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Property Manager Interview: Andy Petzold – EPIC Property Management

Jeri: Hi, my name is Jeri Frank and I’m co-founder
and CEO of AssetRover, and we are here today because we are starting a series of interviews
on the team you need to assemble as a new investor. I’m here today with Andy Petzold
who is a broker/owner at EPIC Property Management. Jeri:Hi, Andy. Andy: Hello! Jeri: How are you today? Andy: Good, thanks. You? Jeri: Wonderful. Okay, so I wanted to ask
you a few questions about your business. The first thing I wanted to find out a little
bit more about is, just tell me a little bit about your business, how long you’ve been
in business for, and what do you do? Andy: Okay, EPIC Property Management has been in
business for 5 years as a publicly available property management service. We offered management
services as a private group for many years before that. So, My team has been managing properties
for a little more than 12 years total. EPIC offers management services for residential
properties, people have purchased as an investment. Single family or multi-unit apartment buildings.
Right now we handle about 80% single family homes, but it’s based on the portfolio of
whatever the investors bring to us. We manage apartment buildings as large as 120 units. Jeri: So what drew you to prop mgmt, you personally? Andy: Me personally, I’ve always looked at
real estate as one of the vehicles for investment that I felt the most comfortable with. I like
the idea of a tangible object that I can invest in, something I can drive by, I can look at, something I can get my hands on and do repairs. So I think of all the different ways someone can invest their money, I think Real Estate is unique in what it offers both for the investor and also what you can
offer back to the community as part of your investment, as making housing available for people
who have a need to fill with your rental. Jeri: So when an investor is out there trying
to find a Property Manager, what should that person be asking when they’re looking for
a property manager? Andy: I think it’s very important that you spend
that time getting to know each of those property managers so you can get to know them and know
what their philosophy is and see how they feel about what they do. They’re going to
be representing your properties to potential tenants and it’s important that they look
at investing like you do. Whatever that is, that they know your goals and that you’re
comfortable that they’ll be able to handle and execute your goals. I don’t think people
spend enough time evaluating who they’re going to use for their management, and then maybe have a negative result because they didn’t spend the time that they maybe should have. Really get to
know who’s going to be in charge of what is a sizable investment. Jeri: Do you have any words of advice that
you’d give to a new investor who’s just getting started? Andy: Yeah, I think the golden rule for real
estate and probably any investment is to plan for the worst case scenario. Plan for everything
to go wrong and be patient to know that what you’re getting into is the right move. There
will always be another deal…there’s always another house coming on the market…and sometimes,
even if it’s your first or second one, you get so caught up that “this is my deal” that
you forget that…maybe it’s not. Maybe it’s not your deal and you just have to be willing
to be patient enough to wait for the next one–the right one. Jeri: So, don’t get caught up in the emotions
of it, just watch the numbers. Andy: Yes, definitely. You should be excited
about investing, but when it’s new, it’s very easy to get caught up in the process and forget
that it’s really about the numbers. Work it backwards and make sure that you’re buying
it for the right place and if you’re not, walk away. It’s okay to walk away. Jeri: Are there any potential pitfalls and
experiences you have seen with investments or investors in the past? Andy: I have seen a number of scenarios where
investors, like I said, get too caught up into one aspect of the entire process. I think
that’s where a good PM will come in and help provide that larger view. Sometimes an investor
will get so focused on their properties that they forget to see some different sides of
the entire process that they’re working through. I think a service that a good property manager
can provide is to come along side the investor and say “we know each other’s goals, we’ve
moved on past that point, and now here is how I can take you from where you are to where
you want to be,” and we make a plan together so that your manager’s handling your day to
day and as an investor you’re focusing on the goals of your investment. Jeri: Do you have any thoughts on investing
in the Cedar Rapids area, the Corridor right now..what do you think the potential is there? Andy: I think it’s a great time. I know when
you’re in real estate, it’s always a great time (laughs), but I do believe it is right
now. We’re through the period of financial turmoil we’ve been through a couple years
ago, I think we’re through that. Traditionally this area does really well. We have a good
combination–land value helps keep development under control, we don’t have huge expansions
of develeopment unless the demand justifies it. The prices stay very steady and I think
nationally, if you look at what happens in different markets, I think our market is very
predictable. We’re the tortoise–slow and steady and we just do nice progress every
year as far as property values and economic influences. We’ve traditionally been a
very steady place to do investing and I think it’s a great time right now to do that. Jeri: I want to go back and unpack one of
the things you mentioned before, that you are a full service property manager. What
does that mean to me as sommeone who’s looking for services? What does that come with? Andy: Typically, a new investor tells his/her
friends, “I’m going to invest in real estate.” The first thing they all say is, “so that
means at 3am you’re unclogging someone else’s toilet?” A property manager takes care
of that. We do provide a lot more, but that’s probably the first question is, “will you
take care of that for me?” and certainly we will. I think larger than that though, it
really is about an end to end service. A property manager should be able to step in from day
one, begin advertising for you, begin the marketing process of that property, attracting
tenants that are well qualified and a good suit for whatever your rental is, and then work the tenants through the process to make sure they’ve been screened properly. All of the documentation
is in place, their lease is in place, and then do a check-in on the property to make
sure that while they’re occupying your investment, they’re treating it with respect and taking
care of the property, that their needs are also being met to make sure that you’re fulfilling
your duties as an investor, all the while fulfilling fair housing rules, making sure
that everyone’s taken care of as far as state and federal regulations as required. Andy: When things go well, a lease comes to
its end, the tenants decide to move on, a good property manager will help with the exit of that tenant, up and out of the property, so that the deposits are handled correctly and that the
properties return to a rentable condition right away. When things go bad, the property
management company is there to handle evictions, to handle significant damage when necessary
and is documented. A property management company knows the right steps to get ready to begin
for an eviction, but also to begin the process of helping defend your investment against
continued loss, and also to maybe collect damages, if necessary, from the tenant. Deposits
don’t go far enough, sometimes a small claims suit is in order. Most property management
companies can handle that for you as well. Jeri: So can you tell me a little bit more
about the process for selecting a tenant for a property? Andy: Yeah, it begins with the tenants contacting
us interested in a property, and they should go through a series of vetting steps. Different
management companies will have different steps. It’s important as an investor to know what
your company does to screen those tenants. A good company will have several things in
place. We do a national criminal background check. We do a full credit check with a credit
score, and you’re looking for indicators in their history that they may not be financially
in a good place to be able to afford what they’re looking for. You want to make sure
that their income matches with what their rent payments will be. Along the criminal
lines, you want to make sure you’re not placing someone in a rental that would have a potential
for criminal activity in a property. Jeri: Okay, what about the lease itself? What
kind of process do you go through for that? Andy: Uh, two things with a lease. The first thing
would be that the leases are updated. Here at EPIC, we spend thousands of dollars a year
making sure our lease is up to date with current law, that it’s also up to date with anything
that may have occurred that we didn’t have before. You should be reviewing that lease
and a good company has a living document. That lease gets updated anytime that there’s
a new change that arises–that lease is being updated to address what’s current. Jeri: Right. Andy: And the second part would be, it’s important
that the tenants understand the lease. We’re signing them up with a contract and it’s important
that we not just get them to sign it, but the tenants understand the expectations that
the landlord and the management company and the investor have. It’s important to have
that foundation, I think, so we go through the leases with our tenants and we take the
time to read through the lease with them and answer any questions that they have. We’ve
found that it has made it much easier. When problems arise, we both sit down with the
lease and go through it and we look at it and say, “If there’s a problem, here’s where
the problem is and what we need to do to correct it.” If the tenants can do that, then things
become a lot better. A management company should be able to provide that to you. Not
only do we have the document, we are also able to go through it with tenants and really
make sure that we have prepared for the worst case scenario but hope for the best. Jeri: How about setting a rent for a particular
property? Is there a process that you use or give guidance to for your clients? Andy: There are. For the owners that we manage
for, we provide an analysis of the property, a market analysis, what rent rates are, both
what we think the property would rent for in its current condition and if there’s anything
an owner can do to increase the rent or increase the attractiveness of the property in that
price range. We like to provide that feedback so that an owner can have a second opinion
on “Do I change this or do I not?” I’ve had owners that spend too much money and I’ve
told them, “You don’t need to do that today, let’s save that money because down the road,
there’s going to be something else we’re going to do.” I think owners appreciate that kind
of feedback because every dollar counts. Let’s work together to spend it as efficiently as
possible so it goes the furthest. Jeri: How about, do you see trends with people
that don’t use property managers and the rents that they establish? Andy: Generally. I see that the rents that
are charged by individual operators tend to be all over the board, but generally they’re
low. What we have found is that many times when we take over management of a property,
the amount that we charge as a management fee, which is based on the rents collected
in our case, generally we can actually collect a little bit more rent for them. So the difference
in our cost vs. what they are losing because they didn’t know they could charge a little
more, we’re able to usually account for our fee just by what we’re able to do for them
as far as increased rents, or lowered maintenance costs by providing some of the other services
we offer that they’re going and finding on their own. Jeri: Right. Do you have any final thoughts
that you want to share with our viewers? Andy: I would say, if anything that I could
express to the viewers would be–each piece of this process you’re going through as an
investor and looking for your team, it’s important to know the people you’re working with. It’s
okay to go interview a property manager. I have a lot of people come and interview me,
not always like this, but I have a lot of people who will interview me to get to know
who I am and who we are as a management company. I think that’s a great thing. A lot of people
will apologize for taking my time up, but to me it’s important that I know who you are.
If I’m going to work for you as your property manager, I want to know who I’m working for.
Likewise, I would expect that you would want to know who I am and who my team is and what
we do, so that you’re comfortable. You’re ultimately going to put me in charge of a
pretty large investment and I think it’s okay to take your time and get to know every member
of your team. Jeri: Okay! Thank you so much Andy, I appreciate
it. Andy: Thank you!

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