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This is the Landlording for Life Podcast where landlords explore their success and stories of failure while building a foundation to improve upon. Here's your host; Sean Morrissey.
Sean: Hey, everybody welcome to the Landlording for Life Podcast for this week. This is your host Sean Morrissey and as always thanks so much for tuning in. Now today, we have on the line with us a gentleman by the name of Mendell Gosnell out of Salem, Oregon. Now Mendell I would say is an all-around entrepreneur. But he has a particular special focus in real estate in that he has his own real estate brokerage and property management firm.
I had a chance to meet him a few weeks ago and thought he'd be a great candidate to be on the podcast. So with that in mind, Mendell's going be on today just really providing tips for landlords from a property manager’s perspective. So Mendell, welcome to the podcast.
Mendell: Hey Sean, thanks for having me.
Sean: You betcha. Thanks again for being on. So wanted to have you tell our listeners a little bit about your background. Perhaps how you got into the arena of real estate over the course of time.
Mendell: Yeah I'd love to. So it’s kind of an interesting story. I think I call it fate or destiny. I happened to have the right landlord in college. And I think it was a little bit luck and a little bit hard work on my side. But as it happened, we were living in college in a house with about seven other guys; pretty typical I’d imagine. And everyone moved out the end of the year and it was kind of incumbent on me to turn in the keys to the landlord. And I felt a little bit like, “Man, the guys left a lot of junk here. They didn't leave in very good shape.” And I kind of felt bad giving the keys back to the landlord. And so, when I dropped off the keys with him I said, “Hey you know, I feel really bad. I want to offer my services to help clean this place up and make it right with you.”
And I think he was a little taken back. He invited me into his house and said, “Hey, I'll pay you to help me. I'm going to be getting that place ready to sell.” And so, he offered to pay me and kind of began the journey into real estate and for about three months, I worked with him. He taught me a lot about real estate and the trades and he wanted to continue that. But our paths kind of went in different directions for several years but crossed again. And I looked him up and sure enough he made good on his word of taking me under his wing and teaching me about real estate. And so, I showed up and he put a shovel in my hand so to speak actually, and literally and kind of began the process of learning about real estate or as they say working to learn instead of working to earn. And so that's the story of how I got into real estate.
Sean: Wow! So you kind of walked into a situation in which you actually were really provided a mentor per say.
Mendell: Yes, so I mean very fortunate. He is just an amazing guy, very successful in real estate, and just a wealth of information and was connected to a lot of other people in the industry. And just really opened up his life to me so that I could get a start in there. I eventually got my broker’s license. His wife was a licensed agent. And so she became my principal broker and I started off on the selling side as an agent. But I quickly just really got drawn to the property management side of things.
And I would definitely attribute a little bit to my work ethic. I mean I worked really hard for him and he saw that and it was obviously valuable for him to put me to work but it was also really valuable for me to gain a really up close look at real estate from a lot of different perspectives. So yeah, very fortunate and as they say “it's amazing how lucky hardworking people are”. And so I think work hard, be ready, and wait for luck to strike.
Sean: All right, you mentioned that you're kind of drawn to property management. And I tend to feel the word on the street is no oh my goodness I don't want to be a landlord, I got to deal with tenants or from a property management perspective really the same thing. Why do you think you were drawn to property management? What kind of opportunity did you see there?
Mendell: Yeah that's a good question and so for me… I mean no doubt when I got my first commission check, it was definitely the biggest check that I had ever gotten at that time you know I was young 20s and here I got a check for six grand and change. And I'm looking at this check and I'm calculating in my head going wait a second there's got to be a mistake. I'm thinking of myself. I'm like kind of like getting anxious here. I'm thinking, “Oh, oh this is got to be a mistake. Something's wrong here.” And I'm calculating in my head about how many hours I've worked on this deal and I'm thinking it can't be more than ten hours. But so it’s good money.
But I kind of look at it as the quality of life is what really attracted me to the property management side of things. I just felt like I was able to manage a little bit of property for my mentor at that time and I was really attracted to the system side of things. And then also I wasn't very attracted to working weekends and evenings which if you're an agent especially on the residential sales and being a buyer's agent stuff, you're going to be working a lot of weekends and evenings and I knew the quality of life that I wanted to have is I wanted to have a little bit more flexibility with my time. I didn't want to be working weekends and evenings at least not forever.
Although I worked a ton of weekends and evenings for the first three years as the property manager. But my mentor really forced me to ask a lot of tough questions because before I went into real estate, I was pursuing a career in law enforcement and he had a lot of buddies that are in law enforcement and he set me down and said, “Well what do you want in life” and he forced me to answer these tough questions and he began to really show me that what I wanted or what I said I was wanting wouldn't really get fulfilled with what I was pursuing. And so I think just self-evaluation and asking those tough questions and seeing myself more on the property management side if that makes sense.
Sean: All right, I totally does and being somebody who's experienced both the residential real estate broker side and the property management side and looking at the big picture. I think what you stated, you hit the nail on the head right. Like real estate brokerage activities look like they're easy money but at the end of the day, you're sacrificing lifestyle for that.
And with property management comes systems that ideally you know evolve into (and assuming that you can manage those correctly), it becomes a fairly passive activity or not that fully passive. But you know it's all relative to how clients you bring on in the systems you get in place. So yeah well stated. Now how did you eventually evolve in owning your own real estate brokerage and then forming your own real estate team from there?
Mendell: So I cut my teeth working for slave wages in the beginning. But I was so glad to do it, so glad to get the opportunity to manage some of the rental property for my mentor again. And then he encouraged me to get my property management license. I had my broker's license and I gave that up so I didn't have to have a principal over me and I just got my property manager’s license and I began to take on additional clients. So some of like his friends or he would sell a deal and I would pick up the management. And it just began to grow organically with word of mouth and advertising it in the streets and just put my name out there. And then as I say overnight success it takes about ten years and about a decade and a half.
And so again, I think I mentioned the first three years were pretty difficult. That was probably the biggest shift that I went through in my life of moving from an employee to an employer. It was brutal. I mean it was a lot of hard work and it was a lot of days. I mean almost every day I got up and I was just like what I do today? I mean I don't have anybody telling me what to do and I'm like okay I guess I just answer the phone, respond to emails. And a lot of days they were challenging and I was like I just don't know if I want to do this. And so having pressed it I would never want to go back. I mean I wanted to do it but it was a difficult challenge but and then I love the quote that Tony Robin says: He says that a lot of people overestimate what they can do in a year but they underestimate what they can do in ten years”. And now with the ability to add hindsight and look back in to see like all the hard work. It was just one step at a time and like I like to share with a lot of people and I don't feel like I had any home or I just feel like it was a lot of tiny victories day after day and implementing a lot of great wisdom that I gained from my mentor and others things like do something every day, do a little bit every day and just make sure that you're focused and being able to say no to a lot of distractions and also reading a ton.
I am very fortunate to have developed a love for reading from a young age and I think that's helped me a lot to gain a lot of good insight by reading. Associating with the right people and then writing down my goals. I think those are the things that really helped grow this process from just incubation to morphing into a brokerage company. It's like for me at least it was just a very slow process of starting one step after another. And my mentor early on said he thought I was like a wild mustang. You know just going in every direction and not getting anywhere very fast you know and he said Mendell if you focus in one direction, you can do whatever you want. And so he said, “I think you should focus on real estate and here's why.” And he convinced me into seeing real estate as a great vehicle for... Well not only wealth creation but lifestyle creation. Like just decide what you want out of life and being able to build that and have the resources to do it and create options for yourself and flexibility and so that’s the long answer to the question but.
Sean: No that's fine and it's funny the more we chat here, the more I'm like boy this mentor of yours is unbelievable.
Mendell: yeah
Sean: Like he’s one of those where I think many of the listeners will say boy when I was in my 20s I could have used a guy like that by my side. So very blessed for sure. Now what about the real estate investment side? How did that evolve over time?
Mendell: The real estate investment, so that's another strike and it comes back to my mentor. I was renting a house at the time and I was reading all the books and trying to figure out how to buy my first investment and here comes my mentor Jeff and he comes… You know we're having this conversation. I remember very vividly he said… in our kitchen he looks up at the white board and there's the name of our landlord and his phone number for paying rent and stuff you need to call the landlord. And I'm just complaining how I can't find any deals. He's like well why don’t you buy this place. And I'm like it's not for sale and whatever he says is this or the landlord and the owner and I'm like yeah that's him.
And so he literally pulled out his phone right there, calls the guy, asked if he wants to sell the place, sets up a meeting for the following week and it turns out that he does want to sell… he helps me negotiate a lease option whereby I tie up the property and one year later, I essentially buy it and sell it in the same day and make pretty decent profit and was what around 27,000 dollars which you know amazing. And so that kind of was my first deal and it just began. I was able to use the lessons that I learned and apply them in real world scenarios by finding properties and getting good financing and leveraging and managing them well and just growing it slowly one door after another.
Sean: Oh I hear you and you know what I tend to find from a property managers perspective is as you hone your property management systems, you're in essence using them for your own buy and hold investment inventory which the right hands help the left hand out in that case which is a beautiful thing.
Mendell: yeah
Sean: So moving right along. So many of our listeners are landlords that are just starting out, might have a few properties. What pointers might you provide them to assist them in scaling their business over time. Be it their real estate investment portfolio.
Mendell: Yes, so yeah that's great. So I think if I'm hearing the question correctly, how to help beginning landlords? Is it for like property managers or is it people that are managing…
Sean: Let’s just say…
Mendell: … some portfolio?
Sean: Yeah just managing their own portfolio. They may own two or three properties as they'd like to be at ten properties in five years. What advice might you give to get to that point?
Mendell: Yeah for me, I come back to starting with why. Like that was something I learned early on and I applied it and I actually I wrote down my goals. I wrote down kind of like what I called my exit strategy and just wanted to essentially create a roadmap in advance. And like if I want to put in all this hard work, I want to know now what the goal line is or what am I trying to accomplish. And you hear these people who have achieved a lot of talk about understanding your why. Like what is going to motivate you. Like what's going to get you up early, what is going to help you push through the difficulties. And so that I think it's so simple but yet, people don't take the time to sit down and put pen to paper and do it, really ask themselves and like they say go six or seven levels deep.
Like so why are you doing this? And then you answer the question and then you ask why and then you answer the question again and then you ask why. And you begin to get to this place where at the core with the real reason, the real driving motivator. I think that's super important. So I think that that would be probably my big takeaway. Like if there is somebody starting out and wants to accomplish like lookout, would write down like and if I can't overstate enough. Like really write it down, physically write it down. I know that people use technology now so put in the cloud; Google Docs, whatever. But definitely, get it out of your brain and on to some sort of paper or in the cloud writing it down super, super huge.
Sean: Well and it seems too like having that posted where in a location where you are every day. Be your office or by the kitchen coffee maker or something where it alternately is in your face all the time and it's embedded in you seems important as well, right?
Mendell: Yeah, totally and then I'll add a couple things. I think we talked a little bit… you mentioned systems with property management. And so even if you're a do-it-yourself landlord developing systems because here's one thing that I always come back to like from being a property manager is like I see one of them. The number one reason people say they get into investment real estate is have an income or quality of life. It's something around that.
Sean: yeah
Mendell: However, if you continue to manage the property or sell and you don't have good systems and or good people that run those systems, you’re just changing your career. You're just getting a new job. And so whether you're outsourcing it to a professional partner managing it or you're creating good systems to do it yourself so that you can free up that time it's kind of negating a lot of the reason why you know people get drawn into real estate which there's passive income.
This lifestyle is freedom that people talk about. And I think it again just really getting that long game mentality of okay it's going to take a while. The more I apply myself in a focused direction, the quicker I'm going to get there and preparing yourself for failure having thick skin and just being ready to persevere. I think those are really important to be top of mind as you're pressing on towards the goal.
Sean: Yeah, yeah well said, well said. So I'll tell you what, I'm going to move on to our next question here and I'm going to ask you to put your property manager hat on here rather than the investor hat. So from a property manager perspective, what tips might you provide landlords that are screening at tenants? Is there a particular website that your office likes to use? Do you like to take the application a little deeper than most I suppose or what tips might you have?
Mendell: Sure, well the interesting thing about property management is you really have two kinds of customers. You've have the clients; the owners of the property, and then you have your tenant. And I think in property management, the tenants really get relegated to kind of like the stepchild. They don't get the attention that they should and I really think that you… whether your landlord has one rental or you’re a big property management company or you’re a big investor that's got a bunch of rentals. You know having a strong customer attention you know, customers service towards the tenants first and foremost and so that comes into play when you begin to screen them. Having a good interaction with them so that if you have a good tenant there, they're going to want to continue to rent with you.
So I think that's like first thing first. But then when it comes to continuing that screening process, there's certainly something you can do and we really recommend having good forms and you can use your own. But we think that using the best forms… and each states a little bit different but we use some out of Portland. They're just great. They're vetted by a team of lawyers. They stay up to date. They’re legal and then we have internal policies as far as how we screen and we just train on those. We do those the same so that we're avoiding any liability any issues, any discrimination type issues.
And then there are several agencies out there and you can go to a website and get information. But unless you're an actual company and get audited and get screened and are allowed to get like some of that… the background information on those tenants. You know that's one of the things that a property management company is really going to shine with. This is I'm going to get information on a tenant that anybody off the streets is going to be able to get.
There certainly a site that you can put their information and they kind of like give you a rating. But they're not gone give you the granular detail unless you can show that you have an office that’s separate from your house and then are established there you know so and then they come out. And they make sure that you have… that you're a legitimate business that you've got safeguards in place filing cabinets and stuff. So I think that that's what I’ll probably say in regards to screening, but yeah.
Sean: Yeah no that's perfect. And it's funny because the more I listen to others talk about this topic, the more the words that are emphasized or be consistent, right. I mean know your fair housing laws but be consistent applicant to applicant. And I think so long as landlords use that as a foundation, it will take them far. And then have procedures in place actually written down if you were to be audited by HUD. But at the end of the day, it's the consistency portion. So other than that, staying on the whole documents side of things. I guess when there comes to like provisions in a lease that you like to see as a property manager which are some of those that you might see as being fairly effective but you know maybe a little bit creative in this day and age.
Mendell: So it's so funny when I first started looking back. I'd be happy to get… If we took over management on a property, I'd be happy to see a lease that was legible. But like for us here in Oregon, we use a third-party provider called Tenant Tech. They integrate with Metro multifamily housing forms and they just do an incredible job. And so they take care of just keeping you legal and up to date. I think that when you're talking about documentation again consistency or if you're talking about leases, you want to have the most up to date forms.
And now with everything being in the cloud it's great because you can do e-signings. Well there's so many millennials out there being able to send that information via their e-mail. They can sign, it comes back. It's all digitized. There's no question about if the box checked or not. There's no question about being able to read their handwriting. So I think that when it comes to leases, those are the things are great. It's standardized as you can get safe and this society that we live in is so legalized that anything that you can do to add that additional buffer layer protection you know it's worth the money.
Sean: Yeah, yeah for sure, for sure. Okay so from a property manager perspective, how often do you think a rental property should be inspected? Some landlords for instance push us to do them quarterly, some say once a year, some just never check in. What are your thoughts on something of that nature?
Mendell: As a property manager, my answer would be as often as the owner wants. But realistically, I think once a year is our standard for our company and or up to two if you've got some reasons. A good way to set it up is like on a house if the tenant moves in do an inspection within the first three to four months. You're going to be able to see things and then just set it annually after that really good internal and external. The problem that you get with doing to them more frequently is that you begin to infringe on the peaceful quiet enjoyment of the tenants which isn’t allowed.
Sean: exactly
Mendell: So we kind of discourage owners from like you know, because sometimes they're like I want to see it every month or every quarter. And I'm like okay well you can do that first you'll definitely want to have that conversation upfront before you sign the lease agreement or rental agreement so that the tenant’s incoming, they kind of know what they're going to be expecting otherwise, you might have a problem with it. But the other thing that you can do which you don't have to, you know can be very non-intrusive is just doing a drive by inspection of the property. You're going to be able to tell quite a bit and we catch a lot of issues.
And then the last tip that I would give for landlords is send out what we call good neighbor letters and we send them out to a few of the homes in the area. We just pull the addresses and we just send them a letter saying hey we're managing this home in this area here and we just want to introduce ourselves to you. We want to be good neighbors, we want to find good tenants that will be your neighbors. If there ever happens to be any issues with the property or whatever we can be a great point of contact. We'd love for you to just let us know and we would love to try and make this a great experience for everyone in the neighborhood.
Sean: Oh I love that idea.
Mendell: Yeah.
Sean: Yeah, I mean just not only from a good neighbor perspective but just a fantastic way to really like brand your company and brand yourself as a property manager who cares. That's fantastic.
Mendell: yeah, yeah
Sean: What about management's inspections software? Is there any particular software you like this day and age for inspections?
Mendell: Yeah that's so funny. For inspection yeah, we have used a lot and we recently have gone to like just in the last three years everything in our company we're pretty much completely cloud based which is great. And so we use snap inspect. So if someone is looking for a good option for inspection software but they've got so many that are out there, this is it. And it really comes down to finding one that works well for you and the price point, right. But like you can even just go on the app store if you are an iPhone user and if you're not an iPhone user, you should be an iPhone user and so.
But yeah there's just there's some that are very inexpensive like a one-time fee or there are some that are a little more expensive of better ongoing and it gives you just cloud access our whole team has access to the data and I mean we love it. And in regards to that, I'll say this is a pretty good check for doing move in a move out inspections. Not only having a good inspection software that streamline the process, it just gives you… you don't have to think about checking everything. You just work to your checklist. But about six years ago, we moved to video inspections. And so we do an inspection when the move out happens and then we do have to make ready getting the unit ready to re-rent.
And then we do an inspection at the end which shows the owner the work that we've done but it then it also becomes a record for when the next tenant moves in and then moves out. It's the premium becomes essentially a premium an inspection. And a video… if a picture is worth a thousand words, a video is worth ten thousand. I mean it's so amazing you can narrate while you film. I mean you can just film on your iPhone. We get a little bit more technical with lighting and mics and a rig that stabilizes the video and stuff. But I mean in a pinch we still have managers go out. They don't have their equipment and they just film it with their smartphone and it just works so amazing. You can upload them for free to YouTube or a lot of the inspection software snap inspect allows you just didn't get it right in the inspection. So it's just amazing. I mean it's a great one.
Sean: It's funny I mean the inspection software side of things to point out one more thing. I feel like it's evolved so much over the last five to seven years where used to be just a product that was affordable for property managers that had some properties under their belt. But now you can pick up a software that a mom and pop landlord can use and use it right off your iPhone once again and utilize the cloud.
So it's certainly something anybody at any level should be considering at this point instead of using pen and paper and trying to file that moving checklist before the tenant moves out. So yeah, glad we chatted on that. Now three of the questions we ask any interviewee we have on the show, right. The first one is what is one of your favorite real estate books and what might be one that you recommend to our listeners?
Mendell: I wish I could be original on this one Sean. But I'm going to have to go with “Rich Dad Poor Dad”. But I do want to add this. I mean it's an oft quoted book or reference book or on a lot of people say number one recommendation I get that. But I will say that it is for me, it wasn't so much just about real estate although it was great. I mean just the focus on real estate but the difference between the rich dad and the poor dad that analogy spoke a lot to me. Because growing up, I didn't have a lot. It was pretty poor so to speak and understanding that the mentality that you have affects what you do is just so much farther than you can imagine.
So reading that book was like a paradigm shift for me and I think like if you read it a long time ago and it was just about real estate for you going back and just even the title like that “Rich Dad Poor Dad”. I mean understanding… because I think that there's still a lot of people that are pressing on or they've got their goals and they're working really hard and they're not make advancements. But a lot of things that hold us back in life are wrong beliefs and I just like you change your beliefs I mean you're going to change your destiny. That's a fact. So I love that book so.
Sean: Well I mean it's funny. There's a few things I can point out there I suppose. So I recently learned this is the 25th year of the Rich Dad Poor Dad book. So that's kind of exciting stuff. But something else over the weekend we were at a birthday party for one of my daughter's friends. And naturally, we’re in their office chatting and I saw that book on their bookshelf, right?
Mendell: yeah
Sean: And I realized that when you're at somebody’s house right any… you know all but you don't really know. But you see that book on their shelf, you're kind of like these people get it. Because it is a paradigm shift, right?
Mendell: yeah
Sean: So long as you read it and you read it all the way through and you're halfway paying attention, your life is going to change. So I realized this weekend that there is a certain brotherhood to those that have read it and then take action I suppose. But certainly, have read it. So that's always fun. So what would be the one piece of advice you would give to an aspiring real estate investor at this point? What comes to mind?
Mendell: Well I you know, I’ll reflect back to the goals and writing things down and really grasping your why so that so great for the motivation. But in all seriousness, I would really say hire a professional property manager as fast as you can. And I don't say that just because I'm a property manager or if you're not going to… if you're just dead set against hiring a professional property manager create some good systems and hire some people because here's the reality. Unless you really want to achieve what most people are drawn into real estate investing for which is passive income, hands on, not creating themselves another job. You have to outsource it. I mean that is the bottom line.
So either you're going to find a good professional property manager or you're going to create a system and train somebody else to do it for you. Or if you just love it so much that you want to be the maintenance guy, the one that collects rent, and do that, then great. I'm not arguing with that person. But if you're really wanting to be like hey this is why I started this because what my mentor taught me early on was as soon as you can make more doing something else, put down the hammer. And I get it. I lived through that. I had to put down the hammer and it was one of the hardest things because you're thinking to yourself wait a second, I'm going to pay this person this much money to do this.
I can do that. And not only can I do it, I feel like I can do it better. And so but if you really want to get to where you're going and you want to achieve great things, I mean you have to leverage and that's what… You know we see that with real estate. That's a great thing about real estate is it's about leveraging other people's money. But in order to really attain great things or attain your goals in life you have to use leverage in other areas like other people's time and that's what you do.
So I think that would be a real good thing to really get people. Because I think there's a lot of people that just… they're staying in that well. I'm not going to pay somebody else to do something that I can. I don’t want to be like Well as soon as I can make a paying more on something else then I’m going to drop that now and it's like I look forward to turning things over to somebody else they can do it because then I'm expanding, I'm leveraging, I'm using this amazing ability that we have to leverage our resources so yeah.
Sean: Some quality comments there on systems and use of leverage and it's funny. I mean while you're talking there what came to mind is all too often when you ask folks, “What you got to do to get started?” They'll say, “Well you've got to have a team in place. You've got to have your real estate attorney and your home inspector and your real estate broker and on and on. But at the end of the day, the longer I've been in this business, it goes back to what you said; the property management system.
You've got to make sure you've got that in place. If you want to invest out of state or in your backyard, you've got to be confident that property management system is going to work and be in play for the duration and which are going to own that property which is hopefully forever. But at the end of the day, that this system is the most important that's been my thoughts on what you had to say there. But finally, what would be would be the best way for folks to contact you if they are interested in learning more about your services either the north west coast or just learning more about what you're doing on a day to day basis?
Mendell: Yeah perfect. You know they can connect with me on LinkedIn. They can send me an e-mail at Mendell@c-rem.com or you can check out our website at the C-rem.com. And yeah, send me an e-mail, ask me a question, love to engage and help people whenever I can.
Sean: Awesome! And well and you know what? I apologize. I had stated at the beginning of the show you're out of Eugene. You're actually out of Salem Oregon. So my apologies there.
Mendell: Yeah perfect. I was going to bring that up but yeah.
Sean: Yeah please. So yeah, the website again is www.c-rem.com. And Mendell, thank you so much for being on the podcast. We really appreciate it.
Mendell: Awesome! Thanks Sean it was a pleasure, appreciate it.
Sean: Yeah, you betcha. So this is going to conclude this week's edition of Landlording for Life as always thanks for tuning in. We’ll see you next week with the next episode. Until then, keep land lording.
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