Jason Hartman continues a two-part interview with client Adam Schroeder. Adam gives us insight into the process of transitioning into self-management. He talks about maintenance and finding people to help do repairs. They also discuss what property management tools are out there. Then Jason advises on late fees and grace periods.
Investor 0:00
When we found you and your podcast, it was like, Okay, this is what we should have done the first time. It’s like the properties make sense the day you buy them.
Announcer 0:08
Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties and 11 states had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day. You really can do it. And now here’s your host, Jason Hartman with the complete solution for real estate investors.
Jason Hartman 0:59
Welcome listeners. From 165 countries worldwide, this is your host Jason Hartman with Episode 1035 1035, thank you so much for joining me today, as I come to you from Kansas City. You know, I’ve been embroiled in this case here for many years, I caught a property manager stealing from me from some of our clients. And we’ve been in litigation and I gotta tell you, whatever you do, stay away from lawyers. I know you’ve probably heard that we got a lot of lawyer clients listening out there. I hope you don’t get mad at me for saying this. But hey, look, we all know it’s true. nobody wins in the legal system. Not even the lawyers most the time. Interestingly, it is a lose, lose lose environment. When I was growing up, hey, I’m a Libra right? The scales right. I weigh I like to weigh things out. And when I was growing up as a I remember, as a kid, I used to watch courtroom dramas and I always wanted to be either a lawyer or a judge. I really wanted to be a judge the most. That’s one I thought I would do. But let me tell you that the system is a disaster, it does not work. And that’s why I created my startup project, my passion project free court.com, which maybe will be my gift to humanity if it ever gets off the ground, an online court system where people can settle disputes for free. Basically the crowd, the public out there is the jury, nothing binding. It’s not arbitration. Arbitration is a scam. If you asked me, it’s just a way that people can resolve their differences. And hey, the history of human life is the history of people having disputes isn’t it? That’s, that’s really history. If you look at history, what is history but a bunch of disputes. It’s a bunch of arguments, a bunch of lawsuits or wars, if it goes to a war. And so let me tell you just a little bit about what’s going on in this case before we get to part two, and we’ll talk a little more about self management. I also want to play a couple of messages I got from one of our clients. Andrew, who is really engaging in the self management process. And I’ll just play those messages for you. I got permission from him to play them on the air. And so you can kind of hear what he’s going through and really how much he likes it. It’s not perfect, but he likes it a lot better than having a property manager. And it’s fitting because this case I’m involved in is with a property manager, who I caught ripping me off who I caught ripping other people off, I interviewed several other victims on the podcast, you know, it’s just really hard to get justice. Let me tell you that. So here we are on the eve of trial in Kansas City, and I just found out yesterday from my lawyer that, you know, he’s getting screwed around by the other side, and we’re not going to be able to depose two really important star witnesses. So we will go to trial. If we get to trial, and don’t settle before then we will go to trial without enough evidence without the proper evidence to argue our case. And this is what happens, you know, you start out in these cases and I kind of build myself as a bit Illegal activists, right? I really like justice. But let me tell you the chances of getting justice in a court of law are very remote. And the reason is, is it’s not because you get to go in and explain your side of the story in front of the judge or the jury. It’s because of all the thousands of compromises and sellouts that happen on the way to trial. That’s the problem. That’s where you just lose, lose, lose. For example, in this case, one of the other attorneys on the other side, scumbag If you ask me, we caught him years ago, having illegal ex party conversations with the judge sent that up on a writ, which is like a appeal during the trial, you know, they didn’t care. You know, go ahead, have X party conversations, who cares? I mean, you know, that’s, that’s completely wrong, right? It’s totally unethical. You’re not supposed to do that, because it would prejudice the judge to one side or another and we caught them doing it. I mean, we caught them red handed. Did anything happen? Were there any cases Nope, nothing pitches totally ignored it is really a very tall order. So the system is broken, it’s got to be fixed. Maybe free court comm will be the thing that fixes that. I don’t know, if someone has burned you and ripped you off, go post your case there and tell us what you think it’s in beta now. Try it out, hey, it’s free. What can I say it’s a free court. Okay, so let’s get to our discussion on self management. And let me play for you a couple of messages I got. Now these are a little bit out of context, but you’ll just get a little bit of a sense and I’ve played some messages from the same person, Andrew, before on the show, as to his experience with self management. So I’m just going to quickly play these messages. And then we’re going to go into Part Two where Adam is asking me some questions about management and self management, and just property investing in general. Don’t forget to subscribe to our property cap. This is our really unique new podcast. There’s no audio, it will take you no time. But go on, for example, iTunes, I can do it right on my iPhone and look up Jason Hartman or property cast instead of podcast. It’s a property cast. What does that mean? Well, all the performers in PDF file format are on the feed. It is a beautiful thing. And it shows you what an innovator Yours truly, really is. Because everybody told me this couldn’t be done and I knew it could be done. I worked through soldiered through all the ears of the naysayers and hey, we did it. It works. So if you want to get those performance on the properties, and use it as kind of a hot sheet to get the newest properties we have available for you to invest in, subscribe to the property cast and please while you’re there, rate and review the quote unquote show it’s not even a show. It’s a PDF file, a whole bunch of them. So check that out. Jason Hartman property Cast, just subscribe, and you’ll get all the latest and greatest properties that we have come available for you. And be sure to join us in Hawaii first week in November, we got a few more registrations for that in the last day or two. And I’m looking forward to seeing you all there. Go to Jason Hartman, calm and check out our prophets in paradise event, Hawaii first week in November, you’ll love it. And of course, the property cast those are your two action items other than listening and learning. So here we go with the messages from Drew. And then we’ll get to part two with Adam and finish that up today.
Drew 7:38
Hey guys, I have another little minor update about the self management stuff. So the tenant that I had recently had placed, he is extremely handy. I have sent him a couple things and he’s installed them and they look great. So I kind of have a little bit of a proof of concept and kind of built a friendship with a guy and he has since told me that I can He did rehab work with his sister flipping houses in Miami. And he’s a local truck driver in Indianapolis. And so he just has given me ideas on ways that I can make the place a little nicer. So I’m kind of used his house as sort of a test case for the direction I want to go. And he’s very receptive to going around and doing that work at the other houses that I have in the same neighborhood. He’s like, yeah, I actually have a cousin that’s going to move in into the area. So if one of these places comes available, I’m sure he’d love to rent it. So it’s just like, by having a connection with these people, really helps bring other opportunities out that wouldn’t normally be there. And the thing that I thought was really interesting, was, you know, he was saying, hey, my wife and I are pretty handy. I mean, they didn’t have to say that it was pretty evident when they were fixing up the front yard and doing all this stuff that I didn’t even ask for. So I said, Hey, you know if I can make you turn these places, sparkle. And you guys can, you know, work on maybe one a month, just a couple hours here and there, I’ll give you a discount off of rent. So that way, it’s just a trade. And it’s like a work for food. So it’s not like I have to send them a 1099 or anything. And it just makes it really clean. They said, which I thought was very interesting was, you know, if one of these places goes vacant or something, and you need our help in just cleaning, or, you know, doing some painting or whatever, we’d be happy to do do that, you know, as well. And we can work that out, as well. So what I was saying is, you know, hey, if I acquired another place, or if I had a place go vacant, you know, it seems like 80% of this work is just elbow grease, getting in there painting, putting in flooring, you know, replacing some crusty fixtures. It’s just above basic, you know, and if I can leave the 20% sent to the experts, and you know, give them free rent in exchange, it just seems like such a win win. So I thought that was kind of a little of an interesting angle, another hack. Just thought that was an interesting new sideline. Since I bought these all within miles of each other, the proximity to have someone help me, makes it very easy because it’s also geographically close to where they live. I mean, think about that, you know, so a lot of these people that I’m hiring live on the other side of town, and then maybe a higher class area, and you know, this guy, he can go next door and knock on the guy’s door and do some of the work. So I obviously have to build a relationship with a guy and start small before I tell him to go do everything, but the proximity really, I think helps so something to chew on. The last point that I was going to make is Thought is an interesting way to think of my approach with these tenants is, I want to strive to be a better landlord than they are tenants. And I think all too often, if you ask these people like I asked my previous tenants, how they felt about everything, they said, Oh, they were terrible, they never responded. They didn’t come out and do what they promised, you know, and the tenant has resentment for that when they’re paying rent. And when the arrangement is not both sides where I’m don’t respond, and, you know, I get the late fee, and then they don’t respond. And there’s no repercussion. It just doesn’t feel very balanced. So I think that’s kind of my metric is to be, you know, the golden rule. Right. So that’s kind of my my thoughts.
Drew 11:54
And where have you found the best quality repair workers like when you get a request from your tenant, they Thank you. That actually needs to be fixed. Where have you found the best results?
Jason Hartman 12:02
Well, one of the great things about self management is sometimes the best result is the tenant themselves. Okay, I’ve had my mom on the show and she’s talked about how she I don’t know if this is a legitimate screening question either. But asking them if they’re handy. And, you know, sometimes the tenant will either be the person themselves and they will fix a lot of stuff around your house, or they’ll find the person or places like Angie’s List, okay. Any places where you’re going to get some reviews? And and no, if you know, they’re verified, actual customers are reviewing them.
Drew 12:42
And whenever you’re doing
Jason Hartman 12:44
one thing, let me say one thing about that list. Okay. So everybody listening to this that’s following our plan is investing in a diversified way in multiple markets. Okay, so Angie’s List, at least last time I used it is a localized membership. So it’s like five bucks a month for each city, right? So you’re gonna have to have three or five memberships, to angie’s list for each city you’re in, which is sort of a pain, because it’s not really set up for the type of thing we do, but deal with it. Okay. just deal with it.
Drew 13:18
Alright. So as you’re doing the repairs and thinking about that, do you put in your lease that repairs under a certain amount, or the responsibility of the tenant? Or how do you work that?
Jason Hartman 13:31
I hate to say it, but I haven’t done that often enough. I have done it before, but not enough. And you know why? Because the property managers don’t do it. property managers generally don’t want to do anything out of the box. They don’t want to charge pet rent. They don’t want to go to bat for you. You know, they just want to do what’s easy for them. Okay. And that’s something you should definitely do. Okay. My mom does it Gentleman does it you’ve heard and gentleman on the show she’s spoken meet the Masters, you know she does it. It is something that landlords do a lot, they say any repair under $100 or $50, or whatever the number is 1500 bucks, you know, tenants responsible, you know, you got to make these tenants view this, like, it’s their home. This is not an apartment building, where we’re going to come and do every little thing. Okay, this is a house, it’s a single family house and with a single family home, you know, you got to be a little more responsible, you got to do a few things. Okay. So it just comes with educating them. And whenever you’re putting together your, your contract for your lease, I was thinking today, let’s say the washing machine breaks. Obviously, that’s something that I as the landlord, I’m going to fix but if it turns out if you if you own the washing machine, right, right, that’s the first thing. So here’s, let me say something about appliances. That’s another area and this is very Market to Market. Okay, but that’s another area where you can make some extra money. You could own the appliances, but you rent them to the tenant.
Drew 15:09
That’s a little nickel and diamond. No, no,
Jason Hartman 15:11
no, no, because a lot of tenants actually rented them from those rental places, okay, which are a ripoff. I’ve rented things at one time. And one of my properties, I rented my television set to the tenant. Okay, now, this admittedly was a property I actually lived in. And when the tenant looked at it, I was living there. Okay, it was before I moved, and he said his name was Dan. Well, he’s a gas. He’s probably listening to this podcast right now. I think it was Dan. I’m pretty sure that was the tenant that rented it. This tenant I’m, I think it was Dan. Hi, Dan. Was it you? I can’t remember. Anyway. Oh, maybe it was Josh. He’s probably not listening. I don’t know. I don’t remember
Drew 15:49
if you’re listening Jason hartman.com slash ask.
Jason Hartman 15:51
Yeah, that’s right. Yes. Yes. Thank you. Tell me remind me of this. But it was years ago, and they liked my TV and I said, Hey, you know, it doesn’t fit that well. In my new Place. I’ll read it to you and I rented by television set. Yeah, like 25 bucks a month. Do you just kind of think, hey, whenever we show this house just mentioned that it’s my refrigerator, do you show it without a refrigerator and say if you want one, and we can do it for 15 bucks a month, or it’s too hard to move it, so you gotta just have it there. Okay. But the nice thing it allows you to do is it allows you to say, you know that the rent on the listing is lower. So you could say the rent on the listing is $1,000 per month, for example, but the refrigerators sitting in there, hey, do you want the fridge and the washer dryer? Well, you know, the refridge is 25 bucks a month and the washer dryer, you know, that’s 30 so you get paid $55 a month more. Okay. And a lot of tenants will just take that deal. Right, but they don’t what do you do with it? Yeah, well, that’s a problem. You can either tell them look, I really want to rent it with the house. And you know, I got several applications here and I’m probably going to choose the person that’s going to take care appliances to because I don’t want to have to move them. But if push comes to shove, they might call your bluff. Okay, other words. Okay, so, but that’s one reason, you know, choosing the tenant that is offering you the best deal is okay. You know, the tenant that rents the whole package is fine. You can choose that tenant over the one who didn’t want to do it. That’s not discrimination over refrigerators or No. Okay. You know, of course, you know, it’s like, if someone comes to look at your garage sale, and you got a bunch of furniture in your house that you’re selling, because you’re moving, right, you could make them a package deal with they’ll buy more stuff. If they buy less stuff. Well, you know, you don’t get as much deal if you just want the dresser. If you want the whole bedroom set. I’ll make you a better deal. Same idea.
Adam Schroeder 17:45
One of the last questions I have is property management software. I’ve never used it obviously since I have a professional manager. What should I expect out of it and what do they do? For the most part well,
Jason Hartman 17:57
okay, so that’s a great question. Course property tracker is great. Okay. And that’s the software that I own half of it. And it looks like I’m going to be buying my partner out or he’s going to be resigning. I’m not sure. So, look for more news on that. I can’t wait to get the whole thing because I’m gonna throw some money at it and spend some money on it. Okay, and really fix it up. That’s a great software, but it does not do every management function. It’s more of a an evaluating and tracking function that it does. Okay. Now, Drew, you know, he, I think he’s using billiam from not mistaken there are several professional property management software’s that property managers use. One of them is building and there’s yardie and there’s a bunch of others out there, okay. And I think he just for his own portfolio is using building him if I’m not mistaken. He got an account for himself using professional grade property management software, just for his own portfolio. He’s not a property manager. He says he likes it very well. So, and he also likes self management very well, much better than having managers, but what should I expect
Adam Schroeder 19:08
to get in them? Like, what do they do whenever you log in? Well,
Jason Hartman 19:11
they’ll do all kinds of things, they’ll send out notices, they have a portal for the tenant, many of them have a portal where the tenant can pay rent, by the way, cozy.co we’ve, of course, had them on the show, and they’ve spoken at some of our meet the Masters events over the years. That’s another one, you know, doesn’t do all the professional grade stuff. But, you know, it’s like an online payment system, which is handy. And you know, it’ll send out notices, it’s got document libraries three day notice to pay or quit, you know, move out checklist, all kinds of things. Now, just oh, I don’t have this software myself. Okay. I’m not actually using it. But I’ve seen the property managers using it and I’ve looked at some demos of it over the years and, but he does all the things that a professional property management company would need Okay, notices for this that or the other thing it does invoicing you know ton of stuff, okay, but just go check it out though. Look at Bill diem.com or yardie, calm I can’t remember how you spell that it’s kind of spelled funny yardie but type in property management software and just check out the websites, a lot of them have little videos on it that demonstrate what they do and things like that. So it’s,
Adam Schroeder 20:25
it’s pretty cool. Now, is there a certain number of properties you think? Or it’s helpful to get them when you hit or is it something that even if you have one or two, it would be useful? The software?
Jason Hartman 20:35
Yeah, for one or two. I don’t know that you need to go that far. But I think the reason that drew and you know, my memory is a little foggy on this. I think the reason he chose building him was because I think it had a like a sort of a small operator pricing package. And I maybe the others were more designed for Having more doors under management, I can’t remember. But again, I would say just go look at their websites and look at the pricing and, and that kind of stuff.
Adam Schroeder 21:10
Okay, and what kind of grace period Do you give your tenants if any,
Jason Hartman 21:13
my mom doesn’t give them any Grace? I remember talking
Adam Schroeder 21:15
about
Jason Hartman 21:16
checking in the hospital. I think that’s really good. Okay, no grace period, but she doesn’t charge very high late fees, either her late fees are not, you know, the kind of light Okay, compared to some, I would say no more than three days grace period on the rent, you know, the rents gotta be there in the first three days maximum orden or just no grace period, you know, I mean, just, you know, have your expectations and people tend to meet them sometimes.
Adam Schroeder 21:41
What kind of late fees do you charge? All right, well, standard.
Jason Hartman 21:45
Yeah, that’s all over the board. And by the way, there are some laws on late fees. So be a little careful with this one. Some charge like every day, they’re late. Some charge, you know, 50 bucks or 25 bucks. But you really have to have a late fee, that increases with time. Because if it doesn’t, and they say, Oh, well, you know, it’s already the fourth of the month, there was a three day grace period. I’m already got it, I have to pay the $50 late fee anyway, so what’s the hurry? No, you don’t want that. Okay. You want to cost more every day? Okay. So the answer is, I don’t have an answer for that one. And I don’t want to run afoul of any particular states law on late fees. You know, where it’s a great resource for this more legal stuff. No low, no low press. I interviewed a lawyer from Nolo press on the show where we talked. Just go to Jason Hartman, calm and type no low and oh, they’ve got great books on this. Everybody that’s going to do self management. Get yourself one property management book. You know, property management for dummies a Nolo press book. I think no law is really very good. I liked it. stuff a lot. And you don’t have to sit there and read the book. I mean, maybe if you have insomnia, you want to read the book so you’ll fall asleep, but just have it there’s a reference thumb through it, skim through it, you know, read a few things that interest you in the book. And this stuff is not that hard. It’s a lot of times it’s easier than managing another person with a conflict of interest. Okay, I’m really I’m really telling you the self management thing is, is pretty good. I do want to say one more thing. Remember, the most tender delicate time is when your property is vacant, okay. You really want to be careful with a vacant house. They can houses can have a pipe break, they can houses can get vandalized, vacant houses might have their insurance canceled, or their insurance company or insurance company doesn’t cover past a certain point. You know, if it’s more than 60 days vacant, the insurance cancels automatically so be Careful, have a vacant house know what your insurance policy says. And one more thing on insurance. Some insurance policies have clauses that say they limit their coverage if you don’t have a professional property manager. Okay. Now, you know, they think that that’s just a sort of a general safety precaution for them, right being the insurer. But I say it’s not that way in practice, you know,
Adam Schroeder 24:29
but that’s the termination. Jason.
Adam Schroeder 24:31
Yeah, it is. I know.
Jason Hartman 24:33
I know. You know, self managers should not be discriminated against. They should not have to sit on the back of the management bus. Okay, that’s wrong. Yes, it’s wrong. I tell you, it’s wrong. But yeah, so just be careful of what your insurance policy says. And you know, your insurance agent, don’t lie to them. Don’t say you have a manager when you don’t. Okay? You know, you if you’re self managing, and you’ve maybe you had a manager when you bought the policy. Then you got rid of your deadbeat manager, because you thought, hey, I want to get more control of this, I’m gonna jump in learn a little bit. And that’s the great thing too. You know, when you self manage, you can learn some stuff. You know, every time like I hired a patent attorney today to patent something that I want to patent right. And patents, I have a lot of trademarks and copyrights and all that intellectual property. But patents are one thing that I’ve only dealt with one other time in my life, right, where I applied for a patent on something. I told him today I said, I said, john, look, I want to learn something. You know, I said, How do you do the search for the prior art, you know, to see if this invention has already been invented? Right? With a trademark, it’s easy. You just type in the words on the trademark website. uspto.gov. But with a patent, how do you search it? I mean, it’s a concept. It’s like a three dimensional thing. You’ve got to figure out a way to explain it, right? I’m making them teach me because I just want to learn something. It’s interesting. Learn some stuff about property management, folks, learn some stuff. If you like it, it’ll make you feel empowered. That’s what we’re all about the empowered investor. Right. empowerment. That’s the thing.
Adam Schroeder 26:07
That’s everything I had. So those are the main questions I had about going into self management.
Jason Hartman 26:12
All right, I hope I answered them for you. Yeah. And with the clip we’re playing on this episode from Drew, who’s found out some other nice things. He’s always boxing. My mom and I, we’ve, we’ve got this little thread where we’re listening to Drew’s story as he gets into self management and he just keeps loving it. It hasn’t been all roses, he’s had a couple of bumps. He just thinks it’s a lot better when you have a direct relationship with the tenant. And you’ll hear that in his own words on that on that boxer. Okay, so, yeah, good stuff. Thanks, Adam. And happy investing to everybody. Be sure to register for Hawaii events coming up. Okay, we first week in November. We’ve got profits in paradise two day conference in Hawaii. And then we’ve got our two day venture Alliance mastermind event right after that in CO ye Okay, beautiful quiet. I’ve never been there can’t wait to go. So beautiful. Yeah. Oh, you have been Hmm. Aaron and
Adam Schroeder 27:06
I went It was our baby moon before Isaac was born.
Jason Hartman 27:09
There’s something called a baby moon, not just a honeymoon baby moon. I have not heard that. But
Adam Schroeder 27:13
yeah, just before the baby’s born before they recommend the pregnant woman not fly, you go and take a vacation. And your last big vacation before you have a visitor in your house for the next 18 years.
Jason Hartman 27:26
Or maybe longer, maybe 30 years.
Adam Schroeder 27:29
If it’s 30 years, he’s paying rent, that’s for sure.
Jason Hartman 27:32
Yeah, well, good. Good and see self management. There you go. Right. You’re not gonna hire a property manager. Are you?
Adam Schroeder 27:38
Maybe one of his brothers if I don’t want to put up with it? Yeah, there
Jason Hartman 27:41
you go. Get the brother to do it. Yeah, good stuff. All right, Adam. Hey, thanks for participating and asking these questions. Really appreciate it. I’m sure it was super helpful to a lot of the listeners. So we really appreciate you coming on the show again, good luck. Let us know how it goes. Thank you so much for listening. Please be sure to subscribe so that you don’t miss any episodes. Be sure to check out the show’s specific website and our general website heart and Mediacom for appropriate disclaimers and Terms of Service. Remember that guest opinions are their own. And if you require specific legal or tax advice, or advice and any other specialized area, please consult an appropriate professional. And we also very much appreciate you reviewing the show. Please go to iTunes or Stitcher Radio or whatever platform you’re using and write a review for the show we would very much appreciate that. And be sure to make it official and subscribe so you do not miss any episodes. We look forward to seeing you on the next episode.
