How to bank 10% without raising rents. (& make happy tenants in the process)

Try it

How is this possible? Drop your property management company. It is easier than you think. Here’s how to do it successfully.

About two months before your lease renewal, notify your current property management company that you would like to manage the property solo.

fear is not a good thing

Brace yourself: The property manager has a vested interest in keeping you fearful about: ‘unspoken’ hassles of dealing with tenants, property upkeep, and needing to be ‘geographically close’ in the event of an emergency. The reality is that, except for tenant-turnover, property management is quite similar to Tesla’s autopilot feature. The majority of the time the rent check comes in, and no action is required. The 10% monthly premium you pay your management company is nearly always 100% profit.

Scenario 1 – your tenant’s renew and the property is in relatively good shape.

  • Generic leases (and renewals) pdf files can be located online, at no cost. Download, edit, digitally sign and send this to your tenant’s email.
  • Edit your lease so that your tenants pay directly through Zelle, PayPal or Venmo. All three are free, provide privacy to your bank account, notify you immediately upon payment, and some direct deposit into your account within seconds. Do not accept cash. Tenants without credit can convert cash into PayPal at local 7-11s.
  • Purchase an annual home warranty for about 300-500 dollars, depending upon what appliances you wish to cover (Baron strongly recommends the higher options for HVAC and septic systems.) Set it up so the tenants call the home warranty company for all repairs, first. Many companies also cover key locks, initial roof inspections, and plumbing issues. Give the tenant a copy of the warranty. Let them make claims. You may need to pay a deductible or copay for each claim, but this is only after the issue is resolved.

Over the years, Baron received tens of thousands of dollars of new appliances, HVACs (including roof installation costs) and new plumbing. This cost is tax-deductible. You’ve also eliminated numerous tenant complaints through a warranty while simultaneously increasing their satisfaction. If you have long-term rentals, home warranties provide you with a prompt response and ‘fair’ estimate for items that are not covered—saving you the hassle of locating a repairperson and getting estimates.

Once, after numerous years and numerous property experiences, a warranty company non-renewed a property This resulted after many frivolous claims during a year. I visited the property and, can verify they were unnecessary. An example tenant was not happy with the temperature of the refrigerator. They wanted everything ice-cold in the non-freezer section so that it frosted inside. Even after the company repaired the issue 3x, and verified the base-cooling unit, the tenant’s persistence ultimately succeeded in annoying the warranty company enough to non-renew. The good news is that there are many warranty companies with boilerplate policies. I also subsequently non-renewed the tenant, encouraging them to leave before the term date (without penalty to hasten their departure).

  • Have tenants text you instead of calling. The most common text message Baron receives is that the tenant will be late on the rent.

Should you desire anonymity, purchase a $15/for 6-month Skype phone number for this purpose. If they call and leave a voice mail, it is saved on their servers until you retrieve it. Tenants feel empowered if they are able reach out to you, the decision-maker, quickly.

Most property managers have a side-deal with late-paying tenants. As a landlord, you will not see this money. When tenants are late, they may need to pay the extra money, unseen directly to the property manager. You will never know about this. When the property manager pays you on the 15th or 20th, the secret transaction has already taken place between the two parties, but you receive only your normal 90% cut of the base rent. Property managers will often say they need this 15 – 20 days to ‘process personal checks’. – Sometimes property managers also charge you to direct deposit into your account, profiting from these small-dollar transactions as well. (link)

  • Next month – Scenario 2 – Your tenant’s departure is expected, and you need to inspect & re-tenant.

Brilliant update is a game changer

What are must-haves for remote managers of vacant properties? First, you require on-demand status updates. What better way to do this than have the house provide this, seamlessly.

This blog is not a product endorsement. Baron receives no compensation for the products found on this site. That said, Brilliant Smart Home Control recently dropped a LiveView update which changes the remote management duties of any property manager.

Brilliant makes an upscale Smart light switch, which some reviewers have criticized as ‘trying to do too much’. Brilliant’s control is essentially a smartphone on your wall: complete with camera, mic, screen, wi-fi connectivity. It makes all of the lights it controls SmartLights. In addition to controlling your lights, It operates with the usual voice assistants, displays your favorite photos, and allows users to: see the current time, control thermostats, their music libraries, and use other connected Brilliant controls as a video intercom system. 

This last feature, until now, only worked when you had 2 or more Brilliant controls in your home. The idea was to use this feature as a baby monitor, or perhaps to video chat with family members while you were in another part of the house. A high level of security setting required both the individual rooms to both be physically present, and also required both parties to ‘accept’ a video chat before the camera would activate.

However, the recent update allows activation of the Brilliant camera and mic to remotely activate using the mobile app. 

Since I’ve installed Brilliant in one of my properties, I’ve been most pleased with the photo displayed on the touch screen. I’ve hesitated to purchase additional controls because of the high entry costs. Having only one control, I’ve not used the intercom feature, or used the camera to monitor rooms. That is until now.

It works well. The video is clear and the sound crisp.

This is a game-changer because it adds another dimension to managing properties for the remote landlord. I’ve positioned the Brilliant unit at a light switch facing the busiest part of the house. When the LiveView is on, I can see whether a person is at the door, and monitor sounds in the kitchen and family room. My future installations at other homes will consider optimizing positioning to maximize viewing near the front door. 

Baron strongly recommends adding at least one of these to each of your homes. Here are the benefits for remote vacant properties.

  1. Live, on-demand viewing for security, and visiting contractors
  2. If you have deliveries, or if people waiting at the door, a light switch facing the door can verify, in real-time, whether you will allow your smart lock to open the door.
  3. Brilliant also has a smart-sensing feature, which can be configured to notify you when movement is detected. I’ve not yet investigated this feature, but the benefits are self-explanatory.

For occupied or leased properties, Baron recommends this device for the following reasons.

  1. It looks aesthetically pleasing.
  2. It converts all lights it controls SmartLights, saving you money.
  3. Your tenants are able to upload their own photos and display them on the touch screen.
  4. Privacy controls prevent you, the landlord from spying while the house is occupied and set up with the tenant’s information.
  5. There is NO monthly fee for this service.
  6. Brilliant does not store or keep any information used by your device. 
  7. The rent value of your home will increase if it is smart.
  8. Works alone, but also interoperable with Smart Locks, Smart Thermostats, Smart Speakers and Voice Assistants.
  9. Even if the unit is disconnected, it still works like a light normal (dumb) switch. Some, all or none of the features need to be activated. This gives some tenants a degree of peace of mind and may allay privacy issues.

Saving money as a do-it-yourself landlord is always in fashion. If you can save the customary 10% on-going property manager fee by doing a few simple things, this adds up over time. If the tenants are also comfortable and happy in your home at the same time, it can only make the entire experience better.