October 2009

CHRIS X: I’m Chris X filling in for Steve who is heading out to San Antonio for our case study. And we’re going to bring on Karen Davis. Karen is a real estate investor. She’s also a mentor with Lifestyles Unlimited. Karen has been kind enough to join us here on today’s show. And we are going to talk a little bit about leasing, also a little bit tenant retention. If you want to join us here on the program, all you have got to do is pick up the phone and give us a call.

Karen is here to answer any questions that you may have about your real estate investment properties—getting started, you want to call about our free workshop tonight, well Karen is here to answer those questions. Also we’re logged onto the Stickam. We have got a lot of people already logged on and they are ready to chat as well. So Karen Davis, thank you, so much for being here in honor of Steve’s absence.

KAREN: Thank you for having me on.

CHRIS X: Tell you what, let’s get into this talking a little bit about—you want to talk about leasing first as we get rolling?

KAREN: Yeah, I do because I’ve been getting a lot of calls from members. You know, they’ve been having problems leasing their property, or it’s been vacant for longer than it should be.

And I just kind of want to go over the steps really that should be followed or should be taking place that are not. And Del, of course, talks about this in the two-day class in great detail, and then we also have additional classes and on line classes that we talk about this very thing—so just touch on that really.

So let’s skip past all the looking for the property, buying a property, okay? Let’s say it’s all done; we’ve got this property on our hands. And let’s imagine in this scenario that you’re still working on the rehab. You’ve just bought the property, you’ve got guys in there doing whatever it is that they’re doing, and you need to rent the property.

First and foremost I want everyone who’s not a member who hasn’t been to the two-day class or even if you just need a bit of a refresher, what we teach here at Lifestyles is make your property the absolute best product and best price available.

So that means whatever for the neighborhood fits, make sure your house is just the same plus one—plus one upgrade. I know Jeff Smith always says that, and I think it’s a catchy tune so we’ll stick with it.

CHRIS X: Yeah.

KAREN: You know, you’re not going to put granite and spend the money on granite on a house completely from top to bottom in a neighborhood where there’s formica and that’s just the standard. Well, I suppose you could, but I don’t think you’ll get your cost back.

CHRIS X: Yeah.

KAREN: How do you say that—I always forget—recoup the cost.

CHRIS X: Recoup the cost, basically your return on investment.

KAREN: Correct, yeah. So get the property in the best condition, replace things from the get-go that you don’t think is going to have the shelf life that they normally would if they were brand new.

You want to make sure the AC system is working. You want to make sure that the roof doesn’t have any leaks. You want to make sure that everything works as far as the water heater, the appliances, et cetera, et cetera, yada, yada.

Best price—now, I know this is another question that actually someone called about today. Everything was fine, they were following all the steps with their property like Del teaches except for getting comps or comparables.

CHRIS X: Yeah.

KAREN: What other properties in that same neighborhood with the same dimensions are renting for. This person got them a little bit backwards. What he had done was he had a Realtor friend who pulled comps for him through HAR—you know, agent access—but gave him comps for properties that were currently for rent, not rented. And they were at least 60 days old.

So first and foremost these properties weren’t rented and that’s not a comparable. Number two, they were taking 60 days to rent or they had been on the market for 60 days, so obviously something’s wrong there. You don’t want to mirror that. Well, he was using that number as his number.

CHRIS X: Yeah.

KAREN: So this property was vacant I think he said—I can’t remember—one or two weeks. I’m looking at Alfonso ‘cause he talked to him on the phone.

CHRIS X: Okay.

KAREN: One or two weeks and that’s just too long. You have the wrong price.

CHRIS X: Amazing. You can see Alfonso through the walls because he’s in his office working diligently right now.

KAREN: Correct.

CHRIS X: I’m kind of impressed that you can do that.

KAREN: I’m awesome.

CHRIS X: You have x-ray vision?

KAREN: No, I’m just awesome.

CHRIS X: All right.

KAREN: Well, I think another question that has been coming up—and I’ll get back to the member’s question from earlier—but people are always asking, “Well, you know, is it a good time for renters?” “Can you rent the properties quickly?” “Are there really people out there?” Everyone — not everyone, but people think that the economy’s down and everything’s—

CHRIS X: Everything’s dead.

KAREN: Totally not the case. You have to always—I mean whenever there’s an up—who’s it, Chris? You’re smarter than me. You know stuff. Equal and opposite reaction—

CHRIS X: Yeah, for every action there’s an equal and opposite reaction. It’s an astronomical—

KAREN: Who said that? Newton? I mean Einstein?

CHRIS X: Can’t remember.

KAREN: Jeopardy question, Alfonso. Newton.

CHRIS X: Isaac Newton — one of those smart guys with an N in his name.

KAREN: One of them. Whenever something is up in the economy or—okay, in this case down in the economy, something else is up. So people who don’t have good credit, they’re losing their homes, they losing their jobs—well, okay, that’s really horrible, and I’m not saying that’s awesome.

What I am saying though is everyone needs a place to live. So for us landlords, it’s totally up right now for us right now. We have lots of renters out there.

CHRIS X: Yeah, you’re right. Less people can afford to buy homes now. What are they going to do? Well, they’re going to rent.

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