How to Find the Right Property Manager for your Rental Home with Duke Kimhan

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Interview Transcription

ADRIENNE: 
Welcome back, and thanks for listening to the Team Lally Real Estate show home of the guaranteed sold program or 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 Teamlally.com.

ATTILIO: 
Our guest today is the owner and principal broker of Hawaii Pacific Property Management. He was born and raised in Honolulu and grew up in Manoa Valley. He was a first Restaurateur. Before it was a Restaurateur before delving into the world of real estate.

ADRIENNE:
He has earned numerous real estate designations and continues to educate himself in all areas of real estate to better serve his clients and friends. As a real estate broker, he specialized in investment properties, condos, military location, 1031 exchange and commercial properties. Please welcome our guest, Duke Kimhan. Hey, Duke.

DUKE: 
Hey, I don’t know if I wrote all that.

ADRIENNE: 
Well, I mean, spell all those that’s very minimal. Like there’s there’s so much more, you know, to unpack about all of your experience in real estate, business. I mean, we can

ATTILIO: 
always say, guest intro is better than a eulogy. That’s true. It’s cool. You’re not gonna hear one of those things.

DUKE:
Right. But it’s interesting to hear someone else talk about it, right? Because people ask you those questions were What have you done before? What led you into the real estate business? How do you describe real estate business today? You get all those questions from interviews and magazines and stuff like that. So it’s really kind of weird to hear actual intro actually come out. Yeah.

ATTILIO: 
So I think what will pick up people’s ears is that you didn’t get into property management yesterday. And so talk us talk tell us about, you know, go back to the beginning. What, what made you made the transition from the previous career into real estate, start there? Well,

DUKE: 
it’s natural, it’s a natural thing, I think, because you’re dealing with customers, and you’re dealing with a product that you have to you know, take good care of, and you’re charging somebody top dollar usually for whatever real restaurant product you guys delve into. So it’s interesting how being on the the management and the service side of of restaurants to actually get your real estate license and then you got to learn in a little bit, something new, but it’s the product, the product is real estate now, it’s not the food. So you have to give some service to that. And you have to take care of it. And you have to describe it. And you have to do all the things to do in the restaurant business. Pretty, really similar. Yeah, so it wasn’t hard to make the transition. But I found that the satisfaction of selling somebody a house, or selling someone’s house, is really 10 times what you would get when somebody tells you, this is the best meal I’ve ever had. Yeah, so

ATTILIO:
I think you’re in your client interactions or hour, hour and a half. Now your client interactions are yours.

ADRIENNE:
That’s right, right. Yeah. In a long term relationship with all of your property management clients.

ATTILIO: 
So are you like the chef Ramsay of property management?

DUKE: 
That would be a good way to describe it never heard it brought to me that way. But here’s the property management side was a natural transition to because as I sold investment properties to people in Hawaii, they would say, Hey, can you manage this property for me? Because we don’t live here? We’re just looking for a vehicle to make a little bit of money over a long period of time.

ATTILIO: 
And simple, yeah. And then talk about that. You know, what are some with your experience? Well, this will be helpful for people that even if you have investment properties, not everybody stepped into them with the right. Gary Keller talks about it thinking hats. So let’s put on our real estate investor thinking hat. If you’re going to be investing in real estate here on Oahu, and you’re going to be managing it, what would you like to see coming? What would you what would you like to see regarding these properties or numbers or things like that, that will be helpful for these people are thinking I need to get some investment properties or upgrade my existing ones?

DUKE:
Well, the perfect vehicle in Honolulu, because this is where I manage is a single family home, usually on the east side. But that’s not what usually comes to me. So single family homes on the west side are normally the bigger turnover product. And then and then you have townhomes and then you have condos. So townhomes and condos normally have an HOA, and I gotta tell you that the way will seriously hurt the amount of net profit you make on your investment property. So if you’re going to do it strictly for investment to not get an HOA fee involved, sometimes a single family homes now have a small one for one or 200 bucks. But that’s that’s great, that’s fine. But when you get those HOA fees that are 500 to 1500 a month, it’s gonna severely hurt your net income. Yeah. So if you can avoid that as much as possible. They don’t get a single family home.

ATTILIO:
I talked about this too, a couple of weeks ago, I think was on a live stream, but we got one it’s a fixer upper. can use a VA rehab loan in the villages of Kapolei view. I’ve lived there for 17 years. It was $35 for the VA Okay. association fees, you know how much it is today? 45 bucks. Nope. 45 bucks. $45. Yeah, for the association with there’s over 2000 homes. That’s why it’s real. It’s well managed. 45 bucks, right? We got a pool with a rec center that nobody goes to. That’s it.

DUKE: 
That’s the recommendation right there where to buy? Yeah.

ATTILIO: 
We’ll keep going. So

ADRIENNE: 
single family home is

DUKE: 
the single family homes in Hawaii have appreciated over the course of my lifetime. Yeah. When when we bought our house in Manoa for $27,500. And, you know, at the time, my dad was a police officer making 600 bucks a month. And so I don’t know how he could afford that mortgage, because the mortgage was like 285 bucks a month, something like that. Yeah. And, you know, it’s a third of his paycheck. But my mom was working at the time they both had an income. And we sold that house 21 years later, for $780,000. Wow. 27 500

ATTILIO: 
amazing Yeah. Wow.

DUKE: 
I don’t know how many times that thing. Right, appreciated. 100%. But it’s, it’s what happens to the real estate market here today. In fact, I bought a house that was a fixer upper. In fact, it had no running water, or electrical. So it was a quarter lot. I paid nine 915,000 for a teardown. I put just under 400,000 in it. And I think I just saw my drive by appraisal and 1.9 9 million

ATTILIO: 
only, you know, five years ago, five years ago. So yeah, how much did you put into

DUKE: 
care? Well, Market

ADRIENNE:
was about 1.8 1.34. Correct? Yeah. 199.

DUKE: 
Yep. So that’s what Hawaii real estate does. It’s it’s just a natural position of appreciation every single time that you go to resell, you know, so I have a lot of my market is military. Yeah. And they normally buy on the west side. So some of them are, you know, they buy townhomes. But a good portion of them are single family homes. Yeah. And they can’t sell in this market today. I’m talking about today, today. So they put their houses on the market, they can’t sell. So we got to put them up for rent.

ADRIENNE: 
So you’re getting a lot of inventory then from homes that we’re not able to sell?

ATTILIO: 
Yeah. Correct. But there’s always renters, right?

DUKE: 
Correct. There’s a ton of renters that can’t buy right now. Yeah. So what I have to inform the seller about is because they weren’t looking to sell, they were looking to I’m sorry, they weren’t looking to rent their property they wanted to sell is what’s going to happen to their property after two years of being an investment property in Hawaii. So, you know, you got to look at those tax issues with the owner and say, just be prepared for this. Right. And because it’s not their primary residence anymore.

ADRIENNE:
Yeah, they’ve gotta be like two of the last five years, but then correct, or ask for active duty military. It’s two of the last ten the last ten if they’re active duty if they remain active duty, but if they come off of active duty, it’s back to the

DUKE: 
last five. Yeah, and that’s a good, that’s a good comment to make, because I’d say a good portion of my new owners that have come to me lately have been people that cannot sell in this market today. Yeah.

ADRIENNE:
Well, I’m glad that they’re coming to you. Because I know that you and your team are going to take excellent care of their, you know, their now investment property. And when it is time to sell, that home is going to be in tip top shape. Yeah.

DUKE: 
Well, you know, I always tell him, I said, get other quotes from other property managers would make sure you ask the tough questions. What’s the renting percentage, right? What’s the fee to rent with them? Do they do walkthroughs of your property at least twice a year? And then is there any kind of guarantees or warranties that come with turning over a $1 million house to a property manager here in Hawaii?

ATTILIO: 
Let’s talk about guarantees. Let’s talk about those. One guarantees, and better looking when you’re done when paying your property to do better at that one good looking guarantee. Well go ahead and go through the guarantees.

DUKE: 
No, the biggest one is the communication guarantee. So we always answer the phone, that’s a big deal. And we stay in touch with the owners. The second one is a rent guarantee, where we tell you what the lowest amount of rent you’re going to be able to get for your house in that market. But we won’t start there to market your home, we’ll start at the highest point. The last one is the eviction guarantee. And it states that if we put a tenant in there, and we have to evict them that will pay the eviction costs in getting them out. So you know, we’re going through several evictions right now. And, you know, the legal fees are 150 an hour for an attorney to go ahead and take your case on to go through an eviction. Wow. So evictions are running three to 6000 bucks right now at court costs, court fees, and the amount of time the attorney has to go and then serve you the tenant, your eviction notice to appear in court. It’s and then the follow up collection after that. It’s it’s generally tedious, I guess

ADRIENNE:
the whole process and if you miss a step or like do something out of order, what happens Duke? what happens to start again? No,

DUKE: 
you have to start again. Yeah,

ATTILIO: 
well, you know, I could, I could watch a YouTube video on brain surgery, but I don’t necessarily would want to perform it on myself. And I do the same thing as trying to evict a tenant. Why why do it yourself? And why not? Why not be with your guys’s team? Because it’s not the eviction guarantee isn’t the reason is probably one of it should be a good reason for you to have the manager home. But more importantly, what’s the front end stuff that you guys do to to to manage, manage minimize that eviction, so we

DUKE: 
do you know, walkthroughs and stuff and we give you advice on here’s a good one. I just did this today. Yeah, walk through a house. And the guy was military and he’s leaving. And he has a bunch of kids in a house that has carpet. And in the in the house was a cat So the cat tore up the carpet, right? Did that whole scratching thing? Yeah. And so he says, Oh, we’re gonna replace the carpet. I said, Oh, are you gonna put carpet? And again, he goes, Yeah. I said, don’t put carpet and put vinyl flooring in. And he said, Oh, isn’t that more expensive? And I said it is, but it’ll last three or four tenants. Whereas carpet may not even make it. The next tenant. Yeah.

ADRIENNE:
That’s excellent. Oh, so when you have the rental properties, stay away from carpet is what your advice was flooring, solid flooring.

DUKE: 
So difficult. Yeah. And if, you know, 70% of the tenants today have a pet. So if they have a dog that’s going to, he’s a puppy, he’s going to pee on the your brand new carpet. Yeah, it’s gonna smell like animal in there too. So highly advise to go to the vinyl flooring. Because, of course, it’s not tile or anything, but it will last a long time.

ADRIENNE: 
So do on this eviction guarantee, I’ve not heard of any other property management company, guaranteeing their tenants the way that you guys do. So this is like your very unique value proposition that you offer to your clients.

DUKE:
It is we’re the only ones that I know of. And if anybody has another company that does offer guarantees, call the call the radio station, I want to know, yeah, I haven’t

ATTILIO: 
really 799-9596.

ADRIENNE:
So I want to go back to the rent guarantee, because I know that we kind of briefly touched on it. So let’s, let’s unpack how how that exactly works, you give a lowest price.

ATTILIO: 
Tell us Duke,

DUKE: 
I type in the address in the computer. And I look at what the rental range is in the neighborhood. And then I take the lowest amount of rent offered in the neighborhood and apply that to your house. Okay, so if it’s 2000, this 2400 2900 That’s what the lowest amount of rent is in your neighborhood. So that’s will be the rent guarantee.

ADRIENNE:
So if the home doesn’t rent in a certain amount of time, then like, what happens with that guarantee? Hawaii Pacific Property Management pays that money to?

DUKE: 
I’ve never seen. I’ve never seen a house start at the low rent. Yeah. And what we’d normally do is start at the highest amount of asking rent, and then lower the price as we don’t get a tenant. So in the month of August and September, it’s usually the toughest time, August, September, December. March. Those are your tough rental months, March because it’s spring break. December because it’s Christmas holiday. And August and September because it just we just finished moving all the military personnel onto the island, because school starts, yeah, first week, August. And so these are the toughest months. And so when we take on new owners in those months, I tell them that I tell them why it might not rent right away, because that’s a question a standard question we get from an owner. How long do you think this will take to be off the market? And you know, when? what price do you think you can get around for? Yeah. And we try to be as honest as we can. So if you gave me your house today, I would say two to three weeks.

ATTILIO:
Maybe it’s ready to ready to have a renter move in. Right? Yeah.

DUKE: 
Because it’s at the end of the rental season. already. Yeah. So I told that to the guy today. And he goes, Oh, okay, what happens if I give it to you August 15. I go well, nothing will happen in August.

ATTILIO: 
With the fascinator renters when you

ADRIENNE: 
come across those, you know those challenging months, I know that you guys like to get creative. And let’s talk about some of those, those things that you do for the marketing to motivate the, you know, the renters to move in? Sure.

DUKE: 
Most of the tenants that are moving in in that time are creative already. So one of the easiest ways is they come in and they go, hey, you know, my budget is this. So let’s just say the rent ask was 2700. They’ll come in and they’ll say, you know, our budget is 2500. Will you guys take that? Yeah. And, and a lot of times, we’ll go back to the owner, and we’ll say, Hey, Mr. Owner, they offered 2500. So let’s do this. Let’s, let’s do 2600 Right for the first six months, and then 2500 For the next six months. So you get some of that back and you do meet the tenants budget. Yeah. And it makes sense, right? Because if you don’t have a tenant in there, you lose 2700 per 20 for 12 months versus losing $600 for the year.

ATTILIO: 
Yeah, every month you’re giving you’re doing. You’re doing a whether you like it or not, you’re doing a rental reduction every month that is vacant. Correct.

ADRIENNE: 
I love how you come up with that win win. Yeah, it’s like a win for the honor. And it’s a win for the tenant.

DUKE:
Well, you know, there, there has been times where the owner will offer half off the rent or even the first month free. And we, we highly recommend they don’t do that. Okay. Okay. So, because it’s just too much of a rent loss, you’ll never make that up in five years of having a tenant. So if you rent reduce for $500, that’s a lot for a tenant, say, hey, we would do a move in bonus the first month that taking $500 off your rent, and they’re like, 500, we’re like, Yep, they’re like, We got you. We’re in. They’ll take it. But we do not reduce the security deposit, we only reduce the rent. Gotcha. So there’s there’s a ton of ways that you can reduce your rent to motivate people to take your unit over the next. Yeah,

ATTILIO: 
I think, what’s your number one recommendation? Just have that thing really in good tiptop shape.

DUKE:
Yeah, and you know, people 90% of the tenants that are out there have a family. Yeah, right. And, and they just want something that’s safe. That’s a turn key. Usually they want people from the mainland want AC. So we try to recommend that as much as we can either putting in or leaving in the window ACs, or giving AC as a part of the option for a tenant.

ATTILIO: 
So that’s a good idea, because they stay cool. They keep sending in the rent.

ADRIENNE: 
The other thing, too, that I know that you’ve talked a lot about is allowing pets, and then you know, having like a whole process that you guys follow with this, you know, the pets.

ATTILIO: 
Tell us about the pet process.

DUKE: 
It starts with the application. So when somebody says hey, we have a pet, so we say pet negotiable under 25 pounds or whatever. Then they’ll say, Yeah, we have a 22 pound dog. We’ll say okay, can you please submit a picture of your dog? So then we send that to the owner, and we’re like, Hey, Mr. Owner, this is the picture of the dog that the tenants want to put in the house. And 90% of the time the owners say that, that’s fine. It looks like a good dog. And then unless it’s a puppy, yeah, so we try to stay away from puppies because they haven’t developed their peeing habits, pooping habits or scratching brains. Yes. Big time.

ATTILIO: 
So with the 20 to improve the 22 pound dog, you don’t say put them on on diet?

DUKE:
Get them down to 19

ATTILIO: 
weigh in like he’s winning for wrestling or something?

ADRIENNE: 
And then you guys do something a little different, too. Right? Once the you’ve identified the home is gonna be occupied. Is it that you guys do?

DUKE: 
So we put that in the lease? With the pet inside the house, we usually do three walkthroughs every four months versus every six months? Yeah. And you know, it’s really just to check on the pet. Just to make sure we don’t walk in there and just reeks of pet smell. Or there’s not stains on the carpet stains on the floor. Or the owners are good pet owners where they take care of the house. Yeah, super important,

ADRIENNE: 
or that they have like swapped out the pet for a much larger dog. Like that’s like the size of a miniature horse. Yeah.

ATTILIO:
I got one pony. Pony.

ADRIENNE:
That’s a That’s a true story.

DUKE: 
We had 100 pounds hog, I think might have been in one of your lives. And the guy said, Oh, no, he’s 25 pounds, send a picture and we went and the dog had his own room. Literally. You had a crate. That was so giant. And and he goes oh, no, don’t go in there. You know, my my friend’s dog is in there. We’re like, What are you talking about?

ATTILIO: 
You go in there. Sitting at a desk. He’s smoking with cigar playing poker with his friends on Zoom.

DUKE:
Exactly. The dog was 100 pounds.

ADRIENNE: 
In a third third floor, walk up. Condo, bedrooms, two baths, like, you know, tiny space.

ATTILIO: 
Imagine the neighbors must have been kind of scared to go up the stairs at the same time.

DUKE:
If you remember we gave your tenant a 10 day notice right? Yeah,

ADRIENNE: 
yeah, on the spot. I was so grateful to have you guys all over that situation.

DUKE:
Well, a military guy you

ATTILIO: 
No, there is some flexibility but not complete flexibility, right? With the pets. And you just you guys have come up with strategies to manage that to minimize the risks but opening up the potential, because that’s already you know, people who have pets, they always dread moving because they’re like, oh, man, it’s gonna be hard finding one rental. I think

ADRIENNE: 
that with Duke and his team Yeah, I think that they’ve got this. This whole process organized and they’ve got a way to work with it.

ATTILIO: 
You know, we got some steady money of some sellers. We have, you know, Carlos and his and Angela they, you have a dog. What’s the dog’s name scout? Ranger, Ranger, a big German Shepherd, really super fluffy. I’m sensitive to pet smells. And I was in there. And I couldn’t even tell. Yeah, other than obviously, Andrew was walking around here. Good pet owners, good pet owners. So that’s one of the houses we have for sale. And you can’t even tell you have pets. Or

ADRIENNE: 
I know, though, yeah, we’re coming to the end of the show. So if there’s any last words of wisdom, you want to leave our listeners,

ATTILIO: 
property owners potential property owners? The time what do you want to share with them?

DUKE: 
You know, when when you have questions about what a process is like, or what a property managers like, ask questions, write down questions. Ask the team, ask our team, you can call my phone, you know, it’s not hard to you can look on the internet, on my website, you can find my personal cell phone number, so you can call it I’ll ask a few questions. And, you know, not all properties are perfect for property management. So there are times when I have to say, just doesn’t fit or our ask right now. So anyway, you know, calling is free, asking questions is free. And basically that’s all I do most of my day, just answer questions.

ADRIENNE: 
And you’re excellent at answering your phone. Yeah, he’s excellent. I do. Yeah. And, and returning phone calls. All due

ATTILIO: 
because he’s gonna tell you can, no can

ADRIENNE:
can look at. Okay, thank you, Duke

DUKE:
you thank you. Talk to you guys later. Bye. Bye.

ADRIENNE: 
All right, so you can give Duke and his team a call at 4459223 Tell them that you heard about him on the team Lally Real Estate Radio show. Yes, again, that’s 4459223

ATTILIO: 
If you’re thinking about buying an investment property instead of calling a realtor first call Duke first because he’ll give you the parameters of what’s going to be able to be managed easily have less lower probability of vacancies ie just less repairs of your rental analysis you can crunch your numbers and see if you’re gonna have some positive neutral or negative cash flow. And then you know and then I probably say the next person you probably want to talk to your CPA just to get a look at the long term tax kind of situation and

ADRIENNE:
then Jody, of course you want to get your get your financing. Yes, and your strategy for the investor financing.

ATTILIO:
Well, you know, all good things must come to an end and this is the end of another awesome show. But stick with us start listening to our show for the instant offers if you got a home and you’re sitting in it we will literally write you an offer. Let you stay in the home and rent it back and help you buy the next one.

ADRIENNE: 
That’s great. Too easy.

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