Interview w/ David Tilney

By Christina Suter on Jul 30, 2016 at 10:53 PM in Real Estate Issues
Interview w/ David Tilney

This week on the Ask Christina First Radio Show I had the privilege of interviewing David Tilney. David started buying houses in 1978. He has spent more than 35 years learning property management from knowledgeable managers. He has implemented, revised, tested and modified other people’s ideas, and created new material as necessary. He has spent a good deal of time building a house portfolio that was challenging at times but finally things started to get easier. he believes effective management of housing is the key to success in the real estate investment industry. 

David says he's big into systems and that houses are not his assets. Assets pay you, liabilities eat as spoken by Robert Kiyosaki. Instead, David says his tenants are his assets. The occupants make all the difference in the world and the most important part is screening potential tenants. Develop a policy/procedure manual and abide by the governing laws and then have systems and procedures in place. Tenants will self-weed, so David puts as many applicants in for a home at once and those who make it through the process are the best of the best.

David says he makes sure to look for people who don't have a victim or entitlement mentality. He said you want someone who make your house their home, and who won't just camp out in it. He looks for applicants who will enjoy and improve your property while they're in it. He says he wants people who will pay the rent on time, who will get along with the neighbors, and who will stay until they die. On his end, he promises to treat tenants with respect and to be available during the day if they have a problem and they are welcome to offer support when needed. 

David's application process is one that has its standards clearly written first and then the three page application. That helps him to weed out the people who aren't going to be good tenants. David invests little time on the showing of houses or the moving in of tenants, he even has his rent through ACH debit where he can subtract his rent directly from his tenants' bank accounts in minutes. 

Master Leasing

In our next FIBI meeting, David will be talking about master leasing. A master lease means you lease a property from a person who owns it, you have all the details in the lease and you turn around and rent the property to someone who will be there for 10 years or longer under your style of management. You keep the monetary difference between what you're leasing it for and what you're renting it out for.

If you're working as a manager for someone, your fiduciary responsibility is to your principal. In essence you put on the glasses of the owner/investor and do everything for their benefit. In master leasing you aren't an agent for anyone else, you lease a property to me only if it's in your best interest to do so and I will lease it from you only if it's in my best interest to do so. So there's no problem of where my fiduciary responsibility lies.

There are many benefits of master leasing over management, one being that it's not one size fits all, it's more what does the owner need. Do you need rent guaranteed? Do you need a performance basis where you may net more, etc. There's no title company and you get to create the documents. If you lease a property for 30 years or more, the IRS says you own it, so you can write that lease off. 

David is doing a 3-day course in Las Vegas Sep 9-11, 2016 that includes the property management and master leasing. For more information on the course at https://www.davidtilney.com