 Welcome to the condo insider show. I'm your host Cheryl Franklin. Thank you for joining us. Today we have with us Krista Stadler and we're going to be talking about why do I need a rental manager. Many of our condo association owners are investors as well and many may want to rent out their units and so we have Krista our expert on hand with us to talk about the benefits and why you need a rental manager. Welcome Krista. Thank you so much. I'm so excited to be here. Thank you. And before we begin because I understand I may be back so this may be something we do often. I'm going to give us our proper little cups with a little beverage in it. Oh thank you. A C for you and a K for me. Cheers. I love it. Great show. Thank you. I adore it. So first off let's talk about what makes you an expert. Let's talk about your background and what you do. Your title is broker and charge for social Hawaii rentals and sales. Yes. But you also own your own company. Tell us a little bit about your background. I owned a company in Kona Hawaii for five years called Pacific Breeze Properties which was recently purchased. I was the principal broker and owner and also president of the local property management association group over there called Narpa. So very heavily involved in the community and I just moved to Oahu. So nice. I'm excited about that. Yeah. I'm happy about that. Yes. Thank you. Let's let's talk about exactly right out of the gate. What are some of the most important issues as to why anybody but even like myself that has investment properties would need a rental manager opposed to renting it or managing it myself because you know I think I can. Right. So first of all the relationship with your property manager should be a partnership similar to similar to what you would have with an attorney that you trust your CPA that you're going to go to for financial advice or your financial advisor. There's someone who's going to keep you out of trouble. That's the goal. The owner is our client and we want to put their best interests before anything else while of course complying with the law. We have to stay within the law. So a licensed real estate agent agent that is a property manager is going to hopefully if you screen them and vet them properly have you know a thorough knowledge of the Hawaii revised statutes any updates to the statutes the fair housing laws will statewide and federally. But we could get into some of the juicy details if you want to. I do. Where you could fall into trouble if you don't have a property manager right a rental manager. Yeah I think that's most important because most people don't know the rental codes and things like that and they can't get into a lot of trouble. Yes. And so hiring a rental manager can keep you out of trouble and probably help you to maximize your investment. Absolutely. Yeah. So it starts out I was trying to figure out where is this actually going to start. But it starts out by pricing the property. It actually might even start out before that with your rental manager coming in and looking at your property and seeing maybe small ways that you can make improvements that wouldn't cost you that much but may increase profitability of your unit. Then we would get into marketing it and marketing it. You want to market it legally. You can get into a lot of legal trouble if any of the verbiage you use is showing any type of discrimination which you may not even realize it is. You want to be very careful. And then also having the tools within the rental agency to promote your your property developing the actual site where they're going to go to look at it. Taking the pictures putting them on the site and hopefully the rental manager that you use has avenues to get that listing out to multiple locations. Zillow, Julia, Hotpads.com. Yeah. Exactly. Exactly. So that's really important. And then having the comps available within either your complex that you own your condo or in the neighborhood in the area so that you can price it properly. Comps being comparable rates rental rates that are being charged and people are moving into under that rate. So you'll know exactly how much how to kind of price your rental unit. Yeah. And people get fixated on a certain price and they could really they're going to have 2500 absolutely have to have it. It sits there for two months empty whereas if they just had put it maybe at $23.95 and had it rented right away, think about the income that they're losing by not pricing it properly. So yeah, yeah, those type of things. That's huge because as a non professional in this industry, I mean, I wouldn't even know where to start. I think that's good information. So and you would also assist or do all of the showings and things like that. Exactly. Do all the showings against showings. You have to be very consistent in what how you were treating each applicant that is coming for the showing. You're using the same words that you're, you know, not treating this one extra special and that one you've already had but in your mind that they're not going to apply. So no, you have to treat everyone the same. And then when it gets to the applicant screening and we're getting into a whole other daily wick of problems that can occur if you don't screen properly screening properly in my mind and with the company I work for is a credit check, background check, sexual molester fender, excuse me, offender listing and rental eviction. And it's pretty straight forward right across the board. You can't vary that from one applicant to the next. You if you sit when you set your standards, what you are looking for, then, then, you know, you have to be consistent that that is your requirement. So you want to make sure that your rental agent has a very thorough screening process. If you get a tenant in there, I've seen owners. Oh, but he was so nice. Oh, he just seemed and you know, I had a friend that kind of knew him from here there. Oh my goodness, please don't please don't. You could get in you could have that person in your property for six months before you can get them out if it turns into a problem. So and then also, you know, there's other other things besides just getting that report, you want to go back and you want to call the current landlord and more importantly, the previous landlord, the one because the one that they're with now may want to get rid of them. Oh, you want to find out you want to talk to the one prior to the one that they're that they're currently with. What if they want to keep you and so they are not, you know, easily or readily available to say, oh, yeah, they're wonderful because they want to encourage that tenant to stay because they're such a good tenant. Does that make sense? Yeah, but typically that's not let's go. There's not usually a lot of conversation. There's a very strict questions that can be asked of the previous landlords, you know, did they pay rent on time? Did they receive any notices? Would you rent to them again? So you're not having like deep conversations about whether or not you like their furniture or not, you know, it's very, it's very standardized. I didn't know you did that. I didn't know you called the previous and then the one before we actually have a form that they actually have to fill out and sign and return back to us verification form. Oh, yeah. All rental managers are rental management companies kind of follow the same criteria. Are they created equally? Should they be by law? No, but that's another show. Okay, all right. Good. We could go on. We could go on. So once you've got your fabulous tenant, they're qualified, they've got great references, plenty income, good credit. Then you're going to want to do a proper move in inspection, which I've seen time and time again when we've taken over properties that haven't been managed by a property management company or property management company doing it correctly. The tenants moving out after seven years of living there and they have absolutely no documentation signed by the tenant or anyone or photos of what condition that property was in when they moved in. So if that place is destroyed, doors or you know, holes and doors and cabinets hanging off their hinges and Lord knows what, the court will deem that the property was in the condition when they moved out as it was when they moved in if there's no documentation to prove otherwise. Does that make sense? It makes perfect sense. But it's terrifying. So that is so important to have that initial move in inspection. And always I recommend with pictures and have the tenant sign off that they agree to the condition you're going to mark, you know, good, fair, poor, there might be things in there that are made a little corrosion on the faucet or whatever you notate all that you want them to sign off that they agree that that is the condition that they're taking the property. But if you take on a property, it's in a certain condition. How much allowance do you give or just normal where life wear and tear? There is normal wear and tear. There's certain kind of guidelines, I think, like court might use, like, you know, 10 years for carpet, seven years for paint. Don't quote me on those. Those may not be accurate, but things like that that you use as a guideline and investors and folks running out their properties need to be aware that there will be normal wear and tear, especially if you have someone in there, three, five, seven, 10 years, which does happen sometimes, you need to maintain it. Absolutely. Yeah. Turn to think of the other. Oh, boy, writing a proper lease. I wouldn't know where to start. Yeah, having any special terms that cover anything that isn't in the boilerplate lease, you know, related to, you know, if they move out early or there are any kind of penalties, obviously, we would suggest there would be, you have to remarket it. Right. Things that they're responsible for upon vacating, like cleaning the unit, cleaning the unit, possibly pest control, window clean professional window cleaning. Keep in mind, you would have wanted to have done all that prior to them moving in. We want to give the tenant the property in the condition we expect them to return it in at the end. Got it. Yeah, so you've got to be able to fix the one time investment that that owner is going to make. Well, not the one time investment, but get it ready. Yeah, and it should, you know, as the tenants are moving out, it should be prepared. And if it isn't, then we're going to deduct it from the security deposit. Which brings me to the security deposit. Okay. Hey, all right. So we've got to tenant moves out, we've got 14 calendar days, not 30 days. No, no, not 30, 14 calendar days to get that deposit sent to them. We have to we usually send a certified mail. Okay. So we're going to ask them for their forwarding address. If we don't have it, we're going to send it to their last known address. We've got any deductions that we're going to make they didn't clean the unit properly. They ripped a screen whatever it might be. We need to have all of the either estimates or invoices, and a nice pretty package with the remaining balance that's due to them to them by the 14th day. That's a pretty quick turnaround. It's, it's, it's very challenging. Sometimes there's a lot of things to be done. I would imagine. Let's go into that a little bit further after the break. Now is a good time to take a break. And so yeah, we'll continue the conversation. We're going to take a quick break and please come back and join us. Thank you. Hey, hello, everyone, and welcome to the Think Tech Hawaii studio. My name is Andrew Lanning. I'm the host of Pretty Matters Hawaii. We air here every Tuesday at 10am Hawaii time, trying to bring you issues about security that you may not know issues that can protect your family, take yourself, take our community, protect our companies, the folks we work with. Please join us and hope you can maybe get a little different perspective on how to live a little safer. Aloha. Aloha. I'm Marcia Joyner, inviting you to join us on Wednesdays at one o'clock for Cannabis Chronicles, the 10,000 year odyssey, where we take a look at cannabis as food, cannabis as medicine, cannabis and religion, cannabis and dear old Uncle Sam. So please join us to learn all about cannabis. Again, Wednesdays at one o'clock. Thank you. Welcome back to the show on today's topic. Why do I need a rental manager? So we're just going to jump back in where we left off with security deposits. I know there's a lot more to be said about that. Fun, exciting stuff. Okay, so if you willfully or wrongfully, it's found by the court that you willfully or wrongfully not return security deposit in a timely manner or withhold it, use the owner, not me as the property manager, well, use the owner if you're the one controlling the unit, could be responsible for three times the security deposit amount. Say it was $2,000. So that would be 6,000 plus court costs. Wow. Three times. Regardless of the of the fact that they may owe $2,000 worth of damages. If you don't, that's the worst that could happen. That's the worst that could happen. So you've got to be really, really careful about jumping in there and getting that done where if you hire a professional, we've got vendors that we use, you know, that are licensed and sure that they handle this type of thing all the time. We have to act quickly. We need to get things turned around quickly. Also, because we want to get that property remarketed so we can make Yeah, or money or money sitting there, you know, having repairs done for a month. Yeah. So the vendors are another another key asset to using a rental manager or property manager. Yeah, and it takes all the work away from the investor trying to vet vendors and make sure they're properly licensed and checking their references. When it's all done by the management company. And some management companies not all will also provide filing the general excise tax returns. And there's different filing requirements, depending on your income and doing your annual report for you. And from an accounting standpoint, I think it's really nice for an owner. The end of the year, if they've got everything running through the property management account, for example, maybe we're paying their property taxes for them or their association dues, they have a nice pretty picture, the statement or a cash flow report that they can bring to the account. Yeah, it's got everything there to present at the end of the year. And they're not hunting and pecking all over the place trying to gather all those little pieces together. Right. That's that's another little that's that's a big sell right there. Especially if you have multiple properties. Yeah, yeah, which is I'm sure the goal of many. Yes. Yeah, so good stuff. I can't imagine why anyone would want to do any of this on their own. The security deposit alone just kind of, I mean, that's a short window to get in there, inspect. Now you have to inspect again on the back end, right? Oh, yes, you're going to take you're going to take that move in inspection and those pictures that you've and you're going to compare it move out. Allowing for Yeah, allowing for for wear and tear, which is that some of that's detailed in the landlord tenant code. And then if it's an inventory furnished property, then you've got that extra added level of detail with with going through and making sure that all the inventory is there. So that's another one. There's other time frames that are really important. For example, if someone doesn't pay your rent by the due date, you want to send a five day pay or quit notice out. They're quick. So basically, it's a notice telling notifying the tenant that you've been you're late. You've got five business days, not calendar days to pay the rent in full, or we're quitting the lease. Basically, you're in lease violation. You've not fulfilled the agreement of the rental agreement or the lease. So you want to make sure that those are going out immediately in a timely manner, in a timely manner. And I've seen again, time and time, well, they told me they're going to pay on Friday. And then then it turned into two more weeks. You're putting off putting out that five day pay or quit notice until the end of the month. And they've kind of sweet talked you all the way along. You're pushing out everything else that comes after that, which is going to be, you know, if they don't pay filing a summary possession, you know, summary possession with the court, and then there's a whole process that the rental agent could is going to take care of for you if any event that that happened, worst case scenario, worst case scenario. Yeah, yeah, idealistically, they just receive the notice oops, I forgot and they send it in. We're lucky. And sometimes, typically, if it's somebody that I when I was more on the management side and not the broker in charge when I was actually having accounts that I knew, hey, you know, this person's never late. They've been with us for two years. They've never been late. I'll still send the five day pay or quit notice out, but I will give them a heads up with a phone call and say, Hey, you know, I'm so sorry, I'm having to send this out. I know you folks are always on time. This is coming to you. I'm like getting an IRS notice, you know, you want a little warning. And nine times out of 10, those type of folks will oh my gosh, yeah, absolutely. We just, you know, yeah, yeah, just had a little just had a or life happened. Long weekend happened. Yeah, yeah, exactly. That's, that's, I mean, I think investors don't think about, you know, most of these things, they just think, you know, I have an investment property, it's going to be easy. I'm going to collect rent every month, they don't understand the legal ramifications of not knowing the codes, things of that nature. I certainly didn't know there was like a 14 day window to return that security deposit. So when they move out, and you inspect the unit, and you determine if there are any damages that you charge the tenant that's moving out. Do you also take a look at the lifespan of the components? Or do you do that kind of ahead of time? Like if that's that refrigerator is 10 years old, and or whatever, you're kind of constantly encouraging the investors to yes, yeah, and they and I would recommend to someone who's going to go into having investment property to not be so tight with that with the income that's coming in that they're barely covering their mortgage or their mortgage and their association dues. And they have no, you know, you want to before you even invest, this isn't again, another whole show we could probably do. But they need to, I would recommend highly that they take a portion of that rent that they're bringing in a quarter of it and put it in a pretty possible things that could happen. And they happen. Yeah. So they have to at least start with making sure you're cash flowing that unit, like it should cover above and beyond your mortgage, if you have on your association dues, right, shouldn't just let enough be it depends on what their long term you have to look in their entire portfolio to figure out, you know, maybe they're looking for a loss. But but I've had situations in the past where I've managed properties where it's their only little investment property, they're barely covering the mortgage or the mortgage and the association dues, and they don't have any despair for any repairs. Well, they probably shouldn't have gone into, you know, owning that investment property if they're in that particular financial situation. Yeah. Yeah. So there's other, I don't know how much time we have, but about seven minutes. Okay. So there's other timelines that are important for anyone renting a property to know there's the 10 day lease violation. So especially in association managed properties, we'll get a notification that, you know, a unit 123 has two puppies running around and it says no pets on the lease, or they got towels hanging all over the house. And that's a direct lease violation of the association, not a lease violation. It would be a lease violation because we, it's a house rule, but typically you would want to have a caveat in your lease agreement that states they must follow all house rules and you're going to provide them with a copy of the house rules. And they're signing that they have read and understand those rules. So that basically states if they break any of the house rules, they're breaking the lease. Then you Wow. Turn around and you send a 10 day lease violation notice, business days, not calendar. Five day in the 10 day or business days, not calendar. Yeah. Pretty deposits calendar. I mean, yeah, calendar. And you're giving them 10 days to correct whatever, whatever it is that is not. Yeah, that's a great point you probably you bring up on the condo side. I know I've managed associations where we had problematic tenants that we eventually had to send or notice the owner or the property management company. The association can actually send notice to evict, yeah, to evict the tenant, which lends itself to exactly what you're saying. I've always liked to have a really strong relationship with the resident managers and the association management. You know, you want them to have all your contact information. I don't want to wait till it gets to the point where you're ready to evict them to find out there's a problem. I want to know when they have their first notice. Yeah, I would rather be completely informed. Like whenever something goes out to the owner, it would come to the property management company as well. Yeah, just so we can kind of maybe nip it in the bud before it even gets to that point. Before it becomes problematic. Yeah, you don't send or maybe you do because you offer so many different aspects to the service. But would you pay the kind of associations dues on behalf and you do that also? Absolutely. Oh, okay, all the time. All the time? Okay, that's a part of the whole. Sure. Different companies have different ways of formatting commissions and fees that they charge for various things. Some will include bill payment, you know, electric cable, you know, things like that. If the owner is paying that, not the tenant and association dues, even their property taxes, some will not charge anything. Other companies, they'll have more of an a la carte menu where they have maybe a lower commission, but they're going to charge if you do any tax preparation like the GT taxes or bill payment just varies. So that's good to know. And I think it's really important that the owner of the property interview several management companies meet with the like the broker in charge of the principal broker and the rental manager that's going to be assigned assigned to your account. Make sure you've you want to make sure from the beginning that you feel like you're getting good communication and that you're on the same page in terms of where you see your property, how you see your property being managed and how they manage properties. Now you may learn something in the process. Maybe your expectations aren't even possible. The owner. Yeah. That never happened. So interview three or four different agencies and get all their information, read their property management agreement thoroughly. I really recommend that people do that. We ask all of our owners to read the condensed version of the landlord tenant code so that they understand the laws that we have to comply with. Oh sure they do. Yeah, I mean that's a that's a great practice. And then are there any regulatory agencies that they should check as a part of doing their due diligence, you know? I have a question, Sheryl. I try. The DCCA. DCCA. Right. Definitely. That's the deal. Look that business name up. You can even look up the you can look me up. You want to make sure that who you're dealing with is in good standing. It'll say in good standing. And the company it'll say in good standing with the Department of Commerce and Consumer Affairs. So DCCA. Okay. Yes. Well good because I'm one of those people that overanalyze due diligence. I mean drives my husband nuts. But you know I do my homework. Yeah. Keeps you out of trouble. It does. It does. So the DCCA is another resource for vetting property management companies like any other vendor, if you will. Are they a member of the border realtors? Are they a member of NARPOM, which is National Association of Residential Property Managers? I'm very involved with them. I just moved to the Wahoo chapter. So we have, you know, very strict guidelines and and classes actually additional classes that we have to take in both of those different words and affiliations. So that's, you know, that's really, really good information because I would think the average person isn't even aware of these organizations and aware outside of the industry and outside of real estate and things of that nature. Just the average person that wants to go and buy an investment property. Like where do I start in terms of, you know, doing my homework and due diligence. So good information. Good job, Krista. I think this is good. I think what we'll do is, you know, we could talk on and on. So maybe the next couple of months we'll kind of make this a little mini series to educate our investors in Kondo land. That sounds like that would be a lot of fun. Yeah, I think so. So I look forward to it. You're also a good friend. So this is fun. And I look forward to doing it in the future. But is there anything else you want to share that you think our viewers should know or think about until our next segment? Look at our notes. Well, the only other thing I was going to say, this is kind of a specific thing. But if we have time, discrimination, that's another big one. And that sounds like a show. Okay, we're going to talk about that later then. We don't have time. Watch again for more information. More information, I think. Yeah, because there are so many topics and so many roads we can go down to make sure that our viewership is educated and they hire a property management company. So thank you for tuning in. Until next time. Thank you for watching the show. This was fun.