Matthew Whitaker - Friday, May 5, 2017
I was fortunate enough to get to be on David Lamb’s, The Blueprint Podcast. Check out this teaser for it he just posted. The show will post on Monday.
I was fortunate enough to get to be on David Lamb’s, The Blueprint Podcast. Check out this teaser for it he just posted. The show will post on Monday.
Alabama has continued to enjoy growth in its home sales market. It is up almost 8% over November of last year. This is great for investors who are looking to capture some appreciation in addition to a well cash flowing market.
Check out Bryan Davis’ article if you’d like to see more industry data and see the Alabama Center for Real Estate’s forecast for the upcoming year.
I recently finished reading the book, Shoe Dog, by Phil Knight the founder of Nike. For anyone who loves entrepreneurship and the idea of growing a business, his story is a fun one to read .
One part of the book stuck out to me which I think is applicable to those of us who are investors and/or building a business.
At the end of the book, when Nike goes public, Knight mentions that he doesn’t feel relief. Nor does he feel stress. What he feels most is regret.
For the guy who built Nike from a distributor of Japanese “Tiger” shoes to one of the largest shoe companies in the world, to feel regret when his company “made it,” seemed a bit odd to me.
The book goes on to say that the reason he feels regret is because he wishes he could build it all over again.
I think that is very important for those of us who invest and “build things” to remember. Far too often we are waiting on reaching the next step in our businesses to make us happy, and here is a guy who has reached the ultimate step and his only wish is to be exactly where we are . . . still building it.
It has been told to us a million times, but I think it is worth repeating. Enjoy the journey, because when the journey’s over you will realize that the fun was all in that journey. If you don’t take a step back and appreciate that, you will get to the end and realize all you’ve missed.
That is a horrible thought.
While the focus has been mostly on Donald Trump, our newly elected President, one amendment passed in Jefferson County, Alabama that affects landlords and tenants.
The bill now says that tenants are solely responsible for garbage at the home. This is a change from the norm, where in places like Fairfield, if the tenant didn’t pay, then the landlord was stuck holding the bill. I’ve personally paid hundreds of dollars for this to keep a lien from being placed on one of my houses.
We’d also love to answer any questions about how this might affect you!
I just got off a phone call with another property manager in Birmingham who was asking me about the seasonality of leasing homes in the City. It brought to mind one of the first questions people ask when they call us is, “How quickly can you lease my home?”
The seasonality of the leasing season has a lot to do with the answer to the question most prospective owners want to know.
So what does the leasing season look like in Birmingham?
Hot times – February, May, June, July, August, November
Cool times – January, March, April, September, October, December
Why the “Hot times”? – The obvious times people lease homes are during natural breaks in their lives. The most natural break is traditionally when children get out of school. Thus the May – August dates. What is so interesting is how the school year still affects when others move even if they don’t have kids.
For people who are “post school” and “pre-kids” they still fall into the cadence of needing a rental house at the same times of the year, because they get out of school, lease a home for a year, then the lease keeps either renewing and/or ending in the summer. Then if they move, they are keeping a consistent cadence till they decide to purchase a home and get out of the rental world altogether.
The less known months for leasing a home are more about avoiding the holidays than they are about trying to strategically move at a good time. November is all about people getting in the new home BEFORE the holidays. February is after the holidays and typically when a lot of people file their taxes and receive their income tax returns – this affords them the cash they need to pay a deposit, first month’s rent and pay to move.
If you have any specific questions about your home and/or when we think it will lease, please reach out to us. We’d love to help.
Thanks Wayne, we are going to miss you.
No, Wayne didn’t die everyone. He is headed off to pursue his passion of construction with Doster Construction. We wish him lots of luck and hope he will come visit us . . . but he has to bring lunch when he comes.
Wayne has been with us for almost three years. He was an integral part of the growth we experienced over that same three year time period. His knowledge of the construction and home maintenance will be sorely missed.
He’s headed south to Orlando. He maybe secretly going to work for Disney World and just not telling anyone.
Wayne is funny and passionate. Doster is getting a great guy.
Wayne hugging Bryan for the last time – these two appreciate a good hug.
If it doesn’t make dollars, it doesn’t makes “sense”. How much should you expect to spend on maintenance for your rental home?
One of the hardest conversations we will have in our relationship with our Clients is the call where we tell them that something is broken and we need to spend their money. I often tell people who ask about our industry, “If you can make that call, you can make any call.”
Many savvy Clients have asked on the front end what they should expect or budget for a yearly maintenance expense.
I’ve been managing my own homes since 2004 and managing for others since 2008. I had a general idea of how much money each house was spending, along with the factors that cause that to go up or down, but I had one question that I wanted to check first . . .
How much can the average homeowner (who lives in a home) expect to spend?
Then naturally, you could expect to spend MORE than that with a tenant in the home; since as a homeowner, you probably do some of the work yourself. Also, you own the home, so you aren’t as naturally hard on it as the average tenant. We are speaking in complete generalities, but I hope you get my point. We have great tenants, but the average doesn’t take care of the home the way the average homeowner who is living in that home takes care of it.
While doing some research, I ran across an interesting article that did a great job (based on my experience) of explaining the factors that affect the yearly maintenance of a home and some general formulas to work with. They were startlingly close to what I was thinking, so I decided to include it here versus regurgitating the information they so eloquently provided.
While the 1% rule and the Age Rule (both cited in the article) are a great start, I think it is most important to point out all the other factors that affect the maintenance costs. When people ask me this question, my first response is . . .
1. How old is the home? Older homes simply cost more to maintain. This is one place I differ from the article. I don’t care how well you’ve taken care of the home, a home that was built 100 years ago will cost more to maintain than a home built 5 years ago.
2. When was the last time you updated the major systems of the home – electrical, plumbing, hvac, roof, etc? These major systems are big ticket items and can move the needle very quickly on how much you spend on the maintenance.
3. Where is the home located? This speaks to the type of tenant who traditionally will live in the home. If you have a low income person who lives on a monthly subsidy, then chances are they run the air twice as much and flush the toilets twice as much; i.e. causing these types of items to wear out much faster.
Being prepared for us to call you for a repair item can make all the difference in the world. Homeowners who live paycheck to paycheck should actually consider not renting if a phone call to tell you about a $750 item is going to keep them from having Thanksgiving that year.
If you have questions about your current situation or would like to find out more about budgeting for maintenance items and rental property, please reach out to us via the link below. We’d love to help.
Are you tired of simply counting the money and reporting the information to the decision makers? Do you want to be a decision maker at a company and help it scale? Are you an entrepreneur that happens to be a CPA or have a Finance degree?
gkhouses.com, Birmingham’s largest and fastest growing property management company, is looking for a future Team Leader who will be an integral piece to pouring gas on our current growth in Birmingham and Nashville and will help us open operations in different cities.
We need someone that thinks both analytically and strategically, is confident (but not arrogant) and has a deep understanding of the creation of accounting and reporting systems and processes.
If this describes you, then we need you on our team.
None of our accounting systems are rocket science, so I won’t go into explaining them. We just need the right team member with an accounting background.
We’ve found that our accounting department is a great way to train the future leaders of gkhouses.com to go run other markets. Who else understands the KPI’s, ROI’s, P&L’s and the PDQ’s?
This post is the one I feel like is the most important. This post is all about leadership development of our team.
I always tell our team, I can teach you how to manage a home pretty quickly; what I’m unsure of is how long it will take me to teach you to be a leader. That is why at the first of the year, we decided to implement our first ever weekly leadership development meeting. It began with us simply just reading a book together. Our first book was Today Matters by John Maxwell. The reason we chose this book is because of something John actually says in the book, “The hardest person to lead is yourself.”
What our leadership development time together has turned into is something I would never have imagined. It is a way for our current leadership team to share real company issues with the people in the meeting and get their feedback on how they would handle it if they were the leader. Real world situations that they will run into in the future when they are the leader somewhere.
This team has also done an awesome job of working ON the business. We learned this phrase from another book we read called E-Myth by Michael Gerber. The team is learning how to take a step back from their day to day role as a person working IN the business and evaluate how we can do things better here at gkhouses. We’ve made some real upgrades to the business through their ideas, that became projects.
We’ve devoured tons of books together too, as we’ve maintained the ongoing discipline of reading a book together. Some other books we’ve read and the lessons we’ve learned are below.
1. Traction by Gino Wickman – We currently run the Traction model within our organization. This is not so much about how we manage a home, but about how we manage the business.
2. Good to Great by Jim Collins – By far my favorite book, this book takes “great” companies and compares them to their counterparts who are “good”. The goal is to see what great does that average doesn’t and glean information about running our business from that new information. We’ve had some really fun discussions about what our Hedgehog Concept is. If you haven’t read the book, do yourself a favor.
3. Multipliers by Liz Wiseman – My favorite book of 2016. This book takes an indepth look at what makes a great leader based on years and years of research in a ton of different companies. Liz did a great job of not just doing the research, but also painting a wonderful picture of what a real leader looks like.
I’m continually amazed at what the team has learned from the books we’ve read this year. I’m looking forward to seeing how much they grow the remainder of the year and all of next year. These are exciting times at gkhouses.
So this concludes my 3 part series. My goal in doing this? Simply to help you understand that you aren’t hiring us for price (although we’ve got some pretty darn good ones). And, you aren’t hiring us for a slick sales presentation (although it is pretty slick). I hope you hire us for the people we work hard to hire.
In my last blog I gave you some insight into how we find talent. Much like finding the right tenant takes tons of time and sometimes going through tons of people, finding the right talented people to work with you takes very much the same approach.
The next step in the process is training that talent. It does us no good to find them and not have a set system for bringing them into our business and getting them up to speed on our processes as soon as possible.
So how do we do that?
We’ve basically bought into the book, Scrum. This book is actually written to describe how software engineers can write relevant software in a much more intentional and meaningful way – thus reducing the amount of time it takes to write a software program. We’ve decided to take the same principles the book teaches and apply it to onboarding a new team member.
The principles of of our onboarding “scrum” are this . . .
1. Decide everything that needs to be taught. The first step in our process is to figure out all the tasks that we need to teach the new team member. We simply brainstorm a list and put it into an excel spreadsheet or (in our case) an Asana project.
2. Decide how much effort it will take to teach the task. We do this by scoring the task based on the Fibonacci Sequence. It is important to determine how much effort so that we can measure how long it will take to train the person based on how much of the “score” is done on a weekly basis. If you know how much score someone is completing, you can back into how long the training will take.
3. Decide who is responsible for teaching the task. Once we’ve defined the task and how much effort it will take to teach, we are very intentional about who is going to transfer the information to the new team member.
4. Decide which tasks will be taught week one. We don’t try to measure out which weeks each task will be taught. We simply start with week one and focus on a certain number of tasks.
5. The goal is to get the new team member operating without anyone else having to be there. This method is only effective when we are able to move through each task to its full completion and the new team member is able to work autonomously on the task without any oversight. This allows the person teaching the task, or whoever has been performing the task, to move on and start accomplishing other objectives and tasks for the team.
Our method for onboarding a new employee has drastically reduced the time it takes to get a team member contributing to the team (a HUGE plus for both the team and the individual) and has also reduced the overall time it takes to get them fully functional in the new role.
Next post, I’m going to discuss our ongoing leadership training designed to get our team members able to go run a new market for us.
I’m a pretty competitive person. After our team building afternoon, I realized we have a lot of competitive people.
Today we spent the afternoon eating lunch and playing games. We have a number of Millennials on our team. They love to play a game. They are pretty dang good at it too.
Here are are a few pictures and a video from this afternoon’s games of “Kan Jam” and “Spike Ball”. If you’ve never heard of either of these games, I had not either till today.
I don’t really want you to pick us as your property manager because we are cheaper than other property managers. While our prices are competitive and probably cheaper than most in town, I beg you not to choose us because of price alone.
I also don’t want you to choose us because we appear slicker than the competition. While it is true we work very hard on our “image” to the public, choosing us based on the feeling we give you would just be wrong.
Lastly, don’t choose us because you really like our nice sales people – completely. We do have very nice people (looking at you Nick Goudreau) helping you get acquainted with how we work, but don’t choose us based on their niceness alone.
I want you to choose us based on one thing that isn’t really obvious when you visit our website or just speak to one of our team members. . .
I want you to choose us because we work terribly hard to find the best people we possibly can (1st), then train them to manage your home (2nd).
That is why, WHO we hire, should affect WHO you hire.
I’d first like to give you a little background about our hiring process. It has 4 steps to it.
1. The phone interview. This interview is designed for us to get a glimpse of the candidate to see if they appear to be a surface match with our values and the job we are currently hiring for. We’ve predetermined the values and skill set we are looking for then attempt to match them as closely as possible during this one hour interview.
2. The 2 – 4 hour face to face interview. This interview is for us to dig into their relevant school and work history and better understand if they’ve developed the skills it takes to be on our team. This is typically done by 2 or 3 team members here at our office.
3. The lunch interview. This interview is done by 3 completely different team members who have not invested the time with the candidate and won’t have a bias for pushing him/her through. They have a completely different agenda and set of questions that are more situational in nature. “What would you do if . . .” is typically how these questions start.
4. The reference check. We don’t like to take the candidates references at face value. After 3 interviews, we have a pretty lengthy list of people we’d like to discuss past job performance with. We deliver those names and ask the candidate to set up the phone calls for us.
As you can see, we take hiring very seriously. We’ve put a focus on what Jim Collins in Good to Great calls, “Getting the right people on the bus.” Unlike most, we don’t have warm bodies filling seats at gkhouses. Every hire is very strategic in nature.
My next blog will cover how we train team members to handle the day to day management processes.
As a property manager in Birmingham, Alabama, I’ve struggled with finding great places to receive continuing education. Most courses taught in and around this area deal with sales agents. Those don’t really have any value to me.
What I’ve done in the past is travel to Nashville or Atlanta to find classes that are property management specific.
Check out this video of our most recent conference!
The Birmingham home sales market continued its hot streak through the end of the summer months. Posting a year over year high of 27% over August last year. All this is according to the Alabama Center for Real Estate (ACRE).
The big question for our industry is, “What does this mean for rental home investors?”
I posted a screen shot of a graph depicting sales over the last 16 years, because I think it is interesting and tells a pretty good story. It shows the cyclical nature of demand. As you can see, we were in a similar market back in 2003 and 2004.
If I was a rental home investor . . . and I am . . . I’d be watching where the trend goes from here. It is my opinion that we are currently in a very healthy climate, in terms of buying and selling. Though, with the pickup in demand, it does make it harder for you to find good deals to purchase.
The median home price according to ACRE was $180,000, which is actually down from last August when it was $185,000.
That median home price is still very favorable to rental home investors, given Birmingham has consistently had high average rents relative to this median price. That, along with favorable property tax bills, continues to make Birmingham one of the top places to purchase rental homes.
Click here if you’d like to read the whole report from ACRE.
The real estate game is changing quickly. Much like the internet has changed many industries, real estate is undergoing a change to a “new normal” that will leave a great number of property management professionals out of the game.
You are already seeing it in the real estate sales industry.
The internet has provided, previously unavailable, transparency to potential buyers and sellers of homes. In the “olden days” if you were interested in purchasing a home you would be required to find an Agent to find out what was even on the market. Your Agent would disappear and come back with a list of homes that met your criteria and you would spend all day Saturday driving around looking at them. All this, not knowing till you arrived at the home that the kitchen was two kinds of ugly and there is no way you would move to a home built on the side of a cliff.
As you well know that is no longer. We have the ability to peruse thousands of homes for sale at our fingertips and typically we know more about the home before we see it than the Agent does.
My how times have changed.
Today you hand the Agent a list of properties you’ve already prescreened and want to see. The Agent makes the arrangements and you spend less than half a Saturday looking at properties and the rest of the day reliving the two you really liked in pictures and virtual tours on the internet.
The management industry, albeit much smaller and much slower to move, is undergoing a shift that will have as huge of an impact on those of us who manage homes.
In the past, it was standard for the property manager to charge a percentage of the monthly rent as a management fee.
And we did the same thing!
It wasn’t until recently that we took a step back and asked the question, “Why?”.
To better explain it, I want to tell you a story about a newlywed couple who lived out of town from their family who was celebrating Thanksgiving for the first time – just the two of them. The wife was busy making dinner, when before she put the ham in the oven, she cut the end of the ham off.
The newlywed husband thought that was odd, since he had never seen his mother do that and (because he was newlywed and didn’t know any better) decided to ask her, “Why?”.
Truth is the new wife didn’t know the answer to that question, but thought that there must be a plausible reason, because her mother had always done it. So, they decided to get to the bottom of it and call home to find out the answer to their riddle.
Everyone was over at the mother’s house for Thanksgiving, so they were excited the newlywed couple called. After talking with the whole family, the wife got back on the phone with her mother and posed the question which had previously stumped her . . . Why do we cut the end of the ham off before we put it in the oven?
To her amazement, her mother didn’t know the answer either. In fact, she had just always done it and never really thought about it . . . because that is what HER mother had always done.
Since it was Thanksgiving, her mother was also present. So she put down the phone and went and posed the question to her mother.
This time she did get an answer.
What was the reason? The grandmother’s oven was too small to fit the whole ham, so she would cut the end of the ham off to fit it in the oven.
And that is the reason managers charge a percentage of the monthly rent . . . it is because managers have always charged a percentage of the monthly rent. That is the answer.
What most managers will attempt to tell you is that it takes longer to manage a more expensive home.
That has not been our experience after managing almost 1300 homes. In fact we believe that the time spent to manage a home is a little more like a bell shaped curve.
If the home rents for very little or a whole bunch (bottom 10% or top 10%), then it requires more time. But, the other 80% take about the same amount of time, effort and energy to manage.
So, when one of our new team members (who wasn’t affected by the end of the ham being cut off) began asking the question, “Why?”; all of our senseless arguments of things we’d heard and learned over the years fell by the wayside when faced with the actual facts and data.
That is why, we’ve decided to move to a flat fee pricing model.
What’s so interesting is that for most, this will actually improve “the deal” for them. We have owners calling now who would have paid 10% in the past, now paying an effective 4-5% on higher end homes. That saves them hundreds of dollars and . . . this is perhaps the most important point . . . there is no drop in service.
That’s right . . . there is no drop in service.
The question I would ask me in this case is, “How can you afford to discount the price and still offer the same service?”
My answer is very easy, just like in my first example, the market is mispriced. Meaning we’ve been charging the same thing for so long, you, the consumer, don’t know any different.
That’s nothing against you. Heck, we didn’t realize it till someone who didn’t have a long history in the industry pointed it out to us. Sometimes it just takes some fresh eyes.
Think about this . . . Owners were paying the same amount for management services since before there was even computers. Property managers were manually posting a ledger by hand and sending out paper checks with a typewriter written statement.
Are you going to tell me that you should pay the same for management services as you would for something as manual as that?
Today we can click a few buttons, which produce hundreds of owner statements to their email and then pay them by dumping the money directly into their account.
Bottom line . . . don’t overpay for services in the new economy. Managing rental houses is not like it was in 1990, so why are you paying for it like it is?
There are no loan wolf successful people. One of my favorite quotes from John Maxwell is his response to people who say they are “self made”. He explains how sorry he is because if they are self made then they haven’t accomplished a whole lot and explains that great things are done with a team. Property management is no different.
Who is on our property management team?
1. An eviction attorney – Yes, no matter how much we underwrite applications and look for the right tenant, situations do change and some tenants go from being great to being very poor tenants in need of eviction. Because the landlord-tenant laws are very specific, it is always best to turn it over to a legal professional to handle this process.
2. Third party application underwriter – We believe it is best to remove us from the equation when underwriting an application. We solicit the help of a company who does nothing but underwrite all of our applications according to a criteria we determine. That way, we aren’t subject to the whims and stories from tenants that some landlords fall so hard for.
3. Property management software provider – We use a number of different software applications to manage our properties. The most important is the management accounting software we use that is industry specific to single family rental homes. Our provider is a team member, because we are constantly calling them up and asking clarifying questions about how to handle certain situations in the software.
Building the right property management team will help you be much more successful as you navigate the waters of managing single family rental homes.
If you have specific questions about any of our providers, I hope you will reach out to us and ask us those questions. We’d love to help.
We are very excited to announce that one of our team members is being recognized by the Birmingham Business Journal as a “Rising Star” in the real estate community.
Mark came to work with us almost 3.5 years ago and at the time we managed only about 300 houses. Since then, with Mark’s help, we’ve quadrupled the number of houses we manage to about 1200. Mark played a HUGE role in helping us accomplish this growth.
Mark continues to grow in both his abilities to manage houses and in his abilities to lead a team for us. We have huge plans for him and hope he will run a new market for us in the near future.
Lastly, it is important to note that Mark has real estate in his blood. His father, Mark Byers, Sr, SIOR, is the Executive Vice President of EGS Commercial Real Estate, Inc. Real estate success runs in the family!
For a link to the full BBJ article, click here.
Nobody wants to have to evict a tenant. The original intent of the lease is that you would provide them a place to live and they would take care of that place and pay you rent . . . monthly . . . the whole thing . . . and on time.
Somewhere your tenant forgot that they had to take care of the place or pay you rent or worse BOTH.
If you are like many people talk to in this business, you’re probably kicking yourself for letting this go on much longer than it ever should have. If it makes you feel any better, if you’ve been in this business for any measure of time, you’ve let a tenant carry on way too long.
So you need them out of your house?
The first step in evicting someone in Alabama is the 7 day notice. I’m going to cover some quick elements to make sure remember, but as always, I’m not an attorney, so I always suggest consulting one before making any legal moves.
There are really two reasons in Alabama to evict someone.
The first is for “nonpayment of rent”. This is fairly obvious why you are evicting them.
The second is for “material breach of lease”. This is a catch all phrase for everything else. Meaning they have violated some other portion of the lease document . . . this could mean destroying the house, having people living in the house other than who is on the lease, etc.
I break these two down, because it used to be a big difference in the type of notice that was posted. Previously, under the Uniform Residential Landlord Tenant Act in Alabama, you were required to post a 7 day notice for rent and a 14 day notice for material breach.
They updated the law a few years ago and this is no longer the case. You post a 7 day notice either way.
So that is where I get to my first tip . . . Have one notice that covers both.
Our notice has the heading:
And in the body, it goes on to include both of them again in the first paragraph:
You are hereby notified, pursuant to 35 -9A-421(b) Code of Alabama that you are in noncompliance with the terms of your rental agreement for failure to pay rent and or a material breach of the lease for the premises now occupied by you, being situated at_______________________________________________________________________________________________.
My second tip is that a 7 day notice doesn’t end on the 7th day . . . it ends on the 8th. Here is the language from our eviction notice:
Your rental agreement will terminate upon the expiration of seven (7) days after the receipt or posting of this written notice, if you fail to pay or cure the material lease breach prior to the expiration of the seventh (7th) day.
My third tip is that you can’t terminate the lease by posting the notice. The lease doesn’t actually get terminated until after the 7th day the tenant has not “cured” the breach. Meaning, they have not fixed the problem.
Here is the next paragraph from our notice laying this out:
If the full rent is not paid or material breach cured, Demand is made upon you to deliver possession of the premises at the time of termination of your rental agreement (7 days after receipt or posting of this notice), otherwise, an eviction action will be filed against you.
Your failure to surrender possession of the premises will be deemed a willful noncompliance of the rental agreement for which the Lessor will seek a judgment for possession of the premises and all damages allowable under Alabama Law.
Additional rent charges may continue to accrue as due and owing under the terms and conditions of the rental agreement.
Fourth tip, only take certified funds at this point. We actually tell them this in the notice.
ALL PAYMENTS MUST BE MADE BY CASHIER’S CHECK OR MONEY ORDER ONLY
Tip number 5, to cover your rear end, include debt collection language. Here is what we have:
**We will assume this debt to be valid, unless it is disputed within thirty days after you receive this letter. If you dispute this debt, or any portion thereof, we will obtain and mail to you a verification of the debt or a copy of any judgment, if you send us a written request within this thirty day period. Also, upon written request within this thirty day period, we will provide you with the name and address of the original creditor, if different from the current creditor. This NOTICE, however, may require you to take some action prior to the thirty days, OTHERWISE, unlawful detainer proceedings may be instituted AGAINST you. This letter is an attempt to collect a debt, and any information obtained will be used for that purpose. This communication is from a debt collector.
Lastly, to make it as official as possible, have the notice notarized.
The next thing we need to cover is how to serve it properly.
While posting a notice can feel like a really weird thing to do, when you put it on the door, you must make an attempt to get someone to the door and hand deliver it to them. There is no requirement for you to come back if nobody is there, but you must make a good faith attempt.
If nobody is home, you may post it on the door where they are most likely to enter and see it. This is typically the front door.
I also suggest you take a picture of it to prove that you were there and served it. It is crazy the things people will say when they are attempting to get out of paying you rent.
Properly posting the notice in our experience gets MOST tenants to pay and/or fix the issue. We have very few tenants who will take an eviction all the way from the 7 Day eviction notice to them being set out by the sheriff.
This is the question every property manager is attempting to answer . . . when a potential client is calling and asking about their services. What makes you different from other managers? Why would I choose you over the 3 or 4 other managers I’m talking to?
We absolutely love it when this question gets asked! Very few other managers have put specific thought and some intentionality behind this question and it is something we have spent a LOT of time thinking about. Why WOULD you want to be a client of ours? Or, better yet, why would you NOT want to be a client of ours?
Wouldn’t it be important for you to know our “flavor” of management before you choose to do business with us?
If that is something you are interested in, I implore you to read on!
We sat down about two years ago now and thought about this question. This is not one we wanted to take lightly, because we felt that our management strategy was something we would build our business around for quite some time.
What came out of that meeting was what we call the “Three gk Uniques”.
Unique #1 – Communication. When clients come over from other property managers, this is the biggest reason they come over . . . lack of communication.
It is interesting to see the dynamic of a new landlord who is calling and asking about services for the first time. They generally want to know the answers to what I call “The big three” . . . How long will it take you to rent my home? How do you keep from renting it to the wrong person? AND How much does it cost to do that?
However, once we’ve rented your home, the questions all shift around communication. How do you communicate? How often do you communicate? What forms do you communicate with?
At gk we use 3 forms of communication with our Owners . . . phone, email and reports. Let’s take a look at each one.
Phone. We currently have an “Owner’s Only” line that was created about three years ago when as our leasing call volume went up, Owners began having a hard time getting in touch with us. We realized how important it was to continue to answer our Owner calls, but had to solve the dilemma of sorting through the 95% of calls who were not Owners. That is how we came up with the Owner’s only extension.
And that is exactly what it is . . for Owners only. Occasionally, a sneaky tenant will get through on the line, but we do our best to deflect those to the appropriate place.
We, additionally, have engaged the services of a call answering service called “Call Ruby“. Many of you have been very excited about the attitude on the phone and I tend to agree, they have an awesome attitude. Call Ruby has really become part of the team. They are so much a part of the team, that sometimes our Owners will get confused that they aren’t in our office and don’t know certain information. Either way, we’ve seen them as a tremendous asset to our business and getting you to the right person in our company when you call.
Email. We love to have everything in writing. And, despite what people are saying, email isn’t going anywhere. When you send an email to us, it goes into our ticketing system and that ticket is assigned to the appropriate person to handle the ticket.
The reason we came up with this fix is two-fold. First, Owners wanted a single point of contact. The only challenge with that for us was that we managed departmentally and we have specialist working in each department. The same person wouldn’t answer a leasing question who would answer a question about your repair bill. Thus, the support email was born. Secondly, when it goes into the ticketing system, we can run all types of metrics on how quickly our team is getting back with you AND ensure that emails don’t get overlooked and never answered.
So what happens to an email when it comes in? First, it is tagged and connected to your profile in our system. Next, it is read and assigned to one of our team members – the person they deem the best to answer that question. Then it is answered by one of our team members. The cool thing is that once it gets answered by one of our team members and sent to you via email, any email back to us from you on that matter will go directly to the person handling the ticket. So the process of assigning only happens once. Lastly, we close the ticket when we feel like the matter is closed. BUT, if you email us back, then the ticket is reopened.
Reports. One of the best ways we’ve found to communicate with our Owners is by delivering to them reports – whether that be Owner Statements or Inspection Reports – that are accurate and occur on a regular basis.
Our Owner Statement Day in Birmingham is currently the last Wednesday of the month. That means we deliver the statement into your inbox on that day. And we work VERY hard on maintaining that day.
Many of you remember Snowpocalypse 2015 . . . that occurred the day before Owner Statement Day and we STILL got the statements out! Whew! That is how important us delivering what we promise on time to you is.
Unique #2 – Uncomfortable Transparency. Trust is the foundation of any relationship, especially when you have someone managing most people’s single biggest asset.
It always surprises me that Owners will turn over their home to someone based on price alone. While we have some of the most aggressive prices in the business, I beg you not to choose us just because of that.
Would you turn your keys to your Ferrari over to someone to professionally drive it based on price? No way! You would want some credentials. Why would you treat your home any differently?
This unique allows us to build trust with our Owners. They don’t expect us to be perfect . . . well most of them don’t. But what they do expect is us to tell them the truth. Even when it is hard and ESPECIALLY when we mess something up.
I tell our team that a screw up is the best thing to tell an Owner because it helps build that trust. Now we don’t want to screw up all the time . . . but that falls more under incompetence.
Uncomfortable transparency is a byproduct of our core value, Integrity. It is something that we hire team members on and something we fire team members if they ever violate.
It is very important to us.
Unique #3 – Celebrate the Tenant. Your home isn’t, by itself an asset. It is the combination of your home and the RIGHT tenant that is the real asset.
This unique came from my good friend and industry veteran Robert Locke in Atlanta, Georgia. Robert used to own Crown Real Estate and Property Management and was explaining to us last summer how he had kept a tenant for 10 years.
We got so excited about the idea of our Owners having long term, paying tenants who take care of the home, we decided to go “both feet in” on his philosophy of celebrating the tenant.
What does that mean tangibly? We recently invested $1,000 in gift cards in different denominations to tenants we noticed being exceptional tenants. Perhaps they are like clockwork paying rent. Maybe we drove by their house and their yard looks like a fairway. For some, we noticed that it was their birthday.
We were very excited about how well this was received by our tenants. While nobody held us on their shoulders and threw us up into the air, we consider it an investment that we will continue to do on a quarterly basis that will hopefully pay huge dividends in keeping tenants for a really long time.
Another way we tangibly celebrate the tenant is by making it up to them when we screw up. There are times when work orders take too long or we forget something on their move in and it causes a real disruption in their lives. We see those as opportunities to let them know that we recognized that we messed up and not only rectifying the situation, but going above and beyond by sending them a card and typically a gift card.
Lastly, celebrating the tenant is also an attitude that we carry. Many managers tend to look down on their tenants. We seem them as the reason we have a job.
At gkhouses, we believe that you must standout and be passionate about certain things and not attempt to be all things to all people. We are passionate about these “Three gk Uniques” and talk about them almost daily.
What we hope is that like minded Owners will find us and be willing to partner in a relationship by letting us manage their home.
If you have questions or would like to find out more about our services, please reach out to us . . . we’d love to hear from you.
There is not a lot of recognition in the residential property management business. There is, however, a tremendous amount of hard work involved in managing 1,200 tenant relationships and over 500 owners. That is why we were excited to discover that Inc. 5000 recognized gkhouses as one of the Fastest Growing Companies in America!
The great S. Truett Cathy once said, “If we concentrate on getting better our customers will demand that we get bigger.”
This award is truly a testament to the excellence our team has dedicated themselves to; as well as the disciplined hard work that ensures we provide both owners and tenants an excellent property management experience.
We were able to catch up with gkhouses Founder, Matthew Whitaker, and ask him his thoughts about the recent honor, “I’ve always admired the people who made this list. Now, the fact that we made it is really exciting for us. We felt like it was a waypoint to reaching our ultimate goal. I’m excited for our team because they’ve put in the long hours, getting to the office early and staying late, to make this company a success. I applaud them.”
As our team has grown and we have been able to provide excellent service, more and more owners have chosen gkhouses as their ‘go-to’ Birmingham and Nashville property manager.
We also believe there are three ‘unique’ aspects of the gkhouses model that have helped triple our business since 2013.
1. Communication – We have found that consistent and efficient communication builds trust…trust that we have our owner’s and tenant’s best interest in mind at all times. We are constantly discussing ways we can improve communication and thus, build trust.
2. Uncomfortable Transparency – This ties in so closely with one of our Core Values here at gkhouses – Integrity. And we not only want to be transparent in our actions, but also in our motives with both owners and tenants.
3. Celebrate the Tenant – We are proud to have the absolute best tenants in Birmingham and Nashville. We are extremely disciplined in our underwriting approach and know that when we find a great tenant, it’s important to make them feel appreciated so that they want to stay long term in the house they now call ‘home’.
This award is truly a team effort. From our leasing department to accounting, to the property managers and maintenance team out in the field. Everyone is dedicated to providing an excellent product for our customers and we couldn’t be more proud of our team.
Because of our team we have recently received testimonies like these:
“I would say that gkhouses has been a great help for me…I do really appreciate the care of my property and collecting the rent each month. I appreciate the notices received when there is a needed repair or replacement that will make my tenant happier and want to stay in the rental. Application of The Golden Rule is most important…gkhouses has given me the feeling that they are there to help both me and my tenant!” – Richard Nichol
“Excellent customer service, great management team, beautiful, well-maintained homes, ability to pay, submit requests, and communicate with the company online at my convenience…and understanding, knowledgeable employees.” – Brittany Rogers
Again, we couldn’t be more proud of our team and their hard work that has allowed us to receive this award. And we couldn’t be more thankful for our owners and tenants…you help make our jobs fun!
We hope to see you next year closer to the top of the Inc. 5000 list!
The gk Team
Birmingham, Alabama is a hot market for rental house investing. It has so many benefits to offer an investor. But, I’m not here to talk about why you should buy in Birmingham, but why you should buy MORE than one house when you start your investing career.
One principle of investing I’ve learned is to purchase more houses, rather than fewer, to be successful.
I purchased my first investment home in 2004 and have owned as many as 30 rentals at one time. Currently I own 23. I purchased my first house when I was 24 and did the work on nights and weekends to fix the home up.
Fortunately, I no longer spend nights and weekends painting and repairing plumbing, but I have learned some real valuable lessons in the last 12 years. This lesson is one of the most commonly misunderstood, so let me see if I can help you understand why owning 10 houses is better than one.
1. Cash flow – This actually could be the only reason. . . it is why professional investors prefer buy multifamily (apartment) buildings. If one person moves out, it doesn’t have such a tremendous affect on your cash flow. 9 people are still paying rent while you spend the necessary money working on your home for the turn and re-letting the property. If you only had one property, you are not only not receiving rent, but you are coming out of pocket (hopefully using some of the cash flow you received previously) to perform the turn.
2. Law of averages begins to work in your favor – You are going to have a bad tenant. Statistically speaking, there are bad tenants out there and regardless of how well your manager or you underwrite their application, someone is going to slip through – or even change over the course of time. When you have one house and you have this unlikely and unlucky situation happen to you, it can be devastating. If you have 9 good tenants and one bad tenant, it is frustrating . . . and it stings; but it is never terminal.
3. Discounts for volume – if you can believe this, people (like us managers) will actually give you a discount for giving us MORE work! Therefore, it is cheaper to have a house managed, a pipe repaired and a roof put on a house when you have more houses than just one. Having the work of 10 houses reduces your cost to operate your business significantly. This holds true operationally in management, getting work completed and even in your accounting.
So now that we’ve established three reasons to own 10 properties, let’s take a look at a plan for you getting there. I’ve seen a number of these plans over the years and I’m going to share a few with you . . .
1. Buy a house a year – I like this kind of disciplined approach to investing. Basically you use the “Warren Buffett punch card approach” to purchasing homes. I’m only going to buy one house, the right house, every year. I have one punch every year, so I’m going to be disciplined to make sure it is the right house, on the right street, in the area I really understand. While I understand this doesn’t get you to 10 houses immediately, it does get you there over time and is something almost anyone can achieve.
2. Be willing to use debt – Debt can multiply your return . . . it can also divide your return . . . so you must be very careful with how you use it. I’d suggest putting a minimum of 20% down on a house and I like the idea of putting much more than that on it. I’ve seen programs as high as 50%. Money is currently so cheap to borrow, it makes sense to use it as a tool in your investment belt.
3. Convert a huge sum of money into houses – There are times in SOME people’s lives that they inherit, receive a bonus or (for whatever reason receive a large sum of money). I’d like to suggest you putting that into owning homes. One of the things I like about the homes I own is that I can drive by them and see a tangible asset. I have a lot of say so in how that asset is operated, thus I have a lot of power in how much money it makes. Try getting that from owning Apple stock. . . “Hey Tim, I’ve got an idea for a few products I’d like to see you working on.”
I’m not saying everyone is a candidate to own 10 rental homes. What I am saying is that owning 10 is a lot less emotionally draining than owning one. Birmingham is currently as hot of a market as I’ve seen in my 12 years to invest in real estate. If you are thinking of doing it, all you need is a good plan.