Category: The 411 on Property Management

Utah’s Real Estate Market and Corona-virus

Our Company Outlook and Expectations Related to Current Financial Turbulence

We want all our clients – current, past, and future – to be aware of our planning and expectations as we have begun what we expect could be a lasting turbulent time as fall out from Corona Virus concerns.  This is not a “sky is falling” expression for our business or personal outlooks, however, we feel it’s important to be aware and have a plan.

I will not pretend to have accurate facts or present opinions on Corona Virus or Covid-19.  I will however share my outlook and opinion on the economic concerns that have begun, and I believe we will see lasting effects, in particular how I believe it pertains to Residential Real Estate.

For some background, my father practiced real estate as a broker, investor, appraiser, and manager starting in the 70’s and through my growing up years, and I learned a lot.  I have been licensed in Real Estate in Utah, and extremely active across many sectors since 2003.  I am a large investor in residential real estate, our company manages many millions of dollars’ worth of real estate for clients, and our companies participate in hundreds of rental and sales transactions per year.  This business is mostly all in Utah, however minimally in other western states, and I have spent time with clients in over 30 states over the years analyzing and consulting on real estate investing.  That is to say, I have seen the market though a few ups, and a few downs, and many angles in between.  Most notably of course the downturn which began in the 3rd quarter of 2008 when median home prices declined year over year until 2011.  The only other time that has happened since statistics can be reliably tracked was 1 year in the 80’s.  To be very clear, I don’t expect we are on the brink of a slide like 2008-2011.

Here are my two biggest takeaways having gone through that firsthand and having taken it on the chops in some aspects.  1st – those who were in a sound financial situation as it pertained to their real estate going in – came out even better.  2nd – Rents never saw a year over year decrease even though values saw four straight years of median price decreases.  My personal rental portfolio saw increases throughout that four-year economic slide, in addition to the other tax and financial benefits of real estate ownership.

Tanking interest rates have already, and I suspect will continue to prop up the sales market – which in my opinion could have used some cooling – but certainly not a drop.  That is great news for sellers, loan officers and brokers, and even buyers who plan to use lots of leverage - they can now afford a much bigger mortgage for the same monthly payment.  I expect this will lead to temporary decrease year over year in inventory, jump in prices, and added frustration in a market that is already heavily multiple offer scenarios.  I’ve lost multiple deals to multiple offer situations in the last few weeks, where my clients offered my recommended max market value, and others were willing to pay more.  If the quarantine recommendations or mandates rapidly increase, and we are all on lock-down, of course that will alter that outlook.  One difference now vs. 2008-2011 is that avg. mortgage rates at the end of 2008 were 5.1%, that’s after the slide had been going for over a quarter, and banks and lenders were closing doors and being shut down left and right.  Current rates at just the beginning of this current storm are already hovering at 3%, lower than where they bottomed out in 2013 after that recovery was already gaining steam.  For perspective to the 80’s where we only saw one year of median price declines, peak rates hit 18.6%, and they had a floor at 9.1%.  I don’t have an opinion on good or bad policy, or other contributing factors here, but those are some facts that will sustain prices in my view. (source:

Cancelled conventions, summits, and other large gatherings, as well as closing of tourist attractions around the country and the world have already lead to a massive financial loss in the travel, entertainment, and hospitality industries – if you want proof, log into your favorite travel search engine and compare your dream vacation now v. the last time you checked, if you can even get there.  To what extent it spills over to other industries directly is not yet known, but it will.  This will have a lasting economic effect, which of course will also affect Real Estate.

Trickle down consequences I expect to see soon are: an increase in late and non-paid rents for landlords from tenants and missed mortgage payments eventually leading to more foreclosures among homeowners.  Landlords will have to make some plans and decisions of how they want to handle late or missed rent payments.  And for over-leveraged paycheck to paycheck owners, it will take some time, but there will be an uptick of foreclosures.  To give you some relevance on foreclosures; Salt Lake County has seen approx. 4-5 avg. foreclosure filings per day over the last couple years, in 2011 there were approx. 25 per day.  Borrowing criteria has been much higher for the last 10 years, so I don’t expect we’ll see foreclosure rates like we did prior.

I’ll tell my management client owner’s what my plan and policy will be on my own rentals, which is a change from our standard company policy to date.  Our owner clients will need to determine their stance and let us know if they would like to adopt any changes.

  • Current company policies:
    • We do not waive late fees
    • If someone is late and they:
      • (a) don’t reach out to us to make a payment arrangement, we serve a 3-day pay or vacate notice within 3 business days of the 5th. If that notice expires, and there still has been no communication, we submit it to our attorney for eviction which takes approx. 3 weeks.
      • (b) respond and/or reach out to us, we will create a payment plan with them, if we deem it to be in the best interest of the property owner, and the tenant shows ability to perform. Still serve them a notice to pay or vacate, so that if they fail to perform on the agreement, we aren’t waiting another 3 days to file.
    • No payment arrangement can carry a balance over current months end.


  • My personal changes for tenants effective immediately (it should be noted these temporary changes will not be shared directly with tenants):
    • Late fees may be waived if tenant provides logical and documented reason for being late directly related to changes in their income or health status, or that of other breadwinners in the property based on current economic factors
    • Payments plans may extend beyond the end of the month, with agreement from the property owner
    • Evictions will be turned over to the attorney only after a tenant is a full month late AS LONG AS THEY HAVE COMMUNICATED WITH US, and we can determine they are trying to get funds.
    • Balances will not be allowed past due of 45+ days without being turned over to eviction

In summary, I don’t propose that I know what the next 6 weeks, 6 months or 6 years will look like.  What I do know is that our company is prepared to weather a storm, and we have weathered past storms.  Our clients are in good hands, with experience on their side.  Throughout history, it is evident that with each economic cycle there can be massive increases in wealth both in good times and bad, it depends on one’s positioning, mental state, and adaptivity.  If you would like to discuss in more detail your specific situation as it pertains to your real estate needs, I’m happy to schedule a time and discuss thoughts and ideas.


Regan Richmond

Utah Select Realty – Associate Broker

True Options Real Estate & Richmond Consulting

The BRRR Method Explained

Who Says Work Doesn't Get Done While In Mexico?

The BRRR Method Explained

My wife Mori and I were on vacation in Puerto Vallarta, Mexico when I saw an email come over for a new deal. I've been looking for a property for my client Kurt for a while now so when my birddog partner sent this over I knew we would have to act fast.

I got on the phone with one of my team members Brooke to get over to the property as fast as possible to scope it out. Within about 15 minutes of getting the email, Brooke was in front of the property and told me it was a go. It had everything my client Kurt was searching for and more. It's in a great location, in his budget and minutes from my office. I called Kurt, while lounging by the beach, and told him about the property, gave him all the details and he was in.. We made a few more phone calls and sent several emails back and forth between us, and by mid-day the following day we had wired money and closed on the property, all while I was still on the beach.

Now I don't advocate to everyone "sit on a beach to get your work done" but years of experience, trusted connections, and an amazing team were definitely in my favor this time around. The property details are below and I'll be sure to include you on updates as we get things completed. Right now this property is about 50% done, the before pictures are below- it was nasty. I'll send out fresh pictures with updates on our progress in the following weeks.

You may have heard of this really fancy new acronym floating around investments groups BRRR. Well I’ve used this since 2003, and that’s what we’ll be doing on this property (Buy - with cash, Renovate, Rent, Refinance – and pull all the cash back out that’s possible). The concept and reason for this strategy is buying bargain priced homes, that probably need some renovation, where an ability to close fast is what makes them such a great deal. Then after it’s renovated and rented it will appraise much higher than we paid, and so now we’ve bought both equity and cashflow rather than paying full price.

This strategy is what we intend to do here. Upon completion of our renovation, I expect Kurt to have about a 7.4% ROI on the cash investment after all costs of ownership and management – nothing to scoff at. However, once he refinances and pulls most of the cash back out, with a very modest estimate of only 3% appreciation, I expect that ROI will jump up to well over 25% - because we bought him equity he will be able to leave a minimal amount of cash parked in the home and gain appreciation and all the tax benefits on the full leveraged value of the home. DISCLAIMER – I’m not a licensed financial planner or investment advisor.  I am an Investment Real Estate Manager, and for me, ROI is the whole purpose behind rentals.

Updates Needed:

  • Trash Out
  • Cleaning
  • Flooring
  • New Roof
  • Demo Walls/Build Walls
  • New Bathrooms
  • New Kitchen
  • Bedrooms
  • Electrical
  • Plumbing

Renovation Cost and Budget:

  • Purchase Price: $239,990
  • Estimated Home Value: $320,000
  • Total Renovation Budget: $55,000
  • New Rent: $1800/mo
  • Estimated ROI: 7.42%

New Project Needed An Eviction & Repairs

Tenants Not Screened Properly

The home on Bryce Dr is our latest project and is owned by a couple who have self managed 4 properties for years, and have been relatively lucky. They have done everything themselves and have done a great job but never had to encounter a tenant like the one they placed in Bryce Dr. They had no experience with what was about to unfold before them in their rental property.

The tenant couple who moved into Bryce Dr last year changed their streak of good luck. The couple arrived to do a walk thru and immediately looked like a great fit. They were nice and polite and even brought their grandmother with them who supposedly lived down the street. They passed all of the owners eye tests and it was left at that. No true due diligence was done on the couple to uncover their past rental history. It wasn't until after the new tenant couple moved into the rental property that problems started to arise. Several months after they got comfortable is when they took the house "hostage".

Red Flags Started To Appear

The first thing our clients noticed was the yard going downhill. The grass turned brown and was not taken care of properly. After that rent started to become infrequent and was often late and eventually not paid. Repeated attempts were made to collect rent and late fees but were made in vain.

Living Room with light coming in through main window

After attempts from the owners to do inspections on the property they were refused even with proper notice. Tenants began to request maintenance. Scheduled repairs were made and the tenants once again would not let the owners into the property. Things began to become heated between the owners and tenant once requests were not being met. Soon we discovered there were as many as 10 people all of whom were not on the lease agreement living on the premises. Requests were made for those living there illegally to leave and they were refused once again. When the situation became clear the tenants were not going to work with the owners they contacted us for assistance in getting this issue resolved the legal route.

We Took Over Management

Dirty Bathroom needing to be cleaned and renovated.

We took management of the home and immediately started an eviction. The eviction process is never a route anyone wants to go down but the only legal option we have to properly remove someone from a rental property. The state of Utah has several policies that must be met and a very clear and definitive guideline that must be followed in order to legally evict a tenant. This typically means a great expense not only for the eviction fees to attorneys and the courts but lost rents collected on the property every month that it sits vacant as the process is followed.

We were able to successfully get through the entire eviction process without much headache or heartache. Once we stepped in we were able to collect money from the tenants to pay these fees. The result is that our clients are out the costs of repairs to the home and were able to collect lost rent and eviction fees. In our research in preparation for the legal process we discovered that the tenants had a 2 previous evictions, 1 bankruptcy, 1 foreclosure all within the last 10 years - and who knows the details of the other 10 people they had been living there.

The home was in decent shape before the last tenants moved in but was on the edge of needing several updates. After everything was done and said it was time to focus on efforts to clean the house up and make some improvements and repairs damages.

The renovation project was started in October and now nearing completion this month right before Christmas. Details for updates needed are below.

Estimated Updates Needed:

  • New Carpet throughout
  • Paint Interior and Cabinets
  • Replace Door Downstairs in Bedroom, Bathroom and Furnace Room
  • Replace missing lights and outlets
  • Fix Kitchen subfloor and install LVP
  • Plumbing under kitchen sink
  • Replace blinds in living room and bedroom
  • Replace ceiling fan with dome light
  • NEW roof, swamp cooler and satellite dish
  • Paint facia and peeling paint exterior
  • Fix storm door and frame on front and back entrance doors

Renovation Costs & ROI:

Total Renovation Cost: $36,000
Judgement Against Tenant: $16,072
Previous Rent: $1500/mo New Rent: $1850/mo
Estimated ROI is 12% with little to no maintenance for years to come.

Time To Assess Damage & Repairs

4 Reasons to Use a Property Management Company

We will be honest, there are a lot more than just four reasons to use a property management company. We are going to break apart the top four reasons why it's the best decision an owner could ever make.

People that own income properties typically believe one of two things: hiring a property management company is too expensive or simply not worth paying someone else to do a job they can do.

Both thoughts are utterly and completely wrong. 

4 Reasons to Use a Property Management Company

1. Increase Property Income

This is easily the MOST IMPORTANT reason to use a property management company. Increasing rent is the number one reason why property owners should seek a reputable management company.

One of the biggest mistakes we see property owners make is NOT raising rents or enforcing late fees. This is where property management companies stand apart.

Whether trading on the stock market, private business, or real estate; every investment is expected to turn a profit. Income property investors need to align their goals with a management company that has their interests in mind.

A management company should do more than maintain a property and do the bare minimum; they should treat it like the investment it is.

*Protip: The number one way to increase an income properties profit is raising rent with the market.

In recent years here in Utah we've had it better than most and have seen an annual 7% increase in market rents throughout our state. We follow a simple win-win process with all of our properties, if market rents increase 7% then we raise rent 3% across the board.

This allows us to keep a happy tenant with lower than market rent, and brings in more income for our owners year after year.

2. Property Maintenance

Maintenance is something that every property will encounter at some point and we don't just mean regularly changing the furnace filters or performing inspections. We are talking talking about broken windows, doors, changing carpet, plumbing repairs, repairing walls, paint the list goes on.

Over time a home will get worn out and need repairs, that not only costs money but an incredible amount of time.

Time isn’t thought about much at first when it comes to owning income properties. So when calculating each hour spent running back and forth doing repairs, trips to the hardware store, setting up quotes, all while working around an already packed personal schedule; the days get eaten away fast.

Let's not forget about the tenants, how unhappy will they be waiting several days to get a water heater repaired to have running hot water?

With a decent management company, owners will save huge amounts of money in repairs but most importantly saving them their time. We have fair prices and are incredibly quick with maintenance. More than that we work with our owners on bigger repairs to get the most out of the money spent. An investment needs to bring money in. So spending money where it's not needed can be avoided with the right knowledge.

3. Rent Collection & Distribution

Property managers should be pros at collecting rent, fines, late fees, deposits and distributing funds to owners. Every property owner should ask prospective management companies about their collection process. Managers should have a smooth and painless process for distributing and collecting rent each month.

In our years of experience we now believe it as a fact that the majority of property owners do not collect late fees or increase rents to keep up with the market. A mistake we see with owners is NOT enforcing late fees from tenants.

*Protip: Collecting a simple $50 late fee, more times than not, will cover a large portion of management costs.

Working with our tenants is our key to success and the ace up our sleeve when we are presented with a situation where rent is late.

Managers should always be on the side of the owner, and keep their intentions in mind. That's defined as enforcing the terms of the lease agreement and collecting late fees when rent it late, period.

Treating our owners assets like they are our own; is what we're all about. We are here to help grow our clients real estate portfolios and see their investments increase in value.

4. Tenant Turnover

Tenant turnover is inevitable, every property will cycle through tenants but the frequency of turnover is completely within control. Every single time a tenant moves out we (the property manager) has to list the property to be leased. Not only that but run background checks, make/receive phone calls, file paperwork, update listings, collect deposits, walk thru's, maintenance and everything else that goes into placing a tenant into a residence.

It’s proven that a happy tenant will stay in a residence year after year which will drastically cut down on the frequency of residential turnover. See what these guys over at Happy Tenant have to say about it, they have literally taken the idea and ran with it. 

*Protip: a happy tenant has the same side effects as a happy wife.

So people ask themselves “what can I do to prevent all that work?” Good question, the answer is to make sure; when the property is filled initially, there is a quality screened tenant and good management policies are being practiced.

Hiring a management company won't just streamline the leasing process but it puts a bigger sense of urgency on the matter. It can cost hundreds of dollars to place tenants into a residence.

The biggest expense is to the owner, every month that property is vacant, they have to pay the mortgage out of pocket. We only make money when our owners are making money so having a pool of pre-qualified tenants and having a healthy network of individuals searching for a home is critical.

Invest. Manage. Grow.

Owners should take the four reasons to use a property management company to the bank, literally.

We believe growing investors assets is the key to property management. Owners need to be educated in the difference between managing a property on their own verse using a property management company.

Hiring the right property management company is the best decision any property owner could make.

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4 Reasons to Use a Property Management Company:

1. Increase Property Income

  • Increasing rent has more upside than anything.

2. Property Maintenance

  • Time can be more expensive than the money spent on repairs.

3. Rent Collection & Distribution

  • Collecting late fees and proper maintenance pays for itself.

4. Decrease Turnover

  • Screening quality tenants is worth it in the long haul.