Why You Need to Be a Hands-on Landlord (Minisode)

Welcome ladies to The Real Estate Investor Show, providing inspiration, strategies, and insight to empower women investors to live balanced and financially free lives. Now here are your co-hosts, Liz and Andresa Guidelli. Welcome back ladies, this is Liz and this is Andresa. Welcome back to The Real Estate Investor Show. Minisode edition. What do we do on minisodes, Andresa? Why do we love minisodes?

Listen, we speak super quick, super quick, super quick, so we can get things done in 10 minutes.

Just a sidebar for all those who have never sped up an audiobook, do that. It is the funniest thing. My husband was talking. I did it the other day for like, I think it was 1.5. It was like hysterical.

I just laughed my butt off because he was like, I only listen at 1.5.

Oh, well, you're faster than me. Do you tend to be faster than me?

Everybody, if you send me for all of those, they'll send me Voxer messages, Zoom, anything. I listen to all of you at 1.5 and you guys sound funny as hell.

But for some entertainment. Okay. So we're going to be talking about on today's mini-sub, which we do 10 minutes or less, I'm going to be talking about why you should become a hands-on landlord.

Oh Jesus.

I know. And Andresa actually kind of disagrees with me.

I don't—

this is gonna be pretty fun.

We're gonna fight online. Let's do that.

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Okay, so Andresa, here's what, here's what I got. Here's my, here's my thinking about this. Now again, my, my opinion comes that I was a hands-on landlord for many years, right? So of course I have that context, but I'm gonna share a little bit about what I got from that experience. Now I would say at least 8 years of our investing, the first half, if you will, we've been, you know, investing for, I've been investing about 16 years. The first half of our investing experience was hands-on. When I say hands-on, our team, it wasn't just me and my husband at the time. We had a team. We eventually built a team. But in essence, you have it in-house. You're landlording, you're hands-on in the sense of you're handling leasing, you're handling tenant screening, applications, onboarding tenants, offboarding tenants, unit turnarounds, maintenance, the whole, you know, A to Z. Okay. And I have to tell you, and obviously working with and You know, with tenants and everything. I really appreciated, not now, not during it, but in hindsight, I really appreciated a lot of the experience. Here's some key things that we really learned during that experience. And I'd say we learned landlording when we not moved, we focused, we were focusing on Philadelphia, like outside of Philadelphia, we had a duplex and then we kind of ventured into New Jersey and we bought 3, 4 units. So we bought 16 units, sorry, 12 units. You can add 12 units. And that's where we learned landlording. And these are small multis. Okay. Now you learn a lot about tenants. You learn about a lot of what they need. You learn a lot of important things you need to put in the lease about trash, about noise, about occupants that shouldn't be there.

Learn about people, right?

You learn about people.

Please.

I'm gonna give a chance obviously to Andresa to disagree with me here in a second, but I'm gonna go through, I'm gonna go through at least each point and I wanna hear your thoughts. So, mm-hmm. Dealing with the tenant issues, I remember a time that we had to have a mediation. It was that bad between tenants. No one was breaking the lease technically, but we had to actually get involved. And that's always the tough part with small multis, right? Because you know, they're all like in this, like it's a 4-unit and you're like living together. This is an older building. The walls are very thin. You have young children running around, you have issues. This is living. People are living there, right? So we had to have like a mediation. So we, you know, we got our skills of how to deal with tenants. Where were we doing too much? Where do we need to do less? And where do they need to just figure it out? Right. And where they, you know, at times they, one time they called the police and that was the right choice at that time. We can't be the saviors of the whole situation. So we learned a lot about where to stretch on how to, how much to get involved and how like less to get involved, if you will. So I think there's value. To really get a chance to get to know what it is to even deal with tenants. So that's my first thing. I have a few. I want to know what your thoughts are. I disagree.

Here's my point, right? I don't want people to think that in order for them to own properties that they must, they have to learn every single thing, right? I am, my style, it's more towards I want to hire somebody that already knows what it is, So I don't pay for my mistakes because I really suck at that part. And I don't want people to think that they're sucking at something and they need to keep doing it until they get better at it. And I don't think that that's what you were saying there, but I just want people to be mindful of it because there is that old saying that say, oh, in order for you to teach your cleaner how to clean a house, you need to know how to clean it. So you got to clean it. I don't want to clean it. I hear you, but I want them to do it.

But in order to hire someone, let's, let's play that out as another thought. If you're going to hire someone to be a property manager, really need to know what to manage them against and what it really means to, for them to deal with tenant issues that you need to, you need to know enough to manage them.

If you don't have a knowledge of that, I don't wanna tell my general contractor, my HVAC, for example, what's the ton, how many tons the HVAC unit should be. I don't wanna tell the electrician.

Agreed. Agreed.

I don't wanna tell them.

No, that's detail.

I received from the property management company what did they believe is the right thing. And I'm not saying like, oh, just don't get informed or educated, right? Absolutely not. Get informed, get educated with books, with supports, And then you hold the property management accountable. But I don't wanna be the thinker, the source of things, if that makes sense.

I hear you. And I, and I think in, in, in hindsight, right, we learned through just trial and error. So, I mean, it took a longer time. I mean, there's no question. I always say you pay for your education one way or the other through literally just making mistakes, or you pay for it more formally through a coach, a mentor, or something to accelerate and cut that learning down. You would've paid for it one way or the other, in my opinion. Sure.

I agree.

For another thought though, or another reason, you know, what are the key things that really matter when you're a landlord and you're managing small multis? You know, at the end of the day, you know, how's your leasing? How do you increase, you know, occupancy? Obviously a 4-unit, you know, 1 unit's vacant, that's tough, especially if you're renovating one. What does even renovations look like? Are you overpaying? Are you underpaying? You know, all those pieces. Pieces of the puzzle really matter. What cost, what things you can do to turn around a unit quickly that are durable. Tenants beat up properties. We know that, right? People, people live where, wherever you live, you're gonna, it's wear and tear. What's wear and tear? What's on them to pay? What's on you to pay? I can tell you like, you know, we at first were just putting in so many rugs of our units and we're like, what are we doing? This costs a lot to literally change. And, and, and we had a tenant was there for a year. We had to replace the damn carpets. That's costly, right? That's very costly to keep doing, especially if you're doing it on 4 units. So where do you need to spend your money? What's the budget? That, that whole business plan in essence. Now, as we're in larger multi, the business plan just accelerated if you're doing 200, 300 units, but there's a business plan with a 4-unit. And I think when you get your, when you're hands-on, you are getting that sense and you're getting that, you're getting really clear on the different ways that you can increase your income or reduce expenses. And yes, you could probably say you could do that if you have a property manager. I think it's a little different though when your team is it, because there's nowhere else to look and you have to figure it out. Again, might take a longer road. It may not be for everyone, but I think, I feel like we are better multifamily syndicators because we are hands-on landlords. I will say that because a lot of people who come to the business, especially in large multi, they don't know real estate. You know, they don't, they never, they were never a landlord. And you could tell as they speak, you could tell as they make decisions. I don't know what it is, but I think there's a piece there. I don't know. I don't know what you would disagree. I'm sure you're gonna say you might disagree. So tell me.

No, I do agree with you. You know, I think he added value. When you look back, you can go through things and say it was a waste of time, or you can go through things and say, I got the lessons there. I pay for my mistake in small scale, and therefore I got the lesson. I'm not making the mistake in a larger scale. So we agree on that point.

All right. We agree on that. Good stuff. Yeah. I mean, and regardless if you're hands-on or not, the, the, the power of building systems, the power of building a team is incredibly important. And by the time we, we, we stopped doing property management hands-on, we, we had a 5-person team. We had a maintenance tech, We had a person who was doing tenant relations, which I was doing. I trained him. We had somebody doing all of our accounting and bookkeeping. We had a leasing agent. I was doing a lot of the leasing early on. I actually liked that, but I like connecting with people and then I was too nice.

What?

I know. Me and Matt were like, just, we let everyone become tenants. So we're like, hold on.

Okay.

This is a business.

You want it?

Sure. But again, I think regardless, I think there's a lot of people out there that just say, you know, just go big, go big or go home. And there is value to getting into something. As you get into a business, you really know, and you're just, you're gonna manage that property manager a little differently because you kind of know the, you know, the business, you know what to ask, you know what not to ask. You know, if they're like, this is taking 3 weeks to turn around a unit and you're like, all you're doing is painting. What? It shouldn't take 3 weeks. Come on. That's ridiculous, right? I mean, I'm not even like a driver like Andresa on timeline and budget, but that's crazy to have somebody painting for 3 weeks, you know, a 900-square-foot apartment. I can do it faster. So again, whether you take my opinion or take my advice and actually become more hands-on, that might not serve you in your life. So I don't mean to say that that's the only way to enter into real estate investing. And that's not what we teach the women in our community, of course. And you need to focus on your genius. But there is something about becoming hands-on. It's an endeavor that you want to commit to. And starting small adds a lot of breadth to what you're doing versus just going big all the time. So that's, that's my two cents on a few key things to think about. And if you want to add anything or disagree with me, I love, I love it.

Let us know who you agree with. Are you Team Liz? Are you Team Andresa? No, just kidding. We love to hear from you. Let us know what you're thinking so we can share with everybody so we can all grow together. Thanks so much for listening. If you enjoyed this podcast and want to receive updates on our next interviews, go to our website, therealestateinvestor.com. There you can subscribe to our show, become part of our investor community, and get updates on upcoming episodes.

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Ciao.