In this episode, I interview an incredible property manager. His name is Phil Dwyer, and he’s based out of Las Vegas. He is an incredibly smart and savvy real estate professional. He also happens to run a really great property management company. I struck up conversation with Phil online and quickly realized I had to have him on the show. He brings a great perspective to buy-and-hold investing that we have not heard yet.
Phil Dwyer started appraising properties in Metro Detroit in 2003, and moved to Las Vegas in 2006 to start Dwyer Home Appraisal. Since then, Phil has changed his focus to property management and sales. He manages mostly single-family residential properties in the Las Vegas suburbs.
When I asked Phil to tell me some of the mistakes that he sees new investors making with rentals, he had a couple of really powerful observations. The first thing that he mentioned was that he sees too many new buy-and-hold real estate investors who do not have enough money in reserve to pay for the inevitable repairs that come with owning rental properties. Too many investors buy properties and do the minimal amount of renovations. When the furnace goes out five months later, there’s no money to pay for those repairs. If you are not going to replace major mechanicals when you buy the property, you definitely need to keep money in reserve in case those things fail down the road. Conversely, if you buy a very new property, or completely replace all of the major mechanicals and put a new roof on the property, you may not need that money in reserve for several years. This is not the case in most instances however, so money in reserve is key!
The second mistake that Phil says he sees investors making is that they’re purchasing properties in areas that they are unfamiliar with. Most often investors will buy in areas that they are not familiar with and don’t have any knowledge of because the cost is very low and that draws them in. An inexpensive property might look like a good investment on paper, but if the area that you’re purchasing the property in is extremely undesirable or unsafe, you’ll always have a difficult time filling those properties with tenants. It is critical to not only buy houses that will cash flow nicely, but also that you understand so that you do not end up with a property that you can’t put a tenant in.
One of the things that Phil brought up that I thought was extremely impressive and very important for all investors to understand is that he focuses on delivering value with his company more than driving customers to his business. That is not to say he doesn’t actively seek new customers, but he understands that his company will do very well in the long run if his focus is on being better than his competition, and always delivering the highest value. That is a philosophy that can and should be applied to any business. If you focus on delivering a lot of value you will create a very strong base for your business. It’s always better to make sure that your current customers are happy than to bring in tons of new customers only to disappoint them with poor service.
Check out the interview on iTunes if you want to hear more. It was a great interview!
www.vegasdigs.com – Phil’s website
BiggerPockets – you can find Phil here as well!