Looking At Passive Real Estate Investing With Ashley Hatten

Have you considered passive real estate investing, but you're still unsure about it? You can make all investments look great on paper, and you can make great returns if you know how to pick them. But in rental properties, the investment wins or loses based on your decisions AFTER the property is bought.

That's why we invited Ashley Hatten, a JWB portfolio manager, to shine the light on things most people don't realize about the rental property ownership experience.

In this episode of the JWB Not Your Average Investor Show, Ashley helps us understand:

  • The difference between cash flow and income
  • How property evaluations compare to actual investment performance
  • How to deal with inevitable changes, like tax increases, during the life of the investment

Ashley isn't just an expert in rental portfolio management. She's a quintessential relationship builder that loves to provide a great experience. This is why we asked her to give a behind-the-scenes look at what portfolio management is like for passive real estate investing.

What Does The Average Investor Think About Portfolio Management?

Most average investors place their financial goals into their 401ks and the people who manage those stocks. Those average investments usually include mutual funds and publicly traded stocks. If the average investor gets involved in real estate deals, it's generally through a Real Estate Investment Trust or REIT.

But for the JWB Not Your Average real estate investor, passive real estate is less stressful and provides higher returns than the average stock portfolio. Ashley Hatten knows the ins and outs of portfolio management regarding passive real estate investing.

The asset class of single-family homes allows passive investors to collect positive monthly cash flow. JWB's clients benefit from the passive income of owning rental properties because it provides long-term cash flow.

How Does Cash Flow Help Investors?

Your cash flow is important. When you first own a rental property with JWB, there's a tenant placement fee, which cuts into your immediate cash flow. We also have a $400 escrow we keep on hand for small maintenance projects. 

We'll apply the tenant fee and escrow money to your account. You will see the income benefit on your rental property, but you may not view the cash flow hit your bank account until the second or third month of owning the property.

JWB core beliefs of having a long-term, holistic way of having a high-performing investment. Your tax write-offs will reflect what transpires throughout the year. We are accounting for maintenance fees and other things that will affect your cash flow, which is why we aim for long-term lease contracts with tenants so passive real estate investors show higher returns over several years.

How Does JWB Track The Values Of The Property And Return On Investment?

JWB focuses on using data to explain to investors what to expect. This data allows us to show the valuation, the returns, expected maintenance and expected vacancies. Our experience over 15 years has demonstrated that the cash flow returns are primarily affected by vacancies and maintenance. Since we keep the expenses low and the income high, we see it average out that passive real estate investing is a win-win for everyone.

What Happens When There Is A Vacancy?

JWB shows what actions are being taken to place a new tenant into the property. If a tenant is behind on rent, is going through the eviction process, or needs a repair in the home, we communicate with the property owner to be informed and adjust for the affected cash flow.

Even if a tenant is not in the home, there are expenses to maintain that home. As a result, JWB works hard to find qualified residents for that property, keep them in there for as long as possible, and reduce the turn fees of rehabbing a property between tenants. Our holistic approach provides a solution, so the passive real estate investors maintain positive cash flow.

We align ourselves to benefit the clients on their properties. There are fees associated with lease renewals, improvements, and so on, but the investor who owns that turnkey rental property is still making money. If our clients are not making money, neither are we. It is in the best interest of everyone if JWB keeps the rent coming in and has the residents stay in the home.

In This Environment When Rent Is Going Up, What Does That Do To The Tenant?

There is a 3% rent increase written into each contract. As a result, rent increases by three percent each year, and when the lease is up, we reanalyze the current rental market to determine our subsequent rent increase. 

The benefit of the resident to sign that long-term lease is that they have a lower rent than the market rent during the lease contract. The advantage to the homeowner is that they are receiving an appreciation on raising rents, while the risk of vacancy and turnover fees goes down.

When you bring people back on a renewal, the rent goes up, yes, but it's affordable to the tenant. We are seeing over 12% of our renewals get a rent increase each month, and we can retain those tenants. 

As the lease renewal date approaches, we show the tenants the JWB rent compared to moving elsewhere. After the resident sees that they're getting a deal, they understand the advantage of the value they're in by staying in their JWB property.

What Is A Post-Close Call?

It's an opportunity for JWB to debrief with the investors buying property from us to find out what went right and what could be improved. We do this to ensure our clients have smooth sailing when investing with JWB. We want to create as stress-free a passive real estate investing experience as possible for our clients.

After that, we produce reports every six weeks showing what is going on with the properties that you own with JWB. Portfolio management reports like these show you how much you've spent in maintenance, what your returns are, and how your properties are performing concerning your financial goals.

The portfolio management reports spell out how your JWB properties are delivering. We put actual data into these reports to see how the asset is performing. This data is stacked year after year, so you can see how the returns perform each year. Some years may be down while other years are up.

JWB gives investors the security of knowing their properties are in capable hands to keep things running smoothly, leaving the investors room to focus on other things. 

How Does JWB Handle Communication With Tenants and Investors?

We are always available to answer questions and explain what is happening with your property. JWB believes in building relationships and frequent communication, so everyone is informed. 

We want to talk with investors and residents about when things are going right and when things are going wrong. We genuinely care for everyone within our sphere of influence, and whether it's good or bad, JWB is looking out for you.

To add, excellent communication reduces the risk of a tenant doing something terrible to the property out of spite. We want our residents to have pride in their homes and take good care of the property.

When Is The Biggest Time Of Year For Vacancies?

Quarter One of the year is always the most volatile time when people are moving into new homes, and it's tax season. January, February, and March are busy times for renters looking for a new home in which to live. Many tax returns are coming in, and residents are looking for a fresh start with a new place to rent.

Is The Air Conditioning Unit Serviced Every Year?

JWB services the A/C unit on an as-needed basis. But they are getting attention at least once per month when JWB communicates with the residents, encouraging them to change the air filters and other minor maintenance they can easily do on their end.

Resident Expense Recovery is a term JWB uses for the maintenance costs the resident is on the hook for paying. If they are causing the maintenance issue, they pay for it. If the coils need to be pulled out and cleaned, it's because the resident isn't changing their air filter. 

Per their lease, the resident can avoid things for clogs, so if they are negligent, they pay for it. When the residents pay their next month's rent, they are charged extra to cover those costs.

What Does The Not Your Average Investor Community Have To Say About This Topic?

“Ashley talked about Rental Expense Recovery, and some investors regret not investing in JWB earlier. JWB Property Management is at an all-time high. We use fantastic tenant vetting, successful RER, reduction in property management fees for a 5 – 10 property rental portfolio, extreme reduction in contracted repair fees due to economies of scale, and comprehensive feedback on all aspects of returns. All of these have been developed over time and have not always been around, making THIS a great time in JWB history to be enjoying their property management services.” – Denny Davies, a JWB client and NYAI community member who commented in this episode with Ashley Hatten.

Why Is Communication Important To JWB?

Our portfolio managers are reaching out to investors every month. Our property managers are reaching out to tenants monthly as well. The relationships we have with both sides allow us to find out if everything is going well or something that needs attention. 

For example, suppose the resident loses their job but stops communicating. In that case, JWB won't know why the rent isn't coming in. We reach out to everyone regularly, so we build relationships, communication, and a willingness to help continue between all parties.

Recently, JWB shut the office down so our team could visit different residents and deliver Christmas gifts. We work hard to humanize the experience, which creates excellent returns through these well-developed relationships. 

Even if someone has trouble paying rent, JWB helps them find ways to pay that rent and find those funds. Very few property management companies go to this level of effort, which is why JWB is popular among residents and investors alike.

If A Resident Needs Flexibility, What Does JWB Do?

Our leasing team has incentives in place that attract long-term, highly-qualified residents. Sometimes we will waive an application fee to fill the home more quickly for the investor. We don't always make money on our application fees and placement fees, and we're willing to eat that cost, so the investor doesn't feel the impact as much.

What Is The Septic Warranty?

JWB offers a warranty plan on properties with septic systems, and the cost is built into the tenant lease, so the residents ultimately pay for it. They know their septic system will be working well all of the time, and everyone wins. 

The passive real estate investor still has positive cash flow. The renter pays a little extra to keep that system operating well. Should something go wrong, the money is there to cover the expense without hurting the ROI for the investor.

Are All Portfolio Managers At JWB Like Ashley Hatten?

Ashley is a rock star, for sure, but yes, the entire portfolio management team at JWB is incredible. Ashley Hatten shines because she genuinely loves and cares for her clients, brings a lot of knowledge to the party, and is a great communicator. We are lucky to have her, and she's very popular among our Not Your Average Investor community, as was demonstrated in today's episode.

How Do I Find Out More About Investing In Turnkey Rentals With JWB? 

If you want to invest in Jacksonville real estate, you are in the right place. Go to www.ChatWithJWB.com and find out how we can help you reach your financial goals through turnkey single-family rental homes. Contact the JWB team to begin the discussion.

If you want to become part of the JWB online community, join us in the JWB Facebook Group at https://www.facebook.com/CashFlowProperties.  

You can also go to www.JWBInventory.com to see what properties are currently available. We encourage you to contact the JWB team for a consultation to determine how our turnkey rental properties can deliver positive passive cash flow. 

We invite you to watch this episode of the Not Your Average Investor Show in its entirety because Ashley Hatten shared some behind-the-scenes information about portfolio management and passive real estate investing. Fortunately for those interested in the single-family rental property asset class, the Jacksonville real estate market continues to be an excellent return for real estate investors. 

To Your Success,

Gregg Cohen

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