rent apartment miami

tara: welcome everybody. my name is tara armbruster. i'm the marketing manager here at appfolio. we are providers of web-based property-managementsoftware, and we also regularly host these free educational events designed for property-managementprofessionals. today we have a great presentation with robertlocke on rent recovery, a subject we're all very excited to learn more about. so, i just want to go through a few logisticshere before we get started. the gotowebinar control panel is on your righthand side of your screen.

feel free to type in questions there and we'llanswer them at the end of the session. one of the most common questions we get is,"will we be recording this session?" we will. we'll go ahead and send out an email to everybodywho registered with the recording of the session and the slides, probably tomorrow, and thenwe'll also have it posted on our blog and our facebook page, so you'll be getting thoseslides very soon. now i just want to take a quick moment totell you a little bit about appfolio. we sell property-management software. it's web-based, and it really is designedto be a complete solution to benefit your

property management business. it includes accounting, online rent collectionfor free, marketing your vacancies on listing sites like craigslist and others, online applications,screening for residents and much more. really designed to help you build a successfulproperty management business. as we always say at the end of a session,if you don't love your property-management software, we'll be asking if you want to hearmore about appfolio. so, if you do, just go ahead and let us knowand we'll give you a call. and now, i'm going to pass you over to ourco-host gail. she's with the national association of residentialproperty management.

i'll just let her take a quick second to tellyou more about narpm. gail: thank you. narpm is delighted to co-host this webinarwith appfolio. for those of you who do not know, narpm isthe professional, educational and ethical leader for the residential property managementindustry. we are an association designed for real estateprofessionals who know, firsthand, the unique challenges of managing single-family and smallresidential properties. narpm offers an effective professional learningenvironment for owners of property-management companies and their employees.

if you wish to learn more for narpm, pleasego to www.narpm.org. it is my pleasure to present our guest speakertoday, robert locke, mpm, rmp is a national trainer and designation course author withnarpm and is known for his 30 years of success in property management. his company, crown realty & management inatlanta, currently manage over 1,000 houses. twelve years ago, robert also started hisrent recovery business. robert is a frequent speaker at national,regional and state conferences in the u.s. and australia. his presentation style is lively, energeticand informative.

robert is a faithful supporter of appfolioand narpm and is a webinar partner. thank you, robert, for taking the time tobe with us today. robert: you bet. thank you for the introduction, gail. i'm hitting my bar and i'm not getting anyprogress through the slides. i think somebody needs to pass over the screento me, yes? gail: so you have control, robert. robert: okay. i'm hitting the screen and not getting . . . oh,that's because i had my pause button on.

no. gail: can you take it out of presentationmode and put it back in? robert: let's try that. [pause 00:04:25-00:04:46] there we go. gail: great. robert: sorry about that. okay. let me give you a little history first, andappreciate everybody attending.

thank you so much. sorry about the glitch in the front-end. a little history, for the first 20 years ofmanaging rentals, we did what most of you do, when tenants moved out, owing money, andthat is to kind of put it in the bottom drawer and say to the owner, "that's not part ofour scope of service. we really don't know how to do that. we're not debt collectors." and we kind ofput it in a drawer and let it grow mold." i got kind of tired of doing that. in the year 2000, we started down this pathof kind of learning how to chase tenants after

move-out for any monies they owed. we had kind of a stumbling beginning. there were a lot of learning curves. in the tenth year, however, after going throughsome of this process, we hit $1 million dollars collected, and we've done it 12 years now. we've collected $1.4 million. we started the business actually four differenttimes, had a good lawyer on the front-end, thought we were getting everything done justright, and just had some learning curves. so about a year ago, after so many peopleasking us about our success at this, we decided

to open up a new service for narpm members. became an narpm affiliate, and basically togo to our colleagues in the industry and offer a new service of teaching and learning andtraining and emboldening our colleagues in the industry, on doing a rent-recovery business. so as a disclosure, we are a narpm affiliate. we do have a product to sell. this particular program is educational, soi'll be very careful to, trust me, it won't be an infomercial. but we've done this for 12 years, and we'reoffering it to our colleagues in the industry.

here's our objectives as we go through this. one is to look at the opportunities of rentrecovery. secondly, to look at some criteria for settingup a rent recovery department or a rent recovery business. then lastly, to evaluate some of the stepsyou might want to go through in creating a successful rent-recovery business. before i get into that, i'm going to tellyou about a new product that experian is offering that you might want to consider tapping into. over the last 15 years, i've seen a numberof companies come forward with a tenant-registry

program of some kind. where they'd try to get all of us in the propertymanagement business to post our good and bad tenant experiences into a directory. that members of that directory could go intoand see what kind of a tenant they had. those companies have come and gone. but experian, in the last couple years, hascreated a rent bureau. it's not a credit report system. it's a membership system where you can posttenants that have moved out owing you money, or tenants that have beat up the house ortreated you badly.

over a period of time, that will create tensof thousands of tenant-track records that you could go in and view, and make betterdecisions about renting to people. appfolio has tapped into that system. so if you're an appfolio member like we are,that system is available through the appfolio system. that's one tool that you may consider usingin terms of looking at other property manager's track records at it relates to their experiencewith tenants. the last year, i've been going around thecountry asking people in my industry, especially the old warhorses, "what is the best keptsecret of property management?"

i got ideas along the way, and then gail [soundslike 00:08:41] said to me one time, "i'll tell you what the best kept secret of propertymanagement is." you might want to fill in the blank here. here's what she said. she said, "there's no money in property managementthe way the brokerage community does it." here's what she was saying. many of us get into property management thinkingit's a big revenue stream. if you come in from the sales community andyou bundle up all your services in the big real estate commission, you don't charge forthings.

you don't really know how to run a business. you're in a sales world. there's really not much money in propertymanagement. it's a thin margin [inaudible 00:09:20] business. if you do it the way narpm members do it,if you do it the way we do it, if you build in services, run little sideline businessesaround your management company, you develop trophies and spreads and margins, the businesscan really gush money. in our business, it gushes money because we'vedone it for 30 years and we really learned how to turn on a lot of little revenue streams.

well before we get into that, here's whati want you to think about. many of you there listening today, have madea mistake by thinking of yourself as property management. when people would ask me at social eventsand chamber of commerce meetings, they'd say, "what do you do?" and i'd say, "i'm a property manager." they'd kind of tilt their head sideways alittle bit and say, "do people really choose to get into that business?" and it's a reputation we've got to face becauseproperty management is really a nickel-dime

business, and you have to think bigger. you've got to realize that you're in realestate. as a property manager, in addition to yourproperty-management business, you need to think of doing sales, open up a lease-purchasedivision, offer bpos to other businesses, on top of your property management business,that are real estate related. get your head out of the fact that you'rejust in property management, because you really can't make enough money in property management. you've got to expand your thinking and getit into other avenues of real estate. and if you think that's really not big enough,you don't want to think that small.

you really want to realize you're in business. if you understand that you're in businessthen you begin thinking, as your management business grows, about other services thatyour owners and your tenants need, that you might be able to serve that need and makea dollar in the process. many of you know that once you get up over200 or 300 houses, you probably should consider a maintenance company, or a maintenance department. i've had fellow narpm members tell me thatthey make as much money in their maintenance department as they do their management company. companies have opened up home-inspection servicesand locksmithing and security systems and

so on. so what we want to talk about today is anancillary business to your management company, not a substitute for. you don't get out of property management todo rent recovery. it's a business that you run parallel to yourmanagement company. this new business is collecting outstandingbalances left behind when the tenants move out. that's what we're bringing to the marketplace,is a rent-recovery business. now, the question that we're going to answerin a poll right now is, "what do you do with

unpaid balances after move-out?" now when i'm referring to unpaid balances,as good as we are and as long as we've done it, we have plenty of tenants leaving oursystem owing $1,000, $2,000, $6,000, $8,000. our average rent is about $1,350, which isprobably a little higher than some others. but it's not uncommon for us to evict somebodyor have somebody skip and they owe two or three months worth of rent, some late fees,some nsf charges, some unpaid utilities, damages to the property, missing keys and remotes,trash-outs. so, we're going to take a little polling questionright now. tara's going to manage this.

and the question is this, "what do you currentlydo with your outstanding balances after move out?" tara? tara: okay, let's go ahead and launch thispoll. so everybody go ahead and answer this poll. as robert said, it's: what do you currentlydo with your outstanding balances after move out? a, nothing, we toss them into a drawer. b, turn them over to a traditional collectionscompany.

c, send them letters and chase them for awhile or d, turn them over to the owner. okay, so let a few more people answer here. we've got lots of votes coming in. okay, i'm going to ahead and close the poll. and let's look at the result. so it looks like 19% said "nothing", 41% said"turn them over to traditional collections companies."[inaudible 00:13:59-00:14:21] robert: tara, i lost your audio. i don't know if i'm being heard or not.

gail: yes, you are robert. good. tell me what the, 41% you said was turn themover to traditional debt collector. gail: the poll has closed, so i can't see. but the largest one was d. robert: d, "turn them over to the owner". you know, for years, we did that. we had that same kind of response. we basically said to owners, "our scope ofservice ends when the tenant moves out.

that we're really not a debt-collection company. we don't really know that business." we made up all kinds of excuses as to whywe didn't do it. and basically, that's kind of what we threwour hands up with 12 years ago and finally figured out we need to do this. we need to go through our learning curvesand figure it out. so here's some of the excuses that i usedfor those first 20 years in the business. one, "collections carries a negative imageto it." you want to end the conversation with somebodyon a social environment, tell them you're

an irs agent, tell them you do car repos,tell them you're a debt collector, or tell them you're a property manager. our industry carries kind of a negative stintwith it, and if you consider yourself a debt collector, that's kind of a negative image. i like to have a positive image. we got away from this because we learned wewere collecting on our own tenants. we weren't collecting on credit card accounts. we weren't collecting on medical accounts. we're not sitting in a chair in omaha callingpeople and bugging them.

we're simply perfecting the leases that wehad in our management business. we're only collecting on our own accounts,we're not collecting on somebody else's accounts. so really, this is a simple extension of myscope of service to extend beyond the tenant move out. we also argued for years, "you can't get bloodout of a rock." meaning if the tenant moves out owing money,it's because they can't pay their rent. if they move out and they can't pay the rent,what makes me think that i can collect any money from them in the long-term? i've got some good answers for that, becausewe learned that was just an excuse and it

wasn't true at all. people recover. people get remarried. people come out of their doldrums. people get new jobs and they recover. so just because they don't have any moneynow to collect, they might have some money down the road. thirdly, "someone might get mad at me." i've heard people say, "i don't want to bein debt collection, people get mad at me."

we're in property management, folks. we're in a business where people are mad atyou most of the time. we actually found that when you set it upright, people are a lot less mad at you in rent recovery, than they are when you arethe property manager. so my assistant, denise, who's been with mesince we started this 12 years ago, will tell you she gets thank you notes in the mail,she gets people very courteous and polite over the phone because we're treating themwith courtesy and respect, and they don't get mad at you. now, they do occasionally, but they do inproperty management.

so if you're afraid of people getting madat you, you should probably get out of property they're a lot less mad at you post move out. the next one is, "i don't know the process". now, we intend to change that. a lot of people don't know how to do thatcollection process after move out. when the tenant's living in the house, youhave the power of eviction over them to get them to pay rent. once they've moved out of the house, you'velost that power completely, and we've learned how to get that power back and how to motivatepeople to pay us.

number five, "i'm afraid of courts and lawyers." well, if you are, you need to get out of propertymanagement, because we do evictions, and we, you know, there's some courts processes andlawyers. so property managers are a tough group ofpeople and they've kind of learned how to deal with attorneys and they're not afraidof going into court and doing an eviction where they've got an attorney on their arm. so we're a tough group of people, and thatgenerally doesn't scare people out. another excuse we used is, "i don't have thetime for another business." believe me.

i understand that. we manage 1,000 houses. i don't need something distracting me. you need to make your notes, whatever you'rewriting on, put this down, 5% of my time, 5% of my time is spent in the rent-recoverybusiness. i've got a competent assistant that workswith me. you'll find somebody in your company to workwith you, to answer calls, talk to tenants over the phone, send letters, because that'swhat this is about. denise spends between 10% and 20% of her timedoing rent recovery.

this is a part-time sideline business thatyou run parallel to your management company. you don't set up a new office. you're not hiring staff. you don't need a phone system or a computer. you're going to use the tools that you havetoday. you're going to use the staff that you havetoday. this not a company where you have to printbrochures, do search engine optimization. there's no escrow accounts. this is a little sideline business that youwork along the side of your management company.

"there's no serious money in chasing tenantsafter move out." well, i'm going to step aside and let anotherpoll question be answered before we go into how much money is in this business. so tara, go ahead. [pause 00:20:04-00:20:15] gail: robert, i'm wondering if we lost them,so do you want to just go ahead? robert: do you think the world is listening? gail: oh, there we go. tara: we're here.

some people are having trouble with audio,but we're here. tara: is it we're doing another poll? robert: yes. tara: okay. so we're going to do the "why aren't you chasingthese balances?" we're going to go ahead and launch that. robert: good. so, why aren't you chasing these balances? a. i'm fearful of courtrooms and attorneys,b, i don't know how.

c. there's no money in it. d. i'm too busy. everybody go ahead and vote. we're sorry for any audio trouble that youguys are having. if you're having audio trouble, feel freeto just hang up and then call back in, and that usually fixes it. robert, if you just want to go ahead and speakup a little. a couple people are saying they're havingtrouble hearing you. robert: very good.

tara: so you need to speak up. so it looks like we have everybody. i'll go ahead and close the poll and sharethe results here. so it looks like 1% said they're fearful ofcourtrooms and attorneys, 65% said they don't know how, 11% said "there's no money in it",and 23% said "i'm too busy". so it looks like the overwhelming majoritysaid "i don't know how." robert: you know, that's what we found. we decided a year ago there were so many peoplecoming up asking us questions that we said, "we've already experienced the bumps and bruises.

we dealt with the restarts. we have struggled through this, so let's figureout a way to share it with our colleagues in the business. "and i think this is a service nobody elseis providing, and we've been doing it 12 years. so we've already gone through our learningcurves and we'll be able to really shorten yours and get you to the big money." let's talk about money first. this is a chart of what we've collected sincewe started. and i want to make some observations as wego through this.

observation no. 1, notice the first year wedid this was year 2000. i want you to note that that's some accumulatedfrom the past. in other words, you might only have 10, 20people a year moving out that owe you money, but you've got three or four years of backlog. people that moved out in 2011 and 2012 and2010. you can go back and pursue these balances. observation no. 2. don't think that we had 1,000 houses whenwe started this in year 2000. we had 300.

so in year 2000, we had 300 houses when westarted going through this. in 2006, we had about 800, 700. today, we have a little over 1,000. so this chart does not represent having startedout with 1,000 houses. next observation, we hit $1 million in ourtenth year. with the right training and the right tools,you can do that in your sixth year, and that's what we're trying to help people do. next observation, this is like finding oilin your backyard. you're rich, you can figure out how to digit out, and that's what we're trying to help

people do. next observation, this is pipeline. notice the ups and downs of this chart. there were years we got distracted in property-managementareas and didn't put much shoulder behind our effort. this is a business you can pick up and putdown. this is a business that some years we didn'tspend any time sending letters and processing files. there are years, when you look at 2008, '09,and '10, we started really putting a shoulder

behind it and got through our learning curvesand really got to a point where we were collecting $100,000, $145,000, $125,000 a year. make a note here, and it's very important. the profit margin runs between 70% and 80%- profit margin. let's move on. we're going to answer the question now, "whoshouldn't get in this business?" we're going to have people all the time saying,"here's my model, should i set up a rent recovery business?" first of all, if you're managing low rents,you probably shouldn't consider this business.

if your average rent is $700 or $800 and tenantsleave you owing $800, $1,000, $1,200, it might not be worth it for you to get into a rent-recoverybusiness. no. 2, if you manage low credit scores. a friend of mine in north dallas says hisaverage credit score is 525. generally speaking, those people are not ontheir way to buying a house someday. the market that i'm in, we're managing 550,600 credit scores, and they're people who ultimately want to buy a home. so if you're managing folks that are chronicallyat that 500 credit score and they're really never going to get out of that, you know yourmarket, maybe this isn't the business for

you. one of the things that work for us is thatthe people we rent to want to get out of those 500 credit scores, get up in the 600 and buya home. that's been one of the huge advantages thathas made our rent recovery business work. next, if you've got loosey-goosey qualifyingguidelines, you know, if you're qualifying tenants that can fog a mirror and you reallydon't have the appfolios of this world to help you do good tenant screening, then maybethis isn't the right business for you. if you have sloppy management procedures,if you don't have a good move-in inspections and good move-out inspections.

if you don't take photos of the damages ata move-out inspection, that you can show a judge to validate your claim that the tenantowes you money. probably should stay in the management businessand learn that a little better. if you manage transient areas, if you're inmaybe, i don't know, south miami, south detroit, some of the areas where people kind of movein and move out, and your average tenant is eight months, this might not be the businessfor you, and if you have no charges built into your lease. in other words, you've got to think aboutmaking pursuing them worthwhile, and you've got to look at your model.

you've got to look at the kind of tenantsyou rent to. you've got to look back a year or two andsee how much money tenants owe you when they leave. if those numbers are $300 or $600 or $800,maybe opening a business like this wouldn't make good sense. but a lot of our tenants leave owing $1,000,$2,000, $4,000, it really makes good sense to set up a rent-recovery business. now, we're going to switch gears a littlebit and we're going to do, i think, our last polling question.

so tara, take it from here. we've got another polling question. let's go ahead and launch it here. what does your owner/client expect of youregarding these balances? a. they expect me to chase them and collectthem. b. they expect me to turn the files over tothem. c. nothing ... toss them into storage. the votes are coming in here. it looks like just about everyone has voted.

so we're going to go ahead and close the poll. let's share the results here. it looks like most people said a, "they expectme to chase them and collect them" 68%, 12% said b. "they expect me to turn the filesover to them", and 20% said "nothing". so does that seem like what you've heard,robert? robert: that's pretty consistent with whatwe hear from people. notice that so many of the people on the linechecked number 1. owners really do have an expectation thatyour scope of service includes chasing the tenant after move out.

to me, it was embarrassing to me for 15 yearsto say to owners, "i chose the tenant. i rented. i managed them. i collected the rent while they were. but now that they're out, i wash my handsof it. i don't do anything with it." that always embarrassed me a little bit. it made me a little uncomfortable. that's one of things that drove me into thisbusiness 12 years ago.

so we're going to kind of turn the cornernow and talk about dealing with the owner, because this is the real secret of dealingwith a rent-recovery business. understand a few things about dealing withthe owner, you've got an agency duty to them. probably 99% of the client that we are obligatedto, is our owner, our agent, i mean, our client, and we have a duty to them. so, if the tenant leaves owing $1,000 of unpaidrent and $2,000 of property damage and $100 of late fees, i think it would be really wrong,and maybe even illegal, for you to go out and chase that money from the tenant and putit in your own pocket. so, you need to deal with the owner.

we found not every owner wants to chase. in fact, we present it and kind of lay outour rent-recovery steps, and we outline the risk to them. and in the beginning, we didn't do this aswell, and about 80% of the owners said, "yes, i want you to chase this money on my behalf." the problem with that is that we didn't understandthe risks. we didn't understand the backwash. we didn't understand what could happen. today, we describe to the owner what the opportunitiesare and what the risks are.

now listen carefully, we get 95% of our ownerstell us, "do not chase on my behalf." ninety-five percent of the owners turn theaccount over to us. they sign an agreement that our agency relationshipis over, that we owe them no reporting, but if we choose to collect, the expense of thatcollection, any attorney fees, and the revenue belongs to us. so we did it one way for the first five orsix years. we figured out some things, did another wayin the last four or five years, and that's why, today, when we say we collect $150,000,there's an 80%, 85% profit margin in that because the owners don't want to pursue.

so don't assume that the tenant owing themoney, owes it to the owner, and therefore, there's no money in it for you. don't assume that. we assumed that in the beginning, and we werewrong. you need to get your owner's instructionsin writing. you don't want to go out without their authority. you don't want to exceed your authorizationunder your management agreement. remember, some of your agency duties extendbeyond your separation with the owner. i've heard some landlords say, "my owner terminatedme a year ago.

i don't owe him anything. i can now collect money from the tenant andput it in my pocket." i think that's very dangerous thinking. i think most license laws throughout the countrywould prohibit that. so knowing how to go to the owner and getthe release of the account is a critical part of what makes this so profitable, and we canshow you how to do that. now, if the owner says, "yes, chase it onmy behalf." then here are some of things that we've learnedto do. first of all, we start out with friendly lettersto the tenant, letters that say, "you left

owing $2,800 bucks. we know you probably forgot about it and you'vebeen busy in your move. it's been three months. we need to kind of wake you up. please contact us." if they ignore you, a couple months lateryou'll send another letter, and it'll be a little bit stronger. you can get busy doing property management,put it off. a couple of months later, wake up, and youcan send a letter that explains the potential

consequences if they ignore these notices. it is illegal under fair debt collection practicesact to say, "if you do not pay attention to this, here are some of things that can happen:one, we can mark your credit and basically, create difficulty in you getting any creditin the future. two . . . and we didn't do this in the firstcouple of years . . . but you can file in court, get a judgment, get in front of thejudge, tell him how much money they owe, show him the move-out inspection, show him thephotograph, validate your claim, and get a judgment. lastly, you can perfect that judgment, andwe didn't start doing this until our third

or fourth year in business. by perfecting it, i mean you can do garnishments. you can file against assets. we can show you some of the crazy things thatwe've learned over the years. we've got 40 car titles in our files rightnow, car liens because of these judgments. you won't do that in your first two or threeyears. understand that. marking their credit is the real power thatyou have over them. while they're in the house, your power overthem is eviction.

when they've moved out, the power over themis marking their credit. give them timelines to solve. we have learned to say, "you've got 30 daysto do this, 10 days to do that, 15 days to do that." and these are part of implementation stepsof how this works. one of the keys that we learned along theway, and it's a vip, very important principle. don't miss this. offer payment plans. that's a code for a promissory note.

one of the things we've learned is that tenantsare afraid of court just like you are. in fact, tenants are a lot more afraid ofcourt than you are. if you say to somebody, "if you don't calland we don't have this on some kind of payment plan within the next 15 days, we are goingto file in court, get it in front of the judge, make our claim to the judge, and this maygo in the wrong direction for you. please contact us and settle." now, here's a percentage you need to writedown. this is amazing, 65% of all the tenants thatwe chase sign a note so they don't have to go to court, or a consent agreement.

now that's very important, because you areconverting a claim to an agreement. when you make a claim and say, "this tenantowes me $2,800 bucks", that's just a claim. when you get them to sign a note, you haveconverted a claim to a fact. you've converted a claim to an agreement. now if they don't make payments, you're notin front of a judge with a claim, you're in front of a judge with a promissory note wherethe payments have not been made. as you know, we manage about $300,000 worthof notes. we receive between $9,000 and $12,000 a month. there are months we do absolutely nothingbut answer a couple of calls and cash checks.

there are months we do no filing. there are months we don't ding anybody's credit. there are months we are distracted with otherthings in our world and we don't do anything with rent collection. i said earlier, this is a business you canpick up and put down. you don't have to work it everyday. we offer many people a cash settlement. if somebody owes $2,800, they get their taxreturn. they say, "look, will you take $1,500?"

oftentimes, we will say, because we don'twant to spend time in court and we don't want to carry it further, many times, we will say,"absolutely." let's move on to marking their credit. one of the ways you mark people's credit isto join the credit bureau. that's kind of challenging for most of usin the business. we were fortunate 30 years ago to join equifax. today, you can't join equifax unless you'rereporting a couple of thousand tenants a month. we had the privilege of being able to go andpull our own credit reports right out of equifax or transunion and we can still do that today.

that's one of the challenges, because my colleaguesin the business get their credit reports from someone else and they can't go out and marksomeone's credit, and that's something we have figured out for people that are involvedin our rent-recovery business. so we now have a tool for you to go out, marksomeone's credit with a 99, seriously delinquent, and you basically have locked down their creditfuture. the minute they want to buy a car, buy a house,you know, get employment with the fbi, people need to get their debts paid off before theycan do those things. so this is a new service that we're bringingalong through our rent recovery. you can get your tenant-screening providerto do that, but they generally can't help.

we can help through the rent-recovery service. now, we have one last polling question, andthen we'll move on. great. let me go ahead and launch that. how do you handle evictions now? a, i give them to a third party to do theeviction. b, i give them to an attorney to handle. c, i handle them myself. d. i don't have any evictions.

it looks like people are voting. i'll go ahead and close the poll. okay, so the results are 8% said, "i givethem to a third party to do the eviction.", b says 42%, "i give them to an attorney tohandle.", c, we have 46%, "i handle them myself." and d has 4%, "we don't have any evictions." so it looks like a pretty even split betweenb and c, robert. robert: yeah, that's pretty common. that's what i hear in the industry when italk to colleagues at national conferences and regional conferences.

it's about 50-50 split. here's the reason i ask this question, ifyou're handling your own evictions, c, you have all the tools you need to do rent recovery. if you're using an attorney to do your evictions,i know who that kind of attorney is. they're not $500 an hour. they're $150 bucks to go show up in courtfor you, and those people can handle your court proceedings, if you choose to go thatfar in a rent-recovery business. so about 80% of you who are listening, rentrecovery is something you can get your head around.

you don't need to be a lawyer. you don't need to be a paralegal. you don't need to have lots of real-estatelitigation experience. my assistant, denise, was an english teacherin middle school before she came onboard with crown. in the last 50 visits to court, she went,not me. i'm a property manager. i'm not an attorney. i don't have any paralegal training.

don't worry about it. don't get afraid of this and say, "i can'tgo to court. i don't know how to go to court. i'm afraid of lawyers. i'm afraid of the judge." that should not hold you back in any way. we knew absolutely nothing about this whenwe started 12 years ago. you can build this and learn it yourself,or partner with us and we can get you through a lot of those learning curves.

so, let's talk filing in court. this is the same court that you go to foryour evictions. this is small claims court. and every state's a little different. generally, in georgia, you don't need a lawyer. this is magistrates court. in georgia, that claims of $15,000 or less. in other states, that might be claims of $10,000or less. basically, 90% of this can be done withoutusing a lawyer.

tenants are afraid of court. we settle about 90% of our cases before weget in front of a judge. we do it with promissory notes before court. we do it out in the hallway with a consentagreement before we go get in front of a judge. tenants are pretty nervous about getting infront of a judge, especially with a competent property manager who has got move-out inspections,photographs, copy of the lease, tenant ledgers. you got all the tools you need to make thiswork. again, what we do most of the time is drivethese people to a settlement, and that's why we're managing $10,000 a month worth of paymentsin promissory notes.

if you get a judgment against somebody, youhave several options. first is to have it recorded on their credit. when we go to court, and by the way, 80% ofthe time the tenants don't show up. so when we do get in front of the judge tovalidate and defend our claim, 80% of the time the tenant isn't there. it's called a default hearing. basically, the court system says, if one partydoesn't show up, then we're going to assume they're guilty and we're going to give itto the other party. eighty percent of the time we're in frontof the judge defending our claim, the tenant

doesn't show up. if you get a judgment, it'll be recorded ontheir credit report. it doesn't have to be done by you in moststates. in georgia and in most other states, becauseit's recorded in the courthouse as a judgment against the tenant, two or three months later,it'll show up on the tenant's credit report. after you've been doing this for a while,or if you want to go down the path of actually perfecting that judgment, there are thingsthat we've learned to do along the way that we can help you with. one is attach their income.

now that's called a garnishment of wages. in states like texas, you cannot do a garnishment. most states, you can. most tenants don't want the employer to knowthat they have a judgment against them, and it's very embarrassing and very difficultfor an employee to acknowledge to their employer that they owe somebody $6,000 and they'vegot to have $300 a month taken out of their paycheck. employers don't like that, neither do employees. so if you're chasing a tenant for some moneyand you know how to do a garnishment or how

to file for a garnishment, and you can learnthat, this isn't rocket science, you just need to learn it. they will settle with you before you go togarnishment, because they don't want the employer involved. about six years into our practice and justgoing through learning curves, we learned how to lien a bank account, and people kindof wake up one day and they had a $6,000 balance, and now they've got a $2,000 balance. we had a legitimate judgment and we know howto go to the bank and get that judgment perfected. we can lien real estate.

we can lien car titles. so after you've been in this a while, notthe first year or two, you take this a step at a time, and we can teach you through eachall of the steps of the process one at a time. you can actually have car titles, and we gotplenty of car titles. and people will wake up, get ready to selltheir car, find out that there's a credit union lien for $8,000 and a judgment fromyour rent-recovery business for another $4,000, and they'll go out and write a check, gettheir car title clean so they can sell their car. now again, we didn't do that until our seventh,eighth, or ninth year, so it's not something

you do upfront. the key ingredient is marking someone's credit,and then sitting back and waiting for some time to go by, and waiting until they recover. let's talk about fair debt collection practices. one of the things that i said to people is,"i don't want to get into the debt collections act. that's a warming area, you know, i reallydon't want to get involved in that." but understand clearly, if you're collectingfrom them while they live in the house, you're a property manager.

once they move out, many people in the communitythink that that's debt collection. in the beginning, i thought, "no, this isan account that was accrued with crown, our management business. we are a creditor. we're not a debt collector." i was wrong. we did this for 11 years, and then we gotinvolved in some litigation where an attorney proved to us that we were a debt collector." so it was not until our 11th year in the business,actually our 12th year, before we actually

opened up the fair debt collection practicesact and started reading it. here are some things we found. number one, the fair debt collection act issmaller than any landlord/tenant act anywhere in the country i can find. texas has an 86-page landlord-tenant act. the fair debt collection act is 21 pages. it is small. it is short. anybody in property management that has readthe fair credit reporting act, looked at the

lead-based paint laws, looked at your licenselaw, looked at your landlord-tenant law, you can get your head around the fair debt collectionpractices act in a fifth of the time. it's small, it's short and it's reasonable. it drives courtesy. it was written for these debt collectors youhear about where they buy $1 million dollars of accounts from target that haven't beencollected and they sit out in montana in their chair and harass people over the phone. that's debt collection from the normal standpoint. that's not what we do at all.

we simply take the files from the managementcompany. we've got the move-in and move-out inspection. we've got the tenant ledger, we've got theletters, we show up in front of a judge, and we get a judgment against them. it is a short, small, easy extension of yourcurrent scope of service. it's amazing, in the earlier poll, most ofyou said the owner expects you to chase it. i think the owner expects me to chase it. i think that's reasonable for an owner toexpect the property manager to chase it. but we don't, and we just say it's not partof our scope of service.

i intend to change that. i want to bring a solution to my colleaguesin the industry that we have learned through for the last 12 years. this act, you need to view as your armor,not your enemy. this act is simple to read. we'll train you on it. all of our letters will be in compliance withthe fair debt collection practices act. all of the conversations, all of the toolswe use for them to make payments, are all conforming with the fair debt collection practicesact.

it's not something to be afraid of, it's somethingto be proud of. you follow it. it is your armor, not your enemy. it pays a lot better than property management. i don't think anybody on the line would testifythat their property-management business had an 80% profit margin in it. rent recovery does. if you do it our way, rent recovery has a70% to 80% profit margin. it beats property management all to heck.

plus, there's no escrow accounts. there's no license law. there's no mold claims. the only staff you deal with is somebody inyour office that can allocate some of their time to partner with you and do this business. who's going to teach you this business? well, first of all, as i indicated in thebeginning, you can go to rentrecovery.com and see the service that we're offering toour colleagues in the industry. we're going to help people get into this withoutall the learning curves that we had to go

through. there's a bunch of speed bumps. you'll bloody your knuckles. you can do this on your own. we did it on our own. you can go out and carve your way throughthe wilderness. we got a path that we've carved out and wecan help you do it. secondly, the county clerk's office will helpyou. one of the great resources we've learned isthat every county has got a librarian in it,

and she knows all the forms and she knowswhat the judge wants to hear on court day. they're like a librarian, they're there tohelp. so, every county court office has a clerk,and there are two or three, four gals or guys in there that know everything about the courthouseand how it runs. they'll provide you the forms. they'll talk you through how to fill themout. this is not something you have to figure outby yourself. the tools are out there in the county courthouse. we manage in 12 counties right now, and everyone of them is a little different, and it's

okay. you just call the clerk and you figure itout. judges will teach you. now sometimes, people get afraid of that. i've been in small claims court 300 times. i'm not afraid of judges. they're nice people. they know that folks are coming in withouta lawyer. they're gracious.

they're kind. they explain things to you. we've learned a lot of stuff from judges,and we've gone to court about twice as many times as we needed to, because we didn't knowwhat the judges were going to ask us. so it took some time, but we learned alongthe way, what do we need to bring the court. if you're coming on behalf of a corporation,you might need to bring a corporate affidavit giving you the authority to speak on behalfof the company in front of the judge. so a judge will teach you some of these things. your attorney will teach you some things.

you need an attorney, not a high-paid one,just an eviction-type attorney that will help you think it through. sometimes, some of our lessons we learn fromtenants' attorneys. we would have about a tenant every two orthree months that would hire an attorney or a prepaid legal service to push back, andwe would have to respond to that attorney. and they taught us things. we learned along the way, and we corrected,made adjustments, and went back out and did it again. you'll learn from your mistakes.

just like learning property management, halfthe stuff we learned, we screwed up and bloodied our nose and figured out and went out anddove into the fight again. so you'll learn from your own mistakes. don't be afraid of that. don't be afraid of this. this is a small sideline part-time business. you don't need to be afraid of it. nobody's going to jail. nobody's ending up in the hospital.

this is just something you need to dive inand learn like you did property management. but keep this in mind, it's a long-term residualbusiness. in 2012, we did not send one letter, we notdid not ding anybody's credit, we did not go to court, file any actions at all in 2012,and we collected $122,000 that year. why? because of the things we did in previous years. we marked people's credit. we got judgments. we sent letters.

somebody woke up, they said, "gee, i wantto buy a house. i got this against my credit. i guess i'd better go settle it." so this is a long-term residual, slow-buildingbusiness. here's some of the fun things i can sharewith you, just some experiences along the way, and we're almost done. we got an $11,000 check from a tenant abouta year-and-a-half, two years ago. there was a name on the check we didn't recognize. it was $11,000.

it came from closing attorney along with ahud, but we couldn't match the name on the hud or the name on the check with anybodyin our file, and we didn't know quite what to do with the check. so we cashed it, and we sat on it. about three months later, we get a call froma gal that says, "i paid off my balance at my last closing, how come you haven't removedit from my credit report?" and we said, "because we don't know who youare." she said, "oh, i remarried. i closed with my husband on a piece of realestate, and the lender required that we pay

off this serious delinquent debt in the closing." we were dealing with her as a tenant underher maiden name. so it took us three months to figure thatout. we went out and removed the mark from theircredit, and everybody was happy. we cashed a check, sat on it for three monthsbefore we could figure out who it was. number two, we use a lot of cosigners. about 23%, 24% of the time, we get somebodywith a credit score that's a little less than we want, and so we'll get somebody who lovesthem to guarantee the lease. about four years ago, we sent our first letterto the tenant, a nice letter, nothing hostile,

and copied the cosigner. then we sent a second letter to the tenant,a little more aggressive, kind of like "here's what we're going to do if you don't wake upand deal with us." the cosigner got a copy of that letter. about a week later, the cosigner called, broughtin a $27,000 cashier's check, because he was closing on a house and he didn't want thisshowing up on his credit report, because he knew that his son-in-law had beat up the houseand left owing a lot of money. now, $27,000 is a big number. that was a lease purchase.

so they paid us for all the outstanding damagesand charges on the rental side, and a big real estate commission for not closing onthe sales side. the third one, we had a tenant sign a $7,500note for $50 a month payments. then he got a tax refund and he called usback, and he said, "i got $6,500. if you'll take a lump sum and clean up mycredit, i'd like to pay this off." we did it. we work with people. another one. we filed an i-9 against somebody.

six years later, we got a $9,750 check. the i-9 means a seriously delinquent account,and that's what you can put on somebody's credit if they don't pay attention to yourletters and if you have a legitimate claim against the tenant. so six years later, i got boxes of files inmy basement and they're labeled "pre-2006 rent recovery." denise will send me home about six or seventimes a year, "pull the file on so-and-so, they're disputing their claim at the creditbureau. pull the file and let's see what we did."

these things go back two years, four years,six years, and eight years. occasionally, a tenant will hire an attorneyor a prepaid legal service, and they'll send us a letter and they'll say, "your claim isbogus, and we're going to sue you, and you're violating fair debt collection, blah, blah,blah." and basically, we just give them an intelligentanswer. sometimes we'll have our attorney send theman intelligent answer, and it goes away. by the way, average that we've spent on attorneyfees, $1,200 a year. almost done, let's go through who gets themoney. first of all, you can give it all to the owner.

secondly, if you do it right, you can keepit all. thirdly, we kind of like the idea of he whopays the expenses and takes the risk, gets the money. we can show you how to balance that out. next, we get the owner's permission and release. don't want to do anything without owner'spermission. you'll want to get it in writing. you don't want to risk the owner getting madat you because they're your client. you can chase your own money, but not theirs.

generally, that's not much money. usually, it's unpaid late fees, bounced checkcharge, maintenance chargebacks, things like that, and it's not a lot of money. we like to offer splits with the owner. if an owner does want to chase, and not manyof them do, we'll offer a 70/30 or a 60/40 or a 50/50, some kind of split. then secondly, you get to apply the collectedfunds to whatever the tenant owes. most of your leases say, "all monies receivedfrom the tenant first go to late fees, bounced check charge, other charges, then rent.

so you get to control that. so let's go back to the excuses i used backin the beginning. "collections sounds like a negative business." you know what, it's not, because i'm not collectingsomeone else's debt. i'm collecting on tenants that we had a relationshipwith and we did business with, and we have good records. "you can't get blood out of a rock." well, you can't, but people recover. when they get down the road a little waysand they want to buy a house, or they want

to clean up their credit, well, they'll comeback and deal with you. "someone might get mad." you know. they're not nearly as mad at the rent recoverybusiness as they were at the property manager, and denise will testify to that. we meet people in court and they're friendlyand they're embarrassed and they're humble. we treat them with grace and kindness andpleasantness, and have them sign some kind of a consent agreement. "i don't know the process."

we'll teach you that. that's something you can learn, or you cando this on your own. "i'm afraid of courts and lawyers." if that's true, you probably should get outof property management. this is a business with courts and lawyers. "i don't have time for another business." again, 5% of your time, 10% to 15% to 20%of an assistant in your office. lastly, there's no serious money in chasingtenants after move out. dead wrong.

there's lots of money in it. lots of money in it. so, how are you going to learn? we would invite you to go to rentrecovery.com,look over that page. if you want to initiate a conversation, wehave set that up to do it. my school, crown investor institute, you canemail me there, or you can go to crowninvestorinstitute.com and we've got a download for you. those of you who have taken classes from usbefore know that we like to give you a lot of handouts and information and forms andsome letters and checklists and some real

meat. so go to crown investor institute, find thebutton that says "free class downloads." find the one that says "rent recovery." when it asks for a username or a password,put in "rent13." "rent13" both for the username and the password,and it will open up a group of files. you can look at them. you can download them. it won't cost you anything. i just want you to get familiar with someof the forms that we've developed over the

years and make sure you've got some real meatthat you can take away from this workshop. tara. tara: great, robert, thank you so much forthat. i think we just have time for one question. so the rest of the questions, we had a lotof great ones. we'll go ahead and put those on the blog withthe post with answers to them. so let's go ahead and do one. a lot of people are interested in how theyfind the person after they've moved out. a lot of people leave without a forwardingaddress.

so what ways have you found people in thepast? robert: there's two or three ways to do it. one is, and this is going to sound like infomercial,i'm sorry about that, but this is the way we have done it. there's a national debt collection companythat we've partnered with, and we file against the tenants through that company. and our clients at rent recovery can do thatas well, and they offer a skip-trace service as well. but one of the things we've learned, tara,is to be patient.

people recover, and they might move out ofa house today and move in with grandma in wichita, texas, or they might move to cancunfor a year. but people recover and they'll come back intothe world and they'll get a job and they'll build their credit and they'll get remarried. they'll kind of come back into the real publicworld and public view. so we have a skip trace system within rentrecovery. we also found - crazy as this sounds - thatfacebook and youtube and linkedin. it's funny people want to disappear from theirlandlord, but they don't mind going out and having a facebook page.

so i would encourage the listeners to go tothe social media, google people. it's astounding, people will disappear fora year or two, and then they'll pop back up. you'll get a mailing address. you can file in court. you can have them served, and you can getthem in front of the judge and force them to deal with the debt that they owe. patience. tara: right. robert: patience.

okay? it's not quick anything. it's pipeline. it's residual. what you do the first year, second year orthird year often will not pay off until the fourth, fifth or sixth. tara: great. well, we appreciate this, robert. a lot of great information today.

we just want to remind everyone that we'llsend out the email tomorrow with the slides and the recording in it, and we'll post themto the blog as well with some of the questions answered. robert: cool. thank you, robert, and have a great day everyone.