Why Would This Property Manager Run an Extended Stay Motel?



Motel-sign“Honey, I bought a motel.”

No, we’re not talking about a new kids’ B movie. Instead this is the story of Travis Martinez, a property manager and REALTOR® who rescued a failing motel, spruced it up, and turned it into a pipeline for new business.

In 2013 Martinez bought the Bitterroot Motel in Hamilton, Montana and added it to the portfolio of Greener Mountain Properties, the company he owns and runs with his wife, Kristyn, who holds a property management license and manages the company’s operations.

Martinez, a former staff sergeant in the United States Army Special Operations who served in Iraq and the Republic of Korea, teaches real estate classes throughout Montana and is the state director for the Bitterroot Valley Board of Realtors, for which he will serve as president-elect in 2015 and president in 2016.

To find out why he decided to manage a motel and what that can do for the entrepreneurial real estate pro and property manager, I interviewed Martinez over the phone while he traveled to a meeting in his native Bitterroot Valley.

This interview has been edited and condensed.

You began your career as a real estate broker. Why did you get into property management?

The real estate brokerage was and still is my main business. During the recession, I bought some rental properties. I liked the residual income that property management can provide, outside of the “big check” (after brokering a sale to a client). Travis-Fall-2012-1-122935-265x310Property management marries the opportunities of sales with the consistency of traditional wealth (building).

Wealth building through predictable income…

Exactly.

Why did you buy the motel?

I bought the motel with a couple of other investors in 2013. Initially we were looking at renovating the units and renting them as apartments. The city zoning board told us that wasn’t possible though. The city inspector said the reason was because the motel is on Highway 93, and the city didn’t like the idea of renting units as residential apartments on a highway.

So we began looking at our other options. Eventually we decided on marketing the building as an extended stay motel. When we talked to the city about that plan, they told us they had no problem with it.

How is the motel working out for you as an investment?

We advertise the property as a motel with reasonable rates but with drastic discounts for people who stay weekly or monthly. We’re able to stay 100 percent full almost all year round.

Why a motel versus, say, an apartment building?

The answer is two-fold. I like doing things that feed each other. As much as property management can feed real estate sales, the motel can feed my property management business. Additionally, I have the opportunity to find people homes whom I might not consider for a regular rental.

The motel gives me the opportunity to evaluate them as traditional renters. These are people I wouldn’t have known about before had they not stayed at the motel. Plus, it lets me consider candidates other companies probably wouldn’t.

It sounds like you place a high priority on building great tenant relationships…

Yes. When an opportunity (for an open unit or property sale) arises, it’s great to help good tenants move to the next level. If they leave the motel because they still can’t afford to rent one of my properties and go to another property, perhaps they’ll come back later to me when they’re ready to rent or buy.

I do a lot of things nobody else wants to do. That’s my business model. A lot of brokers don’t want to deal with property management, so I get a lot of referrals from them, which is great for me.

The motel is very similar. A lot of people don’t want to deal with candidates who have no other living options. Most brokers—and property managers—just don’t want to deal with that. But by dealing with these situations, not only do I make money for my business and my partners, but I help someone find a place to live too.

What are the biggest differences between managing a motel and a traditional rental?

When you manage a motel, there are a lot of phone calls to return, a lot of leg work, especially getting up to speed. Managing a motel is as different from property management as property management is as different from selling real estate. Unlike real estate, where there are associations to help get you up to speed, you don’t have anything like that (for motels).

One big difference is that with motels, you don’t have to deal with evictions. But if you do need to get someone out, be prepared for your options. Approach an opportunity to manage a motel or hotel with the knowledge that it’s a whole separate world. It’s almost like you have to start over from square one.

What’s your best advice to someone who’s considering managing a motel?

Maintenance is the biggest consideration when buying any property. When we bought the motel, it was in foreclosure, and a lot of money had to go into it first (to renovate it for rental). If you’re going to purchase a project to fix it up and rent it, first look at what needs to be done in terms of maintenance and what it’s going to cost.

For example, if the property is a pre-1978 home, the new 2010 Environmental Protection Agency (EPA) regulations state you have to hire an EPA-certified renovator to do anything on that home, and that certainly will cost you a lot more money. Information like that is not necessarily readily available, but you have to be able to caution a partner or investor about something like that, that there are requirements you have to meet.

So my biggest advice is stay up on current laws and regulations. Every state is different, and lot of those requirements are in place to protect both tenant and landlord. And always have a great attorney you can call.

A Pew research study found that 86 percent of adults say a person needs a secure job to be considered part of the middle class, but just 45 percent say the same about owning a home. With more people living in motels, do you think the American Dream of homeownership is fading away?

No, I think that version of the dream is still very much alive. Media articles promoting the death of that dream are a bit misguided. Sure, a lot of people today are frustrated. But at the end of day, there’s nothing like being able to paint your bedroom any color you want or get that dog you like.

Owning your own home gives you independence. It’s yours. People, at least those with our independent streak in Montana, strive for that.

New Report Says Property Managers Want Tenant Portals



man-using-tabletTenant portals let residents sip coffee and pay rent. And then sip more coffee. (Flickr/Yagan Kiely)

In a just-released industry report, Software Advice, a company that publishes reviews of software applications, details what’s driving property managers to ditch pens and paper and Excel spreadsheets in favor of property management software. (In the interest of full disclosure, I must note that Buildium is a Software Advice client. Needless to say, at Buildium, we’re big fans.)

One new development in this year’s report stands out: the surge in popularity of the tenant portal, which lets property managers and renters communicate online. Tenant portals, also known as resident sites, didn’t register a blip on buyers’ wish list of property management tools in Software Advice’s 2013 report.

Bernard Smith, a former property manager and owner of Apartment News Publications in California, explains why buyers are now clamoring for tenant portals. According to Smith, property managers want these portals, also known as resident sites, because they let tenants pay rent online, which cuts down on chasing tenants for rent, late fees, and other charges.

apartment-management-BuyerView-featuresTop-Requested Apartment Management Functionality (used with permission of Software Advice)

Smith also predicts tenant portals may reduce or eliminate the need for running background checks because they store tenant screening information. In the future, property managers within a city, town, or region can share this information with each other to avoid renting to the wrong people.

Additionally, he says portals can drive the evolution of the “paperless office” because property managers and tenants can do away with the burden of physical checks. (And as a property management pro, you never accept cash payments from tenants, right?)

This fall, Buildium released a tenant portal that’s fully responsive, meaning it runs on any device, from PCs and Macs to smartphones and tablets. (Sorry for the shameless plug.) So I asked Buildium Product Director Alo Mukerji for her take on the value of tenant portals.

“Letting tenants easily make payments and interact from any device and from anywhere is top of mind for property managers,” Mukerji said. “It saves them valuable time and, in some cases, resources. And tenants love the convenience, too.”

Speaking of tenants, the #1 tool buyers are looking for in property management software is the same as it was in 2013: tenant and lease tracking.

Check out the entire report, which reveals many insights about what property managers are looking for in property management software in 2014.

And we’d love to know… as a property manager, what other pain points do you hope technology can solve?

New Report Says Property Managers Want Tenant Portals

man-using-tabletTenant portals let residents sip coffee and pay rent. And then sip more coffee. (Flickr/Yagan Kiely)

In a just-released industry report, Software Advice, a company that publishes reviews of software applications, details what's driving property managers to ditch pens and paper and Excel spreadsheets in favor of property management software. (In the interest of full disclosure, I must note that Buildium is a Software Advice client. Needless to say, at Buildium, we're big fans.)

One new development in this year's report stands out: the surge in popularity of the tenant portal, which lets property managers and renters communicate online. Tenant portals, also known as resident sites, didn't register a blip on buyers' wish list of property management tools in Software Advice's 2013 report.

Bernard Smith, a former property manager and owner of Apartment News Publications in California, explains why buyers are now clamoring for tenant portals. According to Smith, property managers want these portals, also known as resident sites, because they let tenants pay rent online, which cuts down on chasing tenants for rent, late fees, and other charges.

apartment-management-BuyerView-featuresTop-Requested Apartment Management Functionality (used with permission of Software Advice)

Smith also predicts tenant portals may reduce or eliminate the need for running background checks because they store tenant screening information. In the future, property managers within a city, town, or region can share this information with each other to avoid renting to the wrong people.

Additionally, he says portals can drive the evolution of the "paperless office" because property managers and tenants can do away with the burden of physical checks. (And as a property management pro, you never accept cash payments from tenants, right?)

This fall, Buildium released a tenant portal that's fully responsive, meaning it runs on any device, from PCs and Macs to smartphones and tablets. (Sorry for the shameless plug.) So I asked Buildium Product Director Alo Mukerji for her take on the value of tenant portals.

"Letting tenants easily make payments and interact from any device and from anywhere is top of mind for property managers," Mukerji said. "It saves them valuable time and, in some cases, resources. And tenants love the convenience, too."

Speaking of tenants, the #1 tool buyers are looking for in property management software is the same as it was in 2013: tenant and lease tracking.

Check out the entire report, which reveals many insights about what property managers are looking for in property management software in 2014.

And we'd love to know... as a property manager, what other pain points do you hope technology can solve?

5 Simple, Proven Ways to Get Tenants to Sign Leases

Get that signature on the lease and then sigh with relief. (Flickr/Juli)Get that signature on the lease and then sigh with relief. (Flickr/Juli)

Often you hear about a new tenant or existing tenant who accepts the renewal or new tenancy, only to not sign the lease until move-in day or when the old lease is set to expire. What is your agency’s policy when it comes to getting leases signed? Do you or your staff rush around every month securing renewals and signings? Or do you follow up quickly to make sure you get those all-important signatures on the dotted line?

If “no” is the answer to that last question, letting your leases expire or waiting until the last minute reduces security for both the leaseholder, who might challenge your reputation if left without a home to live in, and the property owner, who might decide to part ways with you and enlist the services of another property manager.

Consider this unwelcome scenario: after telling the property owner his or her unit has been rented, you fail to get the lease signed by the tenant, who then decides to withdraw from the tenancy. Because you have told other applicants the property has been rented, the vacancy period becomes unexpectedly longer — and we all know what time equals. (Without that binding contract, prospective tenants can decide not to move in at any time, and it’s all legal.)

Follow these five easy — and I do mean easy — recommendations below, and you’ll never find yourself losing sleep (or money) over an unsigned lease.

1. Start your lease renewal process three months prior to the lease expiring.

First of all, this ensures a further term is secured for both the landlord and leaseholder with plenty of time before the lease expires. Secondly, this guarantees that the landlord has plenty of time to secure a new tenant should the current tenant decide not to renew for another term.

Thirdly, this allows enough time for you to provide ample notice to the tenant to vacate should the landlord not wish to renew. And finally, this three-month window provides ample time to negotiate any rent increase. Set up alerts to remind you three months before every lease expires using your property management system, or if you don’t have such a system, use a free tool like Google Calendar.

2. For new leases, ensure they’re signed as soon as the tenant accepts.

It’s always important to have the lease signed as soon as possible after acceptance of the property by tenant and property owner. We suggest 24 hours to ensure the tenancy is secured and to provide the necessary assurances to both tenant and landlord.

Financially, getting the lease signed within 24 hours rewards both the agent and the landlord, if you follow the best practice of collecting money upfront before the signing of any new lease. This enables the property owner to reduce the loss of rent while the property is still vacant and ensures you receive your commission promptly. Win, win!

3. Make lease signings easy.

Your company’s leasing process should be simple and streamlined. It’s equally important for both the landlord and the leaseholder to secure a lease on a property promptly. Always ensure you set the ground rules for the signing of leases and time frames for doing so. When terms are clear and simple, everyone enjoys peace of mind. It’s common sense and good business practice to ensure tenants understand their agreements in their entirety and the time frames for final decision-making.

At Jam Properties, we always make sure tenants come into the office to sign their leases. This gives us the time to sit down and explain the agreement they are entering into so they understand it completely. And if you’re thinking about sending leases in the mail or via email? I recommend avoiding that approach, unless the circumstances are exceptional.

4. A little incentive can go a long way.

With new tenancies, having the tenants commit to signing a lease quickly gives them the security of knowing they have landed a property. We have great little welcome gifts we give tenants when they sign their leases, simple things they tell us they love, such as vouchers for local gyms, beauty salons, and pizzerias.

5. Describe the rental market to tenants who delay their decision-making.

It’s a great idea to supply tenants with market research as to why the property is a great value. Often tenants tell us they will not renew their lease due to a rent increase, only to later to find themselves unable to secure another property to suit their needs, a decision they end up regretting. Educate your clients about what may or may not happen in the market to get them thinking that the more convenient, less expensive option is simply to renew.

In general, it’s good business to get on top of signing leases as quickly as possible, for the security of all parties, your own peace of mind, and your company’s reputation and financial well-being. And remember: without a signed lease in hand, as a property manager, you don’t have a binding contract!

Do you have any great suggestions to motivate tenants to sign on the dotted line? Please comment and tell us your ideas.

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