Episode 106: Find a Property Management Company That Fits with Jeff Greenberg - The Apartments Operators Podcast

Welcome to the Apartment Operators Podcast, where you can learn from experienced operators what it really means to be an apartment operator. No fluff, no sugarcoating, just the raw, unfiltered truth of the ups and downs of operating multifamily communities. Welcome everybody to The Operators podcast. My name is Joseph Golan, and with me we have Jeff Greenberg today.

Jeff is a very experienced operator of multifamily. Jeff, why don’t you tell the audience a little bit about yourself and. Yeah. I’m glad to be here today. I’ve been doing the multi-family for about 11 years now. I’m involved in over a thousand units. I believe we’re involved in over 70 million worth of properties at this time.

I’m also doing student housing as well. That’s fantastic. We’ll definitely dive into that one a little bit later. So we usually like. Ask a little bit about what’s your criteria, what is your preference? You mentioned student housing. Is that stealing your preferred asset or are you looking at other things these days?

We’re looking at both student housing and multi-family assets. Mainly value add. It’s just the, with the student housing we have found that it’s easier for people to make mistakes, and if we can pick up properties where they have issues and we can fix ’em, then there’s an advantage in. . Okay. A lot of our audience is trying to figure out if they’re going to use third party property management or self-manage.

Which way did you go? We went third party. We don’t wanna self-manage our properties. And why is that? I’m in California and my properties are all out of state and I want the property manager to be the first one to respond and. Typically if there’s an issue, we’ll hear about it. A little later we’ll hear about what they’ve already been doing to resolve it.

And if they need some further help or advice from us, they’ll contact us, but we’re not the first responders. That makes sense. Let’s go back to when you started working with third party property management, or even today. When you buy a new property in an area where you don’t already have presence, how do you select a third party property manager?

What is important for you? The characteristic you’re looking for in a company that you want to hide? The thing is, we do go in and we get referrals as much as we can, and we interview quite a few property management companies. Once we narrow it down, we’ll go out and visit with them and talk to them and make sure there’s an alignment of interest.

We wanna make sure that we feel comfortable, that they’re gonna do the best for the property and they’re willing to work with us. They’re. As well as gets the kind of reports that we need definitely need reporting. Typically we have weekly reports as well as monthly and quarterly reports, and we wanna make sure that they’re on the same page.

Okay. So questions you would ask in an interview, things that would make you immediately disqualify a property managering company. Is there a specific size you’re looking for? Give us a little bit more details. We want someone that’s. That their specialty or their niche is the property type or the property size that we’re doing with the student housing.

We will only take management companies that specialize in student housing. That’s a very specific niche. Same with Sea Properties, workforce housing. We don’t want somebody that their specialty is a B class property. We want somebody that specializes in C class. . We’re also concerned about management companies that maybe that are very large.

I have an issue typically being a small fish in their large pond, that sometimes they don’t take care of you. On the other side of it, you get a property management company that’s too small. Can they handle your property? Do they have enough depth. They have to remove some employee or somebody leaves or whatever, are they gonna have coverage?

So I wanna make sure their experience, that they do have a sufficient depth, but I prefer, typically with the smaller property management companies, so the Goldilocks, right? Not too big, not too small. There you go. What is the right size for you? 2000 units, 200 units, 6,000 units. Give us a little bit of a.

I’m, I can’t say that I have a range in there. It depends on the experience of the management company. Right now I’m working with a company that just started their own company, but the owner of the company has 30 years of experience, and her daughter, who’s the regional, has 12 years of experience, both with very large companies.

They’re just starting out on their own, but they have a huge amount of experience, but don’t have a lot of doors. . Understood. Okay. So experience matters more. The experience matters more than the number of doors that they’re working. Okay? Yeah. So from my experience, it’s a lot about chemistry as well. You gotta make sure that whoever you are working with kind of fits with your style, fits with what you are asking for, fits with your pace, right?

So if you’re an owner or. That is high paced, fair, dynamic. Have to move fast and you’ll have to work with a regional or a property management owner that is slow paced, calculated. Let’s stop and think about everything. It’ll drive you crazy, right? And the other way around, if you are the kind of guy that is very analytical and needs everything thought out and planned ahead of time, and you’re dealing with a highly dynamic, fast moving property management company, that would also put you in a very uncomfortable situ.

It’s really important that you have a good chemistry with whoever is gonna be a point of contact in that property management. Do you agree? Absolutely. And in addition to that, it’s, I want someone that is not so set in their ways that they’re not willing to make adjustments for our needs.

If it’s either in some kind of form that we need adjusted or just some. Methodo methodology, that they’ll be flexible enough and work with us as far as making our needs taking care of our needs. Absolutely. No, that’s great. So going to third party property management route means that you focused mainly on asset management.

Yes. You mentioned earlier that you asked your property management company give you weekly, monthly, quarterly report. Everybody gets you the financials, the 12, the rent roll the balance sheet and so on. Is there anything special that you introduced into the relationship with the property management that is a special kind of report specific parameters that you guys are tracking?

I don’t know that our requests are that. , but typically it’s the weekly report. That’s one of the most important, how many, a lot of the lease up information as far as how many people came in the doors, what method they, they used to find the property, how quickly they were met with somebody from the team.

If there was an application, if there was a tour, those kind of things that we’d like to know about, to see how efficiently they’re running the. Especially when we’re in a lease upstage or we’re in a turnaround. We wanna make sure that we’re getting the leases, we’re getting the conversions. And then also on the maintenance end of it how quickly how many maintenance requests we’re getting, how many, how quickly they’re getting turned around we’re we need to keep satisfied customers.

And so we’re wanna make sure the maintenance is taken. . Yeah. So I didn’t mention to our audience, but you and I are today in Denver, Colorado in the Multi-Family Boardroom, which is a mastermind for multi-family owners. And in the last day or so we’ve been hearing a lot of software and tools that people use for their asset management.

Are you using any of those tools? Is there any piece of software that you introduced into your organization to help you with the operations side of things? Not really. We use, I, there’s communication tools that we use, but that’s mainly it. With Zoom, we get on Zoom calls with our property management company as well as with our asset manager to see what’s going on.

We do a lot of taking pictures of new construction so we can see what’s going on. And the internet is just, a great resource as far as being able to. . Okay. Great. How many doors do you currently have under your control? We’re, I have 300 doors that are under my control.

I’m also an LP on another 700 doors. Okay, great. And thousand And I know you had a lot more than you sold recently. I sold off a bunch of stuff. With this many doors, how does your organization look like? Is it a one-man show? Do we have people working with you? Do you have people working for you?

Help our audience understand a little bit about the operation side. I have some people mainly working with me. I do have a partner that we work together on most of the stuff. But it’s mostly my show. I do have people going and finding deals. And I have people bringing deals that they need help getting closed.

And so we partner up. But it’s pretty much a small operation. Okay. And that’s pretty common. And from what we’ve been talking to other operators recently. Okay. So now let’s switch a little bit and talk technical, right? You do a lot of value. Give our audience maybe two, three ways where you guys have to increase income.

That is not the obvious increased rates. , obviously the big ones are the increased rents and the increased occupancy, but also on management efficiencies finding ways to do things, more economically, the water saving type of stuff. As far as other unique things, offhand, I’m not sure that we do anything differently.

We do, one of the things we’re gonna be initiating in the Amarillo property possibly is the covered parking rents maybe some vending. But other than that, it’s mostly the typical. . Okay. And you mentioned the other side of the noi, right? Our expenses.

Exactly. That’s as important as increased income, cuz every dollar increase in income is absolutely equal to every dollar you save in operations because the math is simple. NOI is income, less expenses. Two, three things you guys do for saving cost. I heard you do water conservation, right?

, what does. For you guys? That includes the aerators and the showers and the faucets as well as the the low flow toilets. So we’re doing, that’s on the water con conservation, but we really scrutinize. I have a construction manager as well as the asset manager that are definitely scrutinizes all of our expenses as far as any kind of repairs.

They’re, we getting multiple bid. and making sure that the contractors stay on their bids. . Yeah. That’s very important. And yeah, following that closely and don’t put up with all the extra expenses. Okay. Yeah. That’s great. Going back a little bit, if you could go back in time to when you started this thing what would be the best advice you would give? , Jeff from that time, fire your management company quickly when there’s a problem. Don’t hang on and think that they’re going to improve. Typically that’s not gonna happen. If things going, I’m gonna dig into that one. If things go wrong, it’s probably gonna get worse.

Tell us the whole story. The one, it, it happened to have been a guy that I be had become friends with. He was my act, actual, my broker. This was on a small property, 20 unit property. And he was my, he also was my property manager. First of all, small ties with a broker that doesn’t exclusively do property management is a mistake in itself.

That’s not where they’re making their. and he was losing money actually working for me because his office was 35 miles away from the property. So he was very loose on who he let in. And in a 20 unit property, we let it get down to where we were finally at six units vacant on a 20 unit property.

Wow. That’s a lot. And we finally forced us to fire him. There were other signs where we were getting tenants in there that didn’t belong in the. This was a b plus property. It was three year old property. Wow. It was down the block from a hospital and he was letting tenants in there that, that didn’t belong.

But they had the deposit and they had the first month rent. And so he took ’em even though they were inappropriate for the property. So he wasn’t screaming well, he was not screening well. He was also killing off all of my plans to automate different. Where I had, I set up an automatic system or a system where the people the tenants could pay very easily, either go to the local bank or they could do it online, and he started going there and collecting money face to face, and it made him waste time.

He had to go down there, do it at least three times because people weren’t there on the. And I’m sitting there, this is just a waste. And not only that, now they’re not gonna use my system because you’re showing up. It was just, so we’re still friends and he still brought me other deals, but I said I would never use him as a property manager.

And we went through a couple others prior to getting the one that we finally used for the next three years until we sold the property. Good. Yeah, sometimes take a little bit trial and error until you find the right fit. And it really circles back to what you said earlier, you gotta find the property management that fits the niche, that fits the property, right?

If it’s a smaller, nicer property, you can’t hand it over to someone that handles single families or somebody that handles a C class or somebody that is doing student housing, right? So you just gotta write, find the right fit for that property. Yeah. Touching again on the student housing a little bit.

Give us a few things where student housing is unique and it’s not like multi-family, cuz I try to help people understand that student housing is its own enemy even though it’s multi-family, but it doesn’t behave the same, doesn’t work the same, you don’t have the same kind of people. There’s a lot of things about student housing that are different to start with.

You have a very short time window as far as when you need to. The properties line leased up. If you don’t, if you miss that window, you may have vacancies for the whole year. It’s not like multi-family where, okay, you don’t get something leased up this month. You’ll do it next month. If you don’t get that into that window.

Now each school typically has a different window. I have three different properties and three different states, or three different schools, and the windows are different. And it goes based on when school starts, right? Not so much. My Ohio property, I know that we need to have at leased up by March, otherwise we’re gonna be struggling.

Okay? March. Prior to the August semester my, my Georgia property, my Ford Valley property, that property I could lease up all the way to August, even though I’m already filled, completely filled up. Because I don’t know if it’s the demographics that maybe don’t plan as, because I’ve got a low end demographic in Georgia and I’ve got a very high end demographic in Ohio.

So they plan a little bit better. I don’t know if that’s part of it or not, but the time is real important. The other thing is the marketing. You can’t just rely on putting it up on Craigslist or apartments.com and expect to get students. You’ve gotta have website up there. You have to have a presence on the campus.

There’s a lot of things that you need to. And many property, most property management companies aren’t prepared for that. They’re not able to dedicate the amount of time necessary for the marketing end of it. That’s a big piece of it. The other thing is we rent a lot of the properties we’re renting by the unit and we try to do roommate matching.

, most property management companies aren’t set up for that kind of stuff. Yeah. They’re not gonna sit there and interview the kids to see what you know. How well they’re gonna fit together. So that’s another specialty area. I suppose those are the big ones. Also I guess when you’re purchasing the property, what’s important is not just the market, but the location to the school and you’re looking you’re doing a lot more due diligence on the school as opposed to the community.

That makes sense. I have a property in Oxford Oxford, Ohio. There’s no city. It’s a, basically the, that community is 20,000 people with 18,000 students. Cincinnati’s 45 minutes away, Dayton’s an hour away. So evaluating the job growth of that city or the cities around it really doesn’t make sense.

Relevant. Yeah, that’s right. It’s the school. How well is the school doing? What is the percentage. Units that the school has, where the kids could be on campus. , what percentage do they have? How close is the property to the school, as well as amenities if enrollment is going up a year, over year, and so on.

Absolutely. That makes sense. The health of the school. How is it work with millennials and Gen Z? Because that’s pretty much who’s a student these days, right? The millennials and Gen Z. Is there any. Special ways you have to handle work orders or any special amenities you have to provide. Give us a little bit of that.

The internet is crucial. Your wifi go down, goes down, and your internet goes down and the world is stopped because everything is based on the internet. They’re watching their videos, on the internet. They’re doing it on the phone also, but if it’s on their computers internet goes down, you’ve got that definite issue. The location to the campus or location to the bar district is real important. Yeah. District yeah. One, one or the other will get, you, get your points as far as being close to one of the other, if you’re far away from both, then that’s an issue.

It’s good if you’re near a bike path because a lot of times the students will ride their bikes on campus and stuff. , the, it’s as far as the millennials they have a high expectation of level of service. Of your response, level of service, your response. Yeah. They’re pretty demanding as far as I expectations, but that’s why you have a management company that knows how to handle that.

That type of young. Yeah, and I spoke to other operators that deal with communities that are focused on millennial residents. And while they are demanding a higher level of service from other people experience, they say that they’re also willing to pay for that. So you can get usually higher rents from millennial based communities if you provide that level of service.

Have you met that? Kind of situation. The the dealing with the millennials mainly is, in the student housing and, they have an expectation of service definitely. And we had one student that felt that she was above the level of our particular property and decided, just to break or lease and just take off.

But, it’s so there’s a high expectation. in the higher demographics. It’s a whole different thing, I think in the lower end demographics where they totally appreciate everything you do for them. So it’s not just the age group, it’s also, I think the economic demographics.

That makes sense. One last funny story. We all have one of those from your entire experience. Okay. I was just talking to my property manager about this one the other day where we found little pock marks in one of the units in the hardwood floor. And we were trying to figure out what they were from, and it was about four feet back from the mirror and there was a small area in the front of the.

and it looked as if somebody was wearing stilettos, , stiletto heels and walking back and forth. But the only thing is that unit was male. Okay. So that was rather interesting. Okay. This industry will bring you a lot of interesting stories. Jeff, I wanna say thank you for taking this podcast with us and for being such a great friend.

I appreciate that. Thank you, Joseph. It was great.