The Truth About What It Takes To Be An Effective Property Manager

In this episode we have Dana Dunford from Hemlane Property Management back on with us to discuss what actually goes into managing properties.  Check out Hemlane at www.Hemlane.com  Send your questions for Dana to [email protected] --- Transcript   Michael: Hey everybody. Welcome to another episode of The Remote Real Estate Investor. I'm Michael Albaum and today I'm joined by my co host,   Tom: Tom Schneider.   Michael: And we've got Dana Dunford back on the podcast with us again from Hemlane. She's gonna be talking to us today about property management, and a lot of things that we need to be thinking about and considering when choosing them and thinking about property management in general. So let's get into it.   Tom: Dana Dunford, welcome back to the podcast.   Dana: Great. Thanks for having me.   Tom: So it's been a few months since we've had you on, let know any updates with a company with Hemlane. I mean, today's episode, we're going to talk and to go into detail about the time behind effectively managing properties. But before we get in, how's everything going?   Dana: Things are great. We've launched 12 more cities on em lane, which has been fantastic overlapping markets with you guys, as well as revamped some of the financial reports for real estate investors, which has also been a huge thing for taxes and everything coming up for 2020 reporting.   Tom: Awesome. Yeah, tax time. Like as an investor, it's like one of my least favorite time of year wrangling down all the different stuff. That's very cool. Alright, so let's go ahead and jump into the episode. So again, this episode is on the the truth behind the time it takes to effectively manage properties does all the different timing requirements involved in property management?   Dana: Yeah, so one of the things that I realize, in speaking with a lot of real estate investors, especially ones who've just come in to market is they don't understand how long it takes to manage a property and they they don't value their time. And so what I mean by that is, on average, it's about four hours. That's the general rule of thumb, four hours per month that you spend managing your rental property, it's about four hours per month that you spend managing your rental property. If you compare that for hours, as a general rule of thumb with what we charge for property management, what a full service property manager charges, it's really not that much. If you value your time to be more than, you know, 30 to $40 an hour. It's not that much the property management charges. based on you know how long it takes to manage your property.   The rental housing survey also did an estimate across both property managers as well as real estate investors, landlords asking them how long it took for them to manage their property. Even when you account for traditional property manager who has operations built in house like scalability, etc. It was still around three hours on average that it took per month. Of course, that will fluctuate you might have one month where you literally just need to confirm a rent check was collected. And then you'll have another month where you have some situation where there's a leak, and you have to be much more involved. But as a general rule of thumb, I like to tell people if you budget four hours a month, you should be in good shape.   Tom: That's great. You know, I think the time volume, you know, four hours isn't that bad, but would kill me is like not knowing it's like, okay, Is this our gonna show up on Friday night at 9pm? When the toilet breaks? And, Michael, I think you were…   Michael: Yeah, it's just interesting, I would question how the four hours number kind of came into fruition because if I had to wager, I would say that most brand new landlords are going to be spending a lot more than four hours a month getting their own systems up and running and getting comfortable with all the things so maybe this is a seasoned self manager after doing it for a while. But just to get up and running. Like you don't know what's legal and illegal in your state, you don't know what systems you don't know who to reach out to, like, every time you have a new issue pop up, you have to go spend time searching out the folks to do those types of repairs. So it just seems really low as I guess what I'm saying here, in so many words, it seems like a professional property manager is so much more efficient, that I'm surprised that they're so similar in terms of hours spent on the job.   Dana: Yeah, so as far as the property management have the four hours per month that's on management, so collecting the rent, recording all of your expenses, doing the repair, coordination, taxes, everything that basically goes into the property management side of it, but and that's including inspections that you would do annually, etc.   There's another component of property management, which is equally the same amount of time, but all built into 30 days or less, or you would hope it's under 30 days. And that is what we call finding and placing a tenant finding and placing a tenant is of just as much work as basically 12 months of management. And you see that if you think about it in the cost structure because the fee to find a place to tenant is about equal to the amount that someone charges for 12 months of property management.   And that's where you're right. Once you have processes down you have some efficiencies built into the process. But when you're a brand new landlord, you don't know anything you don't have tenant landlord law, you don't understand where to advertise the rental property, you waste your time on showings. Because you show up and then you meet a tenant who you found out has been evicted three times, and you learn that you should have pre qualified them before ever showing up at the property. So from that person's perspective, it is a lot of time. And that's why we really do recommend, if you're a first time landlord, use the leasing agent to help find and place a tenant get a state specific lease, learn from their process. And then eventually, if you happen to move close to the property, or you want to do some showings or have a little bit of experience, you can do it later on. But it will be worth the fee that you pay for someone to find in place a tenant,   Michael: I think you're being way, way, way too generous, because I would consider myself a semi seasoned landlord investor. And I still don't know anything. So just because someone's new or seasoned doesn't necessarily mean that they know anything, I'm still in that same camp.   Dana: Yeah, and that's a good point. Usually what happens that how people learn is by making mistakes, right? Like, I could teach a class on property management of exactly what to do. But it isn't until that first case where you have a difficult tenant, and that you say, Okay, next time I'm building into my lease agreement that they are responsible for window cleaning, because I don't want to have another fight about a tenant about window cleaning, or gutters, I never want to have that fight again. So I'm going to put it into the lease agreement. So a lot of those types of things you learn as you go along. And the only way I can really say that you could mitigate that even where you are right now, my goal and your stage of real estate investing is to focus a lot on your state specific or your county, specifically, whatever at least you're using, really making that concrete as well as as the education but a time will also allow you to really understand what you missed throughout the process.   Michael: Wasn't it Mike Tyson, I think he said everybody has a plan until they get punched in the face. Like going to the school of hard knocks, experiencing going from that classroom setting to that real world setting. Anytime dealing with people, really anything can happen. And so that's why I've put all my eggs so to speak in the professional property management basket, because there's just too much out there that I'm not aware of or can't foresee. So I'll leave it to the professionals.   Dana: Yeah.   Tom: So that was a great overview on the different time requirements and kind of bucketing it in into the leasing and the property management. Let's talk about reserve requirements of effective property management, and kind of thoughts on that.   Dana: Yeah, I'll tell you what our reserve requirement is how it works. But then I'll give a caveat to it. So we say at a minimum, you should have a reserve of $500 at a minimum, right. And we actually don't hold reserves, you just have to have that in your bank account. Because at point of service, when it's completed, that's when the charge goes through $500 is to essentially cover emergency calls where we have to dispatch someone up to that amount.   However, you should definitely have a reserve higher than that in your bank account, right? Whether you're self managing, or whether you have a property manager, but you can figure out what your reserve is by actually doing an inventory count of appliances, what appliances you have, how old they are lifespan value, as well as huge capital expenses. And what I mean by that is an example would be a roof, if you know that your roof is going to have to be replaced within the next three to four years, you should have that built into your reserve that okay, I suspect I'm going to have to replace the roof. That should be there's going to come a day where there's a leak, my tenants are complaining because it's going straight through the walls, we need to get it fixed. And we're actually going to have to redo the entire roof but it can't be a patch.   So there's certain things like that it's it's specific to your property. Um, same thing with one of the biggest ones we see is water heaters where the water heater goes out, it's really emotional time for a tenant, because they want their hot water. And so you do need to budget for that. And a lot of times if it's a newer property, with some sort of warranty, you're going to need that $500 is probably fine. But if it's an older property, you know, something's going to come up in the next five years, you should have some sort of reserve to say, okay, when do we expect these things to happen?   So that's where I say get out your Excel spreadsheets and actually put that in there of here's everything from a capital expense, as well as appliances like, well, that's still capital, but replacement of those. Those are the huge ticket items that we see.   Michael: That makes total sense and curious to get your thoughts on how you think about home warranties.   Dana: Yeah, that's a great one. One of the things I will say about home warranty, first of all, on Angie's List, it's the lowest rated category.   Michael: That makes so much sense.   Dana: And the second lowest rated is property management.   Michael: That's a good frame of reference.   Dana: There's a couple of things one, not all Home Warranty companies are created equal. That is One thing I will say we work with them all we have some of them like American Home Shield on speed dial where they like know our number coming in, right. So they're not all created equal. And usually what happens when something goes wrong with home warranty is that the real estate investor says great, I have home warranty, they're gonna cover everything. And I just have to pay my $79 service call rave. The biggest mistake you make with home warranty is not reading the terms of service, the terms and conditions because they will say we cover all these things. But here's the things we don't cover. And actually the things they don't cover is actually a longer last right?   And we've gotten in so many situations where someone's dispatched, the owner just assumes that it's going to be covered. And then there's something in fine print that is font six and like you'd literally need binoculars to read it, where it says Oh, but in this certain situation with a piping, we don't cover X, Y and Z. And suddenly, there's a huge bill for the owner. A lot of real estate investors love Home Warranty because it's steady, right every month, you know, the most you would pay is maybe one or two service call rates at most, everything else is covered. This is great, I can forecast my expenses and have capital expenses also paid for through home warranty. Depending on what you have and your home warranty list of services. That's great.   However, then you get into this situation where you have an unforeseen large bill and investors get upset. That's why think home warranty is the lowest ranked on Angie's List is that if you're going to get one and I'm fine, if people get it I personally wouldn't, I'm fine. If you get a home warranty, I think they're great for a lot of people and give a peace of mind. But if you do read the fine print know exactly what's covered, and have those expectation that something's not covered.   There's one other point that's very important with home warranty. And this is SOAs for emergencies. With plumbing requests we've seen with plumbing and no heat or no air conditioning, where there's extremes it's over 90 degrees versus you know, under 40 degrees in the house, they have not been able to meet SOA is that we consider this would be a good experience for tenants, they cannot get someone out in enough time.   Michael: And what's an SOA for our listeners,   Dana: That's the amount of time to get someone on site to assign to the property and on site for an emergency. Usually, when I'm talking about emergencies with home warranties, it's usually something with plumbing, like there's a leak an active leak that cannot be contained, or it's something where there's no heat, and it's you know, 20 degrees outside and the person has a baby that screaming and it's a very emotional time as a real estate investor. If you're doing your own self management or using a property manager, you have to think quickly you have to understand, can we get someone out there in enough time? If not, if it's something like no heat? Can we put them up in a hotel? Can we get them radiators? Like what can we do to make this a better experience for them?   But what we've seen with home warranties, they'll say yeah, we'll get someone out call us in an hour calls in two hours, call them in two hours totally new person you're talking to? Oh, wait, yeah, we call the companies they can't get out. And then suddenly you're talking about It's been eight hours of something. And then you're having to say can we dispatch someone? Get them out there? And can you reimburse us for it? And they say yes, of course if they're licensed, if they're insured, were like, of course, they're going to be licensed and insured, you get that person out there. The second they hear home warranty, they go, we don't want to work with them, they're going to price set and then you get in the situation where the tenant is like what's going on. This is a chaotic situation. And it makes you as a real estate investor look really bad. Because suddenly, it looks like you don't have your operations down.   So that is one thing we tell people, if you use a home warranty, for some people, it's fantastic. People love it, you know, case by case basis of who wants to use it. But if you use a home warranty, know that you might still have to go outside of the home warranty, especially in emergency cases. Again, the last thing you want is a tenant that's upset and they don't renew their lease, because they remember that situation when there was a leak and active leak. And now their floors were flooded. And there's all these renovations that have to go on because you couldn't get someone out in enough time.   Michael: Yeah, that's my experience to a tee. That's that's very real benefits.   Dana: Yeah.   Tom: Not necessarily property manager related but just on reserves. Do you have any? I don't know kind of general philosophies around reserves as a relates to if you have a mortgage and insurance costs and tax goes I don't know. Do you like do you back out a couple of months would you in and kind of general thoughts and holding reserves on those type of fixed costs?   Dana: Oh, you should already have Yes. Sorry. I thought you're talking about repair reserves.   Tom: All the reserves, we'll put them   Dana: All reserves. Yeah, you definitely need that because the most emotional situation for a real estate investor. Like the worst decision you can make is I am leasing out my property I need to make My mortgage payment, you know, that's one. And I've got one tenant who's interested in the place, they have three evictions on their record. Now, this is an extreme case, but they have three evictions on their record, but they're the only person I have. And they said, they can come to me with first month's rent and security deposit today, and they have it in all cash, and I need to make that payment. And so I am going to go ahead and rent to this tenant.   That is a bad situation, because it's going to cost you more in the end, if you do something like that. And you're not really setting up solid operations, it only catches up in the end, you're gonna have more to pay for, if you don't have the money to pay the mortgage, right? Go into foreclosure, all these things that can happen will happen is just a ticking time bomb, right? And so from that perspective, from having reserves for the unforeseen you 100% need and I think COVID has really been a stress test for a lot of investors out there today, to say, oh, wow, there has been these unforeseens and I definitely need some cash in the bank. If there's one rule I've ever learned in life, it's don't run out of cash. And and you definitely don't want that to happen, right? You don't want to be making bad decisions on who's in your rental property or what you do with it. Just because you need to make your mortgage payment   Tom: Panic, renting can turn into panic selling the domino effect. Some people ask like, how many months Do you think about having those types of fixed costs reserves, I've heard three before, it was just love just to hear your thoughts.   Dana: I'm super conservative with that kind of stuff. I say six months, and I'm more conservative than most. So like someone with three, it's probably okay. On average, you'll rent a property in this day and age, especially with single family homes, you should be renting it within 15 days, top market. Now, it depends on where your rental property is. But as long as you're priced correctly, you should have it off market within 15 days there if if you're pricing it correctly, and or at least a lease sign up, the tenant moved in, but at least signed.   So from that perspective, the reason I say six months is if something unforeseen happens, I never want a situation and that might be dispersed across a couple properties, right? If like I have to, and instead of three months, it's like basically six months total. But let me give you an example, you have something happen. And I've actually seen this recent case with an HOA, where the unit above flooded. And so of course in the real estate investor, nothing to do on their end, but the tenant had to move out had to deal with the HOA, you're trying to deal with insurance, it takes a while for some of these insurance claims to come in and money and you have to get the tenant out of there, like the tenant literally can't stay there.   So they're out, you've lost that rent, you're trying to do the insurance, money on it, you don't have any idea of how long until you can actually re rent the place how long it's going to take. And you could be in a place where like, that's a condo situation. But like in a place like Houston, when there's flooding in Houston, try to get some contractors out there to get your property back up. Like it's going to take months to do that. And every insurance company works differently, and how it some are great, and they can get you the funds quickly but doesn't happen in all cases.   And so if you have only one rental property, like I say six months, if you have more than one and then they're diversified a little bit, you might be able to say, Okay, I can get by with lower reserves per each one, because the chance of something happening to all of them is much smaller. So it would be on a case by case basis, I tend to be a lot more conservative than any other real estate investor.       Michael: That sounds Yeah, it makes total sense. It's something that I talk a lot about in the academy is people ask that question all the time, how much should I reserve, you know, per unit or per building, and I agree with you then 100% and that per building, as I add more buildings to the portfolio, more units, the portfolio, the net dollar amount has increased in reserve, but on a per unit basis, it's tends to decrease its statistical likelihood of having a loss or a repair or major catastrophe at every single property every single month is highly unlikely.   Dana: Yep, that's correct.   Tom; So next question for you, Dana. I, you probably have a lot of interesting stories related to tenants. I'd love to hear some of your stories related to tenants. I think there's probably a lot of interesting stuff happening.   Dana: Yeah, tenant stories we have a lot.   Now, Michael mentioned this earlier, right? That it's only through time that things happen and you learn your lessons and you'll never make that mistake again. The most extreme case that we've had was in Springfield, Ohio back in I think it was between 2015 and 2016. We picked up a portfolio of properties and actually had an on site license manager not on site but local property manager just based on the properties being in that very low class C almost Class D type of investment and picked up quite a few properties there.   At the same Time, which wasn't even quite in the news as much as it was, you know, six months later, but the opioid epidemic was happening. And as the property manager said, these tenants are dropping like flies, like literally, she told us that and it was a terrible situation, we were doing the repair coordination for it. But what you're talking about for the real estate investor is no income coming in, because the tenants are just dying, left and right from these opioids, and then you're dealing with all these legal things of what to do with the property, then we're dealing with a turnover, there was like feces on the wall, like, I mean, everything was just terrible, everything was unbelievable in the amount of time we spent on it. And then for the real estate investors, the prices didn't go up at all right, they wanted these to be cash flow, and then they were making no money to turn them over, it made no sense because the amount of work that required to turn them over versus what they could make and renting them over the next, you know, even three years was just not going to make sense.   And the properties were destroyed, you couldn't find tenants that were qualified, it was just a terrible situation. And one thing I learned from that really talk to real estate investors about especially before they purchase is really know your market, and really understand where you're investing and what's going on. And that's where actually I think Roofstock does a good job, because you guys, the types of properties are ones that will cash flow, but you can get a qualified tenant in them. And I think you need that balance, you need ones where you can get a qualified tenant and also cash flow it like you want both, right.   And in this particular case, the numbers looked great on paper, if you put them on Excel for like buying these properties for $40,000, versus how much you got in rent, they looked great on paper, but then the operations associated with them for everyone involved, the owners, the property manager, so as the platform that was helping with repair coordination, and the operations associated with the management, and technology, it was it was just beyond anything that we could do.   And so one thing I learned from that a lot is, there's only so much you can do on the property management side, right. And that's why it's really important to work very closely with on the purchase side to make sure that it's also going to perform on the property management side, some properties just won't perform. That's just the first one.   A second story, I would say with tenants is inherited tenants, we've had situations where we have inherited tenants that don't have leases, they're in cities that are super tenant friendly. And the rules are basically against us and the landlord, right, there's nothing you can really do to get them out of that property except a ton of legal fees, and a ton of legal bills. And you know, there are certain situations like that as well, that you can see happen. Those are extreme cases that I don't think happen, obviously, with Roofstock properties. But definitely we have seen that happen where there have been horror stories with tenants that are inherited. And there's not much you can do about that except get lawyers involved and make sure you can get a really good situation good tenants who respect the lease, as well as for the owner, they're getting their cash flow.   Michael: So in both those instances, is it fair to say that those were four hour a month properties in terms of management or the maybe a little bit over?   Dana: Oh, way over that way over that? And that's where the four hours is average? Right? But those ones spent way, way, way too much time on them. But you know, in hindsight, we learned a lot of lessons on it. Right. And real estate investors learned a lot of lessons on it as well. So all in all, it was a good lesson learned to make sure we're always under four hours going forward.   Tom: Yeah, I think one of the mistakes that newer investors make is they just look at Excel and don't…   Michael: Live in the spreadsheet!   Tom: Yeah, live in the spreadsheet and don't account for risk adjusted returns.   Michael: Yeah, I've got a question. Dana, I'm curious to hear, from your perspective, when should owners change property managers? Or what are maybe some red flags that folks should be on the lookout for that the property management relationship isn't working? Because I know that I've fired property managers, Tom, I think you have as well. So getting some insight, kind of from the property management side of things, I think would be really helpful as to shedding some light on, you know, how do I know when it's gone too far off the rails?   Tom: Good question, Michael.   Michael: Yeah. First of all, when people have a good property manager, if things are going well, you know, because they're transparent, all the numbers make sense. And then you see all the numbers, you don't get a lot of calls, there's qualified tenants in the place. And I always tell people don't change property managers. You know, we've even had people come to him lane and say, Hey, I'd like to use him lane. Everything's great with my property manager. And it's like, Great, yeah, we'd love for you to transfer over. But if things are going well, that's a good sign with your property manager. And there's a couple of things I've seen and I'll give you three primary ones. Where it's time to change property managers.   Number one is transparency, if your property manager is not transparent about costs, and like, for example, one that I've seen happen very often is your like, my maintenance and repair line items are a lot more than I would expect for it in this property, you know, maintenance repairs a lot more than other properties I have in my portfolio or other people that I know who have similar real estate investments are experiencing, right? And then you reach out to them. And you're like, Can I have the invoices from the service professionals, etc. And they give you their invoice, not the service professional actually did the work, but like their invoice for it, and you're like, hmm, these costs seem very high.   If you're starting to question things like that with repair and maintenance, that is a bad sign. So it's transparency. You know, if they're using an HVAC expert, where you're like, oh, their service call rate seems high, but it's a third party, you have the invoice, it's a verified person who has five star reviews, that's not necessarily a bad situation. bad situation, if you're saying, hey, are they hiding something are up charging, and I don't know. Um, so that's number one.   The second one that I see happen a lot is on the side of communication, if I contact my property manager, and they don't get back to me, within one business day, maybe two business days, and sometimes they might get back of Hey, boss, this message will respond to you in three days, that's okay with me. But if I don't hear from them at all, and I'm asking them a question, and I have to follow up multiple times with them to confirm that they did something that's a bad sign. And it's a bad sign for two reasons. One, they're not on top of their operations, right, because something's probably being missed. And two, which I think is even more important is, something's probably getting missed. Like, if they can't respond to you, they're probably not responding to tenants who are going to view the property, they're probably not responding to a service professional who might need approval, like if they can't even respond to you on time, they're not going to be able to respond to them on time.   And so I really think that communication is so crucial. And one of the things I see with traditional property managers, for the most part is, you know, it's 122,000 property managers with an average of three employees. So they are overworked trying to do everything and don't have that operations to say I need to get back to them within a day, right? Because they they have so much going on. And so that's why I do think that even when you're looking at your property manager, they might have been great at the beginning, but they've scaled too quickly. And they haven't hired the right people to make sure they can get on top of everything and get it done. That's the second one.   Michael: Can we chase that down just a little bit? Well, I want to dig in because I agree with you, 110%. But I also think that there's a big, big, big difference in cultural norms as you go throughout the country. I think the coasts are pretty similar and timely, when it comes to that response time. How would you respond to someone if they said, Well, that's just kind of how we do things here. We're just a little bit slower paced here. And they may say it with a twang.   Dana: Yeah, I would say that their expectations if they want to work with you needs to change, or you need to find a manager that drives with you. And here's why I understand that something might be slow paced, and what I mean is, Hey, I got this request, or even if you get an out of the office, I'm out of the office, I'll return ness, and you know, three days, whatever. Or if it's not a business day, if it's a Saturday or Sunday, I totally agree that like that they'll respond to you when they're back in the office.   I think the how to respond to that is, well, if you can't communicate to me when things are going to get done, right, what about emergencies? Right? Like if there's an emergency, how do I even know if you're not even responding to this, that you've received it? How do I even know that you can respond in an emergency situation? We're talking about people's homes here, it's a totally different game. And the more things wait, and there's weeks go by, it's kind of like your inbox when something falls, unless you like Boomerang it back to the top, you're just gonna forget about it. And it's the same thing.   So that's where I do think the communication needs to be there. And they definitely need to get that stuff done. But then to your point, I mean, sometimes they're slower where they say, Oh, yeah, don't worry, I do that every Friday. I don't do it every day. I don't pay my invoices every day, I pay them every Friday or once a month, or you know, net 30 that's fine, but they just need to communicate that with you. I don't think there's an excuse not to communicate at all.   Tom: Love it. Expectation setting.   Dana: Yeah. And then personalities is huge. We've had leasing agents on our platform where we talked to one real estate investor who says I love this person, they are fantastic. And then you talk to another one who says I didn't really like working with them. And a there's personality things there as well. Um, but to me, personally, what I've seen is the top performing agents and managers are ones that can turn things around pretty quickly, even if they just respond, I've got this, I'll get back to you next week on it, it's on my to do list something like that is better than no response because no response means I don't even know if they received it. That's the second one.   The third one is based on your cash flow. Obviously, if you're finding that you're having way too many evictions, they don't really know what's going on in the property. There's just way too much drama with the tenants, then the question is, are they screening the tenants properly, because this should be passive. Now don't get me wrong. There are cases where you have a lemon in your property like a tenant, where are actually I would more call it a professional tenant attendant who looks great on paper, they come in, they're a great salesperson, and they fooled the property manager. And that has happened, don't get me wrong, that happens. It's very rare, but it does happen. And we've seen it happen.   That's not that bad of a case. Because as long as your property manager is on top of it, and dealing with it, and making sure that they get this professional tenant out who's causing nightmares for you, and they get a qualified tenant into the property, that's fine. But if consistently, they're getting tenants in there where no one's qualified, no one's paying bills, there's evictions and you're suddenly seeing this affect your cash flow, because you're having increased expenses and reduced income it like your cash flow is affected, then that's another reason to say this person is not performing. And I need to change property managers.   Tom: On the flip side, so horror stories from owners. So we've talked about some horror stories with tenants talked about some horror stories related to property managers, or just cause about some love to hear some stories related to bad situation with owners.   Dana: In other words, I think with owners who are just difficult to deal with, is that correct?   Tom: Yeah.   Michael: And name names. Just kidding. Yeah.   Tom: Name names. Yeah, email address?   Dana: Well, Michael.   You know, I think there aren't any horror stories, but there's miscommunications or unrealistic expectations. Let me give you some examples of ones I've seen owner is remote, right, and a repair request comes in. And you know, it's about $250, to fix it, the service professionals on site, the owner has a threshold of $200. So we don't perform the work, we call the owner to get approval to let them know it's over your threshold. We don't want you to have any surprises. Here's a breakdown into parts and labor, you know, here's everything, do you approve it? And they say, Can you give me two more estimates for this?   And it's like, I don't think they understand that their service calls with those other estimates. So like, it's gonna cost you more in the end to the service professionals are, you know, verified? And we're checking the pricing on every single one to see, should this person go back out? Are there is their pricing higher than average? Should we not send them out like we're doing that ourselves and for attendant to have to coordinate with three service professionals for three estimates suggest to get some small repair done something under 500. If it's over $500, I totally get getting multiple estimates. And I actually, we actually recommend that. But for smaller jobs, the amount of stress that causes your tenant, and the amount you might save, which is maybe $50, or $25, which you actually don't save, because then you're paying multiple service calls, it doesn't really make sense.   I think it's just expectations and setting like, Hey, we could do that. But here is why you might want to reconsider. And again, we deal with it every day. And our interests are aligned, right? We want to get you the job done as quickly as possible at the lowest price with most qualified person, like our interests are definitely aligned with them. But there's some times and especially with newer real estate investors, usually the ones with four plus properties are like, oh, wow, this is great. You guys totally get it on. But the newer ones don't understand that part. So that's what I would say.   The other one is with rental rates. And this one comes up so often where the tenant or the owner say, Well, I expect to get this price on the property right and list it for that. And week one, no leads, like no one's interested in the property, right? And we've listed it on every website out there. Like there's not a website, it's not on. So tenants are finding it and we say other properties in the area tenants are looking at are going for these prices. And the owner says, Yeah, but mine has granite countertops, and those ones don't. So I think that's why mine should be going for $200 a month more and you suddenly get in the situation where actually we have like a calculator that does the math. If you drop it by this amount based on the amount of days it will stay on the market at this rate, you're actually getting more money more income by just dropping it and getting it rented now.   And so I think a lot of it has to do with the rental rates a lot of investors get attached to this is the rate the rental should go for and they get fixated that somehow miraculously they're going to get that price. And a lot of times it's no, this is the price of the market today. This is what else is on the market. This is what your tenants are comparing your property to. So you need to compete against that, right? You have to be at that market rate. So that's the other one we get. Actually, we don't get that with Roofstock clients at all. I think you guys do a good job on price on expectations. I think it usually happens with a lot of investors who are accidental landlords who end up renting out places they've lived in, and they're emotionally attached to them.   Michael: But my kids grew up here.   Dana: Exactly. It happens more often with those. But I think you know, a lot of stories where there hasn't been anything as Super outrageous, but it's things like that, or slum lords, right, that's another one where the landlord doesn't want to fix things for tenants and doesn't realize it's this person's home, and it becomes a inconvenience for the tenant, the tenant is your customer. And you need to remember that. And so fixing something for them.   Now I get some things like the ice machines broken, great, we'll just buy your ice cube trays, because it's going to cost too much to fix the ice machine, that type of stuff, saving money. In that case, that's fine. But if it's something where, yeah, the hot water heater is out, we're gonna get a new one. But we want to get a used one from this used company in Florida. And we're shipping it to the property in Texas, because we're going to save $300 from what the price would be to get the water heaters here. And the water heaters can arrive in 1.5 weeks. It's like what your tenants can't really go without hot water for 1.5 weeks. And so it's certain things like that, I think it's more of an educational thing. More so than a horror story   Michael: Dana, the last thing that I want to ask you about and you brought it up is the alignment of incentives, your incentives are aligned to get the repairs done as fastly? And as cost effectively as possible. What about the folks out there property managers out there that charge an overage on the job, you know, job estimate plus 10%. So the property manager actually stands is financially incentivized to choose the most expensive bit.   Dana: Yeah, those property managers. So we don't do that, for that very reason of I don't know how you can justify it right? That your incentives are aligned. What I've heard from those property managers who charge 10%, on top of their repair coordination is they usually say, Oh, my monthly fee is a lot less than like the market rate. And if you have a property that doesn't have a lot of repairs, I want to reward you for that by charging you less every month. And those properties that have a lot of work to do. And I'm constantly out there doing the work, I want to charge those people more. And so my incentives are really aligned with you. That's that's something I do here.   And actually, to their point, it's a valid point, right that that incentive is aligned. The real question is, well, how do you make sure that you keep those repair costs down if you're getting paid more for hire bill? And that is where I would say the devils in the details. So understanding like, Okay, well, how many bids did you get? Can I see the bids associated with these? How do you know these people, right? I'm having all of that if they are really transparent, and like, Yeah, we got three plumbers bids, here they are, here's the one we chose, maybe it's not the cheapest, maybe it's like the second cheapest, because the cheapest wasn't going to get as much work done, it was going to be like a patchwork versus actually fixing the root cause. Maybe it's something like that. And they have a reasoning for it. That's built with trust over time.   Again, it's a relationship and you have to trust the person, if someone does charge 10%. It's not necessarily bad, but then you really do need for them to be able to justify time and time again, this is my incentives are aligned with yours. Even though I make more, I'm more aligned to keep you as a customer. And so I want to keep those bills down, that I can justify a little bit more. But then again, the devils in the details, and it's building that trust over time, and you can't build a trust with property manager until you've worked with them over time.   It's a performance thing, right? It's it on day one, you're not going to trust the person, you're going to trust them by them proving they can get you the cash flow. Keep peace of mind, where it's easy, um, there's not a lot to do and that will be built over time.   Michael: That makes total sense.   Tom: I feel like we can we're running up into our 11 o'clock, but I feel like we can do like a whole nother other episode on just the self management that we've done so far is really great. And like the stuff that you have on self management, like I think is like worthy of its own episode.   Michael: Yep. No, this was great. Danna, thank you so much for for sharing the wealth of knowledge. And like Tom said, We'd love to have you back and dive deeper on more of this stuff. Because there's just I think so much so much here to talk about.   Dana Awesome.   Tom: Well, awesome. Thanks again for jumping Dana   Michael: Awesome. Perfect. Dana, if people have more questions about him lane or want to reach out to you specifically, where should they go? How can they reach out?   Dana: There's two different ways. Um, one is www.Hemlane.com. Um, the other thing you can do is email [email protected]. Those are two ways to get in touch with us.   Michael: Fantastic.   Tom: All right, thanks again for jumping on.   Dana: Thanks, guys. Have a great weekend. Talk to you later. Bye.   Michael: Thanks you too. Bye.   Alright, everybody. That was our episode. Thanks so much for listening in a big, big, big thank you to Dana. She's always a pleasure to have on and we look forward to having her on. Again. If you'd liked this episode, feel free to give us a rating or review wherever it is you listen to your podcast, they really help us out and we're constantly looking for recommendations for additional episodes, so feel free to leave us a comment in the comment section. And we look forward to seeing you on the next one. Happy investing.   Tom: Happy investing.