Why I Didn't Offer Full Property Management on This Deal | Ep 70

James: I'm gonna share why I did not offer full property management services to someone who asked for it, and when I didn't, she thanked me for it. And I'm gonna be sharing that on the Furlo Capital Real Estate Podcast, where we dive into the intricacies of passive real estate investing. And our mission is to equip people to invest wisely in both properties and residences, whether they know it or not, so that together we can build wealth while improving housing.

I'm James, and this is my wife, Jessi. I'm so intrigued.

Jessi: I you're intrigued, like why would you say no to someone?

James: Oh yeah. Like, okay.

Jessi: But before we get there this has nothing to do with the pocket. It's good hot. At least I don't think it does. It's a good

James: cook if you're intrigued. It is.

Jessi: I'm intrigued.

James: Dang.

Jessi: But also speaking of intrigue, I feel like that was a good tie in s Samson recently checked out a Guinness Book of World Records. Ooh. Book from the library. And we were just flipping through it and Nice, nice. And some of those things are like, what? Like that's a WHI record.

James: Oh yeah. That's a thing.

Like who created,

Jessi: like who thought of that? I mean,

James: yeah. How many times this person was able to keep a feather off the ground by only using their breath for the most amount of time. Right. It's

Jessi: just like, like there was one the longest time.

James: That's not a thing I could tell you

Jessi: had a certain percentage of your skin touching ice.

I was like, okay. Of course, happened to be just over two and a half hours. Yeah. Which seems like a long time,

James: but that's one of the things, I like it when I, when dude, perfect. They're like, we're gonna break some records. Just get after it. It's, I like Right. Making a basket from the furthest season's blindfolded or whatever.

Right.

Jessi: Or like a basket after a bounce.

James: Some random, yeah. Yeah. Oh yeah. It's totally random. Whatever. It's, it's a weird, it's super weird. I get it. I mean, it's, it's, it's interesting, obviously, like it hooks us, right? It is. It's intriguing. How fascinating.

Jessi: Yeah. Why would someone do that?

James: Yeah. Why would similarly.

You know? Yeah. So why would someone

Jessi: say, you know, why would you say no, no to someone?

James: Yeah. So let's back it up a little bit. So I have a property management company. Mm-hmm. Woohoo. And I've got a website. And on that website I offer free property analysis. So you can go to the website and be like, man, how much does my property actually rent for?

And

Jessi: oh, I'll do the research and figure it out for you. Okay. So if I, if I had a rental unit

James: Yep.

Jessi: And I was like. I have no idea how much the list is for or Yeah, like what I would do. I could,

James: or if you wanna evaluate your current, whatever you're doing.

Jessi: Yeah. Oh, okay. Go, go

James: to the website, do it, and say, Hey, send

Jessi: me this report.

James: Yeah. And I essentially, I generate a report, set it cool, like here's what it's cool. And then from there you go into my, my lead system. Right. And I follow up, Hey, let's talk about what it is that you're looking to do. You know? So, so I did that for this person mm-hmm. Who came to my website. Made the request.

Yeah. I sent it off to her. And and so we started like I. Going back and forth. She, one of the things she did almost right away was I sent the email and she's like, Hey, this looks great. I wanna look at it. PS how much do you charge? And, you know, as a general rule, if that's like the first question that someone asks, you're like, I.

I don't know if they're gonna be a good fit. Right. They're price sensitive. Yeah. They're just, they're trying to save money. Yeah. More than likely. And you're like, okay. All right. All right. Well, I got her on the phone. Mm-hmm. And you know, we were just kind of talking. Well, she, it's this single family home and it's in a really nice neighborhood, and she had another property manager who had tried working with her mm-hmm.

Who was like, oh, we can rent this thing for $3,400 a month. Which is, you know, that's a lot. And she ran into the problem where while they were still. Negotiating talking. Mm-hmm. That property manager went ahead and. It was like just, and I think the idea was like, Hey, I'm gonna get this ahead. I'm gonna try to get you a client as fast as I can.

Well, the owner like freaked out. Right. But, but

Jessi: they weren't, they weren't officially No. Like under contract. Correct.

James: Of, so she freaked out and was like, that's weird.

Jessi: What the heck?

James: And you know, was upset about it. Pulled out from that, went talked to someone else. Who also just didn't seem to have a lot of experience and weren't gonna be a good fit.

Yeah. She then went and looked into doing like a short term rental type of thing. Okay. And they were gonna charge 25% management fee.

Jessi: Wow. A

James: quarter. That's wild. Yeah. And that, by the way, that 25% did not include. Cleaning, coordinating things. What did it

Jessi: include? Didn't

James: include any utilities. That's just a

Jessi: management fee.

James: That was just the management fee. And

Jessi: then you get charged all of those other things like uhhuh, piecemeal,

James: uhhuh. Yeah. Essentially it would be, they would be coordinate, they would be managing tenant bookings and then coordinating cleanings and maintenance. Do people actually use that service? I dunno. I'm not sure.

I feel like

Jessi: I, I, I mean,

James: people do use those services and I know that some of them. Are not cheap.

Jessi: Yeah.

James: And, and that's one of the issues with short term rentals. So interesting. But ultimately she decided interesting. Nope, I wanna go long term. So I gave her my pitch. Now I'm gonna share the pitch that I gave her, and then I'm gonna share the pitch that I probably should have given.

Jessi: Okay. Okay.

James: Okay. So the pitch that I gave her was, I was like, it's a three point, it's a three. Part pitch, and the first one was like, Hey, relief. You know you're gonna get peace of mind knowing that everything's handled like clockwork, tenant maintenance.

There's that. I said the other one is you control, right? So you're gonna, we're gonna treat your rental like it's an investment, not just a property. And like I like to use real market data and information mm-hmm. For my own stuff. And I like to proactively manage my own stuff. Yeah. And so I'm gonna treat, there's like it's my own.

Yeah. Like we'll have control over the market and what's going on. Then the last one was, you'll get freedom, right? Your rental property is gonna work for you.

Jessi: Yeah.

James: Not the other way around. That's the. In hindsight, it wasn't great. So I'm, I'm gonna, I'm gonna, I'm gonna workshop. I was, I was working on a new one.

Alright. As I was preparing for this podcast, my notes, so here's, here's my new one. It's much longer. Shocker,

Jessi: more detail. This is what

James: happens, man. You gimme time. I'm like, oh, I can easily make this three times as long. I am not who is it? Mark 20. Is this like,

Jessi: like AI helped pitch or is this totally James Fur's brain?

James: Does it, why does that matter?

Jessi: I don't know. Think it matters. It just seems like it does. Like why? Well, because it's like, if it's AI generated, that seems like.

James: I'm really curious about, this is the total side thing. Side thing. Yeah. This is a

Jessi: total side note. I don't know. I know this is

James: the great debate right now.

How it just, it is it, it's a great

Jessi: debate and I feel like, I don't know, for something like this, probably not that important. 'cause really what the AI is adding is like it's string, it's stringing it together in a more eloquent way. But the heart and the message of what you wanted to communicate is still true to you.

Yeah. Okay. True to what you wanted to say. Okay. To me, it's like. If you didn't start with any of your core value and you were just like, Hey, write me a pitch to manage this property. Here's the property stats. That would be like that's not really like, yeah.

James: So to be clear, like I'm talking about like the pitch and sense of like, here's what I offer, here's what makes me different.

Does that make sense? So. Involved. This is like my company.

Jessi: Yeah. But it's like, why you should

James: hire me

Jessi: because your property has this. This is what I

James: would do. Alright, let's go down this track. Let's get back on track. Let's go down this track for just half a second here. Okay. I fundamentally mentally believe there's no one who does pure writing.

Someone gets technol technological help on some level at all times. It could be as simple as I'm using a word processor, right? Like that is like, and it's easy for me to delete and go back. Sure. You don't have to nail it the very first time. Sure. Okay. If you're using just basic spell check. You are getting help there with your spelling and grammar if you're using something like Grammarly, which is not only helping with spelling and that it also layers on some like minor phrasing.

Mm-hmm. If you are using something like an AI agent, again, it's just, it's massaging it even more. And at the end of the day, every single one of these tools are garbage in.

It's going to give you a generic answer. If you give a very specific, here's all the stuff that I want you involved, here's kind of what I'm thinking about it.

Jessi: Mm-hmm.

James: You'll get a more personalized response. Hmm. And so, and that's true for all of it, right? And so when someone comes along and starts asking questions about like, well, did you use a I or did you not?

Like for me, I'm like, I, my, I instantly go like, well, what's the heart of the question here? Are you trying to figure out like. Is this an exercise? Like did I, is this purely quote my own thoughts?

Jessi: Mm.

James: Or is it just I'm trying to communicate the message the best I can? Like what does it say about, if you write something and you take it to someone else to read and edit for you, which by the way, every single publisher does.

Mm-hmm. How is that any different than using ai I, AI for editing feel like

Jessi: the difference for me in this particular scenario is when you say a pitch. I think it's something you're going to verbally communicate to someone. Yeah, hundred

James: percent.

Jessi: And so.

James: In this case, yeah. Sometimes, sometimes it's over email

Jessi: depends.

And so it's like if you are getting this help molding it and saying it in a certain way, then you're memorizing that to tell the person doesn't seem as genuine as you are. Just coming up with your ideas

James: Yeah. And

Jessi: saying it.

James: Fair enough. I, I hear what you're saying, which

Jessi: I get like, there, there is this level of like.

I could get better at delivering my pitch, you know, and, and possibly like, okay, yeah, I'm gonna get some help writing it and saying it in a different way, and I'm gonna learn how to verbalize what I want in a different way. Well, like, that's good. Yeah. Okay.

James: I hear what you're saying. Okay. I also, to me, the things that are impressive are, let's use athletes that as a, as an example.

Mm-hmm. And what we do is step curry. His free throwing percentage is ridiculous. It's like high nineties. Yeah, it's, he generally doesn't miss.

Jessi: Yeah.

James: And it's not because he's an amazing, talented person, it's because he practices, practices and practices and he tweaked and he changed and he watched his video and he got feedback and he did the, and he.

And he practiced a ton, which took him like he was already naturally, like he was good. Yeah. Obviously he started

Jessi: at a higher place, but he worked like you don't get

James: to a 90 plus percent free throw without a ton of practice. Yeah. That to me is the impressive part. Every single top sales person who you talk to.

Mm. They work off a sales script and they practice it over and over and over. Now, yes, they've got some natural delivery and there's some things that they can do where they think on the spot, and part of it is they go, I've heard this a hundred times. Mm-hmm. So I know what's coming and it's the a hundred times of practice.

Yeah. Now, if you use a tool like Chatt, BT, instead of saying like, I have to do this a hundred times to get good, I now only have to do it 20 times to get good. Mm-hmm. Like, that's not a loss. At the end of the day, you're, you're still. At that same point where it's like, yeah, no, this thing has been tweaked and changed and we've talked about this, where like I will practice saying something and I will tweak and change it over and over.

And like my little one has has been like, how do I introduce myself and what I do? And I struggled with that for a few years because I was like,

Jessi: well, I mean,

James: I'm

Jessi: involved in so many

James: things,

Jessi: blah, blah, blah. Right. You wanted to include all of it. Yeah. Yeah. And

James: I finally landed on like, I had to simplify it way down.

Right. And it took me. A year to figure it out, to just go, I'm a real estate investor. Yeah. And that's it. And if they're genuinely interested, I can go into, alright, and here's how I actually do it. Mm-hmm. But it took, it took me, I didn't get there naturally. Yeah. As simple as that sounds, that wasn't how I started.

'cause it was super complicated in my head.

Jessi: Mm.

James: And so if you can have tools to help shortcut that, 'cause at the end of the day, again, this isn't, I'm not trying to win some prize for being a thought leader. I am. I'm like. I'm trying to convince someone and communicate with them, Hey, I think my company could be a good fit.

Mm-hmm. So that's,

Jessi: it. Makes sense. And it's like, that's a, it's a tangent to go down. Like Totally. There's, which is okay, but it's a whole nother podcast, a whole nother episode of like the use of AI in sales. Yeah.

James: You

Jessi: know, and marketing

James: fundamentally, I think it's good. Do it, whatever tools make it easier to communicate and help people make decisions.

Yeah. I'm on board with, and

Jessi: I'm not as gung-ho, but I get it. That's fine.

James: Yeah. So anyways, wow, you're working on your pitch. So I've been working on my pitch. I came up with a better one. Which there should be a little bit of an indicator there if I had one that I did mm-hmm. And now I'm refining it, trying it again, that should kind of clue in given the conversation we just had.

Right. Like, I'm not just throwing this in the chat team saying, gimme your best answer. Yeah. You're evaluat the, I'm now the different. After I say it out loud to you, 'cause I actually haven't said this out loud, I just kind of wrote it and thought, okay, this is

Jessi: the first time

James: anyone has

Jessi: heard it.

James: Yeah. So here's what I think is my better pitch.

Okay. Okay. I'm kind ofp it. The first one is I think like I think. What I can offer is pride, right? You want your investments to mean something. Mm-hmm. It's not just about the dollars, but it's also about the dignity and it's, it's the dignity for the people that you're affecting, like in neighborhoods and the tenants and just everything that the property touches and we help.

People not only build their wealth, but improve their housing. And part of that is because we actually like tenants, right? We we want to see them thrive. Like for example, anyone new who moves in, we have an onboarding class and part of that is we go through a financial class. Yeah. And that's because we want them to be successful.

Mm-hmm. Now, is it good if they have a good, if they have a emergency fund, is that good for us? Yes. Yes, obviously. But the heart of it is I want them to be financially successful. We also you can trust us. Mm-hmm. And like, you shouldn't have to babysit your property manager. Right? Right. You want someone who gets it, who can think, like an owner who can solve issues proactively.

Mm-hmm. And make those smart trade-offs that often need to be made. And that's because we're also investors. And so we understand what your goals are and what your challenges are. We think like you do. And then finally, what we're gonna offer you is relief. That's because you don't want to hear excuses like, well, we don't usually handle that.

We you want to know that your property, whatever shape it takes, whether that's residential, commercial, some mix of it, whatever it is, it's incapable experienced hands. And we have built those types of flexible systems because we own a mix of residential, commercial, and specialty properties. Yeah. And so we can handle the gamut because we have to handle the gamut.

And that is what makes us different.

Jessi: That was a much it was a much more emotional pitch. Dang. Or like pulled at the heartstrings a little bit more. Okay. Okay. You know, used words like pride and

James: yeah. Yeah.

Jessi: Trust,

James: trust relief. Yeah.

Jessi: Mm-hmm.

James: Mm-hmm.

Jessi: More than just. Yeah. We're take You're covering the bases.

We're doing the job.

James: Yeah. I felt like the, yeah, the first time I, the first way I kind of described it, which is similar, it was just more of like, I'm just explaining it to you. Mm-hmm.

Jessi: Yeah. I

James: don't know. It was. So I gave that initial pitch to her, and it was good enough where she was like, all right, let's chat.

And I told her that I would charge 9% to do it. And she was like, well, if we do it for eight, like we'd be happy. And I was like, all right. Like, which, the big issue is that she has a mortgage

Jessi: that's,

James: that she pays $2,600 a month on.

Jessi: Yeah. So, and she, and what was it was 30 no, 3000 for the rent. Yeah.

James: I, I went out and I did the, I did my analysis for her, and I came back and said, I think you can rent this thing for three grand.

Yeah. When you throw on a property management fee, she's like, well, that's like 300 bucks if it's 10%. And like, that's like no margin for me. I was like, yeah, that's tough. So we ended up, we met and we did a tour. And like, this house is awesome. It's, it's a nice, beautiful, it's one where I'm glad that you didn't see it because you'd been like, man, I've been, oh, so amazing.

Sampson was with me, I can't remember why. Oh, I think he was sick that day. So he stayed home from school. I was like, you gotta come with me. And it had a very big living room. Oh man. Very big living room and vaulted ceilings. And he was just like, damn, whoa. Do you know about many sports I could play in here?

None. That's so what was interesting though was like, she clearly like. She had a pride of ownership and she wanted to be involved, but she just didn't have the time, and I started this. Talking with her that like I would just be a middleman and that she would never truly be happy with me or any property manager because she didn't actually want a property manager.

Like that was the like interesting, like she knew what she wanted to have done. Yeah. She just didn't have time to do it and she was gonna. I don't, I don't know if I wanna use micromanage being the word, but like

Jessi: Yeah, it was gonna feel little bit, she was gonna wanna be involved in all the different aspects.

Yeah.

James: So what I told her said, I actually said this. I said, you know what? I don't wanna be your middleman, but let me be your backup.

Jessi: Mm.

James: Is how I phrased it. And so what I suggested is that I help her place the tenant and then I hand it off. So like, interesting. Yeah, so like if you think about tenant placement type of stuff, it's like I would do the advertising.

I would do the tours. I would then do the screening. I would do the onboarding. I would even take that first payment just to make sure or upset. And if there were any money repairs that I saw throughout the house, which we saw a couple, I was like, I'll take care of those as well.

Jessi: Mm-hmm.

James: Kind of thought I I said it typically, instead of charging 8%, I was like.

It'll just be a 50% first month's rent and then just kind of a, a one time fee hang. It was amazing watching the relief on her face when I made that suggestion. She was something like, that's what

Jessi: I want. That's

James: exactly what I'm looking for. Interesting. Because I can't just, there's this beginning part.

Right. But if someone sets the foundation for me, I can keep it going. I can do the rest of it. Yeah. And so, well, and

Jessi: especially if you, if you have the help to find a great tenant. They care about the property and they have pride in keeping it a nice place. And there's a relationship there, like,

James: yeah. Yeah.

It

Jessi: makes the owner's job a lot easier.

James: Yeah. So I ended up, I, I put it out there, advertised it so interesting. Ended up finding a couple from who's moving up mm-hmm. Into the area. The wife just got a job locally and they can afford it. Now the, the downside is they're selling a house. But because they've never been to the area, they're like, oh, we wanna live here for a year and figure out where we actually wanna live.

So they're, they're not gonna be there for 40, you know, 10 years. It's super long term. It's gonna be like a year long thing, and then she's gonna be back at it. But she's also kind of in the, I don't really know a hundred percent what I want to do with this. Do I wanna keep it, do I wanna keep it rental, whatever.

So it kind of gives her a year to also

Jessi: mm-hmm.

James: Think about it. Sure. And in the interim.

And like Interesting. She'll make up for that

Jessi: real quick. So what does that look like as an ongoing relationship? Like if, when those tenants leave, is she gonna be like, Hey James, do you like, can you find different people? Yeah.

James: Maybe who've left the door open. I dunno. Yeah, do whatever. Yeah. And I, and I told her too, I was like, Hey, keep my phone number around.

Like if you got questions as things are going on, like if they do something or request something and you're not sure, yeah. I'm like, yeah, gimme a call. Yeah. Like I help other friends like that all the time. Okay. And like, I don't even charge, or if she needs help with

Jessi: a, you know, maintenance thing.

Something. Yeah. If you need

James: a hookup for that, let me know. I can help you out. So that was, I truly was like, lemme just be your backup and, and do that. Interesting. Yeah.

Jessi: So I don't wanna say this, do you think you would offer that as a regular service? As you were talking to owners and you, and you got that spidey sense of like, they really are gonna be like a, a micromanaging or, or like a really hands-on owner?

You know, I might, yeah. Interesting. I, because I could, I could see you being in that position as a property manager where you're like, okay. Like, if you want me to manage your property, you've got to give me some of the control to be able to do this Well, you know, if they're constantly checking on you or asking questions or changing things, that's like,

James: yeah, it's not fun.

This is really hard. I've talked to other property managers. I have talked to other property managers and. It's usually they say the owners are the biggest problem. It's not the tenants necessarily. Interesting. Yeah. Which part of it's all about setting expectations. Sure. But even like this one, I was like, man, I don't know.

I could have set it out and I don't think she would've been happy.

Jessi: Mm-hmm.

James: With whatever, even if she agreed with it.

Jessi: Yeah. With whatever you were doing.

James: Yeah,

Jessi: she was gonna wanna be involved and, no, I like, I even go

James: as far as like if I was doing it for free, I don't think she would've been happy 'cause she wanted it done a certain way, which is fine.

Like, and Totally right. I'm that way. I totally get it. Yeah. And so, hmm. But yeah, so I had a couple takeaways from that. Sometimes like the best isn't a full service, it's just the right service. Mm-hmm. And, and I think that the other thing that that was important for me was. You know, I wanted to build trust.

Mm-hmm. Right. And I get that there's a short term revenue thing. Mm-hmm. And that it doesn't ongoing, but I think long term it just builds trust and credibility. 'cause I'm going to assume that she knows other investors and we'll be like, Hey, this guy, like. Got it. Yeah. He didn't try to push something on me that I didn't want.

Yeah. And and I tried to be that way with all of my investors. Mm-hmm. Right? Like, man, if it's a good fit, yeah, let's go. Right. But if it's not like, no, I'm not gonna,

Jessi: let's take a step.

James: Yeah. I'm gonna try to force it. Mm-hmm. So, so there you go. That was I told her, no. So interesting. I'm not gonna do this for you.

Yeah. She was like, okay. Whew. Actually, like your solution better. Yeah. I remember we were sitting, we were standing in the kitchen. I was like, all right, this sound a little weird, but. What if I didn't manage this for you? Tell someone no, and I just find a and I just placed a 10. No, I, I, I use that language of I feel like I'm just gonna be a middleman here and you're not gonna love it.

Right. So lemme be your backup.

Jessi: Yeah.

James: And so, which,

Jessi: or your set man. It does, that's does show the property owner and, and the investors that you're not just in it for a contract or to make it the next buck.

James: Yeah. You,

Jessi: you're actually paying attention to what it is. What is it that you want? Yeah. And is that gonna be a good working relationship?

Mm-hmm. Mm-hmm. You know, ongoing and yeah. Are you actually improving housing and lives? So, makes sense.

James: Yeah. So if you enjoyed this podcast and consider me now a trusted person who's got the best interest for you in heart, I would love to talk about investing with you. And whether that's you had the funds and want to invest in another property that we're invested in.

Mm-hmm. Or if you already got an asset and wanna partner with us for it we would love to talk to you about it. You can learn more about us at furlo.com. Thanks again for listening and have a fantastic day.