Banner image with Mike LaCharite as the guest for "How to be a long-distance landlord and a good one at that!"

How to Be a Long-Distance Landlord and a Good One at That!

What happens when you put the right systems in place to help you manage properties from a distance? A well-developed business emerges that’s what happens. As a long-distance landlord of rental units in California, Mike LaCharite is a steward for good business practices and discusses why this venture requires careful consideration of all of its working parts.

In this episode, we’ll explore some of Mike’s best and worst experiences as a long-distance landlord and what he does to avoid the shock of bad-apple tenants—some he can see coming and some he can only be prepared for at blindside.

Being a long-distance landlord means you need the right systems in place to be successful!

Mike has learned hard lessons as a long-distance landlord, which has allowed him to quickly adjust course when he deemed it the right time. He’s systematized his processes and made use of free and low-cost apps to help with the granular and grandest of details.

Be sure to check out this episode to acquire the right skill, the right mindset, and the right business practice so that you can learn how to be a good (effective and profitable) long-distance landlord. I’m thrilled to dig into what that looks like for our real estate and rental-attentive audience in this episode with Mike LaCharite.

Puuush play… push it. 😉

Resources referenced in this episode:

Cozy

Landport

rentapplication.net

West Side Rentals

HotPads

Calendly

Z Inspector

Public Records 360

Angie’s List

Yelp

Google

Craigslist

Grasshopper

Don’t Forget to Add to Your Toolbox, Get Involved and Help. Here’s how:

If you enjoyed this episode, I’m sure you would enjoy reading this: 5 Tips Physicians Need to Know Before Buying a House

Join the Financial Residency Community: Don’t forget to join the Financial Residency Facebook Community for exclusive access to taking the Wealth Potential, Investor Composure and Financial Planning assessments.

Help the Financial Residency podcast reach new listeners on iTunes by leaving a rating and review! It takes just 30 seconds. I really appreciate it, thanks!

Looks like real estate may be your thing, check out this episode with Dr. Dave at Doctors Unbound about being a short-term rental landlord!

Full Transcript: How to Be a Long-Distance Landlord and a Good One At That!

Image of a laptop with "For Rent" depicted

Ryan

Mike, thanks so much for being on the show. I’m really excited to have you here.

Mike

Hey, I’m glad to be here. Thanks for the invitation.

Ryan

Of course. So, Mike, you and I were chatting off of one of the episodes that we had done on real-estate here on the show and it came up that you are a long-distance landlord. That is something that I didn’t do. Well, you’re a long-distance landlord, I should say, without a property manager. You are the property manager, which is something I did not do. We were long-distance landlords, but we hired a property manager here in town before we moved here. So, it’s really fascinating. I’m excited to kind of dive into this with you. So, can you just tell me a little bit, like how did you get into being a long-term landlord and what is it like?

Putting the right systems in place is a must.

Mike

Yeah. So, I actually got into this about 10 years ago, in 2008. I was just leaving college and my parents had an opening at their company that they needed to fill. So, I went to work for my dad. He was a residential contractor, so I ran the office there and then started managing his rentals. We were right around 18 to 20 units at the time and he passed away about a year and a half later, and with that, somebody had to sort of step up and take care of this. So, we put the construction stuff aside and I just assumed full management of all of my mom’s properties now. My wife is a physician and was going into residency starting this past Summer. We were pretty sure we were ready to get out of southern California, so we were pretty sure we were going to end up leaving.

Mike

So, for about a year and half or two years before that, I saw this coming and worked really hard to kind of put some systems in place that would then allow me to do everything from long-distance. So, I am in Baltimore now, managing about 14 or 15 units in southern California. And, you know, it’s definitely interesting; but the great thing is there’s a lot of great technology out there that makes it super doable.

Ryan

Yeah, and we’ll jump into some of the technology in just a little bit here, but I’m just curious. So, you started in person, local, setup the process procedures, the technology, all this; and then moved, literally, across the country and are now doing this. Do you feel like you’re missing out? Do you feel like it’s a lot more difficult to do this being so far away?

Mike

No. I mean, honestly, I have my attendants trained pretty well, which we’ll talk about. There’s a couple of logistical challenges as far as when a unit comes up for rent, but luckily, that’s usually only, maybe, one or two a year. So, I would say challenges, that’s been the hardest thing is making sure I can get on the ground to get them re-rented out, but so far everything is going great. It hasn’t been an issue. Actually, in the Fall, we did a full interior renovation on two of the units and managed that from over here too. It all works out pretty well.

Logistical challenges may rise from being a long-distance landlord.

Ryan

That’s amazing. I mean, that speaks that you had setup a lot of processes and procedures, and vetted people; you know, subcontractors and things like that before you left, or maybe you had to change during it, but that is…you’re really relying on a lot of people there to help you out. Obviously, money will take care of that. Right? Everyone wants to be motivated by that. So, you found a good team and hopefully your rentals don’t have a ton of turnover. You know, one of the things that I’ve chatted on a little bit here, that Taylor and I had a few rentals in Vegas, but we bought them when we were still in training and fellowship in San Diego. But, I had all of that infrastructure in place, because my whole family does real-estate.

Mike

Yeah.

Ryan

So, I had all of that in place. It was significantly, I feel, easier for me to do that. One of that is, you know, I also had a property manager. How are you basically…you know, walk me through the process of being a property manager for yourself long-distance.

This is the process of being a long-distance landlord.

Mike

So, just to tie in a little bit with what you said, I had a lot of that. I mean, I got to work with my dad for about a year and a half and he was brilliant in this property, real-estate industry. So, I had, sort of, some of those same benefits; making connections through that, that have served me well, and just learning a lot from him. You know, really, the process for me of managing stuff from over here, I rely a ton on technology. Everything that I do is automated. All of the rent payments; all of the work orders when people have a problem on the unit, and then I need to get a vendor involved…all of that’s automated. So, for me, it’s maybe once a week or a couple of times a month that I’m sitting here and dealing with something active.

Mike

Really, it’s managing the work orders, which are not very frequent; and then when a unit comes up, it’s making sure I have people on the ground to do the move-out inspection and to get the unit back ready. I actually just had one come up. I was dealing with last week and I’m flying to California next week. I happened to be already be there, so that worked out nicely. My process, usually, it takes me about a day to rent out the unit. So, it’s very quick and then all of the paperwork is done online, remotely. That comes back to me and then we set them up in the systems and we roll from there.

Ryan

I mean, that’s amazing that you’ve kind of figured all this out and set this up so that you could do it remotely. So, a couple of the things that I’ve worried about, is my time. Right? I always say that time is your most valuable resource, it’s not money. So, this is going to require some time and you’ve obviously got the system down too, for all of the processing normal everyday kind of things, down to a science, really. But, what do you do with the midnight guys that call you? I’m always worried, like, it’s 2:00 AM and the pipe bursts, and I’m like, even if I was, I guess, in town, what am I going to do, because I’m not that handy.

Automate your systems with technology to help manage work orders, payments, leasing documents.

Image of a tablet with a leasing contract on the screen

Mike

Yeah.

Ryan

I guess pick up the phone, but I don’t know why it’s different for me to be my own property manager and feel like I’m going to field those phone calls. What do you do with that, or does that not happen, and I’m just making it up?

Mike

Well, no, it does. I think part of it comes down to training your tenants property. I’ll tell you kind of a funny story. Right after my dad passed away, we went to Vegas with my mom. It was going to be their twenty-fifth anniversary, so we took her to Vegas for the weekend. We left on a Sunday and I had just gotten off the plane, and one of my tenants calls me. You know, I was gone, I had let everybody know that I’m gone, so I just ignored the call. She called me three times in a row, so I’m like oh, something must be on fire. I picked it up and she literally was asking me to change a lightbulb in her kitchen for her. That taught me, like, that was a couple of years into this, and that taught me the importance of training people that I’m a person. I’m not a robot that sits here to take your every call. That particular experience, when I’m looking at doing things remotely, is what…so, I setup a system called Grasshopper.

Mike

I don’t know if you’ve ever used it, but it’s like a virtual phone system for entrepreneurs. I have a main line for just general maintenance that people can call. They’re supposed to put everything online; but, if for some reason, they can’t get on the internet, they can call and leave a message. If they push two, the extension goes direct to my cell phone. So, periodically this happens. It always happens on Saturdays, Sundays, or evenings. That’s just the way it…it’s Murphy’s Law with rental maintenance.

Murphy’s law with rental maintenance makes work order calls on the weekends inevitable.

Ryan

Yeah, I was fixing to say Murphy’s Law.

Mike

To answer your question, like, yes, it does happen. Sometimes it’s inevitable. The number one way to help is don’t give out your cell phone, have one of these systems. You know, I’ve trained my tenants that unless it’s something where the roof is falling off, we’re going to get to it the next morning. Like, it’s not going to happen at 2:00 AM. So, they know, unless something is falling down, don’t call me at 2:00 AM. They’re all very respectful of that, because we’ve had the conversations. Also, one of the biggest things that has saved me from that, is just being super proactive about the maintenance on my unit. So, when I talk about stuff going out on the weekends or Saturdays, it’s usually water heaters, when the supply houses are closed. So, I’m constantly, about once a year, I try to go through or have one of my guys go through and inspect all the units, check dates, and make sure everything is looking good.

Mike

Then we do the same, you know, move in, move out, all that stuff. So, if I see a water heater is five or seven years old, and it’s been in there for a while, sometimes I’ll just come through and replace it ahead of time, without waiting for it to go bad; because I know it’s going to go bad on a night, or weekend, or something, when I’m not available. So, being really proactive about stuff is super-helpful; and then having just the trusted vendors that I can offload that stuff to. So, a tenant calls me, I go straight to my plumber, hey, the water heater’s out. We have a great relationship and we’ve built that over the past decade. So, he will pretty much drop what he’s doing when something comes up, and go and take care of my tenants, because I take care of him. You know, I do things like send him gifts and cards during the holidays and treat him like a person, like I would want to be treated. Those kinds of relationships really help you out in those situations.

Ryan

Yeah, it’s excellent networking and then just being a kind, caring person. It goes a long way and it’s showing people that you care about the things that they do, the work that they do, and that their work is valued. So, I absolutely love that. We take care of the people that help us out too; even though I pay them a monthly fee, and I’m not my own property manager, you know, I still help them. We’ve got our normal handyman that they contract through and we do all sorts of stuff at Christmas time and all that.

Have your property managers inspect your units on a regular basis—even yearly suffices.

Mike

It makes a big difference.

Ryan

Big believer in that. Yeah. Absolutely.

Mike

Absolutely.

Ryan

So, now we’ve gone over my fear. That was always my fear. So, I wanted to get that one out of the way, just personally. You’ve mentioned a few times, training. So, what is that initial vetting process or what does that initial training look like for what you’re referencing?

Image of For Rent sign in front of a rental property

Mike

For the tenants?

Ryan

Yeah, for the tenants.

Mike

So, it starts…and this is something I’ve had to grow in over the years. Right? It starts with just the initial maintenance of the property. I’m very clear about, you know, this is what we take care of. I’ve also put a lot of stuff in my lease agreement. A lot of times, people are afraid to edit them, because they’re legal documents; and yeah, you don’t want to go in and red-line and take out all of the legalese, but I actually add some of this stuff to, you know, some of the terms to the language. If you get locked out, don’t call me. I don’t have a key, I can’t do anything. Here’s the locksmith’s phone number. He will charge x, y, z. That’s what you’re going to have to do. I would suggest to put in a lockbox, outside somewhere, with a key.   So, anticipating here are the problems that could come up, and here’s how you need to deal with them as a tenant.

Mike

You know, obviously, I’m here; but, I got tired of people calling me because they were locked out and I can’t do anything about it. So, some of it’s that. A lot of it is just those initial conversations. Also, people forget, so every once in a while, I’ll get somebody that, you know, I have this awesome online work order system, and they will text me or call me. Well, they don’t really text me, because they don’t have my cell number, but they’ll call me or email something and it’s, hey, you know what…I’ll take care of that, but I need you to go put it in the work order system before I can take care of that. So, it’s constantly redirecting people, like, this is the right process. This is what you need to do, because I noticed that when people were emailing me things, and let’s say I had five or six units going on at the same time, it’s really easy to lose track of stuff.

Help your tenants anticipate the problems that can come up and re-direct their needs to the correct process.

Mike

Especially if this isn’t my primary career or day job. I have two or three other full-time things that I do. So, you know, it’s really easy to get stuff lost; and a lot of times when I’m talking to tenants about it, it’s like, this is for your benefit, because I’m one person and I want to make sure you get taken care of right away, and I want to make sure that you have a nice place to live. It’s all about doing this for their benefit and people are generally pretty receptive about that kind of stuff. Since I’ve started being a little more direct about it, and rolled out the online work orders and stuff, it’s helped a lot and people have been great about sticking with the processes for the most part.

Ryan

Yeah. I mean, that’s good advice. So, to find these trainable tenants, which sounds weird, but let’s just kind of go with it. How do you find these tenants? Is it just Craigslist? I always feel like Craigslist is like the default, but it’s always like the most uncomfortable for me to say, because I always think of Craigslist creepers.

Mike

Yeah, for sure.

It’s best to vet a new tenant based on the knowledge you have about them.

Ryan

How are you vetting these people remotely to live in one of your places?

Mike

Yeah. So, I think, I have a rule that I will not rent to somebody if I have not met them, or somebody I trust. In the event that I can’t make it over there to actually do the appointments, I have people that I trust. So, you get, especially with Craigslist, you get all these emails oh, I’m moving from London and you know, I can’t see the property, but I want to give you a deposit. First of all, anything like that…gone.

Ryan

Yeah, that’s just weird.

Mike

I’m not willing to do it. Yeah. And, you know, there could be some…I’ve had a couple that I think actually were viable situations. I’ve had a couple where people were coming and trying to rent for their kids, and I couldn’t meet their kids, and I’m just not willing to do it. So, that’s part of it. I’m super-selective. I also, with the properties that we have, and we’ll probably get into this a little bit later too; I’m big on owning rental property that you yourself would live in, in an area that you would live in, and keeping it nice. So, going back to the preventative maintenance, and like I said, the couple of units that we just went through and gutted and renovated…they were only 10 years old. We had built them from the ground in like late 2007.

When people feel like you have taken care of your property, it incentivizes them to take care of it too.

Mike

But we’re still trying to keep it fresh. When people move in somewhere that you’ve taken care of, it incentivizes them to take care of it. Probably the hardest thing for me that I’ve had to learn, is just trusting my gut; because the few bad situations I’ve had, nine times out of ten, I had a bad gut feeling about it going into it, and I still rented it for whatever reason. Hey, the market’s slow right now, we’re having a hard time finding somebody. Oh, I’m probably just being silly. So, trusting my gut, I’ve learned, is a really important part of finding the right people.  As far as what kind of stuff I require from them, we do a credit check, and I used to be super-selective. Like, you have anything pretty, because I have twenty applicants and half of them are perfect credit. So, if you’re not, you know, you’re not going to get it.

Mike

After the economic downturn, that’s changed. A lot of people have stuff now, so I still look at credit and I go through it very detailed, and if there’s questions, you know, I always go back to people and ask them why is this on here? I tell them before they submit, on the application, there’s a space. If there’s anything negative that I’m going to find in your credit report, please explain it there, because if you don’t, I’m going to feel like you’re trying to hide it from me. Then, checking references, and I never used to do that. And taking the time to go and call a few people, past landlords, and some of the personal references; I’ve learned some really interesting things and haven’t rented to people because of that. So, those would be my, you know, make sure you’re keeping the property nice, trusting your gut, and making sure you’re checking the references and credit checks and all that stuff.

Ryan

Yeah. I mean, Mike, that’s great advice right there. I like, literally, all of it. So, you mentioned like trusting your gut and having a few bad apples, if you will.

Sometimes, trusting your gut means bringing in the right tenants.

Mike

Yeah.

Ryan

Would you share a story of a bad tenant? I’m hesitant to ask you this, because then I’m going to be like well, every tenant is going to do this to me. I’m kind of like ear-muffing myself, but at the same time, I really want to know. Do you have a horror story or two?

Mike

Yeah, there’s a few. The first one is kind of interesting, and it’s not actually my story, but it’s from a family member. This goes back to buying a property that you’d live in, in an area that you’d live in. Not saying that people that live in bad areas, or whatever, are all bad people; but, I have found that there is more likelihood of getting certain things happening. So, for example, a family member owned this four-unit building, and the building was old, built in like the fifties. One of the tenants started getting a really high electric bill, like double what they should be paying.

Ryan

I know where this is going.

Mike

Yeah. It had been for several months and they finally called and found out the guy next door tapped into the wall, and tapped into their power, and was stealing their power. So, what happened was, this unit was built in the fifties. So, now to fix that, you have to go get a permit and now you have to bring the whole unit up to code, because you’re in there touching the electrical. So, that’s a big part of why I say buy a property that you’d be willing to live in, in an area you’d live in; and keep it nice and do the inspections. That’s one thing. Probably the worst tenant I’d ever had, and it was a really hard time; this was one that I totally had a gut feeling that it was going to be bad, and it was a really hard market and I just excepted it, even though I had that really strong gut feeling.

Mike

She caused a ton of problems on the property. She would call the police every day, every other day, on the other tenants. You know, he’s watching TV at 2:00 AM and hockey games, and all this stuff; and I’d talked to the other tenants on the property and he was on vacation, he wasn’t even there. The police actually had to tell her to stop calling unless it’s an emergency, it got so bad. And all this other stuff happened, and then this is right when I had my son. Right? It had already been a difficult pregnancy, and then my son was born, and he went into the hospital at four days old with a UTI. He was admitted for a week. So, we’re dealing with all of that and then he comes home and he’s got colic, acid reflux, and all of this stuff going on; and at the same time, she’s calling me at 2:00 or 3:00 in the morning. This was when I stopped giving out my cell phone and went to Grasshopper, for sure.

There are, unfortunately, tenant horror stories you can learn from. Mike shares one of his experiences.

Mike

With all of this crazy stuff. I remember one night specifically; my son wouldn’t sleep and I put him in the car and drove him around for about an hour and a half at 2:00 in the morning. She’s calling me back to back and I’m not picking up the phone. So, I ended up giving her notice to move and she threatened to bring an attorney in, so at that point, I said well, I’m not talking to you anymore. If you need something, email me. It will all be written correspondence. I just ended up being really firm and, you know, hey, you can say whatever you want. If you want to try to take me to court, no problem; but you’re getting out. And she ended up getting out. It didn’t end up being a problem at all.

Ryan

You got lucky.

Mike

Yeah. Well, I think it’s also just having your cards. Like, I know I have an awesome attorney for property management that’s in my network; so, when I served her notices, everything went through him. All the emails went through him and she wasn’t, you know, I had documented everything. So, I’m not going to say it never happens, but since I started trusting my gut and doing a little more vetting on the tenants like we were just talking about, I haven’t had, and it’s been four years, I haven’t had anybody like that at all. I haven’t even had to evict anybody or given anybody a notice since that. So, these are the situations that you learn from and hopefully hearing some of it from me, saves you from learning personally.

Documentation and having a property management attorney can be the saving grace when dealing with bad apple tenants.

Ryan

Yeah, absolutely. So, you haven’t had to evict anyone in the over ten years that you’ve been doing this, right?

Mike

Yeah, I’ve never actually had to go through a full eviction. I’ve never had to go to court, ever. I have given people notice to move over certain things. I don’t know if we have time for one more story, but this one’s kind of funny if you want to.

Ryan

Sure. Yeah.

Mike

So, I really liked this guy when I met him. Like really liked him, had a great gut feeling about him. This was about three weeks before my dad passed away. So, I rented it to him, super nice guy, he moved in, and we were working with him because he wanted a satellite dish on the building. We’re very particular about that kind of stuff. We don’t let tenants just go and mount a dish because we’ve had so many issues with some of these satellite companies, you know. One particular, they mounted a dish, it didn’t work, they pulled it out, moved it over two feet, mounted it again, and didn’t plug the holes in the stucco. So, we’re always involved in this process. He had to move the appointment for something and then it rained, so they couldn’t come out to install it. Then, my dad passed away. He called me two days after my dad passed away and said hey, I got the appointment rescheduled for December 4th. That was the day of my dad’s memorial, which I was not going to miss for a satellite dish appointment.

Ryan

Of course.

Mike

Right? So, on the phone, I said hey bud, I can’t do it that day; it’s my dad’s memorial. He literally said to me, well, you know, Mike, I’m getting really tired of not being able to watch my football. That was literally his response to my dad died. So, you know, we obviously didn’t do that appointment and we had a bunch of issues with him parking in the driveway in this building that blocks all the other cars. I had documented everything, like letter after letter, after email, phone calls; and so, I finally gave him notice to move. He writes me this email that was like hey, I really don’t want to move, you know, what would you do? My daughter is a hundred and twenty-five pounds and five-three, and when she comes home late at night, I don’t want her parking out in the street, so I have her park in the driveway. He has a two-car garage. Right?

Mike

So, I responded, I was in a similar situation with him, and I’m like well, my wife’s five foot even and a hundred and fifteen pounds; and if she gets home late at night, I park in the street so she can pull in. And, you know, I got him out. That was sort of the response.

Ryan

That was his excuse. I mean, it’s funny that people come up with the most random, obscure things of excuses on why they’re doing things, or why they’re not doing things. So, the couple of things that I take away, Mike, from your stories are, one, document everything, like everything. If you’re going to decide to go down this path, it is a little bit of extra work. Right? Because you are the landlord, you’re not shipping it off to, and the property manager, you’re not just shipping it off to a property management company. So, you need to have some process procedures put in place.

Have some process and procedures in place after an initial exploration.

Mike

Yeah.

Ryan

Experiment, maybe on your first unit, kind of build up these things if you’re planning on owning multiple units.

Mike

Yes.

Ryan

And then the next thing that I kind of take away from this, you know, obviously, do your due diligence and document everything with respect to that.

Mike

Yeah. Definitely. You have to trust yourself.

Ryan

Yeah and trust your gut, if you will, on judging character. That’s a tough thing to do, but when you have a lot of applicants, you can kind of do that. Talk with people and do some due diligence, call the past landlords and figure out what happened, why they’re moving. Were they good tenants? Were they bad tenants?

Mike

Yeah.

Ryan

Things like that. It’s a little bit more difficult to vet a subcontractor unless you literally hire them to do the work. You can’t be like oh, give me a list of your clients and I want to call them all; because, one, they’re probably not going to give it you, and two, that’s kind of weird. So, you wouldn’t really ask that.

Mike

Well, they’re not going to give you a bad one to talk to.

Ryan

Yeah. I mean, that’s the tough thing too. Like, if they had one angry customer a year, they’re not going to be like oh, here’s three good ones and the guy that was pissed off and left, you should call him too. So, how do you vet your subcontractors?

Image of empty property ready for lease out

There are a lot of resources online to engage the right subcontractors, but be sure to look at their ratings before hire.

Mike

So, that’s a great question. Part of it, you know, somebody I know recently just renovated a house and she went on Yelp, found her contractor on Yelp, and just moved ahead; and she ended up getting…it was a major problem. The guy was horrible. There’s a lot of these resources online. Right? There’s Yelp, there’s Google. First of all, Yelp would not be my first resource for construction-type stuff; but I think a lot of times I’ll look at multiple. I’ll look at Angie’s List, Yelp, Google, if they have a Facebook page, and the Facebook reviews; and if there’s a consensus among people, then I feel a little more comfortable. If everybody has consistently rated somebody high, but what you’ll kind of find is, on Yelp, you’ll see, maybe, sometimes really good reviews; but then you go to Angie’s List, which is specifically geared towards contractors and home people, and you’ll see that they’re not so well-reviewed.

Mike

So, I do that. I also rarely ever use a new contractor, unless I’m really in a pinch, without getting multiple bids and talking to multiple people. It’s kind of like what you referenced with the tenants, when you have more applicants, you get a better gut feeling. You know, you can kind of pick up on the stronger ones. It’s the same thing with a contractor. I’ll rarely, if I get multiple bids, rarely will I go with the cheapest guy; unless they’re all really close and he’s the guy that I had the best gut feeling about. A lot of times, I’m looking for middle-of-the-road. That has worked out really well for me. You can see, like, sometimes you’ll have somebody come in at three thousand dollars more than another guy for a paint job; and you’re like, okay, what’s missing? Like, something in your bid is either missing or this other guy is charging me too much. So, it gives you a little more of a baseline to compare people.

Figure out the baselines to compare people for certain subcontractor jobs.

Mike

I also, typically, only use contractors that are insured; and I make sure I ask for general liability and worker’s comp. Not always so important with something like a painter or a house cleaner, or whatever; but, if you’re having an electrician or something go in, just looking for that, and asking for their license number, and you can go look up the license on the contractor’s board and make sure there’s nothing against it. That right there, tells me that these people have their act together and they’re at least covering themselves. You know, because, something simple happens…I had a tenant change out a light fixture in their unit and it shorted out some other stuff. Thank goodness that was all it was, but you don’t hire somebody licensed to do that and then it burns down, you have no protection and there’s no liability. So, I think those three things, you know, just between looking at the reviews, if you can find independent references, talking to people.

Mike

I’m lucky, in that, in southern California, I have a lot of connections in the industry. So, a lot of times I’ll ask one of my trusted, current trusted, vendors hey, who do you work with a lot that does this? That’s been really helpful too. My plumbers hook me up with all sorts of people that have been great, because I trust him and he works with these guys a lot. So, that might actually be kind of my top recommendation is, first, go with the people that you like and see who they know in their network.

Ryan

Yeah, it’s fascinating to see how, as you’re describing this, I’m just sitting here nodding my head, because it’s super-similar to finding a financial advisor, vetting that process, and going through. You don’t just pick one person and say hey, you’re the person for me; without looking around and finding out what else is out there and who else does what this is. Go to … Look at whether they have any negative marks. Have they ever been sued by a client? There’s a lot of similarities in what you’re saying. I’m sitting here, and my next comment was going to be that if you need to do anything inside of financial planning, let’s say purchase insurance, if you’re working with a fee-only advisor, they can’t sell insurance. So, what would you do?

It might be a good thing to ensure your subcontractors hold general liability, workers compensation, and other applicable insurance.

Ryan

You would ask the advisor hey, where can I get insurance; and they’re going to recommend, usually one or two people, that they’ve worked through and vetted. They’re not going to give you someone that’s, I mean, I hope they don’t give you someone that does a crappy job; because, even though it’s not their business, that still does reflect something on them. So, if your plumber tells you hey, go to Jane over here who does electrical work, and you go to Jane and she sucks; that does come back on the plumber a little bit. And you’re going why would you send me over there, she was terrible; or send me over to this guy and he was even worse. It does kind of affect that relationship. So, yeah, it’s great advice to ask the already-trusted resource if they have anything and expand the network that way.

Mike

For sure. That’s funny. That is very true. There’s so many similarities. I mean, it’s just good business practice and good life practice, really, I think, with a lot of things.

Ryan

Yeah. I mean, get multiple bids. Get multiple quotes. Don’t just take the first thing.

Mike

Yeah.

Ryan

I try to relate stuff back to planning to make it relevant, but it’s literally everywhere. Like, if you’re going to go and work at ABC Hospital out in, let’s say, LA; I would be making sure that you’re looking at market comps and you’re looking at what a physician in your specialty or whatever is, you know, what they’re getting paid. Then, when you start to negotiate the contract, make sure you have an expert there that does this all day, every day, and helps negotiate and can tell you hey, well, based on the data that’s out there and there’s reports you can buy and things you can do, this is the range you should be looking for. You don’t just walk in on the first job and be like oh, you offered me this, it seems like a lot, I’ll do it.

Mike

Yeah, absolutely.

Ask already trusted resources for recommended subcontractors—it’s just good business.

Ryan

You know, I may not want to relate it to them, but real-estate and finance, all this is very well connected. It’s all business.

Mike

Yes, yes.

Ryan

So, you know, overall, I mean, amazing advice, Mike, on that.

Mike

I mean, even outside of our business sense, think about what our wives do. Have you ever gone to a doctor and they told you that you need to do x, y, z; and it just didn’t sit right with you and you go get a second opinion? That’s happened to me and I’m so glad I did because it turned out that the advice I got was horrible. So, it just permeates every avenue, I think, of what we do.

Ryan

Yeah. In high school, right in the middle of senior year, I was in Vegas here, just visiting, and I went to the doctor and they said we hear a murmur and it’s irregular. You need to go to a cardiologist. I’m like seventeen. I’m running, literally, a five ten-mile. I’m in amazing shape, like, barely any body fat. I’m going huh, that’s weird. Now I’m freaked out because I don’t know anything medical and I hadn’t met my wife at the time. So, you know, of course, my family freaks out. So, we go to a cardiologist and he’s like yeah, you’re going to need this, this and that; and I’m going what is happening? We’re chatting over it and I said I want to go get like two more opinions, because this is just crazy. I mean, it ended up being nothing and the guy was wrong, which is crazy, but essentially after getting to know how the town operates and everything, I’m not surprised by the quality of care that some of the providers give here in town.

Mike

Yeah.

Ryan

I guess I’ll put it that way. Yeah, get a second opinion, because that would’ve been potentially life-changing kind of thing.

Mike

Yeah, for sure.

Ryan

Now we’re not talking anything life-changing. We’re talking about some rental real-estates and things, but still, the point is well taken.

Mike

Yeah.

These tools will help you systematize your long-distance property management process.

Ryan

Excellent advice, Mike. So, right now I tend to ask one question at the end of the podcast, to the expert, and my question for you is this. So, I’m an attending, let’s say I’m five years out, I’m doing all the right things…maxing my 403b’s or 401k’s, my IRA’s, all that kind of great stuff; and I decided I want to look at rental real-estate, and we don’t need to dive into the specifics of the real-estate itself, but let’s just say that this attending says I’m going to be a long-distance landlord. Do you have any tips, tricks, or resources for them, that have really helped you out? You know, feel free to shout out some names of companies and things like that. I’ll make sure I list them in the show notes. Do you have any good resources that could help someone become a, let’s say, a first time, long-distance landlord?

Mike

Definitely. Oh, where do I start? There’s so many good ones that I’ve found and worked with. One of my favorites is called Cozy. It is completely free and it’s a great resource if you’re new to this. They have a lot of information, like training courses and stuff for how to become a landlord, how to be a better landlord. So, there’s great stuff on there, but also completely free. They do automatic rent processing, like ACH deposits.

Ryan

Oh, okay.

Mike

So, you can, you know, you basically put in your properties and leases; you add the tenants; the tenants get an email to sign up. There’s no fees for you or for the tenant and they can electronically pay you your rent. Electronic rent payment has been one of the transformative things for me, just because, A, you’re not chasing checks. I can see when people have initiated their transfer, even if it hasn’t hit my account yet. So, I know at least it’s on its way, I don’t need to hound this guy.

Ryan

Nice.

Mike

One of the new things that I haven’t actually used yet, I just found out last week that they added, was online work order management; also, completely free. I pay for a resource to do that, that I’ll tell you about in a second, and it’s great; but I am going to explore Cozy a little bit more in that realm and see sort of how it works. So, that’s just another thing that they offer. The company I use for the work order management, is a company called Landport. It’s a great system. One of my favorite things about it, is you can setup all your vendors in there. So, let’s say you’re my tenant, and you say hey, I have a toilet that’s not working. You go in and put it in. I’ve entered my plumber. I can literally take that and in about 15 seconds, send it off and dispatch it over to my plumber. He gets an email, hey, Mike needs you to go check this out at this property; here’s the contact information. So, I don’t even have to think about it.

These resources are available to you as a property manager; some of them are free of charge.

Mike

I don’t have to manage it. Then there’s a dashboard that shows you, here’s what in progress, here’s the different stages. It even allows, my vendors don’t do this, but it even allows vendors to invoice you directly through there. It’s pretty inexpensive. I pay, for the annual plan, so that you get a discount, I think I’m paying around eight hundred dollars a year for it, which over the number of units that I manage, is well worth that cost. That’s been a lifesaver. As far as renting out, there’s another company called rentapplication.net. You can create all your applications and save them in there. The way I used to do credit checks, is I get an application, people write me a check for the application fee, I have to then transfer their information from the application onto a credit check form, send that over to the bureau (it takes between two hours and day, depending on how busy they are, to get it back), and then I have to go through it and all that kind of stuff.

Mike

So, with rentapplication.net, it’s also completely free; there’s no fees at all. You setup the application, you send the prospective tenant a link, they pay rentapplication.net directly. You can choose if you want them to run just a normal credit check, or if you also want them to run an eviction check and criminal history check, which I have them do all of it. I get it back in a matter of minutes from when the tenant submits it. It comes back to me within five to ten minutes.

Ryan

Oh, wow.

Mike

So, it’s instantaneous and that’s why I say, when I rent out a unit, it takes me about a day because of this process. So, they’re great. Love rentapplication.net. I know we talked a little bit about listing rentals and Craigslist. That was sort of my go-to when I got into it, and I still list stuff on there. You know, it’s free and it’s easy, and I still get inquiries. There’s also West Side Rentals, if you’ve ever used that before. So, they don’t charge anything to be a landlord and to list your properties, but they charge their prospective tenants, who are doing searching, I think it’s like sixty dollars or so for a couple of months’ worth of access.

These apps somewhat self-select prospective tenants since it indicates they have some skin in the game.

Ryan

Oh, wow. Okay.

Mike

So, that in and of itself is sort of vetting people on its own, because these people are willing to pay a fee to get access to the rentals. So, there’s some sort of accountability. They have some skin in the game. So, I found some great tenants using them as well, and that’s free for us. My favorite, currently, is Zillow. I’m sure everybody has seen that, heard that. It’s advertised everywhere. What’s cool about Zillow, is you create your landlord account, and again, it’s free; you post your property; and they send it out to four or five other sites. One is like HotPads and there’s a couple of others. So, it gets listed instantaneously on four or five other sites. I get tons and tons of submissions through them. Just real quick, I’ll tell you a little bit about my process for renting, because it’s relevant to this.

Mike

So, I typically pick one day. I used to let people call me oh, I want to see it today at 4:00. I’ll get there and then I get back to the office, oh, can I see it today at 6:00. Alright, drive back down there, and, you know, it’s not sustainable. Being remote especially, I know, like I’m flying to California next week; Friday, I have one day set aside. I use something called Calendly. That’s a link I send to prospective tenants. They book a time on the calendar, it’s a twenty-minute slot, and I will fill that whole day. I’ll probably have twenty showings on Friday, and by the end of it, I’ll have probably three or four, at least, that have applied; then I can make my decision and it’s done. Since I’ve started doing it like that, it has just revolutionized, A, the amount of effort I have to put in, which is important when you’re doing a lot of other things; and you know, it just streamlines the whole process.

Mike

With Zillow, I end up getting probably at least thirty to fifty leads on every unit that I Put out there. So, it doesn’t take long to fill up a whole day, and by the end of it, it’s rented out. Those are some of my favorites. There’s a lot of good ones out there. There’s also a new property inspection one that I’m starting to use, called Z Inspector. When you do your move-in and move-out walkthrough, you’re doing it on an app, on the phone, with the people. It has them sign right at the bottom and then it sends everybody a PDF report with photos.

Ryan

That’s cool.

Mike

It saves you, you know, from oh, that was here when I got here. Well, it wasn’t in the report or here’s the picture of what it looked like when you got here and here’s what it looks like now.

Ryan

That’s funny. So, a couple of things on that and then we’ll wrap it up here. One of the biggest pieces of advice that I can give people that are listening, that are renters, is when you go through a place, right at the very, very beginning and you’re excited, or maybe you’re not, and you just want to get out or get moved in, whatever it is; take time on that initial inspection, because at the end of this, the landlord is going to walk through it with that inspection list and if it’s not on there, even though you’re like oh, this happened; if it’s not on there, you’re going to probably get charged for it. So, walk through, do the initial inspection, take pictures. When we were renters, just from my real-estate background, I just knew; I had literally video’d me walking the entire place, that way I could reference it, because I could barely remember, like, three weeks ago, what I looked at, much less a year or two years later on move-out, if something was there or not.

With every new tenant, be very thorough with damages in initial paperwork.

Ryan

So, stains on the carpet, chips on the wall, whatever it might be; make sure you bring it up or if you happen to not see it when you’re doing that initial inspection, but you see it within a week or two, reach out to the landlord and say hey, this was actually here, I saw this. Most people, who are landlords, are going to be good people and they’re not going to hose you on something if that’s the case and you guys all just kind of missed it.

Mike

Absolutely.

Ryan

But don’t just let it go.

Mike

Yeah. Nobody listening to this is probably going to do this, but the one time I’ve, I’m always very reasonable if somebody finds something quick, you know, within a week or so; but I literally had somebody the day after they moved in, send me a picture of this four-foot tall scrape on the wall, by the front door, where, obviously, a fridge or something went against it; and said oh, this was here when I moved in.

Ryan

Yeah, come on.

Mike

So, within reason, obviously. You know, people do stuff like that. But yeah, it’s super-important to document that stuff. As you’re talking to your prospective landlord, get a feeling for how they behave as far as like wear-and-tear. If somebody’s been in one of my units for six months, you know, I’m a little more, I have a little less…what’s the word I’m looking for? I will, if somebody’s been there for six months or less, I expect the unit to look pretty close to what it looked like when they moved out. If somebody’s been there for a couple of years, I’m not going to nickel and dime them. I just had a guy move out for two years and the carpet was dirty and I didn’t charge him a cleaning fee, because they had been good tenants. So, get a feeling for the same was as landlords, you get a feeling for your tenants, you’ve got to get a feeling for your landlord and understand how they’re going to behave and sort of take care of you.

Ryan

Yeah. In competitive markets, this is a lot harder to do, because you’re going to be one of many people looking at a place. I always like to ask them, with your last tenant moving out, how much of their deposit did you take? Just one simple question, and most are going to tell you, oh, I took a little bit or it was this. If they’re like oh, we took the whole thing because they demolished the place, you’ve got to kind of take it at face-value, but at the same time, you’re like you’re probably not going to get your deposit back in that case.

There are a ton of great resources you can use to make your life a lot easier as a long-distance property manager.

Mike

Yeah.

Ryan

You know, you better like the house and everything else. So, Mike, you mentioned a ton of great resources. I actually use Calendly myself. That’s how we, obviously, book the podcasts; but it’s also how I work with all my clients. I absolutely love it. It basically just lets you link up to a Google calendar and you allow certain time slots and certain meetings. It’s all electronic, so there’s no hey, are you available at three o’clock tomorrow? No, but let’s do Tuesday at 2:00. All that’s gone, it’s amazing. One of the things you didn’t recommend, that maybe this will help you, is Public Records 360. It’s a pretty cheap way to pull basically criminal and back history reporting on everyone. You can look at all the past places that they’ve lived. It’s kind of creepy how much information is out there on all of us, but go ahead and look yourself up. There’s a ton of it. Right?

Ryan

That’s a good one to pull, because you don’t want to be pulling records and find out that they’re convicted felons for whatever it is and you’ll have a bunch of problems, especially if you have multiple people.

Mike

Yeah, for sure. I like that, that’s awesome.

Ryan

Yeah. Thank you so much for being on the show. It’s always fun talking with you, bud. I hope that everyone gets something out of this show, because I think you had a ton of great knowledge dropping on us and I really appreciate you coming on and talking about being a long-distance landlord.

Mike

My pleasure. It’s always fun to chat and hopefully it’s helpful for everybody.

Ryan

I definitely think it is. So, thank you again, Mike.

Mike

Yeah, no problem. Talk to you soon.

 

Ryan Inman