Property Management for Turnkeys

Announcer: Welcome back to the FlipNerd.com REI Classroom, where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. And now, let’s meet today’s expert host.

Steven: Welcome, guys, Steven Gesis with Smartland here on FlipNerd doing another REI Classroom expert interview. I want to talk today about property management for turnkey. That’s going to be our subject for today.

Announcer: This REI Classroom real estate lesson is sponsored by UglyOpportunities.com.

Steven: All right. So let’s drill down what property management for turnkeys should really look like. It’s important to differentiate that there are two different types of property managers out there. The first type of property manager can be your conventional property manager that’s going to bombard you with a whole series of fees. They’re in the business of placing tenants and charging fees.

On the flip side of this, there’s a turnkey managing company. Typically this is going to be assigned to a turnkey asset that you’ve acquired from an operator that has a global experience. So it’s really important to understand what that means for the investor.

An investor can really take advantage of a turkey operator as property management, and what it’s designed to do is save you money which increases your ROI. So the more efficient and effective turnkey operator or property management company that you’re defining for your assets, the more you can expect you’ll have a greater ROI on the backend.

A regular property management company, they’re all about placing tenants. They don’t care how long and what quality. For the most part, obviously, they want to try and do a good job. They want to place somebody that’s a high-quality tenant, but they really have no sense of doing that, nor do they really have an interest in placing a long-term tenant for you. They’re in the business of getting fees. So typically you’re going to find exaggerated fees for management, exaggerated fees for maintenance, and continual maintenance conditions and problems that you’re going to be facing all the time.

On the flip side of that is the property management for turnkey specifically. Their goal is to make sure that you’re making more money. That means placing long-term tenants, mitigating costs on the front end and placing better construction materials and methodologies, and the property uniform construction materials and methodologies, increasing the net efficiency of actually servicing it, and then most importantly you want to make sure that that turnkey property manager has their own maintenance in-house.

I’ll give you a really clear example. Our company last year was able to reduce our investors’ tenant turnover by over 37% by placing long-term tenants. Yes, sure, it hits them in the pocketbook but at the end of the day it’s about the investor. So it’s really important to drill down what your property manager is doing and if you have one that’s really suited for turnkey. So please keep in mind that there are two different worlds when it comes to property managers and property managers for turnkey.

And that’s what we’ve got today. So check us out, and I’m glad to have you here today again.

Announcer: Homevestors, the ‘we buy ugly houses’ folks, is a franchise system of hundreds of real estate investors that have purchased over 65,000 houses. If you’d like to learn more about the most powerful real estate investing system in existence, whether you’re a pro looking to take your business to the next level or whether you have no experience at all but a burning passion to be successful in real estate investing, please visit FlipNerd.com/ugly to learn more.

Please note the views and opinions expressed by the individuals in this program do not necessarily reflect those of FlipNerd.com or any of its partners, advertisers, or affiliates. Please consult professionals before making any investment or tax decisions, as real estate investing can be risky.

Are you a member yet of FlipNerd.com, the hottest real estate investing social community online? If not, you can join for free in less than 30 seconds and get access to hundreds of off-market deals, vendors in your market to help you in your business, and you can start networking with thousands of other investors just like you. Get your free account now at FlipNerd.com.

Please check out the FlipNerd family of real estate investing shows where you can access hundreds of expert interviews, quick tips and lessons from leaders across the real estate investing industry. They’re available at FlipNerd.com/shows or simply search for FlipNerd in the iTunes Store.