One of the beauties of real estate investing is how you can either do it alone or have a team with you. If you are thinking of doing the latter, this episode is going to give you the information on whether it is for you or not. Guest expert Laurence Jankelow is here to tell us all about it. Laurence is the Cofounder and Chief Operating Officer of Avail, the first and only online platform for independent landlords and their tenants. Laurence gets down into the scale of managing a property by yourself as an independent landlord and how they, at Avail, could help you jumpstart on this path either as a landlord or tenant.
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I came across a website that allowed you to be a do-it-yourself landlord. I’m not suggesting or advocating that it is something that everybody should do. It’s up to you if you have the time and the inclination to self-manage or be essentially a do-it-yourself landlord. This website or platform allows you to help find the tenants, view credit history, sign leases, collect rent and you can do that on any computer or device. They’ve got tools built-in specifically for those people who want to be do-it-yourself landlords. I personally know people who manage a portfolio of properties from afar, literally hundreds and sometimes thousands of miles away, and do it successfully. These people are typically people who are in real estate one way or another full-time. It’s not that they have full-time jobs or careers and doing their things with their families and following their hobbies and have all that “extra time.”
It’s something that’s a matter of choice and it’s a question of how much do you value your time? Is it something you want to outsource to a professional property management company, which is what most of at least our clients do? It’s certainly something I do. I have thought about doing self-management in the past and I have managed some of my own properties. What I wanted to do is contact one of the cofounders of this company. The company’s called Avail and bring them on for an episode to talk about what it is they do and how they do it and what it is and what it isn’t. That way you can be well-informed and make the educated decision on your own as to whether it’s something you want to do on your own or not. With that, let us get to the interview and learn more about the Avail platform.
If you missed our last episode, be sure to listen to Don’t Save For Retirement – Daniel Ameduri.
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Do-It-Yourself Property Management – Laurence Jankelow
It’s my pleasure to welcome Laurence Jankelow to the show. Laurence is the Cofounder and Chief Operating Officer of Avail. Avail is the first and only online platform for independent landlords and their tenants that provides the tools, education and support to make renting your properties easy. Laurence, welcome.
Thanks a lot for having me here.
It’s great to have you on. I don’t remember exactly how I came across you and your website, but I thought it was very interesting and a different take on landlording. I decided this is probably something that our readers might be interested in, at least not everybody, but a good percentage of them at least to look into. I wanted to share it with our readers. Let’s start off with a little bit about yourself. Tell us a little bit about yourself and how you came to cofound Avail.
It started with me and Ryan, who co-founded with me, both managing our own rental properties. I had a three–flat in Chicago that I had been managing. What’s interesting about that is managing that three-flat, I’ve never once thought of myself as a landlord, it was just something I would do on the side. At the time I was at Goldman Sachs as an associate there. It’s not like you would go out to someone and be like, “I’m a landlord. Let’s talk about landlording.” It doesn’t happen. Because of that, especially at that size, if I needed something or needed help, I’d go online and search for something and there wouldn’t be much out there for me. There are property managers and I think they provide a valuable service also at what I thought at the time it was a pretty large expense. Ryan and I got together, we had the same problems. We’re like, “What can we do to give what we call do-it-yourself landlords some of the tools that professionals use, help them do better processes, do the right things and be a little more efficient? What’s out there?” There was nothing and we decided to go ahead and create this. We both left our jobs, taught ourselves to code, built the website. It’s been up and running now with some success. There are about 150,000 landlords using us. We’re going in the right direction and excited about where that will go.
I had no idea you were around for years. I’m surprised I never heard of you until now. That might be a marketing issue.
You think about this landlord space and what we’re in. A landlord at three units, it’s not going to be listed in a phone book somewhere. They don’t necessarily think of themselves as landlords first. They think of themselves whatever their job is or life is and landlording is part-time. Marketing to them is difficult. They’re super fragmented, hard to find. It’s a challenge. You’ve got to figure out the right avenues for that.
Let’s start off with talking about Avail. What is Avail? There are a lot of people who don’t know what your platform is.
In the simplest sense, Avail is a suite of tools, all online, that help landlords do many of the operational activities that landlords should do. Helping them take a listing that they create with us and putting it on all of the different websites out there so you don’t have to go one at a time. I’m typically getting about eighteen tenant leads in the first two weeks of having that listing. From there, you obviously need to get a credit report, background check, conviction check, know who you might be renting to. It will filter down those eighteen leads to the two or three that you want to pursue. It will give you both the city–specific, state–specific lease to use that you’ll create online. Your tenants will sign it online, take all that paperwork and make digital work. Your tenants have a portal to sign it and pay the rent online. We would make this request online. Taking all the day–to–day operational things and streamlining it a little bit, giving them the right access to the things that they need.
Let me ask you what might be a slightly philosophical question and something certainly that probably doesn’t have a right or wrong answer and can be debated all the time. I heard you say that you’re an advocate for the do-it-yourself landlord. Why is that?
Most do-it-yourself landlords are going to be the smaller landlord, one unit, two units, three units. At that level of landlording, what you’re missing is some of the scales to make landlording profitable. You don’t have the expertise either, so your option is to go find someone with expertise, but they’re super expensive. If you’ve got one unit, the amount that’s going to cost you is probably enough to turn what would have been a profitable rental business into something that’s not profitable. It begs the question, “Should I even be a landlord at that point if it’s not even making me money?” The answer is probably no, unless you can figure out an alternative way to manage that property at a lower cost, but still with some expertise. For that reason, I’m an advocate for do-it-yourselfing because it at least allows you to stay in the game and then you’ve got to find the cheaper alternatives that can get you close to the same level of expertise.
That’s going to beg the question, is that a function of the types of properties that you have, more specifically the cashflows or lack thereof of the properties that you have? I would imagine that a lot of prudent investors have properties that have good rates of return and good cashflow and property management as an expense is not an issue. It’s 8%, 9%, maybe 10%. It is an expense, but it’s an expense that is not turning the property upside down as a negative cashflow investment. It allows them to be hands-off and they don’t need to manage it. Therefore, they may not need a service like Avail.co.
I think that’s fair to say that the economics aren’t as good and that pushes you into that do-it-yourself space. I think the reason for that is somewhat of that scale. If you’re able to find a property with ten units in it, fifteen units, you’ve got some more of that scale, you’ve got a little bit more that allows you to average down that cost of a property manager per unit. What we see is most landlords don’t have ten, fifteen units. They have one unit or two units. That happens to be the majority of owners who manage their properties and they’re going to be small. For them, they can’t make a property manager work. They either should sell or they should figure out an alternative. What we also find is that a lot of landlords don’t necessarily get into landlording on purpose. A lot will get into it because they bought a condo or a single-family home. They had their significant other move in and they started a family and that home became too small that they needed to move out, but they don’t want to sell it. They want to start building a little bit of a real estate asset, so they’ll keep it and they’ll try to rent it out. They never went into it thinking this is going to be an investment property. It’s something that happened to them. In which case, if they don’t go into it thinking about it as an investment property, then you’re going to end up with slightly less favorable economics. This is helping them turn that around.
Do you have a gauge or an idea of how big or small the do-it-yourselfer/independent landlord market is? I can’t imagine it’s that large, but I’ve never seen data on it.
I do know and this is the only way we were able to raise money and continue growing our business is showing that this is a pretty large segment to go after. If you think about the United States as a whole, there are about 44 million rental properties on the market. Do-it-yourselfers own about 55% of that. Anybody with nine or fewer units which has said, “I want to manage it myself,” they own about 55% of those units.
Is the breakdown of the 44 million units single-family duplex, fourplex? Is that including smaller apartment, commercial-type property?
It tends to be heavily weighted towards single-family homes or condos. Single-uniters is where you get this problem with scale. The average size for that landlord is three units. It’s a little skewed north because there are so many who also have nine units and that’s skewed north a little bit. It’s about eight million do-it-yourself landlords in that group. That’s where the average of three and then it’s 24 million units. It’s definitely a huge market. If you think about the other side of it where you’ve got the arch property managers and property owners, those are multibillion–dollar companies servicing these huge 10,000-unit investment rates. This is even bigger than that. It’s hard to go after this market, so no one has.
It’s a pretty big market. If I may ask, how many tenants and landlords does the Avail platform serve?
We have 150,000 landlords using us. For some of the various services we do, majority of them collecting rent through us and screening tenants. That equates to about 400,000 tenants. It’s 150,000 landlords, 400,000 tenants.
I’m a landlord. What are the advantages to someone like myself using your platform or any landlord for that matter?
First and foremost, what we find is a lot of the people who start using our software are less experienced in general. The biggest thing that you can give them right away is here’s what you’re supposed to do and the right sequence of doing it and then the tool to get it done. Most landlords might post a listing on one website, probably Craigslist. We’re suggesting to them that’s not what you should do. You should try to get to all the websites that tenants are looking at. Some websites tend to produce tenants with higher income brackets or higher credit scores. Others, different ones, depending on what rental you want, you want to potentially think about where you’re advertising to. We like to help landlords put out a broad net. We’ll have them create a listing with us. We‘ll syndicate that everywhere. It saves them a ton of time trying to figure that out.
We don’t push to the MLS because we’re not looking to have our landlords pay half their month’s rent to the broker for finding them their tenants. We haven’t found a need for that. We’re getting more leads than most of our lenders can handle already. The next step of that process is how you take those leads and you filter them down to a handful of the ones that you want to rent to. That’s where you give them the access to a rental application, credit report, background check, eviction check. You can help them figure out what’s happening here. They can use that information to make the right decision.
You keep guiding them one step of the way through. Obviously, the next thing there is a lease. A lot of landlords have to be around a lease, “Do I need to go to a lawyer? Do I need to pay $500? What needs to be in it? Am I going to get sued?” We’ve got the city and state-specific leases that we are regularly updating. They start with that and they can customize it if they want, then both parties sign that digitally and then the tenants start paying their rent online. We take everything, we put it in a process for them and push them from one part of the process to the next. We do it in the way where they’re doing the right things at the right times.
I’m going to ask you the same question, but from the tenant’s perspective. Why would a tenant want to use your platform or do they use your platform? Are they finding my properties online through HotPads or wherever it maybe?
Most of the tenants who first find out about us find out because they were originally looking at a listing on Zillow or HotPads or Jumper or something like that. They’ll be like, “This property looks interesting. I want to rent it. I’ll reach out to the landlord.” What they’ll get back is a response from the landlord, but it comes through Avail and it will be prompting them to say, “Fill out this rental application. That’s part of my normal process.” That will be their first experience with Avail, it’s filling out that rental application. The benefits to them for doing it that way instead of handing the landlord a paper form is that all of their information is more secure instead of in the paper form. Paper forms are going to be left on a desk. Anyone can see it, particularly around sensitive things like their income and Social Security number. Our site doesn’t even save the Social Security numbers. We’ll take that in and that’s an immediate pass through to TransUnion. We don’t save that information. Any information we save is encrypted, which you can’t do with paper documents. For the tenant, it’s a lot more private. It’s a lot more secure. On the payment side of things, like paying your rent is probably the last thing that they’re actually doing with the checkbook. Giving them that convenience to pay online is going to be fairly unique situation for them.
When I think of do-it-yourself service and landlording myself, in other words managing my own properties, even if it’s like in the same city that I live in. The two biggest things I think most landlords are responsible for, at least as I understand it with your platform, your service, would be turnovers and repairs. I know we had talked about this a while back. How does that process work for a do-it-yourself landlord who has properties that are 2,000 miles away? Now there is a tenant that’s been there for a couple of years and now they want to move out and now you’ve got to turn the property over. There are going to be some cleanings, maybe some minor repairs, some painting that needs to be done. How is that handled?
I’ll start by saying that those long–distance management situations aren’t as common as you would think. We did a survey to about 300,000 landlords, 150,000 and a subsequent 150,000 and just said, “How far do you live from your properties?” The respondents, 80% of them live within twenty miles of the rental property. It’s not quite as common as you think around having those long-distance situations occur. For those landlords who live that close, they’re probably going over there that once a year to do the turnover probably twice a year and then one week to show the place and then another when you’re doing some turnover and patching some holes you want it to. For those who do manage long distance, it’s not as great but it’s still very workable. What we recommend and what we see them do is leverage their existing tenants to help in those situations. You can offer your current tenant a $10 discount on their rental and show the unit to any potential tenants. We find a lot of our landlords end up doing that. I think there’s a side benefit to that too for the existing tenant is that if they’re the ones showing it, then they’re more likely keep the property clean during the showings. There’s a nice benefit there as well.
Is that $10 per showing or $10 discount off the monthly rent?
That depends on the landlord on what they want to do. For me, if I’m doing that with my tenants, I do a one-time $50 off the rent. Otherwise, I would suggest a $10 showing and then try to have five people come at once.
I’ve never seen it done that way, but that’s pretty cool.
The whole economy, everything is moving into this shared gig economy. Tenants are expecting to be able to do these things. I don’t think they find that it’s unusual at all.
Tenant moves out. There needs to be some minor work done, cleaning the carpet, paint scratches and dents, that stuff. How is that handled regardless of whether it’s 50 miles away or 500 miles away? Is that something that is done through the platform or is that something that the landlord needs to set up with a local contractor or provider?
If you’re talking about turnover, if they’re using our system, they will have zero vacancies. That makes it an interesting situation because you will usually have one tenant move out in the morning and then the next tenant move out that afternoon. What we try to encourage is have a noon deadline for your first tenants to move out and a [spp-timestamp time=”4:00″] move in. That gives you that four hours to go in and do whatever you need to. There are zero vacancies and you’re not paying a management fee. You can afford a little bit more of a professional cleaning service. You have your cleaners come in for $100, $150, they went through, they clean it. Most of our landlords, if there are holes to patch on the walls, they’ll go in and quickly take some twenty minutes to patch those. Those are pretty rare and then most tenants are fine with that.
You’re talking about a turnover now. What about during the tenancy itself?
During the tenancy, a lot of our landlords aren’t qualified to fix a plumbing or electrical issue or most of those kinds of issues. That’s where I think there’s a benefit to a property manager. They’ve got a nice network, they know who to call and do those things. I think that value has maintained over the years, but at some levels also dwindled a little bit only because with the age of the internet, if I need to find a good contractor, I can go online and find one pretty quickly. It’s the easiest on Yelp, but then there’s a whole bunch of other websites that help me get that contractor with all those reviews. I can schedule that. The tenant can be there to open for that contractor or if I am within that twenty miles, I’ll just open myself. We find that getting contractors is pretty easy now. What also is a benefit for me is I can actually see what I’m about to pay before I authorize it. I know exactly how much that maintenance is going to cost me. Sometimes with the property manager, it’s a little opaquer. Not always, but sometimes.
Is there a point where self-managing your properties don’t make sense anymore? Is it a function of the size of your portfolio? At what point does someone go from self-managing their property or properties as they grow their portfolio to the point where they should be hiring a full service professional local management company?
I think the quickest way to answer that is how much they value their time and what their time is worth to them. I think it’s also because of that factor of how many properties they have. We’re definitely focused on landlords with fewer than nine units. I don’t even mean buildings, I mean nine units. That could be one building, it can be three buildings. They’re the smallest of those landlords. I think if anytime you go past nine, you’re probably now spending too much time for one person to do this and do their normal business. They’ve either got to go full-time into the business or they should look at that point to get a professional. Less than nine, you’re not that committed and have the amount of time it takes. I think you can get it done on your own.
I know there’s more to your website. You’ve got a lot of content on there and various tools once you sign up. What did we miss? What didn’t I ask you? Because I know there’s other stuff on there and I can’t think of everything that you have on the platform.
I think some of the stuff that is maybe helpful for tenants to know is rent payments. The last part of the prior era where everything is done offline, you can’t get credit for those payments anymore. We’re trying to help in those areas too. We moved that online. We report all of our rent payments to the credit bureaus, TransUnion, Equifax, Experian, and it’s improved their credit scores as well. We try to take it from an angle of not just providing online tools, but also improving the way that lines from tenants are going to be operating. Giving an overall boost to the way they are doing well to some extent. That’s evidenced with the way we think about reporting rent and those things.
What is the subscription cost? How does the process work?
It’s free for landlords if they’ve got one unit or if they always want to try one of their units so they can pretty much do everything I mentioned, see how it feels. We start charging based on the number of units you had and it’s tiered. Five units are going to be $25 a month. It’s pretty cheap, I would say probably way underpriced for the value we’re providing. We’re happy to see people doing the right things.
In concluding, I’m thinking about everything you’re saying. To me, it seems that the biggest factor someone needs to consider whether they want to self-manage or not is how much they value their time. Not to say that there is no value in a service like yours. It’s do you want to do it as a property owner and landlord? Do you want to be a do-it-yourselfer? Do you want to outsource it to a management company, pay that expense? It’s an expense. Keep your time for other things. Do you agree with me or is there more to it than that?
I absolutely agree with that. Is the time worth it? Where it gets more of a gray area is if you hired the property manager, can you even afford to keep the property anymore? For a lot of landlords, especially these one–uniters, they can’t afford it. In one version, you got maybe a 10% cash–on–cash return where I’m managing myself and the other, I might be losing money. If they’re not losing money and they value their time and it’s worth it, then you could do a property manager. Otherwise, their only option to stay in real estate as an investment property owner is to potentially manage it themselves until they can grow that portfolio larger.
Before you give out any contact information, is there anything else you want to share with our readers?
No, I think that’s good. Internal debate of do-it-yourself versus property manager, I think it’s going to look for the ages. I think there’s a place for both. I’m happy to be on one side of those.
There’s certainly a place for both. I do know people who self-manage and are fine doing it. They enjoy it and good for them. It’s a matter of choice.
I get a sense of pride when I’m showing the property to tenants and then I’ll hear their comments. I can get real-time feedback on whether they like it or not and then I walk away having signed a lease. I feel good about that.
A lot of our clients, in fact, I’d say most of them are what you could define as long-distance investors. They have properties literally hundreds of miles away, if not 1,000 or more miles away. I know people who also own a portfolio of properties that are thousands of miles away and self-manage it from Southern California. It’s a doable thing. It’s a matter of the time investment. That’s the number one defining criteria whether you want to put the time in or not.
Turnkey is definitely valuable to a lot of people and that’s exactly it. It’s the trade-off between turnkey and time.
Give out your contact information or your website, however you want people to get in touch with you guys.
Anyone can peruse the website at Avail.co. Check it out and it’s free to try.
Laurence, thank you for taking the time.
Thanks a lot, Marco. I appreciate it.
Thank you.
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