Navigating Property Management with Duke Kimhan

Interview Transcription

ADRIENNE:
Welcome back, and thanks for listening to the Team Lally Real Estate Show, home of the guaranteed sold program. We’ll buy it. I’m Adrienne and I’m Attilio, and if you have any questions, just give us a call at 7999596, or check us out online at Team lally.com

ATTILIO:
All right, our next guest, Adrienne, is going to read like the regular intro, but I didn’t tell you what I know about Duke. Duke was he was a bodybuilder. At one time he was in the rush. He was a restauranteur and ran, what is it like? Outback Steakhouse? Used to live in Florida. An actor was an actor. He’s had, like, speaking roles too, on the couple different local shows. See

ADRIENNE:
Him in all sorts of like magazine commercial. Yes, like he’s he’s quite famous. Yes, to Vegas. But

ATTILIO:
okay, then let me give stuff we know about Duke, because we’ve known Duke for so long. But okay, professional poker

ADRIENNE:
player. All right. So our guest today is the owner and principal broker of Hawaii Pacific Property Management. Yeah, a true local, born and raised in Honolulu’s Manoa Valley. Before venturing into real estate, he made his mark as a successful best restaurateur with an impressive array of real estate designations. He remains committed to continuous learning to better serve his clients and community. As a seasoned broker, he specializes in investment properties, condos, military relocations, 1030, ones, commercial real estate, please welcome back our guest, Duke Kimhan, hey, Duke,

DUKE:
Wow. What an intro. Yeah, I feel special.

ADRIENNE:
And there’s probably so much more too, because, you know, but I think I know it’s there’s a lot more. Life

DUKE:
has been fun. It’s been really good, and I really wanted to come home. And I did, yeah, so after Hurricane Katrina smashed into my five rentals, it told me, Hey, maybe you better go back to Hawaii, where they don’t have hurricanes. Yeah, they only have passing storms, like this weekend,

ADRIENNE:
yeah, yes, yeah. We got stuck over on the Big Island because of

ATTILIO:
the hit. Yeah, they canceled the flights. Was it Saturday and Sunday? The Hawaiian canceled all the flights, I think southwest too, yes,

DUKE:
so yeah, but it was fun. You just had to stay in place. Yeah, you know, Duke, I

ATTILIO:
was listening to a podcast, and you really dodged a bullet, because what they what Florida has in place right now is called National Flood Insurance Plan, and it’s actually funded by the state of Florida, because all the carriers are like, No, this is crazy. And so what’s happening is people are there paying like $700 a month for, I mean, a year for flood insurance. Now it’s like seven grand. And they even say, like, the seven grand still isn’t in alignment, because coral Creek was a subdivision that they built 70 years ago on the swamplands, and that swamplands was the original buffer for hurricane. So it’s like, there are just houses in Florida that are just gonna get mowed down every time a hurricane comes through, and they just. Keep rebuilding. So yeah,

DUKE:
but it just amazes me every time I talk to somebody, they’re moving to Florida, yeah, because of the economy, because the state has no taxes, yes, blah, blah, blah, blah, blah, but

ATTILIO:
bunker then yeah. Or buy your

ADRIENNE:
home years, buy your home cash so you don’t have to have those insurances. Or then you got to be ready to stay away from coral Creek, Florida.

DUKE:
Yeah, I lived through three hurricanes living in Florida, yeah, but let’s get back to

ADRIENNE:
Hawaii. Yeah, Hawaii real estate and the owners, yes, yeah,

DUKE:
property management is not as competitive as I thought it would be, and that’s why I went into property management. I switched over from sales, yep. And found out when somebody told me he goes, how many property managers do you know? And I said, I don’t know any. He goes, how many? How many Realtors Do you know? And I said, I don’t know. 2000 3000 so, you know, it really made me take a big pivot in my career, yeah, and I adjusted, and I learned to enjoy the pm side. Most Realtors do pm as a side gig between sales. So the problem with that is that you don’t give full time attention and you don’t put systems in place. Hawaii Pacific. We’ve been doing this for 17 years now, full time. It’s all we do. We don’t do sales. We have our property management agreements, our property condition forms, our walk through forms, all the steps and our move outs are all systematic, because that’s all we do. So if you’re going to compare, you’re going to compare property managers. Get somebody. There’s probably three or four of us now that do this for a living. Yeah, that’s all we do. So you know, I got to say great things about the people who are in this industry, because I know them all, and all of us have the best interest of the owners. Line, yeah. So, you know, with Hawaii Pacific, we do walk throughs. And people go, what is a walk through? Well, we visit your home two times a year. And if there’s a pen in your home, we do it three times a year, yeah. Why is that important? Because, Mr. Homeowner, if you don’t look at the house, you cannot see wear and tear issues or abuse issues, or 15 kids living in there when only two are on the lease.

ADRIENNE:
Yeah. Or I know that, like with when you guys were managing my condo, you did the walk through the for the pet walk through. And we were surprised by the kind of pet that large dog was, like, humongous. You

DUKE:
had a The door was locked. And I said, Why is the door locked? He says, oh, no, I, you know, I don’t want you to go in there, but I could hear footsteps in there. Yeah. And so when I, when I told him to open the door, he kind of just looked down at the ground, open the door and there was 100 pound Rottweiler in there. Oh, wow. That was not on the lease.

ADRIENNE:
It was like our medium sized dog was what was approved on the lease, yeah, yeah, yeah.

DUKE:
No. This guy was over 100 pounds. He was giant. But, you know, tenants have a tendency to do what they want to do, yeah? And if they don’t do what we ask them to do in the lease, hassle them. Don’t read the lease, then we give them the five day notice. You can either get rid of the dog or you can move out your choice.

ATTILIO:
You know, we had we put up for sale, and we’re about to close escrow on our property. I won’t say where, but they were self managed, and I tell you all the stuff that you that doesn’t get found when you don’t have all of that stuff, we’re having to deal with, it in the s roll, and it’s costing the owners a lot of money, Hoa violations, deferred maintenance, deferred maintenance, bird nests, AC issues. I mean, it’s just all the stuff that they and, you know, and they’re probably and, and we know for a fact they were renting below

ADRIENNE:
markets, $1,000 a month, yeah, $1,000 a month below the market.

DUKE:
Yeah? So another five years, one that people do, yeah, they go make the tenants take care of the yard. Oh,

ATTILIO:
that’s a big mistake too.

DUKE:
Yeah. Have you priced out yard costs for taking down a big tree or some California grass? Now that’s 12 foot high, yeah, the roots are, like, three feet down in the ground,

ATTILIO:
yeah. And the associations just get on you, and then they have all these notices just to find you if you have a home and Ocean Point area the HOAs has put in place now that they do a walk through.

ADRIENNE:
Once the home goes up for sale, they have to, like, inspect

ATTILIO:
that home can be transferred over to a new owner. It’s required by the ccnrs that they do a violation audit, and you got to deal with it all. Are you trying to close escrow? Whereas, if you had a management Yeah, no headaches. Raise

DUKE:
the price. $100 and get professional services done? Yeah, it’s so easy. I think about two

ATTILIO:
if I was or anything, I wouldn’t want to clean somebody else’s some owners, exactly,

DUKE:
yeah. So especially military guys, yeah, you know, have, they’re young, and they they want to go out to the beach. Anyone be doing lawn work? No. And then you got to spend 3000 $4,000 to get your yard back in shape again, you know?

ATTILIO:
And I just makes no sense. Yeah, I just landscaped the backside of my yard, not, not even just one side part. It was $15,000 I just pay these guys, like, literally, 99 bucks to come out every three weeks to take care of the yard. I don’t have to worry about it. Yeah,

DUKE:
it’s a no brainer. And it gets done, and you got somebody to say, Hey, man, you haven’t been to my yard in like, three months. Yeah? They go, Oh, yeah, you’re right. I’ll fix it for you. Yeah? I

ATTILIO:
mean, Adrienne went to Italy for 10 days. I flew back to go clean my No, I didn’t fly back to go clean my yard. It was already done. So that’s the other thing people don’t think about, because I’ll tell you right now when you self manage, I’ll tell you right now that toilet is going to blow up Super Bowl Sunday. Well,

ADRIENNE:
I mean, like, besides the inconvenience, right of self managing, I think it’s important to touch on the fact that in Hawaii, like the the laws are a little different. You know, the Hawaii tenant landlord code. You gotta really know that ins and outs, because it’s different from state to state.

ATTILIO:
How does it how do the laws favor the tenants here in in Hawaii, Duke? Well,

DUKE:
you know, for example, this is a good one. I went to see a house that had brand new carpet in it, and then after the tenant moved out, after one year, that whitish carpet was not whitish anymore. He didn’t wear shoes in because he’s military, and they want to take it off. You want to walk to his bed, sit down on his bed, take his shoes off, and they put them on in the morning, yeah, walk around the house with his shoes and then go off to work. So after doing that for a year, the house, the carpet was just trashed, yeah, so we went to court because he fought me on it, yeah? And the owner said, you know, better than to put carpet in a house, yeah. And the same judge knows me by name, yeah, went back and told him why the yard was all hamajang, yeah, and overgrown, and that we the tenant, wanted to, we wanted to sacrifice his whole security deposit to get the yard back up. Yeah, the judge said, You should never leave the yard on a tenant, yeah. And I said, Thank you, Judge. He says, Have a nice day, Mr. Kimhan. And then an owner said, No, I don’t want you to take Go, take that guy to court. So I did. Yeah. The judge looked at me and he says, Mr. Kimana, we hear about the lawn again. Yes, sir. And he says, What did I tell you the last time? And I said, Judge, he told me not to let the tenants take care of the lawn. He goes, thank you very much. That’s the order, right there. Yeah. So, so

ADRIENNE:
the rulings are generally in favor of the tenant when it comes to the condition. Yeah, they got

ATTILIO:
a law in the book HR, hrs, 1562, dash, 29 is the law is called, too bad, so sad, but so

ADRIENNE:
they gotta get it taken care of. Yeah, but that leads into the importance of this property condition form. So do so how does, how is that used within?

ATTILIO:
Yeah, talk about that. What is that relationship property condition the

DUKE:
property condition form is filled out when the house is vacant, before the tenant moves in, and when and after the tenant moves in, he gets a chance to amend it, in case they walk in and they see a rip screen or something like that. Says, No rip screen, the tenant can say, hey, here’s a picture. I just moved in and the screen is ripped, and they can adjust that. They don’t have to be responsible for it when they move out. And then when we move them out, we look at the move in pictures and the property condition form, and we’re like, Mr. Tennant, you didn’t take care of the windows or the screens or the AC or all the things that they’re supposed to take care of, light bulbs are all burnt out. All these things get, you know, hit against them on the move out.

ATTILIO:
Oh, I was gonna ask you the professional cleaning. Talk about the professional cleaning, and what you guys recommendations for that, for when, because,

DUKE:
because that’s such a great area, we require the tenants to have professional cleaning with a receipt on their way out, yeah, so we can show that to the next tenant moving in that it was professionally cleaned. And if there’s some touch ups that need to be done, the house sat vacant for a month, we’ll go in there and shine it up for sure. Yeah, nobody’s arguing about that. But you know, when you have receipts for cleaning, yeah, or for professional services, it proves that the job was done to our, you know, our standard,

ATTILIO:
yeah, because, you know, it’s subjective the cleaning because, like a very house, I don’t have any pets and kids, and Adrienne got kids and pets. So that subjective difference between what the house, the clean house, looks like, is different with Adrienne, as it is with me, and I don’t Yeah, so it’s just like, and you look at people’s cars, yeah, the inside of the car, it’s all subjective. Yeah, yeah. But you were saying a tenant.

DUKE:
No, a tenant. Um, relationship with you is great, yes, until they move out, and then you can pretty much put a stopwatch to it when they’ll turn adversarial, when you start talking about dinging their security deposit. Yeah,

ATTILIO:
yeah. I mean contentious, yes,

DUKE:
yeah. It’s like, it’s, it’s like a clock, yeah, they’re nice until they got to move out. Yeah. So

ADRIENNE:
Duke, when you’re doing this property condition form, and let’s just say this tenant, like, just did not care at all, and the damages exceed the security deposit. Does that happen often? Or, like, how do you how do you navigate? Doesn’t

DUKE:
happen because, because we do walk throughs, right? If we foresee that, then we tell the tenant, Hey, you are living dirty, or you’re doing things that you’re not supposed to do. So either you fix it up now, or you move out.

ATTILIO:
I remember using the owners,

DUKE:
yeah, yeah. Owners are happy about that. I

ATTILIO:
think I remember he telling me the story. I don’t know if it was, I don’t think it was one of ours, but you told me, like these people, they was living in a post Imperial home, and then they would cut a hole in the floor, and then they had pigs underneath the house and chicken wire around the outside, and then they would just throw the scraps through the floor, hole in the floor, like true story kind it

ADRIENNE:
wasn’t one of Duke’s rentals, though, no someone else

ATTILIO:
that single family pig farm, that’s what it was called. But

DUKE:
you know, it’s amazing, good and bad, how people live, yeah, and what the standard of their expectation is, yeah. So, you know, owners, sometimes they give us the greatest home, sometimes they give us the dirtiest homes, yeah. And so we, you know, do the walk through the owner meet, and we tell them, hey, we can take this home, yes. And they’re like, What do you mean? We rented it for 15 years. And I’m be like, Yeah, you know, you didn’t make any updates. The house looks original and like it was built in 1950s it’s single wall, yeah? And the biggest thing is parking. If you don’t have parking, we won’t take your your property. Yeah? Now,

ADRIENNE:
dude, you’re mentioning, like, the homes that maybe have not been updated. I know that you guys do offer solutions. You don’t just turn people away without offering solutions. Yeah? Talk a little bit about, like, the project management solutions, yeah, that you guys have done in the past or for clients

DUKE:
and updated and upgraded homes. Yeah, every other day, that’s just part of who we are. We have professional services for all that stuff, and we have flooring choices. And, you know, we use CNC and golden and all the flooring companies, Bougainville, we’ve done business for them all. Yeah, so if you want to switch your carpet to vinyl, man, that’s the best investment you can do on a home

ATTILIO:
vinyl. What do you call it? Vinyl? Luxury plan, get

ADRIENNE:
rid of the carpet. I know that we’ve talked about that before. This trouble carpets, trouble,

DUKE:
trouble and it holds germs and fleas and dander and all kinds of problems. Yeah,

ATTILIO:
the I had a friend, he won like 50 I was in college. He had like 50 properties, and he said he always noticed soon as a car, like, when, because they don’t clean the carpet, but when, soon as it started getting dirty, everybody didn’t want to renew the lease. So he stopped putting in carpet in his places. And people stayed longer because it’s like, what’s easier, clean the whole house or just move. I don’t know. I mean, it’s a toss up, but most people just Yeah.

DUKE:
You know, renting is such a big part of lifestyle here in Hawaii because of the high cost of prices housing, yeah? But, you know, I try to tell military guys or girls who buy houses in Hawaii and then want to sell them or rent them, that it’s really going to be tough because you didn’t put any money down. You got an HOA fee, and you got a GE tax that you have to pay Yes, and you have 10% for a property manager. That’s four costs. Really tough to make money on a VA loan and your military, and you’re moving off Hawaii, yeah? Unless you put, you know, 10% down or 20% down, then the numbers are going to work. But if you have an HOA fee in Hawaii, it’s usually 500 plus, yeah,

ADRIENNE:
oh, I’m glad that you brought up this HOA fee, because, well, we’ve been talking with Bradley the last couple weeks about Yeah, with the insurance, yeah increases, and it’s affecting a lot of the the maintenance fees, some of them going up like triple, even from from last year. So you know, you may have an owner that was positive cash flow, and then now they’re negative by 500 Yeah. So, um. Yeah, they

DUKE:
want to, actually want to try and recoup that through the rent, which is impossible,

ATTILIO:
because the rents are not absorbing that those increases, right? Yeah, two

DUKE:
bedroom, two bath, two parking, you know, 23 to 2700 and now they want to charge 3300 make up for that insurance raise.

ATTILIO:
Yeah, I just had, I had to give notice. I got, I got a place next to the university. And this the maintenance fees and everything went up. So we’re gonna go get clean it up and put Nadia in. She goes Adrienne’s daughter starting, uh, so she lives in Ewa Beach, so you can either sit in traffic for five years, you know, like when you go to a U H for four years from Ewa Beach, one year is going to be spent sitting in the car. So it’s an actual, it’s an actual five year program for four year degree because of traffic.

DUKE: 
Well, what about um, Indar lane, uh, Lange’s, yeah. Isn’t that coming out?

ADRIENNE: 
Yes, and yeah, and you’re managing it, or you’re adding sometimes that’s going to be ready soon for some students,

ATTILIO: 
September, September, well, let’s, let’s, let’s

ADRIENNE: 
talk quickly about that, because I know that Hawaii Pacific Property Management is looking for for some tenants for this great building, way better than the dorms. It’s

DUKE: 
six. Or nine units. I think he has nine or 10 units that are going to be too bad. I’m too bad. Yeah, with AC parking,

ATTILIO: 
nice. How’s that? Yeah? Because close to you. H, yeah, because I know you. H, this. I mean, they just had different, you know what? Speaking of deferred maintenance, they got different maintenance on all the dorms, and there’s always more students than they have dorms that on campus housing for so so with

ADRIENNE: 
this, so with this particular building, Duke, what are the ranges to be expected to rent per month for these two bedrooms?

DUKE: 
The only thing is that they got one bath and one parking. Okay, so that’s all you could arrange. So it’s probably going to be in the location somewhere between 24 to 2700 you know, for two people, they’re gonna have to split it, maybe

ADRIENNE: 
scooter, scooter or bike.

DUKE: 
There’s, there’s this ton of street parking right there.

ATTILIO: 
And they can get this

DUKE: 
in town. Yeah, new never been lived in nice, it’s a deal,

ATTILIO: 
yeah? And

ADRIENNE: 
so if someone wanted to find out about it, could do they, is it on your website yet? Or they would decide

DUKE: 
as soon as, as soon as Ingar gives me the first unit, yeah, we’re going to put it out for marketing, because he’s going to give me. I told him to make one ahead of time so we could use it as, like a showroom, yeah, model.

ADRIENNE: 
And so you’re anticipating sometime within the next 30 to 45 days, it’ll be, yep, ready, ready? Yeah,

ATTILIO: 
yeah. Took a look at the dorms on campus and 13 1400 and you’re sharing a room. So,

ADRIENNE: 
I mean, you can have your own room and split the rent, yep, and AC and parking, yeah, and brand new and brand new. Who wouldn’t want that live and live by all the

ATTILIO: 
restaurants. Yeah, and Waikiki and, you know, walking, have nice walkability over there and chill and hang out and but make sure you get your studying done?

ADRIENNE: 
So as we’re we’re coming towards, we’ve got about like five minutes left. I know that Hawaii, Pacific Property Management is, is hiring, looking for, for talent. So let’s

DUKE: 
you know we we were, and now we have an abundance of 10 talent, we just took on Ruben Gonzalez, yeah, and he is just can’t wait. He is amazing. He’s going to be happy and excited, and we’re going to take a little bit to fill him up, yeah? But his wife is also trying to take a real estate license, yeah? And so I think they’re going to go going,

ADRIENNE: 
right? All right, so all your slots are filled until we get more properties. For now,

DUKE: 
we need more team. Lally,

ATTILIO: 
we’re looking for people all the time to we just brought on two no full time agents. We still probably need two more full time agents, plus we have a w2 position listing manager that we’re going to fill. Yep, health benefits, gym membership, snacks. Yeah, in Kapolei, so not sitting in traffic, getting all stressed out. Yeah, if

DUKE: 
you ever get a chance to go to our website, go to H i Pacific, pm.com, take a look at the the listings. We use professional photos, and we do two or three walkthroughs a year on your property. So give us a chance to come out to your house and say hi,

ATTILIO: 
you know. And you guys do good with the videos and the pictures like really good market. And you’ve

ADRIENNE: 
got some some very specific guarantees. Let’s run through those as we are wrapping up. All right, so give us the rundown, the big the. Big

DUKE: 
one is the rent guarantee and the eviction guarantee. Nice. So we guarantee our tenants AGAINST EVICTION, and if we do get an eviction with those tenants that we put in, yeah, then we’ll pay the legal cost to get them out. Nice. The rent guarantee just states that. We’ll tell you what the lowest amount of rent is on your home. You don’t have to start there when you’re starting to market it, but if you ever had to go down to the lowest rent in that neighborhood, then we’ll pay that amount of money if we can’t rent it in 30 days. Wow. Last one’s a communication guarantee. There’s always somebody answering their phone here at Hawaii Pacific, whether it be on the main inside, the office side or your property manager. Yeah.

ATTILIO: 
And then if you’re an agent and you’re like, I just, I don’t like I just want to hand it over to Duke and his team. You have a return to agent. Guarantee. What’s that?

DUKE: 
So it it states that we don’t do sales, yeah, so if your seller now wants to sell after renting it for a couple years, yeah, it goes back to the agent.

ATTILIO: 
I think I also wanted to add Spam musubi guarantee that if you sign up your property with Duke, he’s gonna go 711 get the deluxe Spam musubi to consummate the property management deal that you just signed. Spam musubi guarantee that’s over and above. But you know why? Because whatever, dollar 49 for the regular one, but you get the deluxe ones. Dollar 79 Okay,

DUKE: 
used to be 99

ADRIENNE: 
inflation, inflation, yeah.

DUKE: 
All right. Well, thank you, yeah, thanks dude.

ADRIENNE: 
Thank you Duke for being on the show and all the excellent information and talking story. Yeah, I appreciate you. Thank you. Do see you soon. Bye, bye.

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