Blakley Hughes the Lead Broker and Owner of Nest Finders Property Management and Real Estate.
In Part 2 of our series, we will be talking in-depth with the owner of Nest Finders Blakely Hughes about how they thrived during the pandemic. If you missed Part 1, you can get caught up here.
Do you have any general predictions on what will happen in the real estate market post COVID-19? Will we see a dip?
I think nationally, yes. Think nationally we are going to see a big dip. I think certain markets like in the past will be a little bit more insulated than others. Our market, Northeast Florida, is extremely desirable. We have a great quality of life. We are not Orlando, which is very tourism based or Vegas. Our market is super hot.
We have on average, two months of inventory for sales, I do think you're going to see things slow down. I don't think you're gonna see prices come down. I think you're going to have owners that may have bought in the last three years who consider selling, but then realize that they're not going to recoup enough back on the back end when closing to cover their expenses as far as sales commissions, et cetera, who may then, in turn, decide to rent that property out. They can let somebody else pay down their principal and interest for two or three years, while things stabilize.
I think we're in a real gray area right now. I don't wanna make any hard set predictions because it may not age well. But here at Nest Finders, we've been on the money about a lot of things and we are definitely prepping for a mass of rental owners to come in and rent properties.
So how are you preparing for that? More staff? Do you need more infrastructure? Is there anything that you're doing to anticipate?
We've really hit a sweet spot with technology and service. One of my hobbies is business. So on a Sunday afternoon, drinking a tea, I'm researching, I'm looking at market analytics, I'm looking at other market analytics. I'm looking at future trends. I'm looking at future technology. We are studying local and national reports regularly.
For example, nobody in my market has been using 360 virtual tours until the last three or four months. We were using them three or four years ago. We are staffed to manage a lot more homes than we have. And again, that's because Nest Finders is structured to provide the highest level of service to the owner investor and the renter.
We're more of a boutique. The foundation that we built the company on is integrity and transparency, we specialize in a high level to touch. High-level touch boutique partnered with technology.
If one of our owners needs to call me personally they can. They're not going to go through 15 phone prompts. They're going to be able to reach me because we are one of the higher tech property manager companies in our market.
Did your owners have anything to worry about when the pandemic shut down hit?
Being in Florida, we've learned from hurricanes. We have to be able to effectively manage a portfolio. If the power goes out, the phone lines are knocked down or if internet lines are knocked down we have to continue to work.
We had all kinds of contingency plans in place already. We want that owner in DC or San Antonio or wherever they may be, to have the peace of mind of knowing that our boots are on the ground are making things happen.
Our renters are just as important as our owners to our company. We want them to be happy but we are going to manage the expenses. We're going to educate the renters. Sometimes renters will make some very frivolous requests. We educate the renters on that.
Is there anything else that sets you apart in your industry?
One of the things that differentiates us, which should tell owners a lot about who we are, is that our team has been together over a decade. Most property management companies have people come and go. But our team, our core team, has been together here an average of 13 years.
What are owners most concerned about?
The number one question that owners call us about is pricing. That they're only concerned about pricing blows my mind. If I have an eye problem, I'm not looking for the cheapest doctor. If I have a heart problem, I'm looking for the person that's gonna provide me the best care.
When I have an IRA I'm not looking for the cheapest, I'm looking for someone who's going to manage it and make me the most money and protect my assets. So when owners call me and say, Oh yeah, your competitor does a flat a hundred dollars a month.
That's great that they do a flat hundred dollars a month, but guess what? Your property is also going to sit vacant for 60 days. 12 months from now you are going to wish that you paid a little bit more money for the high touch, high tech boutique that's tied in and has daily meetings and is out hustling seven days a week to lease, manage and inspect your properties.
Can you give us an example?
Look at it this way... that management company that you hired for a flat a hundred dollars a month, it's taking them five or six days to get back to people. Tenants can't get a hold of anybody.
Is that a happy tenant? Is that tenant going to stay? The property management company doesn't care because it's not their money. If that tenant is unhappy at the end of their lease term, they're going to move out.
The owner is going to sit on the empty property for 30 to 60 days with that company. And the manager is going to make another tenant placement fee to put a new tenant in there. It's actually profitable for them to turn tenants. Non-renewal rates are important to us.
If a tenant is happy, a tenant renews, if the tenant renews, the owner's never without rent. There's no tenant placement fee. There are no vacancy days. A lot of owners don’t think about that. They only see the flat fee, the cheap fee, this cheap company. They may think the other guy is so much cheaper but they're really not. They may be cheaper monthly, but they're going to cost you more in the long run.
Are you able to explain to people how that value spreads out over time?
Most owners get it. Especially when we get into all of our guarantees. We have a myriad of guarantees that most of our competitors charge for.
For example, we have a guarantee for pet damage. We guarantee that we will pay for evictions. We guarantee your property leases in a certain amount of time. We guarantee that if you're not happy, you can leave. I'm not going to hold you to a contract.
I don't want you staying somewhere where they are not happy. Then we would both be miserable. If an owner is not happy or they need to save money or have hit a tough spot and management's not for them, we will part ways and be friends. Just refer your family and friends to me. But we're good. I own the company. I run the company and I want all of my owners and all of my renters to be happy. That's it.
Can you touch briefly on evictions and how you guys handle them?
Right now we don't. There's an eviction moratorium. Under normal circumstances, we have an attorney we use if the need arises. That attorney handles all of our evictions. We cover the cost of those evictions.
If we have a tenant that we've screened, that we've approved, that we've placed and that tenant goes bad why is the owner going to pay for my judgment? I just don't agree with that. I'm the one that approved him. I'm the one that we've made things happen. We've had people with 750 credit scores who live paycheck to paycheck, lose their jobs, and can't pay rent and have to be evicted.
That happens that's life, but the owner can take peace of mind, and knowing that our attorney is going to handle the eviction, we're going to get them out. Not only are we going to get them out, but we're going to find a replacement tenant to move in and we're not going to charge the owner for that replacement tenant.
I'm a firm believer that a properly screened renter is going to be less likely to go bad. During this whole COVID situation, we've had less than a 1% eviction rate because of the screening system that we utilize.
We use a third-party screening system. It takes into consideration savings, income, past rental, history, employment, et cetera. For the tenants that have struggled, we've been able to work with the owners to work out payment plans that have worked out that the tenants have kept to.
Is there anything else that you want to tell people about Nest Finders?
I think there are some unscrupulous companies in the market that do property management. We've probably picked up 40 accounts in the last six months from a couple of these companies where owners aren't getting rent payments. I think that hiring the best company first is always the smart way to go.
Do you want to eventually sell that rental? In four years when the tenant moves out and it only requires a $200 cleaning and you're able to sell your house? Or do you want to, in four years from now, for your one hundred dollars a month, go to sell your house and realize there's $50,000 in repairs, leaks mold, because your a hundred dollar a month company said they were doing inspections, but they weren't?
They weren't providing those inspections to you or they weren't addressing issues quickly enough. You only made your hundred dollars a month payment, but on the back end, you're out 40-50 grand. I think the math speaks for itself.
A good property management company can save you money in the long run. Just like a poor quality property management company could actually cost you extensive money later on.
The old adage, and some people don't believe it, but it's true...You get what you pay for.
If you are in a service industry, you have a $39 hotel room, you can expect a $39 hotel room. When you go into it and it's kinda moldy the walls are peeling...the bathroom has black stuff all around the tub. Like, But you expect that because it's a $39 a night hotel room. If you're paying $200 a night for a hotel room, you expect it to be well maintained. The floors are glossy. The place is immaculate. It's spotless. I treat property management very similarly.
You get what you pay for with Nest Finders. If there's a company charging you a flat rate, they are cutting costs somewhere. They might not be doing inspections. They may not be marketing your property properly. They're not doing video tours. They may say they're doing these items, but are they really doing them?
We get a lot of owners who come in here who have left their companies because they were promised the world and it wasn't being done. While we are not the most expensive in Jacksonville, we're definitely not the cheapest. But we are the biggest bang for the buck for quality.
Tell me about your ideal homeowner. Who do you love to work with the most?
I love the people that have empathy and compassion. The ones that understand that the AC is going to go out eventually. They understand that there's going to be a leaky toilet here or there. And they work with us to resolve it.
Knowing that we have discounted vendors that we've negotiated the lowest rates in the industry with, we dislike owners that fight us on every repair. They make it extremely difficult for us because that tenant has a legitimate maintenance concern.
If the air goes out with kids at home or elderly mother at home, whatever it may be. You don’t want to have the owner fighting us on a repair that obviously it wasn't the tenant's fault. Not only that it needs to be repaired quickly to save the owner from liability.
The way that I would manage my own home is the way I'm going to have my managers manage your home. And there are going to be repair costs. There are going to be repair expenses. And they will be reasonable. If a tenant calls us and says, “Hey, my switch plate is tan and the switch is white. I want a new switch”. Obviously, that's not going to happen.
If it's 95 degrees outside and the air stops working, we have some owners that fight and say the tenant broke it. Well, they didn't break it. AC units are like cars, things go wrong. Ever since COVID a lot of maintenance expenses have gone up.
Most people went to work every day before COVID from 8:00 AM to 5:00 PM. You'd get home at night. You turn your AC down, have a glass of wine, some tea, whatever, and watch TV and enjoy your night. Maybe flush the toilet a couple of times, use your sink a couple of times now COVID hits... And now you're up at 8:00 AM staying home. You're using the toilet more. You're using the refrigerator more. You're using the AC more, you're using the plumbing more and more.
More wear and tear, more maintenance expenses. We've tried to educate our owners on the maintenance expenses. The last six months have been higher than normal, but it’s no different than a car. If you only drive your car to and from work less wear and tear fewer oil changes. But if you're taking your car as an Uber eats driver, 10 hours a day, you're going to have higher gas bills, higher repair bills, and more oil changes.