MIT 3.0: 4.4 Property Management

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MIT 3.0
4.4 Property Management
Cheat Sheet

You’re almost near closing, so before you close there’s a few things you need to consider… Before you decide to outsource property management to another company or person, it’ll be helpful for you to self-manage your properties first – this is referred to as being the technician according to the E-Myth book by Michael Gerber.

1. Create an entity for Property Management with your Secretary of State
  1. Make sure the name you choose is available in both the secretary of state website as well as the domain name just in case you want to create a website in that business name in the future
  2. Apply for an EIN with the IRS
  3. Create a gmail account in your entity name
  4. Get a Google voice number associated with your newly created gmail account
    • Make sure the area code to your Google voice number matches the area the property is located in 
  5. Sign up for a virtual mailing service that offers a physical mailing address. 
    • You can use or research other mailing services
  6. Open a business bank account at a local institution 
    • You may need the Articles of Incorporation 
    • You may need an Operating Agreement 
    • You will need your EIN
    • You will need personal identification documents
  7. Apply for a credit card for your property management business
    • For bookkeeping purposes, use this credit card for all property management expenses 
  8. Track property management hours in your operational plan starting with 5-10 hours per week
    • Share hours of availability with tenants and property management team members only
  9. List your contact information on all correspondence along with your hours of operation 
  10. Hire someone on Fiverr to create a logo for your letterhead
2. Contact tenants
  1. Approximately three days before closing on your property, you must call, mail, email and post a change in property management letter to all tenants
  2. Letter includes 
    • New company contact information
    • Response times
    • Hours of operation
    • Date the rent is due
    • Amount of any late fees
    • Date when late fee applies 
    • What constitutes an eviction
    • When eviction proceedings begin
3. Follow up with tenants
  1. After you mail out the change in property management letter to the tenants and post it on their door (take a photo as proof), then you should also call the tenants to confirm they received the change in property management letter and review it with them
  2. When you call the tenant, introduce yourself as the property manager and not the owner
4. Retrieve rental history

Get the ledger from the seller showing the rents that were paid in the last 12 months

5. Be in compliance
  1. Contact the closing attorney or your real estate agent for local real estate eviction laws which include your rights and responsibilities as a landlord
  2. Learn about the eviction process
6. Get organized

Create an organized folder in Google drive and on your hard drive to store

  1. Leases
  2. Contracts
  3. Forms
  4. Ledgers
  5. Other important documents that relate to property management
7. Document tenant interactions
  1. When tenants call you, you need to track calls with Property Management Call Log Tracker
  2. Tenants call about the following 
    • Rent Increases
    • Late payments
    • Repairs
      1. When you receive a legitimate repair request, then create a detailed calendar invite for all parties involved (handyman and tenant for example) with the details of the repairs to be completed, the location, the tenant and handyman’s contact information, along with the date and time of the repair.
        • Verify contractors completed work accurately and timely with photos or in person inspections
        • Set up a payment schedule for contractors conducive to your schedule but within a reasonable time frame that appeals to contractors
    • Complaints
  3. Handle urgent calls within one business day
  4. Nonurgent calls within a specified time frame that you outline in your schedule called “Phone Zone”. Your phone zone hours are your hours of operation
    • If you included your hours of operation in your Change in Property Management letter, then tenants will expect a callback during those time frames you outlined.
8. Log all real estate expenses on a Schedule E
9. Document Property Management KPIs
10. Pre-lease units when repairs are 80% complete

Allow prospects to preview unit and complete an application

11. Advertise
  1. Advertise vacant or upcoming vacant rental units on Craigslist (using the templated Craigslist ad), Zillow, Trulia or use bandit signs
  2. Include features
    • Location
    • Local Transportation
    • Restaurants
    • Schools
    • Office Parks
    • Parking or Garage
  3. Include your expectations
    • Section 8 Welcome
    • Criminal Background Checks
    • When the unit will be available 
    • Showing Dates 
  4. Include photos
    • Front of property 
    • Back of property
    • Kitchen
    • Living and dining area
    • Master bedroom
    • Master bathroom
    • Hall bath
    • Second, third and/or fourth bedroom
    • Laundry room
12. Follow the Tenant Application and Selection Standard Operating Procedure guidelines
  1. Make sure tenant is gainfully employed and salary is 3x the rent
  2. Has a minimum 600 credit score
  3. Has no violent, sexual, drug-related background 
  4. Tenant must have a positive rental history
    • How long did the tenant live in the current unit?
    • Why is the tenant moving?
    • What is the tenant’s monthly rental amount?
    • How did the tenant upkeep the unit?
    • Did the tenant cause any disturbances?
    • How many times was the tenant late on rent?
    • Did you screen the tenant before moving them in?
    • Would you recommend the tenant?
13. What’s next

After you perfected the craft of managing your own portfolio, you’ll then realize your time can be better suited elsewhere. Thus, it’ll be time for you to stop being the technician and then be the manager – the manager of your property management business

  1. As the manager, delegate the same tasks you did as the technician to a new hire
  2. Your first new hire can be someone who has customer service/admin experience that speaks decent American English
  3. Standardize all processes
  4. Outsource activities that you’re systematized
14. Beyond management
  1. As you become more successful in your real estate endeavors, it’s now time to outsource all tasks related while you become the entrepreneur
  2. If you decide to manage properties belonging to someone else, be sure to check the local laws of that area for you may need to be a licensed property manager

 “If you’d like to learn more, click here”

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