Ode to QuickBooks

What if I told you there was a product out there that could streamline your business, provide valuable real-time data about your properties and virtually eliminate any hassle associated with filing your tax returns? Furthermore, if you use it properly, it can make you love tasks that you used to dread. And it will only cost you a few hundred dollars.  The product is QuickBooks.

I don’t care what free money management software came with your new computer. If you own rental properties, even just one, buy QuickBooks Pro. Now.  If you can point and click and have even the most basic typing skills, you can learn to use it.  One of the most beautiful things about Quickbooks is that you can ease into it.  When I taught myself to use it, I treated it like a computerized checkbook register.  Little did I know that in one step of data entry, I was creating all of the information that my accountant needed to do my tax returns, all of the reports my bankers would want to see, and valuable reports that would allow me to keep track of my tenant’s rent payments. My awareness of all of these built-in features came much later.

I was really clear when I started buying property that I wanted to build a four lane highway and grow into it (which I did when I went from 2 units to 79 in three years).  Quickbooks was the asphalt on that highway.  I am so grateful for this product (and it has been a long day) that I decided to write a little poem . . .

Ode to QuickBooks

In the past

My receipts would tatter

And day after day

I had no idea what was the matter

Try as I might

I lost sleep at night

Because I had no idea of my numbers.

On a fateful day

Not so long away

I taught myself to enter

Everything that brought my business to center.

Now I peacefully slumber

Enthralled by the numbers

Knowing that my data

Has nothing the matta’

And that when I awake

The cheerful noise you do make

Will let me know

That as I grow

I can do my books quick

And still have my pick

Of how to report

On my free time spent at the resort.

One of these days, I am going to post some links to help you learn to use QuickBooks.  Be sure to follow my blog, so you don’t miss that information (as well as any future dreadful poems).

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Checking Out Your Options Regarding Property Management Companies (part 2 of 2)

If you want to explore the option of hiring a company, here are some questions to ask perspective property managers:

  1. What type of property do you specialize in?
  2. What do you see as the role of the owner in the property management process?
  3. Will you require me to have an onsite manager?
  4. How do you work with on site managers?
  5. What does your fee include?  Lease ups?  Legal fees?
  6. Addressing problem situations:
    1. How long do you let a tenant fall behind on their rent before taking action?
    2. What is your process for dealing with noise complaints?
    3. What is the biggest challenge you have dealt with as a property manager and how did you handle it?
  7. Do you offer routine maintenance services?  Landscaping?
  8. What are the costs of these additional services?
  9. Does your company have a set policy on how you interact with tenants?
  10. Who is your accountant?  Attorney?
  11. Do you have a list of current clients who would be willing to talk to me about your services?

And don’t forget the rule of three (see “Working with Contractors” posted under Rental Property Maintenance).  Be sure to block out enough time to talk with at least three property management companies.  And don’t make your decision based solely on price, because it will probably end up costing you more in the long run.

If you are still on the fence about diving in and becoming a landlord, here are some unexpected benefits of managing your own property:

  1. Low vacancy rates—the more units you rent, the more you get paid. Self interest is a great motivator.
  2. The celebrity factor—I can’t set foot on my properties without everyone wanting to talk with me (and it is not always bad stuff)  Tenants, neighbors, contractors, everyone has something to say
  3. I have met people I never would have met in my ordinary life.  It is interesting.  It is better that TV.  It is like traveling without leaving home.
  4. You are a part of the community.  In fact, you are a leader in your community.
  5. You can make a serious positive impact on people’s lives beyond what you ever thought possible. Hopefully soon I will have an audio file posted that gives you a powerful example of this from one of my apartment buildings.
  6. You will learn more about yourself and realize your potential more than you ever thought possible—all while making money (hopefully)!!
  7. You get to create your own corner of the world.  For me, good manners are important.  I treat my tenants well and don’t tolerate bad behavior and, in turn, I am creating little pockets of better manners in the world.

Why Property Management May Not Be a Simple Solution (part 1 of 2)

OK, you are reading the books, you went to the seminars, you have saved some money up, and now you are ready to buy.  You have chosen your strategy and if you are successful, you are going to end up owning some real estate.  Hopefully sooner rather than later.

What I have noticed is that all of the guru’s tend to gloss over the part about what happens once you actually own the real estate.  The mantra seems to be “Oh, well, you can just hire a property management company to take care of it for you.”  Let’s explore why that not be such a simple, or even desirable approach.

  1.  Property management companies cost money, often 10% of your gross rents.  When you are just starting out, you may not have those kinds of margins.
  2. Many property management companies will not take on smaller properties, or they will require that you hire an additional on site manager (who you will also have to compensate)
  3. Property management companies often charge extras for things such as evictions, unit turn overs, and yard maintenance
  4. Property management companies do not share your self-interest of filling vacant units—they get paid regardless of whether or not the units are filled—you do not get paid unless there is some actual cash flow
  5. If you have never managed a rental property and maybe it has been a long time since you lived in one, how will you know if your property manager is doing a good job?  Could they be improving their performance?  How do you even have a baseline to judge from?
  6. Have you ever dealt with a property management company?  Did they leave with a warm and fuzzy feeling?  Were they a source of joy in the world?

So, whether your reasons are financial, developmental, or personal, you might need to think long and hard about the realities of putting your property under management.

Check back tomorrow for some specific questions to ask potential property management companies.

Accountability Theory

Over the years, I have seen that people actually appreciate being held accountable.  It shows you respect them enough to give them a chance.  Holding someone accountable is very different from establishing rules.  I believe that setting expectations is a sign of respect, whereas making rules starts from the belief that people are going to fail.

Of course, there will be plenty of rules at your properties, both your own and those required by the landlord/tenant laws in your state. What I am talking about are situations involving a specific tenant, usually around rent payments or disruptive behavior. When an issue arises, the first step is to communicate directly with the tenant. It is important that you are in a calm and controlled place emotionally before you start this interaction. So give yourself time to blow off steam and release any frustrations you may have about the situation.

There is a saying, I think written by T. Harv Eker in Secrets of a Millionaire Mind and it is this: “You can be right or you can be rich, but not both.”  I remind myself of this when I am in a heated situation with a tenant.  I always try to stay focused on my desired result (i.e. rent payment, prompt move out, the end of disruptive behavior) and adjust my behavior in such a way to maximize the chances of achieving that outcome.

Once you are having a conversation with the tenant, it is important to clearly establish what you want them to do and when you want them to do it.  Most tenant issues follow this pattern.  You want them to pay their rent by a certain date or move out by a certain time or turn down their music after a certain hour. If there is any confusion about your expectations, put them in writing and give a copy to the tenant.  If it is a chronic issue, that written statement should be an official notice (i.e. a 3 Day Pay or Vacate or 10 Day Comply or Vacate).  For a tenant who is behind on their rent, you might just write up a simple letter that they sign, with the understanding that if they do not comply, they will be served with an official notice.

Once your expectation is clear with the tenant, it is your job to follow up if they are not being accountable to their agreement.  It is so easy to let this critical piece slip through the cracks, especially if you are frustrated with the tenant.  Don’t let that happen! Write a note in your calendar to remind yourself to follow up. I am often writing myself notes like “Joe, pay $300” or “Check with neighbors at lofts about noise” on specific days in my planner.  It is important for the tenant to know that you take your agreement seriously.  If you don’t follow up with them, they will know that they can continue to get away with whatever they were doing.  A simple phone call or text message is often all it takes to keep them on track.

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