Welcome back to The Landlord Profitability Playbook Podcast! I'm Chris McAllister, here to help you create and coach business opportunities and strategies that support and add value to the lives of residential real estate investors.
Today, I'm joined by my trusted co-hosts, Laci Leblanc and Gretchen Mitchell, our Director of Property Management at ROOST Real Estate Co.
In this fifth installment of our series 'What To Expect From Your Property Manager,' we're tackling a question every landlord wants answered: "Will They Rent Your Property For Top $$$ FAST?"
Minimizing vacancies is crucial to maximizing your profitability as a landlord. But how can you ensure your property manager is up to the task? This episode breaks down the essential steps that can help your property rent quickly and at the highest possible rate. Here’s a glimpse of what we cover:
• Setting Market Rate Rent: Discover how to set the right rent rate for your property to attract qualified tenants who can comfortably afford the rent and maintain your property in good condition.
• Casting A Wide Marketing & Advertising Net: Learn the importance of extensive marketing strategies, including leveraging robust management platforms like Appfolio and Buildium, to reach a broad audience and reduce vacancy periods.
• Showing Your Property In The Best Possible Light: We discuss the impact of high-quality photos and self-showing systems, such as Tenant Turner, on enhancing your property's appeal and convenience for prospective tenants.
• Screening IN Qualified Applicants: We emphasize the importance of fair and unbiased tenant selection criteria that not only comply with legal standards but also ensure a pool of well-qualified applicants.
• Assessing the Application Process: Understand how a streamlined and accessible application process using tools like Tenant Turner can improve operational efficiency and tenant satisfaction.
• Auditing the Onboarding Process: Learn the critical elements of a thorough onboarding process, including lease signing, setting expectations, and utility setup, to ensure a smooth start to the landlord-tenant relationship.
Whether you're a seasoned landlord or new to property management, this episode offers valuable insights and practical tips to help you minimize vacancies, maximize your rental income, and create a positive experience for both you and your tenants.
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TRANSCRIPT
(AI transcript provided as supporting material and may contain errors)
Chris: Hello everyone and welcome back to the Landlord Profitability Playbook Podcast. I'm Chris McAllister and it's my job to create and coach business opportunities and strategies that support and add value to residential real estate investors like you. Joining me today are my trusted co-hosts Laci LeBlanc and Gretchen Mitchell. Good morning, ladies.
Laci: Good morning.
Chris: Laci is the queen of marketing for Roost Real Estate Company and Gretchen is our director of property management at Roost Real Estate Company, so we are very lucky to have them here today. We're going to dive into part five of our series called what to Expect from your Property Manager. This episode is titled Will they Rent your Property for Top Dollar Fast? I think that's a critical question that you want to ask any property manager that you may decide to interview to work with to manage your properties. So, of course, minimizing vacancies is critical to landlord profitability and there's a tremendous amount that goes into being able to rent your home for top dollar fast.
We're going to go through these things one by one and some of these steps, or all of the steps that we're going to touch on today. They start off with number one setting the market rate rent. Number two cast a wide marketing and advertising net. Three show your property in the best possible light. Then we're going to talk about screening in qualified applicants and that's screening in versus screening out and then we're going to talk about how to assess their application process and then we're going to talk a little bit about their onboarding process. How do they bring new tenants online. So that's a lot, would you agree?
It is All right. Let's start off with market rate rent. So what is market rate rent, Gretchen? In your words, what would you call market rate rent?
Gretchen: Market rate rent what the market really states that your house could rent for. What does everything else rent in that area? Same bedroom, same baths, comparable homes all renting for about the same. What do they rent for?
Chris: It's what the market will bear.
It's what people are willing to pay, and that is critical, because if you expect that you're going to get more than what the market's going to pay or what people are already paying for similar houses, you're in for a long vacancy as a rule, I'm afraid.
So setting the right rent for your property is the first and most important step in the overall success of your property. It's really hard to persuade somebody to sign a lease, to pay more for a property than it's worth, and if you are able to do that so many times, those people are in dire straits. They're desperate. They happen to have cash, they can get into the property You're happy to take the cash all too often and then they're just in no position to continue to pay the rent or finish out the term of their lease. So there's a lot of pitfalls for trying to go in and expect that in some magical way, your property is going to be the one that either raises the market rent in the area or breaks that rule, and we've had many people who have tried to do that and all it does is prolong the vacancy process Just real briefly.
Laci: Can y'all tell me how that relates to the neighborhood standard? I think that's an important kind of point, that those two things go together. So if you've improved your property past the neighborhood standard or it's not up to neighborhood standard, how does that affect the rent that you can charge?
Chris: Well, I think if your property isn't at the neighborhood standard, whatever the average is in the neighborhood, you shouldn't expect to get market rate rent. You could use another term for market rate rent as the neighborhood standard rent, but traditionally, financially, in this business, we call it market rate rent. But the fact is, if your property isn't up to the neighborhood standard, you can't expect to get market rate rent. And, conversely, if your property is improved ahead of or beyond or way better than the neighborhood standard, you shouldn't expect to be able to get more rent beyond the market rate rent. And that's where people get in trouble. That's where I got in trouble early in my investment career. Is the expectation that well, I made this so much better. People are going to be happy to pay for it. And the fact is you may get somebody in, but the chances of them finishing out the lease at the price you want to pay is just not a very good chance. Do you see that a lot, gretch?
Gretchen: I actually saw it recently. This owner I mean the house is beautiful on the inside and it's beautiful on the outside he has the house is beautiful on the inside and it's beautiful on the outside, he has the prettiest one on the street and he wants to get top dollar and the house deserves it. But that area, that market area, does not allow him to get the money that he wants for that house. It's disappointing, but we do see it a lot.
Chris: Yeah, I always call that magical thinking and I've suffered from it and we still see people that suffer from it. So that's one thing you know. Do they know what the market rate rent is? Can they help you set the market rate rent? Can they help you set a rent for your property and asking number that's going to, in effect, cast as wide as net as possible for as many qualified applicants as possible? So you know, I always take the approach with my personal properties and I try to coach this with our owners.
You know, if market rate rent is $2,000, and you want to attract as many qualified applicants as possible and you can afford to be the guy that's able to come in at, you know even $1,995, or you know $1,900, $1,895, something that is just marginally you know a little bit better value for a similar house.
You're going to be inundated with applicants and you're going to have a far better chance of finding two, three, four qualified applicants with you know, when you go start, when you start looking at people who come through, so, is the market rate, is the rent that you choose to charge even a hair lower than what market rate rent or what people expect?
Because if you're able to do that financially, you're going to attract a lot more qualified applicants, which means you're going to have people who actually finish up the lease, pay the rent every month on time and, of course, there's a much, much better chance that they're going to leave that property in a better condition when they leave than even when they got it. We want people to be able to comfortably afford the rent right. We don't want this to be a strain. We don't want it to. We don't want to increase their anxiety. We want them to feel, if not good. We want them to feel that what they're paying is very fair and again, in our experience, that makes it far more likely that they're going to take care of the property, if only because they're not going to be taking out their additional frustrations on the property.
Laci: Yeah, we talk a lot about sorry, chris, we talk a lot about, you know, my Nana and her properties here and there's another side to that where you know she manages her own properties and I think that you know you get comfortable and you do get good tenants if you're charging a good rent rate but then you fail to increase as the market will bear right, so you fail to keep up with the market in some cases. So I feel like Nana might be not making enough on several of her properties, as indicated by the thousands of inquiries she gets every time she posts one for rent.
So, I think there's a. The alternative is you know there are some people out there who are not charging enough because they just don't. You get good tenants, you know, or you have a lot of properties and you don't. If you don't keep your eye on the market, you could really be losing out. You know, hundreds of dollars per month times, however many properties you own.
Chris: It's one thing to make a conscious decision that you're going to keep this tenant who's been with you for 20 years or whatever it is, and you know you're below market rep, but you also know this person's not going anyplace. You know that's a business decision. What's really sad is, though, when you have people who just don't aren't even aware of what the market rate is and they just keep doing what they've always done, and you know many times they're leaving money on the table. The other thing to think about is you know, when you set a market rate rent, you want to take into consideration as to how your property management is.
Property manager is compensated for leasing your property.
You know, if the property manager you know gets paid a significant amount of their income from leasing your property, that could theoretically influence what they recommend for rent.
It would be in their best interest if the market rate rent is $2,000. Sometimes it could be theoretically in their interest to say, oh, $1,600, will do it because they know they can pocket a quick $1,600, right, if they may be incented, depending on how their company is structured, that it's in their best interest to get a higher rent. You know, maybe they get a percentage of the management fees that are charged every month. So a higher you know rent on a lease potentially can make the monthly income for them a bit higher, and a lower rent could potentially help them get a lease fee quicker. I wouldn't say that people are everybody you talk to isn't going to be completely out for themselves, but I do think it's important that, as a manager, you understand how your property manager is compensated and how that relates to the fees that you pay. So, gretchen, why don't you give us a rundown as to what we charge and how we work, the whole lease fee and renewal free fee?
Gretchen: So when we have a house that we're marketing and we run all the applications and we get a new tenant in there, sign the initial lease, in one market we charge the lease commission is equivalent to half of the first month's rent.
And then in another market a couple other markets we do the commission is equivalent to one month's rent. And then I like to explain the lease fee renewals to a lot of owners because it makes me feel like we're looking out for them. So when we do a lease renewal we can increase the rent all day, we can offer them a new lease or we can keep them month to month. If we increase the rent and we choose not to offer them a new lease, that owner is not charged a lease commission, which is $200. We're very open and honest about hey, this tenant's been great, let's offer them a new lease, or this tenant has struggled to pay, or we've had complaints. Maybe we don't offer a new lease. We work together with the owner if we want to offer that new lease, but it's truly only. They only get charged a $200 renewal fee if that tenant commits to another year.
Chris: Yeah, I think that's important. I personally, on my properties, I like to get another lease signed for another year because I think that's a commitment from what it is. It's a commitment from the tenant that they're going to stay another year, right? If you choose to go month to month and even if you charge an extra fee for month to month, you do that in anticipation of the tenant not staying for another year, right? So I personally prefer a commitment from the tenant, who's obviously a good tenant. They've gotten through their first year. We want to keep them. I would rather pay the 200 bucks and worry a heck of a lot less about that property going vacant over the 12 months. So that's my feeling as an owner. When I last checked the math on this, I think that our tenants choose to sign a new lease about a third of the time, maybe it's a third of the time 20 to 30% of the time they move out to another apartment. Another roughly third of the time they choose to stay month to month, even if it involves an increased fee. And then the other roughly third of the time they choose to sign another lease, and I do believe wholeheartedly that it's in the best interest of any owner unless they've got other plans for the property. If they think they're going to liquidate it at some point in the next year, I think it's far in their best interest personally to get a lease signed. The other thing I want to talk about is, yes, in the Springfield area, which is a far different market than, say, Columbus or Florida, our lease fee is half a month's rent. And then in the Columbus area and the Melbourne area and so forth, we charge a full month's rent. That's competitive, that compensates us for the effort and work involved and it makes great sense for our owners. But the other thing I just want to touch on with our lease fee, in our property management agreement, in the PMA, we do offer a guarantee, right? So we say and I'm just going to read these couple of paragraphs management will re-rent the property at a reduced rate of 0% for the first full month's rent if previous tenant defaults and vacates within 90 days.
So what we're saying is and again, we tend not to put people in without consultation with our owners, right, but we want to share the responsibility, share the risk, so to speak. So what we're saying is, if we put somebody in a property and they move out within 90 days, we're going to re-rent that property for free. We don't expect to get paid twice. If that tenant moves out between, or I guess within, 180 days 90 to 180 days it gets out to the 180 day mark, we will re-rent the property again, but we'll do it for half price.
So we want to try to make sure, within the PN, convey to our owners that we are in this together, right, and we have no interest in working for free. We're going to do the best we can to get the best possible person in there, because the last thing we want to do is have to rent it again and not get paid. So, speaking of in the whole discussion of market rate rent, gretchen, why don't you? Well, let me start with this. Our biggest marketing outreach initiative is that we send out these postcards and we and Lacey runs Google ads that offer a free market rate rent analysis and we sort of frame it as a second opinion, right. So we hope to get these messages in front of. You know various owners that are currently working with us.
Laci: And trying to get this in front of Nana.
Chris: We want to give them something of value that they can count on. And, gretchen, why don't you just walk us through? When somebody does respond to a market rate rent offer, either via postcard or on a Google ad, what do you guys do? What do you and Taylor do?
Gretchen: So we use a platform, a company called RentRange, and you plug in the details for the house and it pulls a report out. It tells you what RentRange thinks the appropriate market rate rent is for that unit or property and then, honestly, we see if we agree with it. So there's other comparables listed on that report that it pulls and we look at those. But we also compare to what we already are managing. Does that make sense? Because we just rented one down the street for X amount of dollars? Or we look at square footage so we can input all the numbers and it spits out a number and we just see if we agree with it or not. Looking at other things in the area, we can pull up Zillow. Maybe rent range didn't pull all the properties in that area or some of them really aren't comparable. So we do a little digging. But rent range is pretty awesome. Most of the time it's pretty spot on. But we do double check. Rent range works sometimes.
Chris: Yeah, and rent range is kind of cool because it gives a confidence level right. If it has a lot of data, you might see a 90 plus percent confidence level. If they don't have a lot of data, then that number starts to fall. I do think it's important to check other sources, but the best source possible is are we already managing a home in the neighborhood and what are we getting? So we don't rely just on that technology to put this together.
Although it's a beautiful package and it provides a lot of extra demographic information that an owner is going to appreciate, the fact is we look at the people we're actually working with the rent we're collecting now and if we need to go out to other sources like Zillow or anyplace else, then we'll do that too.
So if you see one of those market rate rent cards come in the mail to you, which we'll be sending out a ton of coming up again this fall, because we are in a position to add about an owner a week over the next year finishing out 2024 and into 2025. So if you happen to be listening to this and you get a yellow card in the mail offering you a market rate report, it's coming from us and that's how we do it. So, just to close this out and this is a deep introduction to this thing, but setting into this whole episode, but setting a rent rate for your property that allows for the return on investment you deserve and attracts the greatest number of qualified applicants, that is your goal and it's also the challenge, and that's the challenge that you need to pose to your prospective property manager. Did I miss anything there?
Laci: No, I think it was really well said and I think that you know we talk about Nana on here, but I don't know if everybody remembers or knows that I'm in North Carolina, so Nana doesn't have access to Roost, unfortunately for her property management and the fact that you guys have made such an effort which everything else we talk about in this episode we'll attest to that too for this to be mutually profitable and mutually beneficial, as you talked about with your.
You know your clauses and your PMA is rare, so I hope that there are people out here who can take this information and apply it, like I'm helping Nana do here, because she doesn't have access to Roost and we haven't found anyone quite as conscientious about the relationship and mutual profitability here in Western North Carolina. But I think that's a point worth making is that this is there's a lot of thought and time and effort and experience that goes into figuring this stuff out and you guys have that and I think that's it's amazing that you share it like you do, but also people have access right to you if they wanted it.
Chris: And I really appreciate that, lacey, I do want to also say you know, sometimes we get requests for market rate rent in markets that we don't have any experience in, and when that happens, you know I'm the one that sees those come in. Really, it seems like every morning there's a couple of market rate rent requests in my inbox and if it turns out that the market that the address that's been requested isn't in an area that we work or not within our coverage area, I immediately shoot an email off through the CRM and say I apologize, but this is just outside of our coverage area. So I'm sorry when that happens, but I think it also speaks to the fact that we don't just take rent range as word for anything. If we don't have practical experience, actual experience, boots on the ground in a given neighborhood, then we're going to respectfully bow out and we hope we get to your neighborhood someday. How's that? All right?
Let's talk a little bit about casting a wide marketing rent. You want to look for your property management company. You want to look at their website, right? You want to see what their available listings for rent look like. You know, if they're using a robust platform like Appolio or Buildium, their listings should be automatically populating to every other for rent site on the internet. So that's a question you want to ask If it's not getting out to the whole world on every platform possible, if it doesn't show up in a Zillow search. That should be a concern and something you want to dig in deeper and find out. Okay, if you don't have access to that sort of network, then what are you doing? So ask the question.
But also bear in mind we use AppFolio and obviously there's a charge that we pay on behalf of every owner, every door they own every single month to AppFolio. They own every single month to Appfolio. But bear in mind if you're talking to a company and they happen to use Appfolio or a building and you want to ask specifically, are you on Zillow or Apartmentscom? And the reason I say that is Zillow and Apartmentscom require an additional fee and sometimes that additional fee is charged extra and tacked on to whatever fee that you're paying for leasing.
So I've seen a different company's website, for instance, that if they're going to advertise your property on Zillow, it's an extra 30 to $50 because that's roughly what it costs them. So at our company you know we pay extra for Zillow. We do not pay extra for apartmentscom and, quite frankly, we've never needed it. I think Gretchen said we had an owner who wanted us to advertise on apartmentscom and we did do that for them and I believe we charged them back to do that. But the fact was I don't remember that being of any help whatsoever. Did it make a difference?
Gretchen: I don't think so. We do have one owner that does it himself and he pays for that. But he puts all of our information in, so any leads would come to us. He just pays for it directly.
Chris: Yeah, and from our experience that's an expense that I you know personally. I think he could probably see.
Gretchen: Yeah, I don't think much really comes from it. A lot of it Zillow. The sign in the yard is a lot.
Chris: Our website it is amazing how much the signs in the yard still matter. I mean, just, they do no question about it. So at the end of the day, it might be on every platform in the world, but if they don't have a sign in the yard, you know they're missing the boat. So please ask that question too. You know, how do you put a sign in the yard, how do you put a sign in the yard and how do you keep the sign in the yard? Because sometimes we put like five signs in the yard, depending on where it is. If it's on a corner, we line up that baby. Well, I also remember, depending on the neighborhood, that we would just we would attach the sign to the house itself, because it was less likely to have kids steal it, or something like that.
Gretchen: Yeah, we just did that. We actually just zip tied one to a porch rail this week.
Chris: So signs still matter. It's low tech but it still matters, so all right. And you also want to show your property in the best possible light. You know you want to get the best pictures you can and you know I think Brenda, for us, does a pretty good job at that. If we have a really super incredible rental you know it's something that you know maybe is in the two $3,000 a month range then you know we'll talk to the owner about doing a, you know, like a 3d video or some sort of package that you know they can keep forever. We use a company called wow these days and we use it for our sales side of the business, but it's also available to an owner who has a higher end property that wants to see a superior marketing plan for their rental property. And the cool thing is, a lot of times when you see these 3D branded videos and it's not just a video that you have to watch start to finish it's actually a floor plan of the house and you can just click straight to the room you want to see and it'll show you a 3D view of the entire room up down and sideways. And it'll show you a 3D view of the entire room up, down and sideways. The other thing if that's something that is necessary for you, every company that does these whether it's WOW or anybody else has an option to get an unbranded version. So when WOW does it, they give us an unbranded version and they give us a roost-branded version. My advice to you, an owner, if you choose to spring for one of these, or if your property manager chooses to spring for it, ask for the unbranded option. And you want to own that. You want to keep that, because there's really no good reason not to use it again, even one, two, three years down the road when the property becomes vacant again.
Self-showing systems. So let's say that you've got great pictures on the internet, or you've got, I don't want to say, good enough, but you have perfectly acceptable cell phone pictures, iphone pictures on the internet. How do you get people into the property? Well, what does this property manager do? Do they physically show every property? Do they have in-person open houses or do they use self-showing systems? So, larger companies I think every company with a thousand doors or more that I've ever seen, including our company we use a service called Tenant Turner, and there's a couple of different services out there, but we use Tenant Turner to automate the initial tenant screening and allow qualified prospects to get into a property on their own, on their schedule, without anybody looking over their shoulder or without forcing them to adapt to, you know, potentially, our schedule or the owner's schedule. So, tenant Turner, we've had great success. And what was the company we used before Gretchen?
Gretchen: Rently.
Chris: Rently right. We used Rently a few years ago and we ran into some serious problems and we shut it down and went back to in-person showings for gosh probably two, three years. And then we discovered Tenant Turner and everything that we were concerned about with rent. Lieutenant Turner addressed so the technology for this service. It combines a quick public record background check with the security of an internet enabled lockbox. So the lockboxes that we put on our doors are very similar to the lockboxes that you see realtors put on properties so that other agents can show houses. So it's a technology that is connected to the internet. We can monitor the box. We can basically see what's going on remotely. Because of that technology and the way it's set up, that only those who the system that can verify that they are who they say they are they're the only ones that can get access to the property. So it is super efficient, it is secure and the cost savings is amazing Because, quite frankly, if we had to physically go and show every single property that we listed, we quite frankly would have to charge more and either that would show up in the lease fee or it would show up in the monthly management fee to cover those costs and nobody wants to pay any more than they're already paying.
Said that, however, that still doesn't mean that Brenda doesn't have to go and check every single property at least once a week to make sure that property is secure. And the beautiful thing about it is, if you've got somebody like our Brenda, who's our leasing manager she basically tenant Turner is open on her desktop at all hours of the day that she's at work, and probably on her phone as well, so she can immediately see if somebody is requesting access to a property. And the other thing is, every morning she gets a report and she can see. Well, why didn't we have anybody look at the property yesterday? Or why didn't we have anybody, you know, look at the property for the last three days? And that's a red flag for her to get in the car and go make sure that the signs up, the lock boxes in place and everything is absolutely secure.
So the technology is fantastic, but it still requires you know, that personal touch. Now, gretchen, we talked the other day. There are places where this technology doesn't work, like we don't use it right. Correct me if I'm wrong, but if we've got a building that has a single exterior door and then you walk into a hallway and then there's various units with their own doors. It doesn't work there, correct?
Gretchen: Yeah, we don't put it on there. Those are more in-person showings. Now, if we have to someone needs to see it after they get off work at like 10 o'clock, we'll put an exterior key and that unit key, but then we'll take it back off.
Chris: Yeah, so there are again. There's places where we need a human touch and we provide that. The other thing is, what's our rule now? That if we don't get a property, a tenant in a property with when I think it was 21- days 21 days.
So ask your prospective property manager about this. But basically, if we don't have that property rented in 21 days and quite frankly I think Brenda waves the red flag sooner than that then you know we immediately go into. We keep tenant Turner, of course, but we immediately go into in person mode and that may mean that we do an open house. We tell anybody that calls you're welcome to go in on your own, but we're going to be there at the property Thursday at between four and five and we'd love to see you and we'll show the property to you. So automation goes probably 80, 90, even 95% of the time most months. But there are times and places where it's appropriate that we we get that human touch involved and we actually have a human being out taking care of the showings. The 21 day rule, all right.
So the next thing that I want you to talk to your prospective property managers about is screening in qualified tenants and again, the message here is screening in, not screening out, and we're going to talk more about this in our next episode.
But when you're interviewing a property management company, I want you to be sure to gauge their commitment to fair and unbiased tenant selection. They should have clear and consistent criteria that aligns with legal standards and your expectations as a property owner. And please understand and again we're going to get deep into this next week but Housing and Urban Development, hud, has really had a recent crackdown I think it started in April against property management companies that are employing quote, ai, artificial intelligence services to decide who to rent to and who not to rent to. And basically HUD is saying that is unacceptable, that if you, at a minimum, are using those as an aid or as a tool, that you have to basically review the recommendation and you personally, as a property manager and internal owner, have to catch anything that comes out as biased or unfair from that technology. So again, screening in is what you want to do and the key to doing that is to cast the widest net that you possibly can.
Laci: And you want to ask how are you going to?
Chris: make sure that I'm not going to get a call from HUD.
Laci: What's an example of screening in versus screening out? Like just a practical?
Gretchen: Well, I think the trick is kind of like a credit score Sorry, but like a credit score. So a credit score could be kind of low, but we remember, maybe that's why they're renting at this time. But we look and see what's on the credit right. So it's not like, okay, you didn't pay medical bills, education loans, things like that. We look to see the details of the credit. Is it, you know, a Columbia gas bill? Is it an electric bill? Is it a previous landlord? So we dive deeper into not just the score but why the score is what it is.
Chris: Yeah, and that's part of the we want to screen in so we try to even help people.
Right, we've got to screen people in and you can't just go by the credit score, you can't just go by what the AI says. You've got to look for reasons to put somebody into a property, not looking for reasons to keep people out of the property. I think that's the best definition of screening in versus screening out. At this point, hud doesn't want us to use credit scores at all and if we use a credit score, it has to be sort of it can't really it can't ever be the determining factor. We're not allowed to use credit scores if it involves medical bills at this point at all.
Quite frankly, and again, there's a difference between somebody with a low credit score who's already always paid their rent. So sometimes a commitment to screening in versus screening out means that your property manager is going to do everything they can to contact previous landlords and try to get a fair recommendation over the phone. And don't forget some of the onus on getting a good landlord recommendation previous landlord recommendation that still has to come from the tenant. A good tenant, even in a bad situation, is going to find a way to either abide by the terms of their lease or do a legitimate above board open negotiation with their previous landlord to move on. So again, it's not just the landlord that has a responsibility to this. The tenant has a responsibility as well. They have to do what they have to produce the information, they have to tell the story, they have to provide the documentation that helps us screen them in, versus not having that and getting screened out.
Laci: Yeah, I think this is just one of those. This is, like to me, the riskiest part, right, like the real risk, the riskiest part here and I think this is one of the quote unquote easiest parts to try and cut corners or automate or, like you said, people are using AI when it sounds like this is really the part that needs to be hands-on. You know brains on, eyes on and these other things. You know where we're talking about. You know tenant Turner and being able to show your property, or you know, wow, and being able to to have a video of your property.
Those things probably feel pretty cost prohibitive to property managers who own their own properties or you know smaller property management companies, but by automating those things and investing in that, I feel like it allows you guys to focus your time, your human time and energy, you know, on the things that really matter, like screening in applicants, and you know the the things that really matter, like screening in applicants, and you know the 21 day rule and all that good stuff. So I just I feel like this is one of the places where a lot of property management companies and property owners try to make things quicker and easier, because it is such a manual and time consuming task that requires someone who you know, who knows what they're doing, to do it. You can't just hand it off to an intern, or but I feel like that. That's backwards. Does that make sense?
Chris: There was a phrase that was going around for years. I haven't heard it recently, but it was high tech, high touch, and it almost got to be a cliche. But the fact is we use as much technology as we can possibly use in service to our owners' profitability and our own profitability, Because if we're not profitable, we're not going to be there for the owners when they need us. But if you don't have that commitment to having that human touch, you know and you know Marcy is our tenant relations specialist in Columbus and Shannon just started as the same position in Springfield. And then you've got Brenda, who is our leasing manager for both.
If you go to our Google reviews, you'll see that I bet you at least 20% of the Google reviews, the five-star Google reviews that we have, are for Brenda and probably another 10 to 15, 20% for Marcy. So you know, half of our reviews are I'd say a third of our reviews are for Marcy and Brenda, because they do such a fantastic job working with the applicants, working with the tenants, screening them in, helping them, holding onto them, getting their problems solved, and that's huge. And I think that's proof that this is a personal business, it's a one-to-one business, it's a belly-to-belly business, for lack of a better term. And we do employ as much technology as we can, but we never employ technology for technology's sake.
Laci: Yeah, and I think that you guys are obviously Roost is relationship-based, right. That's why I work with y'all, because relationship based marketing is what works and that's what I love. But you guys are relationship based and I think that you know that also right.
Building a relationship with somebody from the start, when you're going through the application process, when you're talking about the property, when you're getting them in there and getting them settled, I think really sets the tone for the relationship overall and I have a strong suspicion that is why you see such long-term kind of successful renters in the properties is because they have somebody that they can talk to, that they've actually met before, that they've seen in person or that they've talked to over the phone, that they can ask a question to. You know we talk all the time about how Amazon like there's no way to get in touch with most companies these days If you have a question you just have to submit a request online and hope for the best. So having somebody they can reach out to I think facilitates that positive relationship and probably impacts lots of things down the line, like how well they take care of a property. It's really hard to mess something up when you know the person who's going to be responsible for coming in and having to sort out the mess in the end.
Chris: Yeah, I think that. I think you're absolutely right. So the next thing I want you to ask your prospective property manager your current property manager is you need to assess their application process and you need to be looking for a streamlined and accessible application process that's beneficial for both the applicant and for you, the owner. You know a bad application process can, at the end of the day, screen people out without even trying. A great application process again is another tool for screening in qualified applicants applicants we happen to use again we use Tenant Turner at our company and Tenant Turner provides a application service, an application module within that. How does that work, gretch?
Gretchen: How they get an application.
Chris: Yeah, how do people apply for an apartment at our company?
Gretchen: So if they use the Tenant Turner service to view a home, they are then just immediately sent an application to complete through Tenant Lieutenant Turner and it's our app fully applicable.
Chris: Perfect.
I wanted to touch base, too, on some challenges we've had with applications recently.
This is probably a podcast episode in and of itself, but in Springfield, ohio, we've had a huge influx of Haitians and Haitian refugees over the past five years. At one point I heard it was five to 10,000 people that have come to Springfield that were from Haiti, and I've also heard reports that that number may be approaching even 15,000 or more people in Springfield, and this has been a challenge for us, because we don't speak Haitian Creole and they don't speak English. So we've really been trying to figure out how do we communicate with these folks, because they are so much of the rental people now, the rental population that if we don't learn how to work with them, learn how to communicate with them, learn how to help them, our owners are going to suffer, and I'm one of those owners in Springfield that would suffer because you know, I've still got the majority of my holdings in Springfield. So, gretchen, why don't you tell us about the challenges of the Haitian population and what you've been doing in the past few days to address that?
Gretchen: Like you said, a lot of it is communication. It has been difficult to communicate with them. However, most of the time they will bring someone in who can translate for them. We're also I've actually had a conversation with a company that helps them upon arrival when they get to the States. One of the challenges, though, is that so many are coming at one time that they seem to be staying with families when they get here. So they're not going to a shelter or any place designated for them, they're just truly living with their families in homes that are probably suited for less people to live there. So that's one of the struggles is having too many people in one home when they arrive.
Chris: Yeah, and sometimes that's a temporary thing, but it's still a concern of ours because you know it's a concern for our owners, or it should be but I think one of the key I think there's three keys here that you know you've been putting into place, and the first one is we have to be able to communicate. So I know you're working on a piece of technology you sent me yesterday. That's actually a tablet that is designed for somebody speaking English and somebody speaking another language to communicate through, and I guess the courts in Springfield are using it, as well as other different interpretation services. So we're going to go ahead and employ some technology, and I think you told me this was going to be about 2,500 bucks to buy this thing, but it's absolutely worth it because we have to be able to speak to folks. I think that's the first leg of the stool. The second leg is our. You know, shannon, that we just hired. You know we made it very clear that she, you know, is expected to do everything she can to help these people, to take care of these people, to embrace these people. And then, you know, you made contact with was it Catholic Social Services? What was the name of that? Yeah, and these folks have been taking care of the Haitian population, you know, helping them get their kids into school and so forth, and you know they volunteered that whenever we have a tough situation or a situation we're concerned about with an existing tenant or with a new tenant coming in, that they will come to the office and partner with you, or Shannon or Tina, and help make sure that we convey, you know, the appropriate expectations. You know of what we expect of them as tenants and, just as importantly, what they can expect from us as landlords on behalf of our owners. So I'm really proud of you, know how you and the team has embraced this because, again, yes, it's the right thing to do, but it's also the right thing to do for our owners and if you have to rent to the people that are in your community, if you're going to be a successful landlord. So I know that's a little bit of an aside, but every community has challenges. Do they have bilingual people in their office? It's a great question to ask how prepared are they to work with somebody who they have a bad time communicating with?
The other thing I wanted to touch on real quick are application fees. You want to ask them what is their approach to application fees and background checks. It's a step in the screening process, right, and I think it's important that there is a charge for an application. I think every tenant should have to be expected to pay an application fee. Application, I think every tenant should have to be expected to pay an application fee. Now, from our point of view and from the owner's point of view, there's obviously a charge to running an application or soliciting an application through tenant turner, etc. And, yes, it's absolutely appropriate that charge gets covered, and that's what we do. The other thing, though, is an application fee Also. Paying an application fee shows a commitment on the part of the tenant to do their part in the process, right? It's very unusual that somebody is going to pay an application fee. You know, I forget what we're charging these days $65, I think. Is that our current application fee?
Gretchen: Yes, it is $65.
Chris: Yeah, and I know in Columbus there's application fees that are $100 and above. So it is a fine line between charging a fee that we feel is appropriate and not gouging somebody, or not charging a fee and potentially not getting that extra commitment from the tenant. So ask them about the application fee, ask them what that fee covers, how much it is, and the other thing to ask is that fee refundable and if so, under what circumstances is it refundable? So you know, gretchen, why don't you tell us? I know that if we collect an application fee for somebody and their property is contingent on a section eight inspection, tell me how that works.
Gretchen: So we would really only refund an application fee if we didn't spend the money to run it or if something happened to where, yeah, a Section 8 inspection happened. So we have somebody applied, they paid the fee, they're approved, we do the Section 8 inspection. The inspection come back with repairs and the owner isn't comfortable making those repairs for whatever reason, and that person can't move in.
Chris: We would refund it then back to them and I'm also confusing the application with the deposit there, with the security deposit. Yeah, so that happens too. So I'm also confusing the application with the deposit there With the security deposit.
Gretchen: Yeah, so that happens, so I apologize for that, but that's okay. It happens to you, though, with the security deposit Same way. They pay the security deposit to hold the property, and if it's at no fault to the applicant or a future tenant that they can't move in, that's when we refund it.
Chris: And sometimes that money comes out of our own pocket, but it's the thing to do. Comes out of our own pocket, but it's the thing to do we also. So, again, with this whole new HUD guidelines from last April, we've written a blog post where, basically, we've just posted our company policy regarding application fee refunds. So in the show notes of this, we're going to go ahead and have a link there and you can actually read what our company policy is when it comes to refunding applications. So we make this available, obviously, to our entire staff, we make it available to our owners and, more importantly, we make it absolutely available to our tenants so they know what the rules are before they commit money that they don't want to waste. So I think that's important too. So when you're doing your due diligence, a good question to ask. The other thing quickly as we start to wrap up, is what does their tenant onboarding process look like? So things to look for, things to ask for lease signing Again, if these folks don't come in and close after all this work you know, closing I mean signing the lease it was all for not you know when and how did they collect the security deposit?
You know, do they pay the security deposit in the first month's rent in person. Do they take cash? Do they not take cash? You know how do they make sure that utilities are actually turned, that the tenant the new tenant actually puts the utilities in their name in a reasonable amount of time so that the owner is not continuing to pay utility bills on a vacant property. You know what is the process to have them you know, sign off on the condition of the home. What's it like to get keys? How do they get instructed on how to use their tenant portal? How do they make a maintenance request? Do they get copies of things?
It sounds like a lot and it is a lot, but it's absolutely important and I think all of us have to put ourselves in the shoes of a potential tenant, because they may not know these things are expected of them and we have to explain it to them. Maybe it's the first time they've ever rented a property, but this is also the mark of a professional organization. If they have a process of procedure for the tenant onboarding, they're far more likely to do a great job and earn a five-star review when that tenant moves in than if they skip some of these steps or they forget some of these steps or it's just an unprofessional process to put people in. The other thing, I really want us to sharpen up our tenant onboarding too as we go forward, because I think it's critical. You know that we constantly try to get better at everything we do, and one of the things that I mentioned to Brenda the other day and again for our listeners, this might be something that you want to talk to your potential property manager about.
You know, I think even if you don't hear from a tenant, you know everything went well. I think it's critical that somebody like Brenda the leasing manager, or Marcy Tenant Relations they make a follow-up call with that tenant, you know, at least at 30 days, maybe 60 days, and then, of course, do a follow-up call at least 60 to 90 days before the end of the lease. You know, I think it's important. Sometimes it's out of sight, out of mind, and we only deal with the people who are, you know, knocking on our door at any given time. But I think it's critical that we also reach out to the people who we don't hear from to make sure that everything's okay and that we're doing a good job and there's not going to be any surprises for our owners down the road?
Laci: I think that's a really good point. I think that you know your reviews and your reputation right as a property management company is something that maybe people. It feels like tooting your own horn when you talk about how great your Google reviews are or how much everybody loves you, but nobody wants to rent from a property management company that has a bad reputation right. The problem that poses is you know everybody's going to spread the word that oh, don't rent from you know XYZ. They're terrible. You know they didn't come on time, they didn't do this or they you know they didn't refund my money when I didn't get the place, or whatever the case may be.
But the reputation of the property management company is a key factor in how you're going to be able to. You know the type of applicants you're going to get, the quality of applicants you're going to get, how many applicants you're going to get. So I think that's important and I think that you know, gretchen, you had mentioned that people were mentioning the Google reviews. New property management clients who were prospects, who were calling in, were mentioning that they looked at the Google reviews and they were great, and you know that's important to property owners because it, you know again, it determines you know the quality of applicants they're going to get and tenants ultimately in their properties, right?
Chris: Yeah, it's huge and I can tell you. You know, we I think our average is 4.9 and you know it's not. That's not that you know, our all of everybody on the team, the team we urge them to ask for a review, but we're not saying ask for a three-star review, right? Our standard phrase is have I earned a five-star review today? We're basically asking up front for them to go to Google and, if they're happy with this, to give us five stars. That helps a lot.
But you can also go look at our reviews and there are some, you know, bad reviews. There's only a couple of four star reviews, but there's a couple of well, probably more than two one star reviews. But you'll find in every case that you know we responded. We either owned up to it, apologized, fixed it offline or, in the case of somebody who just was flat out wrong, you know, we'll try to respectfully explain, I guess, our side of the story. So everybody gets some bad reviews. You know we do too. But our team works very hard, not just to get great reviews but to literally, you know, offer five-star service and, like I said in previous podcasts I'm so proud of you know, offer five-star service and I, like I said in previous podcasts, I'm so proud of you know, gretchen and her team that we've been able to get that review thing working in our favor and we've actually signed up owners, you know, just based on that five-star review score, and it's something that we talk about every single day.
Laci: Yeah, I think it's fantastic. And worth noting is no one's incentivized right. The owners, the tenants none of those people are incentivized in any way to give these reviews. Roost incentivizes its employees to ask for five-star, like that's your culture. Right, like you want your it's on every job description.
Chris: It's the top of everybody's job description. The number one duty is have I earned a five-star review today? So we are trying very hard to make this a cultural thing. That just becomes, you know, as routine. As you know, working by referral or prioritizing relationships it's number one priority for everybody in this company is have I earned a five-star review today? And, quite frankly, if we get a bad one, it's a fire drill and Gretchen hates those days. They happen Not often, but they do All right.
Well, that wraps up today's episode of the Landlord Profitability Playbook podcast. We've covered a lot of ground in this segment how to ensure your property manager is well-equipped to rent your property for top dollar and fast. So let's quickly recap these points. I'm just going to run through them quickly. Setting market rate rent Understanding market rate rent is essential to attracting the right tenants without overpricing or underpricing your property.
Casting a wide marketing and advertising net. Effective marketing strategies, including leveraging technology and widespread advertising, can significantly reduce your vacancy periods, Showing your property in the best possible light. High quality photos, flexible showing options like self-showing systems can enhance your property's appeal to prospective tenants. Screening in qualified applicants focusing on screening in qualified tenants, while adhering to fair housing laws ensures a broader pool of potential successful tenants and a better fit for your property. Assessing the application process the streamlined, accessible application process that uses technology like TenantTurner can improve efficiency and tenant satisfaction and audit their onboarding process. A thorough onboarding process, including lease signing, utility setup, is critical to setting clear expectations and starting the landlord-tenant relationship on the right foot. So by following these strategies, you'll minimize your vacancy and your property manager can help you maximize your rental income, and that makes it a win for everybody involved. Anything else, ladies?
Laci: I think we covered it.
Chris: Okay, well, thank you all for tuning into today's episode. If you have any questions or want to dive deeper into any of these topics, feel free to reach out to us at wwwinvestwithroostcom. And don't forget to subscribe to the podcast and, god forbid, leave us a review. Let's make it a five-star review. If you found this interesting, we'd appreciate that. Your feedback helps us continue to provide valuable insights and tips to help you succeed as a residential real estate investor. Thank you very much and we'll talk to you next time.
Laci: See you next time.