4 Ways to Partner with a Property Management Company on Your First Apartment Syndication Deal

A frequently asked question I receive is “how do I partner with a property management company on my first deal?”

 

The challenge first-time apartment syndicators face when pursuing a deal is a lack of credibility. They’ve never done a deal before, so being taken seriously isn’t a guarantee. However, by partnering with a property management company, the first-time investor can leverage the management company’s experience in order to establish credibility with the seller, the lender, and the investors.

 

Based on my syndication experience, there are four distinct ways a first-time syndicator can partner with an established property management company

 

Method #1 – Sign the Loan

 

The first way to partner with a property management company is to have them sign on the loan. As a result, they will become a general partner in the deal.

 

This is ideal if the syndicator doesn’t personally have the liquidity or net worth to qualify with a commercial lender. By having the property management company’s signature, the syndicator can leverage their liquidity to be approved for a loan.

 

To compensate the property management company, the syndicator can offer 0.25% of the loan balance, which will be paid out annually, or offer a general partnership ownership interest, or a combination of the two.

 

Method #2 – Invest in Deal

 

Another way is to have a property management company invest in the deal and as a result, become general partners. For this method, the compensation will depend on the actual deal and the value of the property.

 

Method #3 – Bring on Investors

 

A third way is to have the property management company invest in the deal and bring in their own investors as well. The extra benefit of following this method is that it adds another layer of credibility (i.e. the property management company’s investors) and it adds another level of alignment of interests since the property management company and their investors have their own skin in the game.

 

Similar to method #2, the compensation will depend on the deal.

 

Method #4 – Ownership Interest

 

The final way that a syndicator can partner with a property management company is to exchange the property management fee for ownership interest in the general partnership.

 

The benefits of this method are three-fold. First, it establishes credibility right out of the gate for all parties. Two, the first-time syndicator can leverage the property management company’s liquidity or net worth to qualify for the loan. And three, since the property management company will likely bring in their own money and/or their investor’s money, it decreases the amount of money the syndicator must raise.

 

Are There Any Downsides?

 

The downside of bringing on a property management company as a general partner is that they and the syndicator are essentially married. Therefore, if the management company falls off the face of the earth, completely forsakes the property, or they turn out to be bad people, then the syndicator is going to have a very messy divorce. If this happens, the syndicator will have to buy them out in some form or fashion.

 

If you decide to follow any of the four methods, in order to mitigate your risk, you need to make sure that you have proper clauses in the contract that stipulates a buyout process. Also, you have to be careful about who you select as a property management company. (See All You Need to Know About Building a Solid Real Estate Team)

 

 

From personal experiences, I believe the benefits of partnering with a property management company outweigh the potential downsides, as long as you’ve planned for them in advance. I have successfully overcome the challenges mentioned earlier (i.e. lacking in credibility and/or liquidity/net worth) by partnering with property management companies on past deals using all four of the methods described above.

 

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Best Ever Success Habit of the Nation’s #1 Landlord Aid

Linda Libertore, who created the number one tenant communication and payment assistant company in the nation that supports over 1,000 landlords, is one of many speakers who will be presenting at the 1st annual Best Real Estate Investing Advice Ever Conference in Denver, CO February 24th to 25th.

 

I interviewed Linda on my podcast mid last year and she provided her Best Ever Advice, which is a sneak preview of the information she will be presenting at the conference. The main, practical takeaway I had from our conversation was find something, a habit, technique, etc., that needs to be done to further your success and do it on a daily basis.

 

Linda attributes much of her success to being a big “daily person.” In other words, she is always looking for specific activities that will bring or has brought her tangible success. When she discovers one, she exploits that success habit by doing it on a daily basis. Not on odd days or even days only, and not weekly or monthly, but she makes the commitment to doing it daily.

 

When Linda first began her tenant communication and payment assistant company, she was starting from scratch. The only real estate experience she had was obtaining a real estate license, so she did not have many connections with landlords. The only way she could expand her business was by conducting everyone’s favorite activity – cold calling. Being a “daily person” and understanding the power of consistent and persistent activity, she committed to making a certain number of cold calls every single day, no matter what. Linda knew that if she wanted to create a large, successful business, she couldn’t give up in the face of rejection or even miss a single day.

 

Another habit that Linda commits to daily is widening her education of the real estate industry. She is involved in eight local real estate associations. In order to add value to those meetings and not just sit silently, she must perform research prior to attending meetings and remain dedicated to her self-taught education. And with eight meetings to attend every month, she has committed to conducting some from of research or self-education every day in order to continuously have information she can provide to others.

 

Education and cold calling are just two of many examples of success habits you can introduce to your daily routine. Reading, journaling, running numbers on deals, or creating posts on BiggerPockets are a few other examples of success habits that you can implement daily, but your options are basically limitless. Once you find an activity, habit, exercise, etc. that furthers your real estate success and brings you tangible benefits, exploit that activity by performing it each and every day, no matter what.

 

What are some of your daily habits that have furthered your real estate success?

 

 

Want to learn other real estate professional success habits, as well as a wide range of other real estate niches? Attend the 1st Annual Best Ever Conference February 24-25 in Denver, CO. It’s the only real estate investing conference whose content and speakers are curated based on the expressed needs of the audience. Visit www.besteverconference.com to learn more!

 

 

Related: Best Ever Speak Brie Schmidt Sneak Peek How to Avoid the Shiny Object Syndrome in Real Estate Investor

 

Related: Best Ever Speaker Kevin Bupp Sneak Peek Lessons Learned From Losing Everything During the Financial Crash

 

Related: Best Ever Speaker Theresa Bradley-Banta Sneak Peek Don’t Invest in Real Estate on Unfounded Optimism and Emotions

tenant

How to Create the Ultimate Tenant Experience


“If you go above and beyond, so will your bank account” is the mantra of Susan Colwell, who has spent 5 years of managing two successful vacation rental companies. In our recent conversation, she provided her best ever tactics on how to give yourself an advantage over the competition. While this advice was provided in the context of vacation rentals, one can easily tweak these techniques and apply them to almost any aspect of real estate investing.

 

Professional Photography

 

The main tactic Susan attributes to her success is taking the hotel or resort experience and applying it to her rental portfolio. And the best way to emulate that experience is to hire a professional photographer to take amazing pictures for all of your listings. Photos are the first windows a potential tenant is going to look through to see what you have to offer. Therefore, you don’t want low quality iPhone photos, or worse, junk in your shots. Rather, you want to portray a 5-star experience, even if you have a modest property. That means your property must be immaculately clean, well lit, and inviting, which you bring together with a great photographer that captures it all and conveys that feeling to the tenant.

 

Before preparing a listing, Susan will go on various hotel websites, browse through the pictures of the highest quality rooms being offered, and model her pictures after that. Typically, it is as simple as getting some nice fluffy pillows for the bed and furniture, making sure nothing is wrinkled or cluttered, among other small additions, which makes everything in the unit look pristine. All of this ties into the aspirational aspect of vacations. Tenants aren’t just looking for a place to rent. They are looking for the entire luxurious experience.

 

 

Provide Phenomenal Customer Service

 

The next area of focus is backing up the experience you’ve promised from your amazing photos with phenomenal customer service. Susan has an amazing assistant, and between the two, their top priority is to make sure that the tenants are taken care of. Their service starts before the tenant even arrives, because they work towards anticipating specific needs before they occur. For example, Susan provides all of her tenants with a list of local amenities, like food delivery services and nearby restaurants, shops, parking locations, etc. Or, if a property has a unique feature, (one of Susan’s properties has a steep spiral staircase) she discloses that information upfront so that there are not any surprises. Essentially, she offers a service that is similar to what a hotel concierge service provides and is completely truthful and transparent about the features of the property.

 

It is also important to anticipate a game plan for when things go wrong, because in real estate, unforeseen issues are almost a given (A/C breaks down, minor flooding, clogged toilets, etc.). Since you know that these types of things will happen, how you deal with them is key. For Susan, when an “expected” unexpected issue arises, depending on the severity, she will give the tenant money to get dinner or will provide a discount. However, at the very least, you must commit to answering any problems – or questions – as soon as possible. It helps to identify with their frustrations by putting yourself in their shoes. Ask yourself, “If I were renting a property and the toilet goes out, what type of response would you want?”

 

As the owner, it is about understanding the frustration and easing the pain as quickly as possible. If you’ve followed the “professional photography” advice and are selling a high quality experience, you don’t want people to think that you did a bait and switch. You really have to follow up on that amazing experience that matches the amazing photos that you put out there.

 

 

 

 

Best Ever Success Habit of the Nation’s #1 Landlord Helper

 

In my conversation with Linda Liberatore, who created the number one tenant communication and payment assistant company in the nation that supports over 1,000 landlords, she provided me with her Best Ever success habit: find something that needs to be done to further your success and do it on a daily basis.

 

Linda can attributed much of her success to being a big “daily person.” If she finds a specific activity that brings her tangible success, she exploits it by doing it daily. Not on odd days or even days only, but she makes the commitment to doing it daily.

 

When Linda first began her tenant communication and payment assistant company, she was starting from scratch. She had previously obtained her real estate license, but did not have many connections with landlords. Therefore, the only way she could expand her business was by conducting everyone’s favorite activity – cold calling. Being a “daily person” and understanding the power of consistent activity, she committed to making a certain number of cold calls every single day, no matter what. Linda knew that if she wanted to create a large, successful business, she couldn’t give up and miss a day.

 

Another habit that Linda commits to daily is her education of the real estate industry. She is apart of 8 real estate associations locally. In order to add value to those meetings, she must perform research and self-education. And with 8 meetings to attend every month, she has committed to gaining knowledge every day to always have information she can provide to others.

 

Education and cold calling are just two of many examples of success habits you can instill to you daily routine. Reading, journaling, running numbers on deals, creating posts on BiggerPockets are a few other examples of success habits that you can implement daily, but the options are basically limitless. Once you find an activity, habit, exercise, etc. that furthers your real estate success, exploit that activity by performing it each and every day, no matter what.

 

What are some of your daily habits that have furthered your real estate success?

 

Awesome Resident Recognition Ideas

Recently I was brainstorming ways to recognize my residents of a large apartment community. I want to let them know we value their role in our community and appreciate everything they do.  That’s the human objective. The business objective is to develop more of a sense of community and goodwill which in turn will lower turnover and increase the NOI. 

My criteria:

  • No rent concessions
  • Costs $5 or less per resident
  • Minimal coordination required to pull off

For the brainstorm process, I posted on BiggerPockets.com to get some ideas from other landlords. (view post here).

I got a ton of great responses, some of the highlights:

A community garden

  • While this takes a bit more time to create (breaks one of my rules above) I love the idea because I could buy in bulk from a local flower shop (helps them get more biz), it would make the property look nicer and could lower turnover because residents who garden want to stay. Plus, it strengthens the community since the residents will likely interact with each other more as a result of the garden

Five crispy dollar bills with a note that says “High Five! Thank you for making 123 Elm St. Apartments Your Home. We really do appreciate you.”

A handwritten thank you card

Some other ideas I had:

Portrait of Family Drawn by Artist

  • You could go on Fiverr.com and get that for $5. This is more involved as I’d need to get a picture of them. However, I like how it lasts a long time and is something they might treasure

Give everyone a $1 scratch-off lottery ticket with a nice note

Give everyone a cutting board (or something else that helps keep property looking nice)

  • If they have a cutting board they’d be less likely to cut on the counter top therefore our countertops would last longer

Partner with a local restaurant to offer free or discounted food

 

I’m going to be implementing something in the next couple months and will report back on how it goes.

 

 

 

 

 

 

 

3 Rental Ad MUSTS

If you’re a landlord finding tenants, there are only three things you need to include in your ad to create a successful real estate ad. I define success by potential tenant taking the action you desire.

And, if you follow my stuff, you’ll know that I ALWAYS use a property mgmt company so this info is based on my experience working with them and doing some first-hand testing for my latest acquisition (a 168-unit apt community).

Here we go:

Big, beautiful pictures – think you’ve got more than enough in the ad already? Add 5 more. Seriously, pictures are the key. A good online program my management company uses is Smore.com. It’s a free online service gives you design templates so you just plug in copy and pics and you’ve got a nice looking online flyer in minutes. I have zero design skills so this was a godsend when I came across it.

Contact info stated multiple times in multiple ways. This is your call-to-action and needs to be stated multiple times. Make sure to give the address, email address and phone number. Everyone likes to communicate in different ways so you’ll want to give them all three options.

Include legitimate scarcity or urgency. If you have an apartment building and only have one 2-bedroom left then say it. People want what others have deemed as valuable. If you have a move-in special program then end it on a holiday weekend so you can have a definitive deadline for the potential tenant.

Go ahead and try this approach. Let me know how these ads do compared to your normal ones. If it’s anything like my properties, you’ll be pleased with the results.