up to 30 days of sitting there waiting for them to get kicked out because you got your court, your eviction, you and then you got to get your troopers to come in there, remove them during that time. They're just running your place in the running your place.
I was going to say Who rents to this group of people who obviously need a home but whose behavior is costly?
It's the people who don't do checks. Okay, um, they don't do background checks. They don't know that these tenants are the bad ones. They just they just let him in. When you hand keys, you had signed up for it.
And when you encounter higher ish tenants, is the industry alerted to them? Or does every property manager find out for themselves? Sooner or later,
they do find out for themselves. Sooner or later, there's, Ah, there's a thing in this town with what I call tenant hopping so attendant will find somebody that doesn't do background checks or find somebody who is a sucker really wants their place rented and get so eager. Uh, well happen is that tenant will move in and let's say let's say you let them move into your place, right? They move into your place and you don't pay the first month's rent. You're like, Oh, this just happened. Then they don't pay the second month rent. Oh, this just happened. But because your new landlord you don't know you should have already started posting. You should have started already doing late fees. You should already start evictions. And because you're busy with work, you just go. I'll let it slide There go, people. They just moved in. Well, by the time you decide to finally post on them before, right before you start to do the court process felt leap. They'll leave your place with the truck because they have just enough to fill up a pickup truck and then they'll go pick on the next person. And, um, I have a friend who has a kid that's probably and now sitting around 10 months of not having to pay rent because they're hopping from landlord toe landlord to landlord.
You mentioned the word systems quite a bit. How do systems play into property management success specifically yours
for me? Ah, systems. Make it to where I can keep emotions out, that that's my biggest still, and it also makes it toe Aiken skel. And it's where I can manage profits. Um, systems keeps you out of trouble with the federal rules and the state rules systems make it to where you increase speed systems is basically the corps property management inland lording. A lot of people don't realize how important that is, because in the rental world, like like the story we just gave you were so excited You want to get that place rented so you can pat yourself on the back and say, I got it written in three days and I'm getting rent. Well, you're not actually getting ready because they haven't paid rent in two months and you didn't have systems in place to figure out how to charge him the late fee or how to give him options to swipe their credit card because they don't have the cash or you don't systems in place to enforce. And when you're missing any of the systems, you get emotional and you get scared and you're writing the check for the mortgage and the utilities, not them. So then you're like, now I don't have money for my own place. So it's a cycle of bad decisions.
And ultimately, what will the right system produce for a property management? Ah, property manager and the real estate investor
profits. Everybody wants profit. Bring wants cash. Everyone sits there. Cash is king. I mean, it really is. Cash is king. And if you don't have a recurring revenue coming in consistently, then that means your systems air flawed or your ability to make decisions is flawed. And you need to get out of the business or put somebody in charge of the business to help you get that flow going. You. If you miss that profit, you're not buying more. Reynolds. You're you're I mean, think about it. This is like your retirement account. You don't put your money in the stock market and go Oh, it went negative this month and look away O negative again this month. We're going to look good away. It's 30 year hold, 10 year holds, right long holds. But if it's negative long enough, wouldn't you just take the money out? Move It Sounds good. I mean, you put systems in place to watch that, So why aren't we putting systems in place to manage your multiple. Hundreds of thousands dollar investment. Highland Lords I'm Cassandra Tiger with real property management. Lillard's know that if you want to be profitable, you'll need a team to manage your rentals. That's why we've developed several different packages to assist with the ongoing demands of rental properties in Anchorage in Wasilla from maintenance, coordination, collections, accounting, communication, marketing and even affections. We help with it all. Give real property management a call it 2684779 mentioned this radio ad and receive a special price to 64 779
time Now for questions and answers that we've collected in anticipation of today's conversation with Cassandra, I'm sure these have come across your desk before. I'm sure you'll have qualifying for all of these. Here's your first question. How do you have? Well, I should say, How do you have water well tested for minerals?
So there are specialists in town that a lot of people don't realize that well has, well, septic tanks and all that stuff have many specialties and facets to it, like you got Electrician's that condone make the pumps work. You got people that know how to test the waters. Then you've got people who installed the wells. You got people who clean the wells. You've got people who know how to ah, fine leaks in the lines between the house and the well. And then you got pumps that deal with the well took filter and clean it. So there are specialties for those items, and in you can call a lot of contractors and they're already connected to them because a lot of people don't know their direct numbers or know that they're licensed, bonded, insured and that their specialty is actually certified in wells. So you definitely want to research before you just hire somebody off of Google, for example, with that one
as a as a property manager, do you go outside your own business outside your own building and look for qualified contractors and water testers? Do you go into the community and look for those people?
Yeah. So what's interesting is a lot of people don't realize that when you're working with thunders, um, you have to have a lot of vendors. So, for example, were preparing to 99 to 90 nines is something you have to send to your vendors when you're using them for work. Because the IRS wants to make sure they truck the dollars right for 2019. We did over 237 10 90 nines for vendors that we paid over $600 for. That's how many vendors I had to use to get work done. So you don't just have one guy you need to have, like, a list of all kinds of guys. And then you have to have one guy on your list that is connected or knows a lot of the other guys that can get things done. Example was yesterday I was talking to a good friend, Um, or two days ago, and she didn't realize that when your place freezes, you don't call plumber, you call a far.
I never thought about that.
Yeah, you have to call a guy who has special equipment to Di Frost all the pipes. Then you have to have a plumber at the same time, ready to fix those pipes, turn on off the water and fixed those pipes when they discover them. So you actually have to have two vendors to fix frozen pipes and potentially 1/3 for a guy who knows how to pick up the water And if what? The pipe that broke. If it's a class, depending on the class of water, you may need somebody who's sanitize who could do sanitation because it could be a septic sewer that broke or dirty water that broke. So you many 45 particular vendors to take care of one freeze
and you need them right now. So they must be on a master list
of contractors they must, and to make it even more complicated in, unfortunately, it's business this way. It is because of ha the volume that I have as a property manager versus the volume of what you might have as a landlord. Your, um your speed dial list might be the same Speed Donald list is us. But because of my volume, they're gonna pick my property and come to service us before they service you on dhe. They're also gonna give me a special rate versus you. And I don't mean to be rude, but it's business. I have volume. I have the ability to call somebody up and say, I want you here by this time, like every day this week at 4 58 We've had pipe breaks, price freezes and everything because we're in the cold temps right now, right? And, ah, the vendors were there within 30 minutes to an hour for all of our properties. I don't think they were there that way for my friend. She said it took two hours before she finally got help, and most of all, was because the only Smith she got that help is because she called a friend of a friend who knew of person who worked there to try to pull favours. Because that's how it works in business.
Absolutely. You have led me to my next two questions. Who pays for frozen pipes? The landlord or the tenant
Lo Que goes back to that person
very seldom will go on the tenant. There are some stories where it can go on the tenant, but most of time it's the landlord. So to give everyone some updates on numbers. Right now, most of our pipe break situations air running between $1,505,000. That is how fast it goes and how much damage it goes when it goes bad.
Intimately, the weather it's gonna warm up by next Wednesday. We're going to see temperatures in the mid thirties. I saw that on the Weather Channel this morning. My next question, and it's one you just talked about. What is the dollar limit? I have 2 10 99 Contractor. One of our listeners wants to know
it's actually $600. And if it's an entity that doesn't require a 2 99 So, for example, In Star would not need a 10 99 for you paying your utility bills because they're a corporation. They file their own. But Elsie's contractors. So in the year of 2019 or whatever year were in until they change the tax code, you're supposed to send a 10 99 to your vendor for $600. I also want to give you one extra bit of information that I'm now learning Is that the ire s. They'll do these audits and they'll say up this vendor didn't pay their taxes, But you said that they exist. So I'm gonna come to you and try to find them, and in because you're supposed to have your paperwork and order. I'm gonna give you $100 fine per vendor that you mess up for not having your paperwork in order because that guy didn't file their taxes and I can't find them. So I'm gonna come to you to try to find him. So you should have your paperwork in order to find him, right? So you should have your w nine in place for this person. You should make sure that their license buying it insurance is on file. Because you never know when the permitting office is gonna come after you For that, um and and you need to have all your paperwork in order for every vendor you hire. Sounds like a lot of work.
It really does. That's why you're a professional property manager. I'm on the radio is an interesting question. Does not having a dishwasher make a big difference in rental value or quality of the renter?
I think it does. It is possible to have, like, a studio apartment that may not have a dishwasher, but has a a way to wash dishes. But I don't recommend it. I don't even think I have a single property in our database that doesn't have a dishwasher. I understand dishwashers are painful. They break. They don't make them like they used to usually have to replace them every 17 years. Now it seems like, but they're like 203 100 bucks now to put in a new one rather than service it. And when the when the pipes in the back disconnect or get clogged, then you gotta fix that. That's like $150 service work order, so it gets annoying and it gets expensive. And unfortunately, that's the cost of doing business at this time.
You don't have to ask. As we head in, we're in the 21st century. When you look at the new appliances, thes smart appliances, appliances that talk to you, appliances that produce things. Are you stymied by the technology that is now going into washers and dryers, dishwashers, refrigerators? I mean, it's just not open the door and close it anymore. And the cost to the repair those things must be astronomical.
It is. That's a very good perspective. A lot of people forget this thigh because when you make it your home, you want all this fancy technology
as we do.
You want that those nest thermostats that hook up to the WiFi you want. You want the fridge to go shopping list. Add eggs. You know you want those things when it's your home. Here's the problem when they break right. So first of all the concern is is that you gotta have a technician that understands the electronic site of the appliance is enough to know what part broke. Is it a programming issue, or is it the control board? So let's just say it's a control board on LG Appliances. Most control boards air 802 $1200 for me to get that brought in from wherever it's made because they don't have them ready made ship home here, which is another week. And then they finally get here. And then you got to get on the text schedule to get him installed. So you're looking at an easy $1500 which is the cost of a basic G e world pull type appliance that you could have just installed made the tenant happy in a week.
You know, I'm running into old school appliance repairman who are are struggling with the technology as it comes into the marketplace. They just don't have the training,
they don't have the training. There is not really any certified training for these guys. It's usually a whole bunch of like guys that don't wanna be handyman's because it's hard on their bodies and they don't want to work for union. So it's Thies. This type of technician is who typically picks up thes job independent business. Yes, the little Independence guys. And be careful. There's a lot of Craigslist fried guys that claim they could do our prayers. And they can't because but But the issue to is is that to pay them a healthy wage and to make them qualified for license, bond insurance and all this stuff, um, there call out fee is a minimum 75 90 bucks minimum. That's just to show up. And then, if they have to do multiple trips, Fixit end because we're in Alaska. Some most parts have to be ordered unless you can get it at the rehab story stuff. I'm so you're looking at 150 bucks easy all day long to fix the dishwasher. That only cost 300 bucks. Did you know that if you just invested and decided, you know what? Instead of paying $150 for service call, we're just going to replace it. You then get to go into the world of depreciation and taxes and all those other topics. So sometimes it might be better just to replace it.
You mentioned thermostats, and I didn't even know these existed. I want to get limiting thermostats on my units, your thoughts.
We have lots of Landler to want this in Anchorage. Why? So here's what the There's various landlord thermostats. You can get him on the Amazon you can get him from. Ah, I believe central plumbing has, um, Now there's a couple other places that have a gene. Kim. Uh, they're not too too expensive to get home, and then instalments, just like hooking up any other thermostat and thermostats right now need to be upgraded in most properties, because when they're little mercury thing starts going out or batteries or wiring goes bad, you need upgrade in many ways. So a lot of landlords are saying what? I'm going to take this opportunity for the upgrade to do the landlord thermostats, Lindner thermostats. What it does is it regulates the he in a property automatically, so whether they're there to press up or down on their heat and automatically keeps the temp at a certain temp. Interesting. So if Attendant wants to keep it at 80 in their house, they're not going to be ableto they literally, depending on which start you buy. It literally were like regulate the temperature in that unit from more between, like 65 75 never let the temp never let the tenant override the stat so it it can reduce the heat bill. I'll be honest. It can. There's a couple landlords that's in our portfolio that has done the work, and it did reduce their heat bill. I would say somewhere between 15 and 25% which sounds like a significant difference. So you're talking maybe 25 50 bucks per month in the wintertime. It dropped its depending on, you know, you're building everything, but here's what it did. D'oh that everybody for guy, tenants or people. Tenants are human. They pay a lot of money to have their space and their space their way. When you start restricting them when you start messing with their space. When you start doing what they feel is taking away their freedom and their right, Um, you're gonna lose your good tenants. And the 2nd 1 of the landlords had done that, they lost three really solid good paying on time tenants, and we ended up with not paying tenants. Um, so and then you end up with the cost of turning over the unit in turnovers typically cost $1500 then your rent as well. So you're losing, you know, easy to $2000 in one shot. So saving about 50 bucks a month on your utility versus having a turnover of $2000. Easily the math doesn't make sense.
They want we're talking about temperature. Should I prohibit the use of space heaters in my properties?
You definitely want to consider that as a conversation, especially depending on who pays the utilities. What kind of space heaters? There are tenants still to this day that have lack of knowledge about the different types of space heaters like their space heaters that have the trip feature sofa trip circuits clogged. It'll turn off those air safe, right? But the other ones there are tenants like we have a conversation just last week, with the tenants saying, You aren't supposed to use space heaters that our propane filled oil filled. All this
sounds kind of dangerous,
dangerous, Um, and if their home when they're running, there's a lot of complications with space heaters. Space heaters are needed for the purposes of when you have a no heat. We gotta put in space heaters to keep things going until we fix things. Absolutely, but it's it's a liability. It's it's Ah, it's a concern
one of our listeners wants to know. Should I take a credit card payment for rent?
So that's an interesting debate because credit cards cost money to process and credit cards. For some people, that money is an emotional thing for a lot of people, right? So they think if I allow attendant to pay with a credit card, that means they ran out of money and they're living on credit. How do they have that kind of budget? They must be bad tenants. Um, some landlords take it as well. If they don't have the cash and something happened with her car this weekend, at least they could swipe a card. And I still get paid. Um, and Then there's the debate of who pays the fees for processing of credit card. So there's that concern as well. We took the approach of continuously trying to receive money. So, um, we have 86% of our tenants pay online. ANA. Out of that percentage, I think it's around 5%. Do use credit cards because they get points and they don't mind paying the fees to get their points. It's not that they're about tenants, so we do accept credit cards, and we do have a system set up to where it's safe and secure. Just know that credit cards do come with other problems that you don't get with cash. For example, they can mark that the credit card swipe is fraud and make it reverse. And then you're out the rent.
You know all the stories, don't you know all the tricks?
So there is a rest. A credit cards. You will get your money, but it's possible that they may play a game with a credit card to make you fight to keep that money up to a few months after its bait.
And while we're talking about money, do you chase down tenants one of our listeners wants to know that owe you money or just let it go and just get a new tenant.
That's Ah, that's always an interesting debate because the debate really is about how much money do you want to spend going after it? How much time do you want to spend going after in time's money? So if your lender who don't pay yourself a wage for doing property management, uh, then you may not be one of those landlords that pay yourself a wage to go stand in the court lines to go file all these writs of judgments and writs of executions and runaround bank to bank doom being sweeps, um, you could be that landlord that does all that, and that's fine. If you want to be one of those, um, the When you make a mistake in place about 10 in, Sometimes you place bad tenants that just get in a fight, and there's issues. But when you make a mistake, that actually is about tenant, um, going after them. The likelihood of you getting your money is very slim. Ah, what you can do is you can contract with a collection company and the collection company will take a percent of whatever they collect. They're allowed to negotiate the balance. So you may go all the way from. They owe me 1000 to you only get 200 bucks, but they'll do all the legwork, so it's a good option. How much
does the tenant balance need to be before you consider filing an eviction?
Everybody has a different threshold. Um, here's what I can say in and you should have your own threshold that you're comfortable with the cost of a court. Just a file is around 405 100 box, Right? Then you got the stress of them yelling and being mad. Then the open work orders. Then they do all this other stuff to you, and then you have a bad taste in your tongue. So if you're filing for a eviction and willing to bay $600 because the tenant didn't pay, let's say 100 bucks. You're not making the best business decision with money. Ah, and you're being shortsighted and emotional. So we like to say it needs to be at least above 300. Before we start filing court proceedings. We will do payment arrangements? Um, it on certain circumstances because they've been good and then just had an oops because of a job transfer or something. Um, so you need to make a business decision that works for you. She always funny.
One last question. One of our listeners wants to know what is the state of the 2020 rental market here in Anchorage.
So it and of course, we're having this conversation right after the e. D. C. Made their announcement, saying everything a stable, everything potentially is going to start turning around. Um, I work off of the stats based on the last six months is what I like to d'oh and for us, the rents are still dropping. Um, and they're still dropping at the same ring as they have been for the last few years. Collections, which is the 1% of your portfolio that tenants don't pay rent. That number is still holding firm. In fact, it's grown a little bit through the season, so tenants that are able to pay or they're slow pay because of whatever happened that's still growing. So that's all signs in my world. That's all. Signs of tenants are strapped and tenants are hurting and tenants are willing to. Most of it's actually are signing lease renewals right now because they don't have the money to move. So finding new tenants is even harder than it used to be. S O. I don't predict that that slowdown is goingto happen this year. I think it's going to continue. Scott, with Pioneer Floor Care, is a longtime friend business owner and happens to have many rentals in the family. He falls into a category of what I would like to call hard working good people that provides great value for the price. As a result, Scott needs to be on your speed dial list. Since he and his family are landlords, they completely understand. You need to have a variety of options when it comes to solving foreign problems. This is why Pioneer Floor Care is more than just a carpet cleaning company. They help with four repairs, excessive water on the floor, creative options with odors, mildew mitigation and many, many more give. My friend's got a call at
Vulcan. Investors find out more about joining the landlord's club,
the landlord's club and the fastest way to get everything you need is to actually go to the website, which is the landlord's almanac dot com. There you'll see connections to credit screening to the classes that are going on every month. We have the next six months posted on the Web site for you now, where 5200 people actually attend every month to learn. Uh, this is also a place where you can post questions and forms and thoughts that you have or be supportive of other landlords that air here in Anchorage. The databases over 2500 landlords sitting there chatting and helping each other
out is amazing. And where do people go to meet when you do meet?
We all meet at the Megan's Room, which is in doubt Midtown Anchorage. Sometimes we do are able to pull off. Some class is out in the valley. Ah, but that is the main place that we mean is on a C.
You're a very busy person, as is Mr Taggart. Do you make yourself available to mentor new investors
all the time, so just say, just attend the classes, and if you can't get the direction that you need, ah, call in and we'll schedule sometimes to guide you either on how to step up how to buy the right property that fits you will help you in strategically handling the maintenance. We have so many different packages with property management that we can help you. Just ask and say This is what I need
That is so easy, Cassandra. Thank you for your knowledge, your passion and your guidance over this last hour. You are, as I'm sure, our listeners now, no. On invaluable resource and experienced adviser for those who are investing in real estate and taking their first step towards success.