{Webinar} – How To Navigate Buying and Managing Rental Properties


How you find, evaluate, and manage potential investment properties during the coming market disruption will determine if you’ll succeed or flop as a landlord. Our speakers guide you toward the best rental properties and how to manage them. Evergreen Investment clients see an average of 58.11% growth in their rental income since their purchase. We will reveal our secrets and tips for landlords. You will learn how to purchase the best rental properties and manage those properties to achieve the highest return possible.


You will learn about:
  • Determining the best location to purchase
  • How to evaluate a property – calculating the expected return and cash flow a property will provide
  • Financing your rental property
  • The most important factors to consider when managing a rental property
  • A new easy property search solution to finding the best rental properties


Speaker 1: 00:00:06 I think I have to start the broadcast on my, Cause I started when I came in.

Speaker 2: 00:00:10 Oh, ok.

Speaker 3: 00:00:11 Go ahead and go ahead and start it then please. All right. Hello, Can Laverna, rj can you let me know if you can see my screen?

Speaker 2: 00:00:33 Yes, I can.

Speaker 3: 00:00:35 Okay, perfect. Perfect. All right, let’s get started because it is two o’clock and we want to stay true to our timing. So hello everybody. Thank you for joining us today. My name is Krista Westfall and I am the marketing director for Evergreen Investments. We are super excited to continue this webinar journey today where we’re helping homeowners and investors uncover ways to make money, to save money, and to invest money in residential real estate. As you know, home ownership is the number one way to grow wealth in America. And our goal with these regular webinars is to educate, to inform, and to guide you toward wealth generation strategies that are unique to homeowners. Our topic today, how to navigate buying and managing rental properties.

00:01:22 Today you’ll hear from Evergreen Investments leadership. We have Laverne Cox, CEO and co-founder in RJ Cox, managing director and cofounder. Laverne has been an entrepreneur since childhood from the family business to starting her own enterprises all the way to business development consulting. She is a season expert in guiding homeowners and investors to success in finance, real estate, business formation, and s strategical operational management. RJ has 25 years experience in real estate, property management, brokerage and asset management. He has demonstrated a successful track record in residential and commercial transactions, acquisitions, leasing and investment analysis for individual, corporate and institutional clients. So you are in good hands today. With that, we have an exciting agenda. First, we’re going to talk about the best practices before buying a rental property, determining the location, calculating the potential return the cash flow that a property will provide, an info on financing.

00:02:28 Then I’ll shift gears to the best practices for after you purchase a rental property, the legal and tax registrations, scheduling, management, and overall property management. Last but not least, we’re going to introduce you to a new, very easy to use property search solution that we’ve developed to help homeowners and investors find the best deals out there. If you have any questions, feel free to drop them in the chat and we’ll try to get to them, but if we don’t, I’ll make sure that we follow up with you after the webinar. So let’s start at the beginning and talk about what you should do before buying a rental property. We’re gonna fous on three things today in determining the location, determining the roi, the return on your investment for a particular property, and the financing. Rj, talk to our landlords, what are the most important factors when determining where to purchase a property to rent out?

Speaker 2: 00:03:22 Fantastic question, Krista. So the first thing that you wanna take a look at is how’s the area doing? You wanna make sure that you’re buying in the area where you can get your rent and keep your rent. Some tenants stay in a property for decades, some move in a year or two, and you need to know where your next tnant could be coming from if the first one vacates. So one thing that most investors look at is a job, the population trends, making sure that they’re in areas where there’s growth. You don’t wanna buy in a town where the factories are all closing because once all of those guys leave town and turn off the lights, you’ve got no one else to help you pay those bills. Second is a percentage of the owner occupied households. The more potential people that are there to rent your house while they’re looking to buy their first home or they’re working in transient area, they’re better for you because you’ve got a product that can meet that need.

00:04:26 Second, the third thing that you wanna take a look at is how values are changing. You know, buying at the top of the bubble is tough for your cash flow because you’ve gotta un rent at the top to make sure that you can cover your expenses. So being able to know what, where you can buy and how much you can spnd on each property based on your cash flow and expenses is gonna be key to holding that investment as a successful investment. And then lastly, you’re taking a look at your potential for profitability and scalability. Can you buy more properties in that area? So you’ve got a portfolio in one section of town that you can get to easily? Will you be able to make some money right now while there’s a big event in town? But then if it’s vacant for the rest of the year, how’s the neighborhood looking?

00:05:12 Is that the only good house on the block? Is it the ugliest house In a great block? Know what type of assets you’re buying and what you’re gonna do to make it appealing to your potential tenants and you’ve got the beginnings of a winning formula. And then lastly, death and taxes are the only two inevitable parts of life. Property taxes are a big chunk of your expenses and it’s the largest one. In many instances, HOA fees tend to be the second. So knowing where you’re buying and what that rate is gonna be. So every year you know that just as you gotta pay your mortgage, you’ve gotta pay the tax man will help you know how to budget your income and expenses accordingly for your rental property.

Speaker 3: 00:05:56 You know, RJ one thing that is really standing out to me here is the sheer amount of data that is important to research to determine the best location to purchase. So is this something that a landlord can do on their own or do they need some extra support from an advisor?

Speaker 2: 00:06:15 It’s always good to get some advisement from someone who’s in the field and knows exactly what they’re looking at on a day-to-day basis. Just like you wouldn’t try to sit there and perform brain surgery in itself, it’s good to get an expert to do those things that are just tough for you to do. However, there are a lot of tools and we’ve developed a couple that can help you if you were interested in doing it yourself or just getting a rough estimate on whether or not something you’re looking at is a good potential investment.

Speaker 3: 00:06:45 Nice. When talking about location, what are some of the things that a landlord needs to consider when looking at a neighborhood?

Speaker 2: 00:06:56 So, so you’ve got a lot of data that you can find from the Bureau of Labor statistics, census data online portals from realtor.com to Zillow to wherever your favorite website for information lies. You can get a lot of this information piecemeal from one site to another, or you can just ask someone at Evergreen Investments to put together a market report package for you and you’ll have everything in one shot and you can read it in piece by piece or all at once and you’ll have everything you need to know about the area and the property you’re looking to buy,

Speaker 3: 00:07:32 Right? Which is so important for, you know, a real estate, estate investor and a landlord. Knowing things like the school ratings and demographic and psychographic reports are, are gonna help determine who that renter is and really help them to succeed as a landlord and find that renter. So moving on from location, let’s talk a little bit about determining the roi, the cash flow that a property can provide. And rather than bore you all today with investing jargon and what’s important to calculate, we’re actually gonna show you how we would calculate the potential return or property can provide. So RJ has a property ready that he is going to evaluate right in front of you, rj I’m gonna stop sharing my screen right now so you can share yours, show him how it’s done.

Speaker 2: 00:08:18 All right, sounds great. Let me share my screen.

00:08:36 All right, so as we’re walking through this sample property here, this was an investor deal that we had done recently and we are gonna take a look at it in two scenarios. So one where you’re purchasing, purchasing the property, own an occupant, getting a mortgage, and then somewhere down the line your plans change and you decide, you know what, let’s rent it out. So the numbers are gonna look initially like an owner occupant type of deal and then we’re gonna talk about the rental numbers and then you’re gonna look at it from a different perspective. So I’m gonna go rather quickly through it, but I’m gonna talk through each line. So let’s say you were able to purchase a property for $321,000, you put 20% down and then closing costs typically range from one to 2% depending on your lender. 1% is typically for cash or use a little bit more if you’re lending, but we kept it conservative at 1%.

00:09:38 And let’s say that you had $10,000 in make ready costs, you had to buy new appliances, do some paint and carpet miscellaneous things to get it in shape forward to be moving ready. So now you’ve got your down payment. So that gives you a little bit of equity. You’ve got a remaining loan balance around 256,000. So now let’s say that you’re expecting appreciation of slow down from the rapid fire pace that has been going for the last couple of years and you go very conservative and just say 1% appreciation today, if you had to go and sell the property within the next year, you can expect to net somewhere in the area around $208,000 because you got your purchase price, which will get to show a little bit further down the screen minus paying off your mortgage minus commissions and holding costs. So then you know what you’re walking away with after everyone gets paid.

00:10:36 But let’s just say you don’t need to sell today and you’re currently paying your mortgage rate. Yes, right now mortgage rates are in the sixties and sevens no longer are we seeing four and a half. But we want to put something as a blend between what it was over the summer and what we are now. Let’s just say you’ve got 20 years left on your mortgage. So you’ve got mortgage payment around $1,600 and this effective interest rate just takes into account interest charges. So before I go down to the sell expense, I’m gonna go up to the Holden rent part briefly. So let’s say you’ve got a great job transfer and you’re leaving town and you want to keep the property rented out. You look online and you say, Okay, based on what I’ve seen on a few different sites, I can rent this for about $3,200 easily.

00:11:28 I don’t expect any other monthly income from say renting out the basement or storage in the backyard or laundry facilities, anything like that that could add to that bottom line. So we left it a zero factoring in a benchmark 5% vacancy rate is gonna take some time to get the tenant in place, or you may have a tenant that stays for a couple of years leaves and then it takes you a month or two to rent it up again. So we budget that in to say that you’re not gonna get every penny out of this monthly rent. And you do expect though that rent will increase 2%. So all of this is bundled into the formula. Of course you can change these as you see fit for yourself. Some of these like benchmarks have made it to be easy with the evaluation. Your budget, 10% for management is towards the high side.

00:12:20  You can look between six to 10% in most markets for management fee based on the services you’re looking to have and the provider you’re speaking to. But let’s just say you went full service. Ask the company to include leasing and everything in one package and you’re paying 10% if you get more at the end of the day, great, but there’s budget 10% on the cost budget for repairs and maintenance because as long as you’ve got real estate, you’re gonna have something that needs to be taken care of. So you might as well put something aside to take care of it before the tenant leaves. And now you’ve got zero event because you didn’t make a couple of a hundred dollars appear for a AC unit that wasn’t working optimally or a furnace that goes out in the middle of winter Property taxes. This is gonna change county by county.

00:13:07 However, for this property in Cherokee County, the median property tax rate is 0.82% of the home value. Other jurisdictions like Cook County, Illinois, home county of Chicago has the highest property tax rate in the country at the moment. So you’re gonna have different values based on where you are in the United States. Insurance is also gonna be different based on your neighborhood. These can always change and your insurance provider will help give you a estimate that’s truer. Once again, we just put a benchmark here to start. If you had a hoa, you’re gonna put those across here to add to those expenses. If you are covering utilities for some reason, a older duplex or multifamily where everything is still master metered and so the landlord’s paying those utilities or billing back the tenants, you wanna put those in there so you know those costs. And then you expect even as you’re increasing rent 2% your annual increases, ie. Property taxes are gonna go up 2%. The HOA fees may go up a little bit, you may have a little bit more of it appear as a maintenance. So you just wanna budget accordingly on both ends. And then of course, income taxes, you’re making this money, but Uncle Sam wants their piece. There are different ways for businesses to take advantage of lower tax rates. However, for the sake of this example, we kept it as if you were buying this in your own personal name and you’re still paying income taxes on an individual basis.

00:14:43 So if you expect it to sell, you can look at at for this property about $511,000 to sell it for. And then this appreciation rate would take into account if you were looking to hold it for the remaining 20 years. You cost to sell commissions, closing costs, maybe potential buyer concessions are included there. And then capital gains tax, if you’re budgeting for that expense as an owner occupant, there are ways that you can avoid some of that. But however we budget worst case scenario that you’ve gotta pay Uncle Sam on the income and on the capital gains. And if you don’t then great, that’s more money in your pocket. But here we just have the management fees broken out, repairs and maintenance as a dollar item along with property taxes, insurance, and if there were any HOA or utilities. So this way you’ve got a great way to break down line item by line item what it would look like if you were to rent or if you were to sell.

00:15:46 This is something that’s available for any client or prospect that interested to use it. We can offer this to you at no charge. However, we also do have another tool that gives a simpler version in a more graphical format from folks that like to see a little simpler presentation. I’ll show you our market report. So looking at this property again as well, you see where you could potentially sell it to an owner occupant at the five 11 price. But if you had a property that needed a lot of repairs and it was better suited for an investor that was potentially looking to renovate it and resell it, you may get an offer in this range. This section gives the details on the property, five beds, four baths when it was built square footage. And then you’ve got your lovely picture going into a comparison.

00:16:45 We’ve got the traditional resale option on top, but if you went to get an idea of what it would look like if you were to seek an investor offer versus a tra traditional rental or a short-term rental, we break out those three options for you. So you can see in multiple scenarios where you may have something that makes the most sense for you. So we move up just a little bit. So for an investor offer, after you took into account what they would budget to make the property ready for their final use for a rental or resale, you’ve got that number there, which is potentially about $10 a square foot on average. Every property’s gonna be different, but once again it’s an average here. Resale closing costs commissions, buy your concessions, anything that is gonna come out of your pocket at the end, not including mortgage because we don’t know at any given time if you’ve got a mortgage on the property.

00:17:44 So this is a quicker analysis compared to the first one we showed. And then management fees, while you’re waiting for this fire to close, you’ve got holding costs that you’ve got to consider your mortgage payments and taxes, you’re covering any ongoing maintenance and maintaining your lawn. So you’ve got a budget for those costs. While you’re waiting for closing day match, check to clear so you can estimate a sales price right around here at the 423,000 mark. If you were looking for an investor type offer, if you said, you know, I like both of those numbers, but I’m thinking renting is gonna be where I’m looking, but I can’t decide if I wanna do a traditional type of rental or short term rental. Could you walk me through what those look like? So very simply put, I’m going to scroll down just a little so we can see the full scenario here.

00:18:38 So everyone’s gonna have your gross income, you’ve got your monthly rent rate or 3,200, which breaks out to an annualized rate here around 38,000. On the short-term rental. You’ve got your daily rate and your occupancy percentage. Not every short-term rental is rented year round 100% of the time and every property has an area and a neighborhood percentage. So you can budget accordingly for your annual estimate of revenue on both sides. The expense ratio is part of the challenge when it comes to analyzing, analyzing or evaluating both options. A traditional rental in the landlord business, you’re providing a space for people to occupy long term. So your expenses are mainly gonna be focused on taxes and maintenance and making sure that you maintain a property that your tenant wants to keep paying money for. With a short-term rental, however, your operating expense goes up significantly because you’re more in the lodging business.

00:19:44 So you’ve got taxes that are a little bit different between landlord business and lodging industry expenses and deductions that you can write off on that basis. But then you also have ongoing expenses like changing sheets more often because every guest is looking for a fresh, clean experience to those bottles of water that you find in a fridge every time you go into a new place to stay or those appliances that are on the countertop to make you feel like you’re walking into a place that feels like home. All of those different things change your costs and so your operating expenses are going to be a little bit high on the short-term side. Now that being said, you take a look at the net operating income in both scenarios and you can make a decision as to which one you would prefer, but at least you’ve got the numbers in hand to sit there and make an educated decision and figure out which way you would like to proceed.

00:20:43 So when you’re ready to talk to an advisor, you can sit there and say, I’ve looked at my options, I’ve decided which way I would like to go. Let’s go with this pursuit. Or I would love to talk to somebody a little bit more about these options and learn a little bit more about which option makes the best sense for me. But at least you’ve got that data in front of you to make an educated decision. And then of course on the last side, we give a couple of tips on if you’re considering selling, you’ve got some keys to success, and if renting seems preferable, then you’ve got some keys to also consider some principles that’ll help you win long term. And at the end of the day, a lot of it comes down to some of the same benchmarks. You know, you present and you price your property well, you’re gonna succeed whether you’re looking to resale or to rent.

00:21:35 Everybody’s looking for a place that they can call home. So if it looks good and it’s at a price that’s attainable, you’re gonna have a lot of interest and you’re gonna have a lot of potential applicants that you can choose from. Choosing your agent wisely is going to be your second key. Just because someone is next door to you does not always mean that they’re the most knowledgeable or the best fit for your strategy. Sure, term rentals are a great opportunity and have become a lot more popular in the recent years. However, as we mentioned, the expenses can add up whether selling or renting repairs and updates do not always guarantee higher profits. So speaking to an advisor about which types of updates give you more perspective, higher return on that investment will be key before you put out that money and then find out that you are not going to get that money back. However, even in a rental, you do wanna pay attention to making a presentable property. Those renovations and updates do matter because everyone wants to feel like they’re in something that reflects their lifestyle and their willingness to live here properly. So skimping on certain things makes people wonder, what else am I missing? So thank you Chris for the opportunity to walk through some of this and discuss how you can look at a property that you’re currently looking to buy or one that you own and see what your options are at this point in time.

Speaker 3: 00:23:07 Awesome. So guys, this is something we do every day for our clients. We definitely make sure that every dollar invested will have a robust return attached. So if anyone is interested in getting a property evaluated, just drop a line in the chat or respond to the follow up email at, mention us on social media, we’ll get back to you. So moving on. Can you guys see my screen again?

Speaker 2: 00:23:30 Yes we

Speaker 3: 00:23:31 Can. Awesome. Moving on. We’ve determined the location, we have the property with the solid forecasted cash flow. Let’s talk financing. A lot of us don’t have a ton of cash laying around just to buy an investment property. So rj, can you talk me through some of my options?

Speaker 2: 00:23:49 Absolutely. So starting with the example that we just gave before, most folks are gonna start with a conventional bank loan. You’re gonna go to your local credit union or your favorite bank and you’re going to get a standard mortgage around 20% down payment, sometimes a little less. And you’re going to sit there and finance that purchase and typically look to use the income from your day-to-day work to pay for that loan over time. However, if you’re buying an investment property, there are a few different other options that you can consider. So hard money loans are something that you hear about quite a bit where those lenders typically are not asking for your W two s and your credit score, but they’re looking at the asset to determine whether or not they’re going to make a loan and how much of a loan they’re gonna make.

00:24:43 They’re not gonna be as aggressive as your local credit union or bank loan at 65 or maybe 70% of the after repair value, but it’s more of an asset type loan versus a personal credit and qualification loan. So if you find a great investment property and the numbers can work out for you to take that loan, that could be an option. The rate will be higher, the payments of course are gonna be higher, but there’s another option if for some reason a conventional loan doesn’t fit, you also have private lenders, folks that are sitting on additional cash that they would rather not put in the stock market or leaving a savings account that are interested in investing in real estate but not on an active basis. Whereas I don’t wanna get my hands dirty, fixing toilets, talking to tenants, doing all this stuff, but I’ll invest in a business opportunity and get a return on that investment.

00:25:41 So there may not be as high of an interest rate as your hard money loan, maybe not as sweet of a rate as your conventional money, but there are a nice bridge in between. And because those terms are more negotiable because you’re dealing person to person versus with a institutional bank or a hard money lender, you may be able to find a set of terms that fit your criteria well and enable you to get into a deal. And then lastly, you’ve got pulling out equity from the properties that you do own. If you bought a property some years ago and you’re looking at resale values at a significantly increased from where you purchased that you may have an opportunity to pull out some equity at a favorable rate and use that to help buy an investment property. And then with that it’s a blend between you being the private money lender, borrowing from yourself and using your bank to help get the best rate in terms that you can afford to get into another deal. So you’ve got a few different ways to find the money to make it work. Every scenario is gonna be different, but you don’t have to always just lean to one example to be the only way to get it done.

Speaker 3: 00:26:59 And and how, how does an investor determine investor, homeowner, landlord, or whoever determine which one of these loan options is best for them?

Speaker 2: 00:27:08 Everything starts in my, I always say it all starts with a conversation. Sure. You start talking to your local credit union or lender and you see if they’re lending cuz some banks are still lending with some higher your interest rates. Some have paused. So get an idea of where your options are. You know, you don’t have to do an official application and a hard credit poll to just get an idea on whom would be interested in working with you. You go in there as an informed consumer and you say, Hey, this is my situation, this is my financial situation personally. This is what I’m looking at for a property. This is what I have in reserves. Would I be a good client for you? And they can, a good loan officer can talk to you and say, Okay, that’s something that we can discuss and here’s some general parameters because they know that an informed investor is not gonna sit there and throw their application around everywhere and get a bunch of hard credit polls that’s gonna decrease their ability to get the best rates from their preferred finance and channels.

Speaker 3: 00:28:08 Great info, rj, thank you for guiding us through the best practices for before you purchase a rental property. Now let’s move on to hap what happens after you purchase and talk about the management of the rental property. Laverne, there are three topics we wanna talk about today under managing rental prop properties, topics that I know that you are an authority on. So those are the legal and tax registrations, scheduled management and overall property management. Laverne, can you talk us through some of the legal and tax registrations our landlord need to know about?

Speaker 1: 00:28:42 Absolutely. number one, when you begin a rental business, whether it is a, a long-term landlord or a short-term rental business, it is just that it’s a business. And for many homeowners that become landlords, the transition oftentimes looks legally and financially exactly like their pre-landlord state, which means number one asset protection is removed. So if something was to occur on your property or premises with your tenant or with someone even moving across the parameters of your, your property or maybe a family member or a friend somehow was injured, not even directly but passively in based on some of your personal activities driving your car et cetera, and a lawsuit was to be pursued, the assets that you are creating in your rental business will be one of those areas that they will seek to recoup some of their losses in an external lawsuit for, it’s basically called direct and indirect protection that you need to have when you begin a business.

00:30:13 So the direct protection is the legal protection, the limited liability that you ultimately will obtain by having a legal structure. So for most people that entertain the business of becoming a landlord, whether in long-term or short-term rental practices, they often are told to first put their property under an entity. And the entity of choice that most people have heard of and have seen online is often stated that you know, the LSE is the best option. The truth of the matter is it really does depend on your financing. It does depend on how much equity you hold in the asset. It does depend on quite a few factors that really you really should speak with a tax professional about to determine the best outcome for long-term savings and long-term asset protection. However, I’m here to give you just a few tips so that you can do some basic startup registration on your own independently and then be able to manage it more long-term.

00:31:24 First of all, you should know that having a legal entity to manage the cash flow of your assets is one of those expenses that RJ was talking about before. It is separate from you that legal entity is either an S corp but LLC or some partnership that you have created to manage the rental activity. In under tax provisions, there are two types of classifications for rental activity. So one is called rental income or rental income, and the second is called trade or business income, namely under a short-term rental. The activity that is considered hospitality has different tax provisions and it does, it does not get the same beneficial treatment as a long-term rental, especially when it comes to d depreciation of the asset. So when you are looking at ways to reduce that return or increase your return on investment and reduce your expenses, similar to the spreadsheet that RJ shared, knowing what your legal and tax requirements are, is a primary state to managing your ultimate outcomes.

00:32:46  In light of that, one of the things that most homeowners turned rental landlords needs to bear in mind is that covering your cost for example i i e $800 a month is the shortfall that you may have in managing your asset. And that is what you seek from a rental tenant. What oftentimes is covering the cost is not taking into consideration the aspect of the fact that this is a business. And there is also business income cost as well, regardless of whether you set up a legal entity or not. So the benefit of having a legal structure to manage this business is number one, you get asset protection which is limited liability, meaning any business activities that occur and income that in is incurred or generated from this within this rental will only be limited to the liability of what you’ve incurred during your rental business.

00:33:58  There no, there’s no outside external activities that can come and jeopardize that income either from personal or familial relationships. So the business income is now protected under that legal entity. And then secondly, the tax opportunity is that if you structure the relationship of how you own moving forward in the most optimal way, you can reduce your annual cost of taxes anywhere from 15 to 30% year over a year just by choosing the structure properly to register your entity as, and then secondly, working with a tax professional to ensure that you are taking the necessary monthly and quarterly steps to record your expenses and the requirements to offset some of the income that is being generated from this business. So those are some just key points. Just bear in mind if you work with a professional, they will definitely go into much more detail with you, but it’s definitely helpful having had that ROI conversation that RJ shared earlier, to bear in mind that there are more than just meeting that their necessity of cash flow needs to bear in mind when owning and managing a rental

Speaker 3: 00:35:33 Awesome info. It’s so important to protect yourself as you spoke about. So we’re going to move on to scheduled management. Having a plan or a schedule is so important for business owners and that’s what you are as a landlord. So Laverne, talk to us about the different areas of property management that a landlord should and can schedule and plan for ahead of time.

Speaker 1: 00:35:59 Number one, I would suggest that every landlord creates what is commonly called in commercial real estate and operations plan. And one of the things that we’ve created internally here at Evergreen Investments and have offered to landlords is a landlord calendar. This landlord calendar does bear in mind the asset management, meaning how do you manage the property year over year? What are the things that you need to bear in mind in terms of units maintenance as well as tenant correspondence as well as tax and legal implications. Because this is a business, there is also a legal calendar that you need to bear in my under your operations plan or your landlord scheduled management duties. Part of that is the contracts. Any vendors that you may have your tenant lease for example, is, would come under that legal calendar that you should be watching for making sure that the dates and responsibilities that you have to your tenant as well as what your tenant has to you as a landlord are being maintained in accordance to that contract.

00:37:13  Second aspect of this, your vendor contracts, if there’s a property management company, just having regular check-ins to determine if they are providing the quality service that you ultimately sought when you hired them, and any additional vendors that are providing support throughout the year, just ensuring that if there are contracts there that those get reviewed on a scheduled basis and then that you are reviewing on a regular cadence, I would suggest monthly your time and expense tracking from those legal requirements of maintaining those relationships. Third calendar is your tax calendar. If you are generating a portfolio, there are sometimes tax benefits of not just waiting for your annual corporate filing but having quarterly filings that you can’t learn about by working with a tax accountant or a tax specialist. There’s also vendor and employee tax compliance. So if you’re paying vendors from your business at the end of the year, you have your 10 90 nines.

00:38:21 However, if you have employees associated with the business, then you have your W two s that need to go out at the end of the year. But of course, on a regular cadence, moving towards the W2 is just the tax compliance of paying state and local taxes for the employees that are managing your rental properties. Finally, sales tax filing every revenue and any jurisdiction does associate certain aspects of the monies generated specifically from short-term rental businesses as connected to sales tax. And so sales tax is something that you now need to become a, be better versed on so that you can better manage the monthly or quarterly requirements to ensure that the filing is done on time and you don’t be, you know, become at risk for penalties. So those are the three primary areas that a landlord should consider when considering his operations plan overall, but not only for an annual review, but on a regular cadence for just day-to-day. And I would say overall check-ins then on how the asset is performing because if you do this regularly, you’ll be able to check and check in on the little points out those little foxes that spoil the vine that ultimately reduces your ultimate roi, which is the point of beginning the rental business, which is to obtain the rental income outcomes that you had desired. So this landlord calendar checks and verifies that you are moving and tracking towards success in the financial independence in this rental business.

Speaker 3: 00:40:15 Yeah, so landlords, attendees, friends, you are in luck because we will be sending you a special freebie. We’re gonna be sending you our landlord calendar. It is the perfect time of year to receive this as we are closing out 2022. You can start 2023 on a really good foot with this calendar. And so check your email inboxes because we’ll be sending it to you after, along with the recording of this webinar. So let’s now move on to talk about the general management of the rental property itself. We’re going to break this down into two categories. One, what needs to be done from the landlord’s perspective, and two, how to get it done. So let’s start with the what. There are three important pieces here we’re going to talk about tenants, finances, and property upkeep is without tenants, we don’t make money. So Laverne, talk to us a bit about how you can find the best tenants in screening them and leasing in any important legal matters that you can think of.

Speaker 1: 00:41:14 I love this part. I love people businesses because I do like connecting with my audience. I like connecting and serving. So number one, finding the right tenant is directly linked to all of those metrics that RJ shared earlier, which are what makes your particular asset and your service that you’re providing specifically beneficial to your ideal customer. So your ideal customer may be a long-term tenant or a short-term renter that is specifically looking for some of  either attraction school ratings and or amenities that your asset has a direct connection to. Second aspect of ensuring that you find someone that is looking for what you provide is recognizing that you should also have some qualifications as to what you and who you wish to rent to. So regardless of the rental business, you really should have some parameters and some guidelines as to how to have a good landlord-tenant relationship long-term.

00:42:18 So finding someone that fits that, that sweet spot is really about making sure that you’ve described outlines and conveyed that communication in both of your marketing as well as in your contracts. So part of the screening process is to make sure that you’ve shared and you’ve communicated exactly what the guidelines are for working and receiving service from you as either a long-term or a short-term rental landlord. And then finally making sure that when someone signs a lease that they understand those guidelines are going to be checked on a regular cadence so that both parties recognize the responsibilities as well as the communication that’s necessary to have a fruit for relationship. Finally, laws every state has tenants laws that are directly related to how you are allowed to manage those tenant relationships. So if you are within many jurisdictions in America that have a high demand or have high occupancies for short-term rentals, there are some recent laws that have come up over the past two to three years that have limited the number of properties that you can own, For example under the short term rental business.

00:43:42 A secondary aspect of laws that a landlord needs to be aware of is occupancy rights and understanding what the tenant’s occupancy rights are and ensuring that you understand how that differs from jurisdiction to jurisdiction is definitely something you can work with a licensed professional to provide you some insights on so that both parties, both you and your tenant understand what the requirements are by law to ensure that this service is of ultimate benefit to both parties in managing the long term journey of the business. So that’s number one. Or I would say that’s the number one spot then to begin understanding this rental journey of management of the property unit.

Speaker 3: 00:44:32 Good stuff. So that’s where it starts getting your tenant, but now let’s move on to some important finance info. How to determine rental rates, rent collection. You’ve already talked a bit about taxes and expenses, but give us the goods. The other stuff we need to know as landlords on how to handle financing finances rather.

Speaker 1: 00:44:52 So your rental rates are going to really be determined by the market standards and the affordability of what that audience can afford long term. So an example in short term, the short-term rental business is there are high peak times for occupancy on a unit and those are directly related to the size of the unit, the access and connection to the location of where a majority of the tenants or renters are seeking to be. And as a result of that, those rental rates will vacillate throughout the year. Having someone that can provide you with the occupancy rates, not only for your unit as it is today, but in as it moves based on the demand is vital. For long-term landlords, it may be a little bit different in that with the long-term landlord, the renter rate may not move as quickly, but it does move.

00:45:58 So although you may have a contract or a lease in place that says that if there’s an expectation of maybe 2%, if the cost or the exposure that you’re getting from the use of the asset is becoming jeopardized or there’s opportunities for increasing that based on demand and the lack of supply of that particular type of unit, those understanding of the rental rate can inform you that you maybe a 2% increase may not be within a normal range or the normal benchmark that RJ had mentioned before. So understanding the market activity helps, mm-hmm. <Affirmative>. And then finally, when it comes to collecting rent, you really have to understand we all about the focus of the business is to generate revenue every business. And if you’re collecting the rental payment in a fashion that makes it difficult for someone to work with you, it’s going to make it difficult for you to generate a successful return.

00:47:04 And so we wanna make sure that when we select the method for collecting rents, that it is easy and it’s simple for both the tenant and the landlord to communicate with one another and to confirm the communication during the rent collection process. Finally, the filing of taxes that they made mentioned before it’s vitally important, getting a calendar and a cadence in place will make your life so much simpler. And then finally, the reporting not reporting of expenses, but reporting of income that is generated from either the sales on your short-term rental or the the aspects of your income annually from your long landlord rental business is something that you really need to get some assistance with and a great bookkeeper. And it can cost you anywhere between a few hundred $75 to a few hundred dollars depending on the volume of business that you have.

00:48:08 But I would suggest if you are doing a really sizable portfolio the accounting software that’s necessary to manage the rental is anywhere between 30 to about $50 a month. Well worth it. We can actually recommend some even cheaper options if that’s necessary. And then the bookkeepers or the accountants to connect you to that will help to manage some of this so that this is not a, a headache every single day or month for you can really be advantageous. Again, with our system, we can connect you with those types of service providers that can limit your exposure and financially provide you a way to kind of calculate your expenses for the management of the rental units overall, especially when it comes to the professional service providers that help to make this a profitable and sweat list income generating opportunity

Speaker 3: 00:49:18 Sweat list. I like that. I like that we are learning so much today. So we are running outta time, but we wanna make sure we get to these final few points. So let’s move on to the third point. Property up. Keep Laverne, talk to us a little bit about maintaining your rental property and the best practices.

Speaker 1: 00:49:36 Okay, this file, I’m gonna actually back over to RJ on the property upkeep because he definitely is much more well versed here. So all I can say is that this is vital and it’s also included inside the calendar so that RJ can possibly give you some more pointers to bear in line.

Speaker 2: 00:49:56 All right, I will say this, I am maintenance is cheaper than repair. And so if you’re regularly maintaining your property and catching the little things before they become big expenses, you’re gonna spend hundreds and save thousands. Now that all being said, there’s a seasonality to these things and that’s part of why there’s a landlord calendar. You know, as well as I do, the worst time to call for an HVAC technician is in the middle of summer. They’re busy fixing everyone else’s ac and if they gotta get to you urgently, you’re going to pay for the service. However, if you were to engage in an annual service contract and they were to come out, say in the early spring to check your system, or in the fall outside of those peak seasons, you’ll get the same quality service at a lower rate and you’ll still get that annual maintenance on those types of things.

00:50:47 Same thing with lawn care and other major systems throughout your house. Knowing when to buy and how to save is going to be key to keeping most of that money that you’re getting in terms of your rental inspections. If you catch something early, once again, you will save a bundle. There’s a lot of folks that will just look at a broken window or a leaky faucet and just turn a blind eye to it because it doesn’t affect their bottom line until all of a sudden you come back in a month or two and now you’ve got mold coming into your living room because that little cracked window was leaking rain in during the last couple of storms, or that roof leak that wasn’t a big deal, that was just dripping in the garage has now taken a whole wall out. Or if you’re in Georgia termites, it is not a matter of if you’re going to get them, but when, and so being mindful of preventive maintenance will save you literally thousands of dollars by just taking care of the little things.

00:51:50 Now that being said, emergencies happen, things occur, but knowing who to call and how quickly they can get out there will stop a leaky faucet or a busted toilet from flooding out your entire first floor as it rains inside your rental property. And if you’re gonna hire your personnel, the same standards that you hold your tenants and vendors to, you’re gonna wanna maintain their same standard with those folks that are W2 s you wanna make sure that everybody understands what makes for a good job, what makes for showing up on time every time customer service, because just because the tenant likes the property doesn’t mean that they’re gonna stay there every time they call in the office or have a technician come to their house, they’re getting disgusting service. At some point, that negative reflection is going to impact your ability to maintain that cash flow because people are going to go, Well, the house is fine, but every time someone shows up, I wish they would never show up and now they leave to go somewhere else. So all of these things come into play when it, you are thinking not only on the upkeep, but making sure that you keep your cash flowing.

Speaker 3: 00:53:03 RJ thank you so much for making the hair stand on my arms when you said termite. Ah, <laugh>, all of that sounds like a lot of work though. So I can one of you talk to me a little bit about how landlords can effectively manage their rental properties.

Speaker 1: 00:53:23 Well, there is the old adage that, you know, we can do everything ourselves, but it’s not wise to do so. Mm-Hmm. <affirmative> the DIY landlord is someone that I would say is someone who selects or wisely selects to do this because he’s running the rental properties as part of a real estate business. So it’s not just one asset that he has, but a portfolio. And he’s engaged in the, the, the business of doing real estate in different capacities. So if you’re not engaged long term and you’re just starting, I would suggest not becoming a DIY type landlord because a DIY type landlord is really someone who tries to manage every aspect of what we’ve just shared by themselves with maybe the support of one or two people if even that many. So they are the people that get those calls and say you have to unlock the toilet, so to speak in the middle of the night.

00:54:30 It is something that requires someone who is seasoned and someone who has a dedicated time slot just like a nine to five for serving their tenants at their beck and call. However, there is a secondary option, which is a hybrid, which is the a la carte. And so what a la carte option really does provide is effectively the ability for the landlords to have that oversight, which we all want. We want the control. But at the end of the day, it does give them the support, it gives them the support to know that there are areas where they may not be specialists, they can provide a direct connector to their tenant to service those particular needs on a regular cadence or at emergencies just in case they are not available. So a service provider generally provides you a list of either ongoing services or interim services like what RJ mentioned on the maintenance calendar component of the landlord journey, where that maintenance is something that you can plan for the HVAC unit over the course of a year.

00:55:48  And it, you already know the cost before the beginning of the year. Sometimes you can actually prepay it at the beginning at the end of the year. So you have some tax savings going into or ending the one period based on the amount of income that you’ve generated. Another, and the most important one for what we recommend for people that are utilizing landlord or real estate as a wealth generation tool or an asset is to have a full-time property manager. And a full-time property manager is something that can run the gamut from managing all of those requirements on your behalf. Everything from your legal to your tax to your vendor and your property. Management day-to-day needs for the rental business that you are actively in. So this is long-term landlords as well as your short-term rental business.

00:56:46 They can provide connections and vendor management oversight as well as the payments and the upkeep and the communication just so that at the end of every period, whether it’s monthly, weekly, you decide based on your contract with your property management company that you are just receiving a check, which is the profits from the business. And you’ll know going in exactly what your costs are with your full-time property manager and the insights or the needs that may occur over time that are outside the scope of what may be normal is something that has a set process that has been agreed upon in writing that you and the property managing company has disclosed. This is how emergencies should be handled. This is where the reserves for these emergencies can come from. So really at the end of the day, there is no need for keeping you up at night if something should come up or an unplanned circumstance may arise that will disturb the unit itself should not disturb now the landlord. So those are some of the three primary ways to manage a rental property. I’m certain that there’s a hybrid of a hybrid on all of these, but at the core, these are really the primary ways that most, if not all landlords manage their rental properties.

Speaker 3: 00:58:16 And so guys, there are a lot of options and opportunities and information and wisdom out there for landlords and Evergreen Investments is really an excellent partner for landlords who are at any stage of their journey, even if you haven’t started your journey. So we have just a couple of minutes left, so we want to very briefly show you our new off-market property search. We saw the need to better connect our sellers with buyers and felt like this was a really strong solution to do so. So the daily dose of deals, the daily dose of deals is our off market property search. You will find hundreds of rare investment opportunity deals that you’re not gonna be able to find on the MLS. It’s customizable. So you can create a search that’s unique to you and only shown properties that meet your criteria. For now, we have the ability to search by beds, baths, location, and price.

00:59:17 These deals stretch across the nation, so you’ll find opportunities in new markets or in your own backyard. You can select multiple properties at a time if you are looking for speed efficiency and want to get your answers now, and you’ll be able to receive more information or schedule showings from there. Or you can pull up our individual listing page, which is going to give you a lot of relevant info to help you make your decisions. The estimated rehab costs, estimated resale value, the estimated monthly rental value, and the estimated daily rental value. This is the first stage of this. We do see it growing and improving based on your needs. So we would love to get feedback from you all as you begin to use it. Everyone here will receive an invitation to access the daily dose of deals in a follow up email.

01:00:12 There is no cost to use this tool and zero strings attached. We’re really just aiming to continue providing homeowners and investors with solutions to build their wealth in one singular place to search out properties is just that. So that’s all we have for you today. Keep an eye out in your inbox for a recording of the webinar, the Landlord Maintenance Calendar, and an invitation to our daily dose of deals. You guys, our social media links are going to be in the emails as well. We’d love for you to follow us and stay up to date with everything going on in Evergreen Investments as we continue our journey to helping homeowners build wealth through residential real estate. Thank you all and we will see you next time.


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