The market is whatever the market is. We can put our blood, sweat, and tears into a property and it not do anything differently. In order to play the rental game, you must understand the market trends in order to make a profit.
Recorded:
Recorded January 30 2020
Host:
Kassandra Taggart
Dave Stohr
Links:
The Landlord's Almanac
Facebook Page
Website
Property Management
Donations
Sponsor the club
Book: Pain or Profit
Sponsor:
Real Property Management Last Frontier
The market is whatever the market is. We can put our blood, sweat, and tears into a property and it not do anything differently. In order to play the rental game, you must understand the market trends in order to make a profit.
Recorded:
Recorded January 30 2020
Host:
Kassandra Taggart
Dave Stohr
Links:
The Landlord's Almanac
Facebook Page
Website
Property Management
Donations
Sponsor the club
Book: Pain or Profit
Sponsor:
Real Property Management Last Frontier
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 decided to invest in real estate rental properties, then let me introduce you to someone who'd like to join you. On the journey, every step of the way to success. Kassandra Taggart is the president of Real Property Management Last Frontier a property management company here in Anchorage. She is also the president of the Landlords 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. Yeah. And welcome.
Kassandra Taggart:Thank you. very much.
Dave Stohr: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 to win in the long run of your investment. Kassandra, what is a property manager's absolute top priority when it comes to their client's investment?
Kassandra Taggart:Consistently receiving the rent.
Dave Stohr:Oh, there we go. Bottom line.
Kassandra Taggart:Yes and it's actually much harder than it sounds because a lot of people just think property managers, the only job we do is collect a rent check, but basically you're in a situation where the tenants want to 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 can do to pay their rent. You have to be able to have systems in place for like collections and provide many ways for tenants to pay rent. 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 hard conversations of what the rules are and getting the money. That's the hardest part.
Dave Stohr:I know you're not afraid to have those conversations when renting your home quickly and turning a profit is the number one goal. How important is consistency use? Talk about it in your book.
Kassandra Taggart:Consistency is huge because what happens is if you let things slide and if you don't have enough discipline in sticking to the regimen of the rules, that you've set in your, how you're going to perform as a property manager or landlord things will start to slide. A great example is I was talking to a landlord about two weeks ago and the rent kept sliding. The rate kept sliding and the rent went from well, they were paying on the first now they're paying on the fifth now they're paying on the 10th. Now they're paying on the 15th 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 them the rules and charged 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 paying yeah. On the 15th. Well, your mortgage is due on the first, so.
Dave Stohr: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.
Kassandra Taggart:The market determines the rent price, not 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 textured it and you had to learn how to fix a hole. And you put your sweat and 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 were painting the wall.
Dave Stohr:What are some of the circumstances in a market that will make rental prices, fluctuate
Kassandra Taggart:circumstances. So this can be like right now in Anchorage. We'll talk about that number. We have the, the Anchorage job market dropped like 3%, right? Since, since this last turnover of paper this morning. And when that happens, it's changing the number of people that are rental property, therefore your supply and demand has changed, which then will change the type of tenants you're going to get. It's going to change the number of tenants. That'll qualify. It's going to change the the price because the supply and demand has now changed. So therefore you might have to to relook at your strategy of requirements before a person can rent the property.
Dave Stohr:Let's talk about tongue. Does time play any role at all as to how you price the property for rental?
Kassandra Taggart:Yeah. A great example of that. One is timing around the snowfall, right? So something that we do at our company is that we, we. Have a lot of stats in inner stats will determine what type of property is best to rent at what time of the year. So that way we can max the rent. Cause obviously we're paid on commission. I want to max that rent out just like you do. So we want to time when those lease renewals will happen. So that way you were maxing, the rent for the lease renewals are a maxing, the capability of getting it rented at the fastest time. So for example, if you're a person who has a townhome or a 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.
Dave Stohr:No, they don't. E specially
Kassandra Taggart: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, right. 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 so therefore you want to price it or make it to where it'll always be rentable during peak season. and you have to decide what that peak season is for your property.
Dave Stohr:Where do you go to find quality tenants, as opposed to just tenants
Kassandra Taggart:today, we're in a digital world where it's different, right? So we have upper-class properties, which will, you would call a properties. Then we have BC and then the D properties. Every tenant in those brackets shop a different way right now, a rentals. Isn't a place where you can just go to one website and get all the details. You have to go to many different websites, many different avenues to try to grab that tenant 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 there, it's croming across the country. It's already in several States now. So it's going to, it's a matter of days, months before it's going to be here too.
Dave Stohr:So if you place an ad in zillow, you're going to have to pay for that.
Kassandra Taggart:They're going to 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 their 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 view a rental. Right.
Dave Stohr:Right.
Kassandra Taggart:So those guys care very much about it. Sweet. So having technology where they can look at the property, click a 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. So those guys will advertise or grab them from like Facebook, oodle, hot pads, all these other various random syndicated websites or whatever app they're on. A lot of those guys run through various apps. So you gotta be on those platforms. And then the CD tenants tend to still be on the Craigslist ADN or. Flyers at Freddy's and stuff like that.
Dave Stohr:I've 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.
Kassandra Taggart: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 tend to have better credit, very stable, very can qualify all day long for homes, right? People in the tenant world. Depending on the type of property you have, you're going to get a lot of people that have. A 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 bad tenants based on how they use their credit, how, what they decide to pay and not pay is a big indicator of if they're going to be able to pay their rent or not a great example. I hate to say, I say this, but it's the truth of today's reality
Dave Stohr:and we're talking the truth.
Kassandra Taggart:Yeah. Lots of tenants 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. They're leasing, they're starting their cars. They're 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. We'll probably pay their shelter and 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 as a tenant, then what their credit score is.
Dave Stohr:Are people generally surprised that you actually check a credit score just to rent a house?
Kassandra Taggart:That's a huge surprise.
Dave Stohr:You're going to what you're going to look at my credit just to rent this apartment.
Kassandra Taggart:So what's interesting is Five years ago, 10 years ago, a 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 prove that they are who they say they are. In, in with our company because of us being in a franchise nationwide, we're able to pull reports for nationwide to grab those that are 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 you're going to get, but it's also a huge indicator of if you're even using it at all. 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 it yourself, landlords, because most do it yourself landlord, or do not actually run the background check or anything. We did a survey in the latest landlords Almanac class, and we asked in the room who does background checks, only half the room answered they 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 courtview or do you do the 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.
Dave Stohr:I was going to 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,
Kassandra Taggart:have to be you have to have set rules and, and you have to be comfortable with saying yes and no to people. We're 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 to create roles and I have to look Stringent hard core and cold sometimes. But the reality is, is you have to set criteria is to make profit and you have to follow business.
Dave Stohr:Somebody doesn't qualify for a property. Do you tell them the truth? This is why you didn't get in.
Kassandra Taggart:No, actually, I can't completely say everything. 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're doing background checks of tenants, sometimes landlords 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 date of 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 criteria because of, well, I feel this because fair housing texts, protected class passes, and you can't make your rules look like you are persuading one class protected class over another class. So where I'm getting to. Is that yes, you do have a requirement of saying approved or decline and under decline, you have a few ways to articulate your declined for income ratio or your declined for background check. You don't have to go into the fine, fine details of why. And you better have rules in place to say and support if they file an audit against you
Dave Stohr: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. You're big vacancy time. I like to say I'm a connector of dots and, and I always go back to my little story of you're making a pot of soup and you got to 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 know how and seeing trends and facts and how trained we are makes the difference.
Kassandra Taggart:I'll give you an example. Did you know, in 20, yeah, 2019, where we ran over nine 950 applications.
Dave Stohr:I did not know that
Kassandra Taggart:because of that, you can see, trends very clearly and the 950 applications we can say, Oh, this, this trends coming through, or this trends leaving right. But when you are only doing one application or two applications, every two years, you were not going to see the trends, a 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 landlord call them for a reference check. You call them and they're not a landlord. It's just a friend's cell phone number. Oh yeah, Johnny's great. Of course. They're going to say Johnny's great. It's your friend. So you have to combination it with a whole bunch of other stuff to make the decisions.
Dave Stohr: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?
Kassandra Taggart:If it's too high, you're going to get the wrong crowd, actually. When you have too high of a rent you're going to have the wrong type of people wanting to apply because the bad tenants know that if we overpay for rent you'll look the other way on their background. Right. We have a story. And this was kind of an interesting story. There's an there's a landlord who called call me up and said, I want you to rent to these people. We said, okay, well, we're not renting unless we do a background check. He goes, no, no, no rent 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 to any of our properties that we manage unless we do a background check. We did a background check and found six evictions, one pending. And 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 and you're not trying to get it rented. So, so I want you to prove them anyways. I said, sir, I need you to put in writing that you're okay to rent to a tenant 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 going to move them in, give them Keystone property, and they're not going to be able to pay rent. The risk is high. If you want to sign off on it, here's a letter you're going to sign it, not me 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 overpriced.
Dave Stohr:And what if the tenant qualifications are just too low,
Kassandra Taggart:if they're too low, your eviction rates are going to start increasing in your property. The dollar amount of damages in your property is going to go up and your maintenance bills are actually going to go up because bad, tenants that don't care. For example, they don't report the wash machine is leaking water underneath the good tenants that care about building their future and building their lives. They're going to report everything in anything. Sometimes it might be a little annoying because they're reporting everything in anything but they will report. So you can make a decision of how to keep your property maintain, but bad tenants, everything goes.
Dave Stohr:I was going to say, what's been your overall experience with high-risk tenants is it just a problem?
Kassandra Taggart: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, the result of a divorce cause of divorce. Everyone destroys everyone, right? Yes. But there are other bad tennis. That's just not a fit for them. So 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$2,000 all day long?
Dave Stohr:That's amazing.
Kassandra Taggart:And you're up to 30 days of sitting there waiting for them to get kicked. Because you got your court, your eviction, you, then you gotta get your troopers to come in there and remove them during that time. They're just ruining your place and ruining your place.
Dave Stohr:I was going to say, who rents to this group of people who obviously need a home, but whose behavior is constantly,
Kassandra Taggart:the people that don't do checks they, they don't do background checks. They, they don't know that these tenants are the bad ones. They just, they just let them in. When you hand keys. He had signed up for it.
Dave Stohr:And when you encounter high-risk tenants, is the industry alerted to them or does every property manager find out for themselves sooner or later?
Kassandra Taggart:They do find out for themselves sooner or later. There's a, there's a thing in this town with a, what I call tenant hopping. So a tenant will find somebody that doesn't do background checks or find somebody who is a sucker and really wants their place rented and get so eager. 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 and you're like, Oh, this just happened. Then they don't pay the second month's rent. Oh, this just happened. But because you're a 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, ah, 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, they'll leave. 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 I have a friend who has a kid that's probably now sitting around 10 months. I'm not having to pay rent because they're hopping from landlord to landlord, to landlord.
Dave Stohr:Y ou mentioned the word systems quite a bit. How do systems play into property management success? Specifically yours f
Kassandra Taggart:or me systems make it to where and keep emotions out. That that's my biggest still. And it also makes it to where I can scale. And it's where I can manage profits. Systems keeps you out of trouble with the federal rules and the state rules systems make it to where you can create speed. Systems is basically the core property management and landlording a lot of people don't realize. How important that is because in the rental world, 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 rent cause they haven't paid rent in two months. And you didn't have systems in place to figure out how to charge them the late fee or how to give them options to swipe their credit card because they don't have the cash or you don't have systems in place to enforce. And when you're missing any of those 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.
Dave Stohr:Right?
Kassandra Taggart:So it's a cycle of bad decisions.
Dave Stohr:And ultimately, what will the right system produce for a property manager, a property manager and the real estate investor.
Kassandra Taggart:Profits. Everybody wants profit. Everyone wants it's cash. Everyone sits there. Cash is King. I mean, it really is cash King and if you don't have recurring revenue coming in consistently, then that means your systems are flawed or your ability to make decisions. A lot 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 rentals. 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. Oh, at it went negative again, this month, we're going to look out away. Its 30 year, whole 10 year holds right long holds. But if it's negative long enough, wouldn't you just take the money out and move it.
Dave Stohr:Sounds good.
Kassandra Taggart:I mean, you put systems in place to watch that. So why aren't we putting a systems in place to manage your multiple hundreds of thousands dollar investment?
Dave Stohr:The conversation's unlimited with Kassandra Taggart, the president of real property management of Anchorage and the author of the book pain or profit secrets of profitable rental property investors. I'm Dave stohr time now for questions and answers that we've collected in anticipation of today's conversation. Kassandra, I'm sure the have come across your desk before. I'm sure you'll have qualified answers for all of these. Here's your first question? How do you have well, or I should say, how do you have water tested for minerals?
Kassandra Taggart: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 an electrician that can make the pumps work, you got people that know how to test the waters. Then you got people who install the Wells. You got people who cleaned the Wells. You've got people who know how to find the leaks and the lines between the house and the well, and then you've got pumps that deal with the well to filter and clean it. So there are specialties for those items 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.
Dave Stohr: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?
Kassandra Taggart:Yeah, lot of people don't realize that when you're working with vendors you have to have a lot of vendors. So for example we are preparing 1099, 1099 is something you have to send to your vendors when you're using them for work, because the IRS wants to make sure they track the dollars. Right. For 2019, we did over 237, 1099 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 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 D frost, all the pipes. Then you have to have a plumber at the same time, ready to fix those pipes, turn on and off the water and fix those pipes when they discover them. So you actually have to have two vendors to fix frozen pipes and potentially a third for a guy who knows how to pick up the water. And if. The pipe that broke. If it's a class, depending on the class of water you may need somebody who is sanitized, who can do sanitation, because it could be a septic sewer that broke or dirty water that broke. So you may need four or five particular vendors to take care of it. One freeze
Dave Stohr:and you need them right now. So they must be on a master list of contractors.
Kassandra Taggart:They must, and to make an even more complicated. It, and unfortunately it's business this way. It is because of how the volume that I have as a property manager versus the volume of what you might have as a landlord, your. Your speed dial list might be the same speed dial list as us, but because of my volume, they're going to pick my property and come to service us before they service you. And they're also going to 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. 4:58. We've had pipe breaks, pipe freezes and everything. Cause we're in the cold temps right now. Right. And 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 them was because the only response she got that help is because she called a friend of a friend who knew a person who worked there to try to pull favors because that's how it works in business.
Dave Stohr:Absolutely. You have led me to my next two questions who pays for frozen pipes, the landlord, or the tenant.
Kassandra Taggart:The landlord.
Dave Stohr:Okay. It goes back to that person.
Kassandra Taggart:The seldom will go on the tenant. There are some stories where it can go on the tenant but most of the time it's the landlord. So to give everyone some updates on numbers right now, most of our pipe break situations are running between$1500 and$5,000. That is how fast it goes and how much damage it goes when it goes bad.
Dave Stohr:Yeah. Incidentally, the, what the weather is going to warm up by next Wednesday. We're going to see temperatures in the middle. 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 to 10 99, a contractor. One of our listeners wants to know
Kassandra Taggart:it's actually$600. And if it's an entity that doesn't require a 1099. So for example, enstar would not need a 1099 for you paying your utility bills. Because they're a corporation, they filed their own, but LLCs contractors. So until they changed 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 is that the IRS they'll do these audits and they'll say, Oh, this vendor didn't pay their taxes, but you said that they exist. So I'm going to come to you and try to find them. And in because you're supposed to have your paperwork in order, I'm going to give you a hundred dollars 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 him. So I'm going to come to you to try to find them. So you should have your paperwork in order. To find him. Right.
Dave Stohr:Right.
Kassandra Taggart:So you should have your W9 in place for this person. You should make sure that they're licensed bonded insurances on file, because you never know when the permitting office is going to come after you for that. And you need to have all your paperwork in order for every vendor you hire. Sounds like a lot of work.
Dave Stohr:It really does. That's why you're a professional property manager. I'm on the radio. Here's an interesting question. Does not having a dishwasher make a big difference in rental value or quality?
Kassandra Taggart: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, they break, they, they don't make them like they used to usually have to replace them every seven to 10 years. Now it seems like but. They're like 200, 300 bucks now to put in a new one rather than service it. And when the, when the, the pipes in the back disconnect or get clogged, then you got to 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,
Dave Stohr:you're going to have to ask.
Kassandra Taggart:As we head in where we're in the 21st century, when you look at the new appliances, the 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 of the repair, those things must be, it is that's a very good perspective. A lot of people forget this thought because when you make it your home, you want all this. Fancy technology. Do you want that those nest thermostats hookup 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. So first of all, the concern is, is that you got to have a technician that understands the electronic side of the appliances 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 are 800 to$1,200 for me to get fit brought in from wherever it's made. Cause they don't have them. Ready-made ship them here, which is another week. And then they finally get here and then you've got to get on the tech schedule to get them installed. So you're looking at an easy$1,500, which is the cost of a basic GE Whirlpool type appliance that you could have just installed, made the tenant happy in a week.
Dave Stohr:You know, I'm running into. Old-school appliance repairman who are S are struggling with the technology as it comes into the marketplace, they just don't have the training. The training.
Kassandra Taggart:There is not really any certified training for these guys. It's usually a whole bunch of like, Guys that don't want to be handymans cause it's hard on their bodies and they don't want to work for union. So it's these, this type of technician is who typically picks up these jobs
Dave Stohr:independent.
Kassandra Taggart:Yes. The little independence guys and be careful. There's a lot of Craigslist fraud guys that claim they can do or repairs and they can't. Because, but, but the issue too is, is that. To pay them a healthy wage and to make them qualified for licensed bond insurance and all this stuff. Their call-out fee is a minimum 75, 90 bucks minimum. That's just a show up. And then if they have to do multiple trips, fix it in because we're in Alaska. Some most parts have to be ordered. Unless you can get it at the rehab store stuff. So you're looking at 150 bucks, easy all day long to fix the dishwasher that only costs 300 bucks. Did you know that if you just. Invested and decided, you know what, instead of paying$150 for a 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.
Dave Stohr:You mentioned thermostats. Here's a, I didn't even know these existed. I want to get limiting thermostats on my unit. Your thoughts.
Kassandra Taggart:We have lots of landlords who want this. Yeah. Why here's what the, there there's various landlord thermostats, you can get them on Amazon. You can get them from I believe central plumbing has them. Now. There's a couple other places that have them, so you can get at them. Yeah. They're, they're not too too expensive to get them and then install them. It's just like hooking up. Any other thermostat and thermostats right now need to be upgraded in most properties because when their little mercury thing starts going out or batteries or wiring goes bad, you need to upgrade them anyways. So a lot of landlords are saying, well, I'm going to take this opportunity for the upgrade to do the landlord thermostats, landlord thermostats. What it does is it regulates the heat in a property automatically. So, whether they're there to press up or down on their heat, it automatically keeps the temp at a certain temperature. So if a tenant wants to keep it at 80 in their house, they're not going to be able to. They literally, depending on which stat you buy, it literally rely re regulate the temperature in that unit from more between like 65 and 75 and 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 of 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 winter time, it dropped it depending on, you know, you're building everything. But here's what it did do that everybody forgot. Tenants are 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 you're gonna lose your good tenants. And the second one of the landlords had done that. They lost three really solid, good paying on time tenants. And we ended up with not paying tenants. So, and then you end up with the cost of turning over the unit in turnovers, typically costs$1,500 than your rent as well. So you're losing, you know, easy to$2,000 in one shot. So. Saving about 50 bucks a month on your utility versus having a turnover of$2,000 easily. The math doesn't make sense
Dave Stohr:while we're talking about temperature. Should I prohibit the use of space heaters in my properties?
Kassandra Taggart:You definitely want to consider that as a conversation, especially depending on who pays the utilities, what kind of space theaters 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. So if it trips or gets clogged, it'll turn off, those are safe. Right. But the other ones, there are tenants. Like we had to have a conversation just last week with a tenant saying you aren't supposed to use space heaters that are propane filled, oil filled all this kind of stuff. Those are dangerous. Right. And if they aren't 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. But it's, it's a liability. It's, it's a, it's a concern.
Dave Stohr:One of our listeners wants to know, should I take a credit card payment for rent?
Kassandra Taggart:So that's an interesting debate because. Credit cards, costs 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 a tenant 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. 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. And then there's the debate of who pays the fees for processing of credit cards. So there's that concern as well. We took the approach of continuously trying to receive money. So we have 86% of our tenants pay online. And 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 bad 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,
Dave Stohr:you know, all the stories don't you, you know, all the tricks is a risk to credit cards.
Kassandra Taggart: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.
Dave Stohr: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.
Kassandra Taggart:That's a, 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 it and time's money. So if you're a landlord who don't pay yourself a wage for doing property management 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 run around bank to bank doing bank sweeps. You, you could be that landlord that does all that. That's fine. If you want to be one of those the, the, when you make a mistake and place a bad tenant. Sometimes you place bad tenants that just get in a fight and there's issues. But when you make a mistake, that actually is a bad tenant. Going after them, the likelihood of you getting your money is very slim. 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 a thousand to you only get 200 bucks, but they'll do all the legwork. So it's a good option.
Dave Stohr:How much does the tenant balance need to be before you consider filing an eviction?
Kassandra Taggart:Everybody has a different threshold. Here's what I can say in, in, in, you should have your own threshold that you're comfortable with. The cost of a court just to file is around 400, 500 bucks. Right? Then you got the stress of them yelling and being mad. Then they 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 pay$600, because the tenant didn't pay, let's say a hundred bucks. You're not making the best business decision with money and you're being shortsighted and emotional. So we'd like to say, needs to be at least above 300. Before we start filing court proceedings, we will do payment arrangements it on certain circumstances because they've been good and then just had an oopsie because of a job transfer or something. So you need to make a business decision that works for you. Shall waste money.
Dave Stohr:I'm Dave store with the president of real property management of Anchorage and the author of the book, painter profit secrets of profitable rental property investors. Kassandra, how can investors find out more about joining the landlords club,
Kassandra Taggart:the landlord's club and the fastest way to get everything you need is to actually go to the website, which is the. It's almanac.com there you'll see a place where you can post questions and forums and thoughts that you have, or be supportive of other landlords that are here in Anchorage, the databases over 2,500 landlords. Sitting there chatting and helping each other out is amazing.
Dave Stohr:You're a very busy person do you make yourself available to mentor new investors
Kassandra Taggart:all the time? So just say just attend the classes and if you can't get the direction that you need a call in and we'll schedule some times to guide you either on how to step up, how to buy the right property, then. That's you we'll help you in strategically handling the maintenance there. We have so many different packages with property management that we can help you just ask and say, this is what I need.
Dave Stohr:That is so easy. Kassandra, thank you for your knowledge, your passion and your guidance over this last hour. You are, as I'm sure our listeners now know an invaluable resource and it. Experienced advisor for those who are investing in real estate and taking their first step towards success, have a good day.