Recently we sat down with Jenni McKenna, owner of McKenna Property Management, and discussed a variety of topics that will be of interest to Las Vegas investors. Below are the summary of the meeting.
Q: How long have you been exclusively managing properties? (No part timers)
JM: 10 years. But I started getting involved in real estate when I was 8!
Q: How many properties are you currently managing?
JM: Approximately 1,025 units
Q: What is your mix of properties (single family, condos, residential versus commercial, etc.)?
JM: 30% condo/townhomes (including a few high rises); 70% single family homes, one multi-family (28 units) and a few 4-plexes.
Q: Do you have properties all over the city or only in specific areas?
JM: Henderson, Las Vegas and North Las Vegas are where I'm managing properties. I do have one in Boulder City but that is the exception to the rule.
Q: Do you have a staff? Please tell us about them. How many are full time?
JM: I have a wonderful team of 9 full time team members and 1 part time member. I am a believer in the saying, "Jack of all trades, master of none" so when I set up my company I was very specific that I wanted masters of the trade. For example, Nicole focuses on "tenant liaison". She reviews applications, signs leases with tenants, and collects the initial funds to start the lease. After so many applications, she knows what to look for and how to spot "red flags", or how to address questions on the leases. She is truly a master of being a "tenant liaison". The same can be said for Elonda, who is in charge of rent collection. She makes sure that late rent is paid and, if not, the eviction process is started immediately. Each and every member of the team is empowered to run and improve their department every day.
Q: How do you handle frivolous repair requests?
JM: Great question. I am very protective of my owners money. If we have a tenant who is calling in frivolous repairs we implement a clause in our lease that makes the tenant pay up to $75 for each service call. We have found that as soon as we institute this policy the frivolous calls go away.
Q: Who does your repairs?
JM: I do not have an in house repair or maintenance company. There are a lot of property management companies that have gone that route. I decided not to. Once we determine what the issue is we choose the right skill from among the trusted handymen, plumbing, electrical or roofing vendors we have experience with. If any of the vendors does not do a good job or charge more than what I feel is fair, we will not use them for our properties ever again. This way I can always give my owners the best service quality and value.
Q: Do you add a fee to the contractor’s bill?
JM: NO..... let me say that again, NO. I am an investor myself and I do not believe a property manager should mark up any repair costs. My owners are only charged what the actual invoice is. NOTHING more.
Q: Tell us about your fee structure.
JM: Half of the first month's rent (this is for the leasing agent's commission and marketing) and 10% of collected rent. Of course, we offer 8% to clients of agents like yourself who have a number of properties with us. Also, we collect a $300 reserve on each account to handle future repairs.
Q: How often do you do evictions?
JM: We average about 1-2 evictions per month.
Q: Are skips and evictions increasing?
JM: Not for us. We educate our tenants and explain to them that they do not want an eviction on their records. We do all we can to let them "quit" the lease and turn in the keys so that the cost (both time and money) of an eviction can be avoided.
Q: How much does it cost and how long does it take to evict?
JM: 28 days from start to finish and $480-$525 (depending on how far the constable has to travel to serve papers).
Q: How do you market the property?
JM: Everywhere we can!! MLS, realtor.com, Hotpads.com, rentals.com, military websites, the Appfolio website, Craigslist, Postlets, the McKenna Property Management website, and I allow any rental agents in town to advertise my properties as well.
Q: What is your average days to rent?
JM: 26 days (the Las Vegas metro average is 65 days). We are very proud of that number and are constantly working on getting it even smaller.
Q: How do you screen potential tenants?
JM: Extensive background screening. We use a service that has access to credit reports, criminal records, landlord evictions, collections of any type, sex offender records, and previous addresses. We contact the current and prior landlord for feedback. We also request the applicants last two paycheck stubs and last two bank statements. We want to see who this applicant is and if they pay their bills on time.
Q: What is the average length of time your tenants stay?
JM: For premium areas such as Summerlin and Green Valley, the average is about 2 years. I believe that's because the tenants of these properties (I call these class A properties) are usually home buyers in waiting. For what I call class B properties, the length of stay is much longer.
Q: What is your average cost of a turn over?
JM: About $1,000: approximately $300 for paint touch up, $300 for deep cleaning and $300 for miscellaneous.
Q: Do you get involved in the property qualification process?
JM: Yes. I work closely with investors and their agents. Before they purchase a rental property, I provide them my opinion of the property including the probable rent and time to rent.
Q: Are rents increasing, decreasing, or staying the same?
JM: Increasing. Since January we are increasing most rents by $50 to $100 per month. I have always said that the rental market is the caboose on the real estate train. It has taken us a while to come out of the valley and start seeing the rent increase but they do seem to be here now.
Q: Are there any areas or types of properties in Las Vegas that you recommend against as rental properties?
JM: Areas with high crime rates. Crime scares renters and attracts the types of tenants you do NOT want. Also, I believe that renters like convenience, such as being close to freeway access, bus lines, neighborhood shopping within walking distances, etc. If you have a property that is too far out or near nothing, it will take longer to get a qualified tenant in place.
Q: If you were to invest in rental properties in Las Vegas today, where and what type of properties would you look for?
JM: 2 or 3 bedroom townhomes with a 2 car garage and a small backyard or courtyard. Or a 3 or 4 bedroom single family homes with 2 car garage, maintenance free backyard and built after 1995. I would look around the outskirts of Green Valley, Green Valley Ranch, Summerlin, or Alliante.
Jenni, thank you for your time today.