Yonatan (Yoni) Schmidt is the Regional Vice President of Sales and Marketing at Keyrenter Property Management, which has offices in Tulsa, Oklahoma City, and Arkansas. After working as a financial analyst at a private equity firm, he founded Tulsa Property Lad to offer clients a better way to buy, sell, manage, and invest in real estate. Yoni provides comprehensive Oklahoma real estate services and listings, supported by first-class customer service.
Here’s a glimpse of what you’ll learn:
- How Keyrenter Property Management prices its services
- Yoni Schmidt details property owners’ responsibilities during the management process
- Keyrenter’s lease renewal process and rental pricing
- How to determine the median price of rentals
In this episode…
Are you considering hiring a property management company to help with the rental process? Service fees and rental prices are some of the most common concerns among property owners, and many are hesitant to seek assistance as a result. So how are property management services typically priced, and where can you find an affordable company?
When it comes to services, many property management businesses utilize a tiered fee structure based on the number of rental properties owned. For instance, Keyrenter Property Management requires 10% of gross rent on one or two rentals, 8% on three to 11 rentals, and 7% on more than 11. Rental pricing depends on local market conditions, so Keyrenter assesses rent compensation within a two-mile radius and a 12-month period to establish a median price.
In today’s episode of The Same Day Podcast, Yonatan (Yoni) Schmidt, Regional VP of Sales and Marketing at Keyrenter Property Management, is back to chat with Mat Zalk about Keyrenter’s rental pricing and service fees. Yoni explains how Keyrenter prices its services, property owners’ responsibilities during the management process, and how to determine the median price of rentals.
Resources mentioned in this episode:
- Mat Zalk on LinkedIn
- Keyrenter Property Management
- Keyrenter Property Management Tulsa
- Keyrenter Property Management Oklahoma City
- Keyrenter Property Management Arkansas
- Keyrenter Property Management email address: [email protected]om
- Yonatan Schmidt on LinkedIn
- Yonatan Schmidt’s email: [email protected]
- Ross Heyman on LinkedIn
- “Paving the Way for Affordable Housing in Urban Communities” with Devin Howland on The Same Day Podcast
- “HVAC Systems: Maintenance Considerations and Pricing” with Kevin Evans on The Same Day Podcast
- “How To Raise Capital Using a Growth Perspective” with Michael Basch on The Same Day Podcast
Sponsor for this episode…
Chris Lile at State Farm Insurance.
This episode is also brought to you by Chris Lile at State Farm Insurance.
Chris Lile at State Farm helps you protect your most precious assets and investments, including home and auto.
To learn more about how you can save double digits on all your insurance needs, visit diallial.com or call Chris’ office at 918-878-7771
Keyrenter Property Management
This episode is brought to you by Keyrenter Property Management.
Keyrenter Property Management is a full-service property management company who helps their clients buy, renovate, and operate real estate assets.
They help clients build wealth while taking the headache out of property management.
That’s why, no matter what rental you have — single-family homes, condos, townhomes, or apartments — they can give you the management solutions you need.
To learn more about their services, go to https://keyrenterpmc.com/ or send them an email at [email protected].
Welcome to The Same Day Podcast where we discuss driving incremental business growth and other topics related to real estate, property management and entrepreneurship. Now to the show at hand.
Mat Zalk 0:20
Mat Zalk. I’m the host of The Same Day Podcast where I connect with top business experts and real estate leaders. Some past guests on our pod include Devin Howland, talking about economic development in Fayetteville, Arkansas and Mike Basch have Atento Capital talking about the world of venture investing in the southern Midwestern states. The often overlooked venture space in our fair part of the country and Kevin Evans of Liberty, Liberty air services, talking about H vac systems, how they work and why they’re so complicated. Today’s episode is brought to you by Chris Lile State Farm. Chris Lile State Farm helps you protect your most precious assets and investments. Whether it’s your home and auto investment rental properties or other valuables call Chris Lile State Farm for a quick and painless phone call to potentially save you double digits on all of your insurance needs, visit diallel.com or call his office at 918-878-7771 He only needs like 90 seconds to see whether he can save you some money. Today’s episode is also brought to you by Keyrenter Property Management Keyrenter Property Management we are a full service property management company helping our clients buy renovate and operate real estate assets we help our clients buy sorry build wealth while taking the headache out of property management. Yoni you know better than most that it’s super hard to line up contractors to get make readies done in a in a reasonable amount of time after a tenant leaves the property and we need to re rent it contractors are busy and the work seems to drag on forever. And that leads to loss of rental income that Keyrenter we line up our dedicated vendors so that turns can happen quickly and we get more money back into the pockets of our owners. That’s why no matter what rental you have a single family home or condo tanah townhome apartment, we have the management solutions that you need go to keyrenterpmc.com Yonatan Schmidt is our guest today. He’s the VP of Sales for Keyrenter handling sales of property management services across all of our markets. Keyrenter tulsa oklahoma city in Northwest Arkansas in Wichita, Yonatan’s been with our Keyrenter team for four years, has been in the industry since he purchased his first investment property 16 years ago. Yoni, welcome to the pod. Thank you great to be here. We often get inquiries on our website, from owners who are let’s face it not even certain that they want a property manager, they know that they face a pain point. Whether that is in needing to cover some income that would pay for a mortgage, or whether that is that they left sorry that a tenant or previous tenant left the property in disarray, because they did poor a poor job screening or for any other reason. And those people that come to our website and leave an inquiry. They are not certain about what we do what we charge and how we price a rental in the event that they want to make a primary home or rental or any other property or rental, they might also be considering a purchase in Tulsa from out of state and they want to understand what the property would rent for and what we can do to help. So I thought that today on our podcast, we would discuss some of those concerns that the owners have when they are potential owners future owners have when they inquire on our website, so that we can give them more clarity. Many people come to our website, they put in their details, they want to speak to somebody or text with somebody, and they just don’t even know where to start. So this would be helpful for those owners. And I think we should provide some some enlightenment or clarity on you know, the the basics, the very basics. So if we start with their most pressing question, which is what do you charge? And then we kind of go through what we do for that fee that we charge. And finally, how we price a rental. Then perhaps the final question that I that I posited, which is Do I even need a property manager? We’ll be a little bit clearer. If it’s not, then we’ll we’ll tackle that first question also. So let our listeners know.
Yonatan Schmidt 4:32
How do we price our services? So we generally price our services. Great question, Mat. We generally test our services based on the amount of rentals that you bring to Keyrenter. Right. So our fee structure is a tiered is a tiered structure that is in line with what most property management companies are doing out there. And many of them are Um, you know, doing it in different ways. But at the end of the day, they’re charging the same thing, even though it may not look like they’re charging the same thing it, it really is. Once you consider all the fees and everything that goes into managing the property, our fee structure is basically one to two doors is 10% of your gross rents collected per month, three to 10 doors is 8% and 11 or more doors on the single family residential side is 7%. of monthly rent collected. On the multifamily side boutique multifamily that would typically fall anywhere between seven and 8%. Sometimes 10%, it just depends on the type of property, the condition of the property, where we are with it, and what kind of work needs to go into the property.
Mat Zalk 5:52
Got it. So let’s just stick with a very simple example, we charge 10% For a single home that we are renting. What do we charge if the property is vacant.
Yonatan Schmidt 6:03
So if the property is vacant, and we need to place a tenant, we would charge a flat rate of $695. To place that tenant. This includes us coming out to the property, conducting an initial inspection, coordinating and facilitating all of the showings seven days a week from 8am to 9pm. Collecting applications, getting feedback from prospects who have come through the property to walk in and see it. Of course, any application that’s coming through, we’re vetting that application, we’re conducting an extensive 14 Point screening check because we have some certain guarantees that are built into our contracts for our owners, and from there, basically, we would market the property across a bunch of different online platforms and handle anything and everything from finding a suitable tenant all the way through moving and collecting the first month’s rent and the deposit along with also ensuring that the tenants have transferred over the utilities and submitted all those accounts to us through a form that they can fill out. Got it. So
Mat Zalk 7:11
we will take the property in any condition basically, we will conduct an inspection do any work that’s necessary. We will market that property take professional photos, we will conduct the the showings screen the tenants once they apply, send them a lease countersigned lease, when we have done our verifications, collect the deposit, collect the first month’s rent, and then move them in essentially, right? So it’s soup to nuts, we do everything and owner doesn’t have to do anything. They could be on vacation in Thailand, for example, and never know that any of this was happening. And we handle everything is that right?
Yonatan Schmidt 7:46
That is correct. Of course, if the initial inspection were to reveal that there’s a large amount of work, a punch list of items might be shared with the owner, if it’s not. And we think that this is something that, you know, we would we would tackle and the owner understands exactly that, we’re going to handle the work because we had the conversation previously in our kickoff call with them, then we would run with it in the event that it requires a lot of work, we may send them a punch list with an estimate, we can review it talk about the scope of work, and ensure that the property adheres not only to our minimum standards, but also to federal housing quality standards that we would want our tenants moving into. Right beautiful,
Mat Zalk 8:33
if a property is brought to us, and it is occupied fairly quickly after we take it over. And then 12 months 12 months pass and a resident moves out, of course, we would attempt to not have that happen, we would try to keep a resident in. But if they did move out, say they were moving out of state, and that property was vacant for a period of two weeks. Would we also charge a management fee during that vacant period?
Yonatan Schmidt 9:03
We do not know we align on incentives with the owners so that we we make money when they make money. And so if we charge 10% of rents collected 10% of 00 Every time I checked, so we won’t be charging any owner while their property is vacant.
Mat Zalk 9:21
I have to be for those of us that are listening out here we your math is very quick on that one and your mathematical skills. So we charge 10% of the single house plus 695 to lease the property. And for that we we discussed what we do on the leasing fee. What do we do on the management side? What does an owner What does an owner still responsible for doing that we don’t do is another way of asking the same question.
Yonatan Schmidt 9:48
So the owner is responsible to monitor their email communicate with us review their owner statement at the end of the month to you know, just be that last line of defense and make sure that Everything looks good on their statement. And, of course, respond to us if and when we have questions. And if and when we need to make any one single repair or expense that’s larger than our minimum threshold of $300, which is stipulated in our contract. Other than that, really the owners, as you mentioned, they don’t need to do anything they could be, as you know, they can be on vacation, they can be, you know, unresponsive and let us handle everything. The only thing they need to be responsive to is emails that come from their property manager, towards the time that least gets expired or becomes comes to its expiration date, then their property manager will be sending them a 90 day notice to inform them that their tenant for the lease on their property with a tenant is coming up and expiring. At that point, we make the decision together, whether or not we are going to renew that lease, or offer that tenant or non renewal for whatever reason that owner could be moving back into the house, they could be selling the house, they could be moving a family member into that house. And so there’s really nothing that the owner would need to do except be available to talk to the property manager or answer emails that come from their property manager, we’ll do everything we will move the tenant and like you said, we will answer their calls, we will take care of their work orders, we will collect the rent, we will distribute the rent, we will coordinate and facilitate with maintenance technicians, we will handle any emergency repairs that, you know, inevitably come on, you know, what happened to me last time was New Year’s Eve, January, or December 31. You know, our heater went out and I had to call a an HVAC plumber, an HVAC technician in Oklahoma City to handle the repair. The guy got out there that same evening, left his family and went to take care of the issue.
Mat Zalk 12:12
Right. So let’s go back for one moment to the renewal of the lease, we ask that question of our owners for a couple of different reasons. But one is because in the past, we have made the assumption that a property was an investment property, that would be an investment property into perpetuity. And then we renew the lease and found that an owner actually wanted something else. And so we made a mistake. And we said sorry, we have now have a signed lease or renewal that’s been signed. But had we asked that question ahead of time, we would have known. And so now we do that for the past probably four years, we’ve done that renewal request. If an owner does not respond to that request, I think we give 14 days and we say please respond to this request. If you don’t respond to this request, we will proceed as outlined in the email that we sent you, which generally includes the current rent that we’re charging, and the proposed new rent amount. Of course, if if an owner doesn’t respond, we will proceed as if we are managing that property into perpetuity. And we are doing what we would do if this were our properties. Of course, you and I both own rental properties and we want them to be occupied all the time. If, however, in that process, a tenant balks at the increase, and say we’re increasing them 6% From $1,000 to 1060. They say, I won’t accept that increase, we would rather have a an occupied property and come down a little bit on the rent increase, rather than have two weeks or a month of vacancy, depending on how much work needs to get done. And when we’re able what season it is and when we’re able to actually release that property. So we might say to them, Well, okay, how about 1030. And if they accept that, then we would rather have 3% or 3% increase, then then a 6% increase. That’s that is rejected and the vacancy that ensues. We also know that a ton of it is based on what we can get in the market if we were to have the vacancy period. So if somebody brings us a property and it’s under rented and we’re trying to bump that up over time, we may accept a we may accept the tenants rejection of that increase. If we know that we can get two or three or $400 more per month on the open market, right? That’s just basic math. And it’s return on investment for an owner. So if it’s $1,000 for the current resident, they say I’m moving out if you raise it at all, but I know I can get 1400 bucks 1224 36 $4,800 A year is much greater than you know, the $30 increase if we just raise it on that existing tenant. So that’s a decision that we make we’d like to make it in concert with an owner. But if an owner again in our example from before, is in Thailand, enjoying a relaxing beach vacation, they may not answer our email and we may just proceed as So as we see best for that owner, is that right?
Yonatan Schmidt 15:03
Yes, that is 100%. Correct. As you’ve astutely recognized, I think that you have to take a look at the opportunity cost and understand, you know, what is it that I’m giving up if I’m renewing at that lower rate, and what needs to be done if I if I decide to move the tenant out if the tenants been in there for 1015 years, and now you know, you’re at $1,000, but you can bump it up to 1400. If you come in and make you know, $5,000 worth of repairs, it may be worth it, even though it costs you $4,800, even though the difference is $4,800 in the rent that you’re receiving. Because now, when the tenant comes to renew, again, at the end of the lease of the $1,400, you are essentially at that market rate. And starting year two, you’re really starting to see some, some better returns on your investment.
Mat Zalk 15:54
And you don’t really want a property, we’ve covered this in other podcasts, you don’t really want a property that has significant deferred maintenance, because it’s just going to get worse, if a window still has wood rot, and is letting water into the property and is destroying the sheetrock, you want to know about that and fix it. So it doesn’t continue to destroy the sheetrock down to the hardwood floors and cause more damage over time as it wicks through. Solving that now is better than solving that in the future. So if if you’re dealing with a tenant that’s been in there for 10 years, and is not reporting some of the issues, because they don’t want you to come in and see that there are issues that you need to repair and all of a sudden you have expenses that cause you to raise the rent, that’s, you know, we see that we see that sort of thing on an ongoing basis on a routine basis. So you want to make the repairs early, bump the rent with a bump and rent at two market rates, you’re gonna get better quality tenants that are often going to stay longer that are going to accept rent increases, they probably have better jobs, etc. And so it’s a domino effect that’s generally beneficial for the owner of the property. And that’s how you and I own properties together. And you and I own properties individually. And that’s how we operate our properties, just transparently. How so once an owner understands what we do and how we price, their next question is often what can I get for my property? Because they’re making the determination of should I sell my property potentially? Or can I earn enough after fees to cover my mortgage, which is then paying down principal, I continue to receive the tax benefits associated with owning real estate, which are, in my mind, second to none. There’s no other tax benefits, like depreciation, and they want to know how much they can rent it for, I’ll say I want you to cover how we determine rental prices using comparables, but I will say the market is the market. So if a tenant is comparing two properties side by side, and one is at $1,500, and one is at 1450, they may identify that the $1,500 property is nice is nice or enough to warrant that $50 increase and still choose it. But they might also say the 1450 property is the same and therefore I’m going to go into that property. A resident looking or a potential resident that’s looking on Zillow, to identify where they’re going to live does not really care whether your insurance costs went up. They don’t care whether you have decided to take a strategic position as an owner to pay off your mortgage in 15 years instead of 30 years. So they don’t really care what your costs are as an owner, they care what the market is for a rental property that’s similar or comparable. And so we often have owners that say, my insurance just bumped up $70. Can I add $100 to the marketing rate and we say, sure, but that doesn’t make any sense. The tenant that’s coming in doesn’t care that your return just went down. They just care what the next property that’s similar looks like. Having said all that, can you explain to us how we do rental comparables or how we price a rental for a potential new owner?
Yonatan Schmidt 18:51
Sure. So generally speaking, we will. We will take a look at Rent comps within the last 12 months and within a two mile radius we look for four or more rental comparables in a two mile radius. We will base our rent on the median of those four or more rentals. But like you said the market is the market sometimes we are in areas and neighborhoods that do not necessarily have great rental comps and so it’s harder to comp those what what helps us determine the market rate is a knowing the neighborhoods knowing the area’s being local experts in each of the markets that we operate in and having good relationships with other other people within the industry. For example, just the other day I got a property a lien on a property from an owner who has a house in Sand Springs in a neighborhood that has one rental when I opened up that one rental it it came up as a different property management company who we know very very well and we worked with closely. And you know, I said, Okay, let me call this person, his name is actually Ross Heyman, great guy. If you haven’t met Ross, I highly recommend it. And I said, Ross, you guys have this rental in the neighborhood? Could you tell me what you guys are what you guys are enjoying for your other rentals in the neighborhood. And Ross, you know, generously enough shared that information with me, I was able to share it with the owner, the owner seemed pleased with you know, the numbers that we we were giving him and is potentially considering a move to Colorado, based on the fact that we can, we can help him cover the mortgage, and also collect the fees that we would collect. So cover the entire expense.
Mat Zalk 20:44
So many times, we have rentals in the same communities that our owners are potentially bringing to us. And we can say this property is at $1,000. But we know it’s under market, this property we just rented two months ago, and it’s at $1,200. And this market, this property, excuse me, is rented for $1,400, but we leased it in peak season. And that leads to the difference. So if you’re bringing us the property in January, we expect to get 1200. If you bring it to us in May we expect to get 1400 or something similar to that. In addition to having our own internal rental comps. Because we manage so many properties, we can go to other property managers like Ross at Tallgrass or Kelsey at Tallgrass. And understand what they’re getting for rentals so that we can have a better idea of what’s going on. That is in addition to just pulling rental comparables from the MLS or from Zillow, through our the tools that we use in our business to assess rental comparables. Tell me a little bit more about the median price, because I understand if you have a two mile radius, you might have a median price that is based on something that’s a four bed, two bath that is 2200 square feet and maybe a four bed two bath that’s 1700 square feet. So there’s distinction. And then you might have distinction in size, I should say. And then you might also have a house that has granted and when that doesn’t, when that is upgraded when that doesn’t and so the median can blend those two things and be misleading at some point, how do we determine whether the median is a fair representation or if it should be higher or lower? Sure, that comes
Yonatan Schmidt 22:19
down to just understanding the value for some of these things that you mentioned. And drilling into the kitchen, every single individual property, like you said, two houses that may be the same bedroom bathroom, you know, the same number of bedrooms and bathrooms that are in the same neighborhood and have different trim levels could rent for, you know, different prices, even if they’re if they are the same size. Unlike the example that you get, just get if we if we drill in and we take a look at you know Zillow, we look at the active listings. And we really zoom into the map and look at the lots and we start clicking around to understand, you know what properties were listed at how many days they were on the market, how many days they’re currently on the market, if they are active, how many contacts have submitted, you know, inquiries about this one specific property, we can take a look at the price per foot and extrapolate that on to the footprint of the subject property that we’re trying to understand. So if there is a property that’s larger, right, the price per foot would normally be a little lower. And so we would understand that, you know, it’s, it’s not even if it’s in the same neighborhood of four, two and a half that’s in the same neighborhood may if it’s different sizes, it’ll definitely rent for different prices. And same goes for you know, anything that has to do with trim level, if you have granite versus Formica or you know, any other countertop surface, it’s going to look a lot better. If you have stone on your countertops, and the property will show better. It’ll be it’ll advertise better, more contacts will come through. And it’s just a matter of personal choice for a tenant who comes through those properties with you know, nine foot ceilings crown molding, and you know, really nice countertops, bathrooms, kitchens, you know, custom made cabinets, as opposed to, you know, the old 70 style cabinets will rent for more. And so taking a look at not just the not just the area, not just comps in the area, the trim level of the property understanding you know that the footprint does matter. And that you’re not going to charge the same thing for $1,700.17 square foot 1700 square foot home as you would for 2200 square foot home if they were to be side by side and almost identical, right? The subject
Mat Zalk 24:49
for another podcast on another day is how should an owner determine to what level they should upgrade a property in the event they’re doing so Where do I start bathrooms? Kitchen? Crown molding? Yes. No. backsplash? Yes, no, we’ll save that for another day. But we can certainly give some feedback on that question. At some point, one thing that’s worth mentioning is the mathematical inflection point associated with the long term return on the property. If you lease a property at $2,300, day one, it’s marketed versus at $2,400. Day 31, that it’s marketed a month later, you’ve basically gotten the same result. So if we say, this rental should not rent for $2,400, it will likely rent for 2375. But an owner says I want to keep it at 2400. And we lose a month, they just mathematically speaking, 12 months times $100, differences $1,200, they would be better off just leasing it today at 2325. Right, they would get that extra $25 times, times the month they saved in and would be mathematically ahead at the end of 12 months. The benefit of leasing it for $2,400, after a month of vacancy, however, is that the bump of three or four or 5%, whatever we do, on the at the time of renewal and rent increase is on a lower sorry, he’s on a higher denominator. So they’re gonna get percentage wise, a little bit of an increase. That doesn’t mean that we can’t also just bump it higher on the 2325 number, that so those are some considerations to think through that we encourage owners to think through when they want to get higher rents than we’re supposing the property will lease for ultimately, the other consideration is that peak leasing, season prices will always be higher than lower seasons of rental because there’s more demand. So if we get three applications on our property, we can always go to those people and say, we have three applications is anyone willing to pay 25 or $50? More. So there’s more demand for the properties and peak leasing season than there is in the base rental season. And that’s, that’s a huge component of how we price properties, we often see that a rental comparable that we’re looking at was leased in June, and so to say to somebody, or if an owner asks us, why did that property rent for $1,700. And you’re suggesting that my property should rent for 1650, we would say, Well, that was seven months ago, you’re now in February, or or January, this was the middle of peak leasing season. So we expect that demand will be lower, and therefore we’re not going to have as much competition, fewer people are moving, we’re going to get a slightly lower rental rate, what we try to do in that scenario is rented for 18 months, so that it bumps us back into peak leasing season. And at that point, we can actually charge the premium associated with that increased demand level in the market, is that generally right or anything to add to that?
Yonatan Schmidt 27:49
Generally right, I will add that, you know, we do the tenant does have to accept that $2,400 monthly rent, you know, and if they feel like they’re, they’re overpaying or if the value isn’t there, the risk that I think an owner is running is that the tenant will pay that for one year, and then eventually realize that, you know, they’re a little bit over what the what the market is and may not accept an increase in the rent of 6%. So it might be a lower increase, as opposed to if you’re at 2300. And then they feel like it’s good value, then they would be a lot more likely to accept a higher increase in their in their monthly round. Generally speaking, I Yes, you are correct. We would try every single time to put the owner on a more favorable leasing cycle to have it expire during those peak leasing season during those peak leasing months. It makes our job easier, it makes the owners investment, a better investment and generally speaking, it is it is the it is the time of year that you can charge them with high demand and rats. Love it on
Mat Zalk 29:03
this pod. Today we’ve discussed what we do as a property management company, what we charge as a property management company and how we determine prices for your rental as an owner. I’ve got Yoni Schmidt with me. He’s the VP of Sales for Keyrenter handling sales of property management services across all of our markets, Tulsa, Oklahoma City, northwest Arkansas in Wichita, and he’s been with us for four years and he’s been investing in real estate for 16 years, who’s got a wealth of knowledge reach out to Yoni at [email protected] If you have more questions, or want to chat further, you only thanks for being on the show today.
Yonatan Schmidt 29:43
Thanks so much.
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