Episode 101: It's All About the Relationships with Andrew Cushman - 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 Apartment Operators Podcast.

I’m your host, Joseph Golan, and today I have a personal mentor of mine, Andrew Kushman. Andrew, welcome to the show. Oh, thanks Joseph. Glad to be here, man. Awesome. So for the audience that haven’t heard about the great Andrew Cushman , can you give a few minutes just to run down a little bit about yourself, your background, and your portfolio?

Kind of so everybody know what you’re doing these days. Yeah. I took the standard route into real estate and got a chemical engineering degree. And then yeah, after about seven and a half years of that, I discovered flipping houses. And we, when I say, and whenever I say we, it’s my wife and I we flipped our first property here in Southern California.

It was. I think it was early 2007 and made about as much as I did all year at my job. So I said, all right, that’s it. I’m outta here. Went in and quit. We did the flipping thing full-time for about four years, and then we were, we said, this has been great, but now we’re kinda at the bottom of this recession.

No one has equity anymore. Deals are getting hard to find as a ton of competition. What’s the next big thing? And we kinda looked around. , we said we think it’s gonna be apartments because now, eventually we’re gonna come out of this recession, which means household formation, job formation.

No one can buy a house for the next seven years cause they all got foreclosed on. And we still have immigration, we still have population growth. So we think apartments are gonna do really well. So we went and found a mentor. Just word of mouth, we. We asked our single family mentor, Hey, do you know someone who does apartments?

And he’s yeah, I do. And so we connected with him and he, he taught us the business and our first deal was a mostly vacant 92 unit property on the other side of the country out in Georgia. And that was 2011. Since then, we’ve done a little over 1800 units and have been full-time apartment investors, seven, seven years now, something like that.

Awesome, thank you for that. And 92 mostly vacant units for your first deal. That sounds like swinging for the fences. I wouldn’t recommend anyone to do it that way. . Now I should clarify. 92 units is a first deal. That’s fine. Mostly vacant. No. , share a little bit more. Why not? When you’re doing your first deal, there’s enough challenges to begin with without adding on unnecessary ones.

Un properties, especially in this economy, if a property’s 75% vacant, odds are there’s some serious things wrong. And if part of what’s wrong is the neighborhood, that’s something you can’t fix. So that’s one thing to be aware of. If you don’t have a lot of experience in the business, And you’ve got a property that’s, 50 years old and mostly vacant.

The odds of you making mistakes on estimating the renovation is gonna be much higher. The odds of you not knowing the specialties of managing that type of property and making mistakes are gonna be a lot higher. You’re gonna have more problems with vandalism, with crime. You’re gonna have, you’re gonna have trouble getting a loan on the property.

There’s just things that, done right, can make a lot of money, but on your first deal can also increase the chances that it doesn’t work out so well for you. So what’s your biggest takeaway from that deal, that first deal with all the challenges that went through? On the one thing I’m glad I did it because it did end up, it did end up profitable.

We sold it for several times more than what we bought it for. We dramatically underestimated the rehab. So I learned a lot about, about, how to do that, especially on older buildings. But the biggest takeaway is even though. Deal was very challenging. Probably the most stressful six months outta my life.

I’m very really, we’re still super glad that we did it because without doing that deal, we wouldn’t be here today. If we had given up or letting it fall through, who knows where it would be. But the second deal is far easier than the first one. So that deal, as difficult as it was, it still ended well for us and the investors.

And it’s the one that got us started in the business. And every deal after that has been easier because , we’ve never bought anything like that again. Okay. That’s a good segue. So what do you buy these days? What is your preferred profile of a deal these days? Unfortunately, what we’ve been buying for the last five years has now become very popular, and that’s the c plus to b property class value add properties generally built 1980 to maybe two or, 2000 or so.

And my value add that could. Generally that falls into two categories. That’s, management, meaning it’s a property that isn’t being well managed and we can improve on that and, or it hasn’t been upgraded or there’s deferred maintenance, or there’s amenities or something that we can do to the physical asset to improve it and get higher rents.

Okay. And like I said, this market, it makes that very competitive. How do you go about finding your next deal? The biggest thing for us is broker relationships. When and part of that is because we’re looking at stuff that’s generally a hundred units and up, meaning and most owners have a hundred units and up.

Number one, they tend to be a little more sophisticated, so they’re not very likely to sell you their property off of a yellow letter. And then you know, the brokers spend their lives building relationships with all of these owners. They know, especially if it’s a long term broker, they know every owner of every property in their region.

And we’ve found it most effective to leverage those relationships. Now, that’s not necessarily just waiting for the email blast for the next listing, it. And we do, no, we do look at those as well, but it’s also, Having good relationships with that and having the broker know what you, what is a good fit for you as a buyer, so that when they talk to a seller, they can be like, oh, this property’s a great fit for Joseph, or This property’s a great fit for Andrew.

Let me just call them and see if we can put a deal together now. Because if the seller, something many cases the seller can get, if the seller can just get their price, they’re happy and they don’t necessarily care about going through the whole marketing process. So the number one is broker relationships and then we are.

In the process of being, of setting up a system to be even a little bit more proactive as opposed to just, talking to our favorite brokers and catching up and saying, oh yeah, hey, he talked, I talked to the seller, it might be a good fit. We’re actually gonna go out and. Make a list of properties that we like, and then to give that to the brokers and say, Hey, of the people of these properties, who do you already have a good relationship with?

Is there any way maybe we could just put a deal together and jump, instead of waiting for the seller to come to the broker and say, yeah, okay, I’m ready to sell. We’re gonna identify properties we know we already want. and then go to them and say, go to the broker and go to the seller and say, Hey, let’s see if we can put something together.

Yeah, that’s a good idea. We’ve done the same thing last year when we pointed at a property across the street from a property where they owned and told the broker, go get us that one. So that was very good strategy that we were able to capitalize. . So let’s talk about your current portfolio or your past portfolio.

Can you give us a little bit of a our listeners like to hear some funny stories, some horror stories. Give us a couple of nuggets of the things that someday when we’ll write a book about apartments we’ll put. You want just horror stories or something that or something that They, we can learn, they can learn from or what?

I’ve got plenty of all of those. I’m sure you do like most operators out there. Just give us a couple that come up to you to mind. I think one of the most I talked about not buying properties in rough neighborhoods or neighborhoods that you can’t.

And one of the things anyone who’s watching the video can see this, but what I’m holding in my hand is a bullet that I pulled out of the wall of one of our properties when I was there on a visit. And I keep that as a reminder that I never, ever buy in the hood. It is number one, those proper.

Don’t ever pencil out in real world like they do on the spreadsheet. And two, even if they did, they’re just generally not worth the headache. Now there are. There is. There are very, there is a small subset of apartment investors that specialize in that type of stuff. . And if you’re that person and you have the fortitude for dealing with that kind of crap and that kind of tenant base and the stuff that goes along with that, and you do specialize it and you get really good at it, you can make money at it.

I’m not saying it’s impossible, but in general it’s just not worth it, and it never works out as good as you think it will. So that’s that. I have that sitting on my computer at all. And that actually that, that very same property. This is one of one of my favorite stories is that property, it was a big property.

It was over 300 units, so it had a nice big standalone leasing office and it had skylights and all this stuff. And one day middle, five o’clock in the afternoon, broad daylight. Someone who was pissed off because they weren’t paying their rent, and we told them they had. Climbed up on the roof of the building and threw Molotov cocktails through the skylights and attempted and attempted to burn down the leasing office.

They didn’t burn it down, but they did burn it. So that was that, that was a fun one. And yeah there’s plenty of stuff like , plenty of stuff like that from those type of properties. Although I shouldn’t say we only bought a couple like that, and that was in, in the beginning. And those are long sold off.

And nowadays we’re in the B class properties where, you know, Probably the worst thing we see now is, someone left their iPad on the front seat of their car and naturally someone, grabbed it or something like that. Okay. Thank you for sharing that. Yeah. We have our own stories that, that come with the properties and you’re right rougher the property that are more extreme, the stories are.

Let’s talk a little bit about your operation, right? So I know you are the operator. You had 1800 units recently before you sold a couple, and that’s a big operation. So how does a one or two men show control that much span of units?

We, so we’ve got the one, the, probably the biggest key is we have a very good third party property management company and we, we lean on their resources a lot and they’ve grown along with us when we first hired them. They managed 3000 units now they managed 25,000 units and they’ve they’ve been really, they’ve actually maintained discipline as they’ve grown.

I’ve seen some management companies be awesome at 3000 and then when they got to 20,000, they were horrible. But they haven’t, and so we lean very heavily on them and that’s one of the reasons we try to buy properties that are a hundred units and above so that property can support its own full-time staff and management.

And we’re. We’re not involved in the day-to-day process of okay, does this guy get $5 off his lease, or, and all that, just day-to-day admin stuff. And that’s part of being a true, an operator and an a more, and really when operator, it’s almost asset manager where you’re not, we’re not handling the day-to-day operations of, oh, we got a lease today, or, this unit has to be ready tomorrow.

We are providing the leadership, the vision, the direction. The funding all that kind of stuff. For the properties. And so how we manage that many units is, of course we’ve got the onsite staff, but then there’s regionals and then I’m still in touch with the owners of the property management company.

And there’s also a renovation coordinator and. Keeping all those people on the same page. We do weekly conference calls and we include the maintenance supervisor at each property. Everyone always tends to forget that guy or gal, and they’re in, they’re very they, in fact, think about it. They probably have more interaction with the residents than almost anybody else on the team once those residents move in.

So we always bring them and they have a huge impact on your expenses. So we always wanna make sure. The maintenance guys are part of the, don’t get left out. We do those, we do weekly calls and then we, of course, I actually personally do go out and tour the properties generally once a quarter.

If something’s, if it’s something we’ve owned for five years and it’s just cruising along, I might not visit as frequently, but then something that we just purchased that’s in the middle of a renovation or repositioning, I might actually visit more frequently. So that’s generally, how we manage that.

It’s real. And then we actually did just bring on have an office manager that’s been with us for five or six years. She does an amazing job with a large variety of things. And then we just actually just a month ago brought two additional people on to help with both asset management and to help increase the pipe, our deal pipeline and looking at new acquisitions.

Just to touch back a little bit, you said you have weekly. Who’s on that call? Do you do that? One call for all the properties. Do you do a call per property per. How does that look like? Yeah it’s just every Tuesday is just a marathon of conference calls back to back.

And it’s the, it’s myself, it’s the all of the property staff. So that’d be the property manager, the leasing assistant, the maintenance supervisor, the maintenance tech literally everybody on onsite, and then the regional manager for that property as well. And then if it’s a property that’s under renovation, the rehab coordinator is on that call as.

And so what generally what we do is we our agenda is we run through anything renovation or maintenance related, and then we let the renovation guy go, and then we get, then we go over the weekly report and, how many leases did we get, how would we collect, what was traffic, turnover, all those kind of things.

And then any other issues that come up towards the end. so yeah, those are for most properties, those are every week. And again, for the properties, are just, we’ve had ’em for four or five, six years. They’re cruising along, they’re way ahead of proforma, and there’s just not that much to talk about.

Some. Some of those properties are either every other week or once a month. Understood. And why did you decide to do that weekly meeting with everybody on site? Most of the operators I get to talk to are doing that with the regional, maybe someone from the corporate office of the property management, but they never get to the leasing agent and the maintenance tech level.

What led you to that format and what do you see value coming out of those? Because if you want to get the absolute truth of what’s really happening, talk to the people who are actually on site every day. A regional manager, part of their job is to polish things up and present a nice picture to the owner and the way to get around that.

Is to have everybody on a call at the same time. And as long as you’re halfway decent at asking questions, you will find out what is really going on and what the real issues are, and you can be a much better operator. Second of all, and I cannot tell you how many times I’ve had property level staff come to us and say, , you guys are like, are the best owners we’ve ever worked with.

You actually listen to us. You actually give us feedback. You actually help us get things done. And they’re like, most owners we never see, we never talk to, and it is all through the management company. And we do, we let them know that the management company exists for a reason and then they are supposed to follow the chain of command.

But that my job is to empower and enable them to do the, to be able to do the. They can at their jobs. And that’s why we’re there. And there’s so many times where I have found things out because the maintenance guy is on the call and I asked a question, or they just happen to blurt something out because that’s another thing you, a regional manager or anybody is cannot coach for, 2, 3, 4.

Onsite staff of all what they can say and not say it’s gonna come out especially, the maintenance guy, he doesn’t whatever. He’s not gonna be, he, there’s no politics there. Yeah, exactly. The politics falls apart when you have every level right there at the same time. And it, it gets very hard for somebody to, to spin the picture and present some, present something a little different than what it is.

So that’s why we had that. And like I said, we, I’ve got a list of managers who we sold the property or something and they’re like, you, I, I’ve got one from Texas who’s I’ll move to Georgia to come work with you guys again. It, it also builds loyalty and trust because they know, there’s been times where, No management company is perfect and no individual is perfect.

So there’s been times where for whatever reason, the A manager felt like a regional or someone else on the team, it just wasn’t. Happening the way it should or just an issue wasn’t getting dealt with. And they ha they reach out to me and I’m able to solve that at a di and from a different angle or at a different level and, and really ma and, keep them moving forward.

Yeah. Don’t I that’s actually, and you’re right, most people don’t do that. And I think it’s a missed opportunity and it, you. It builds a lot of trust and a stronger team. And I will be clear though, that’s not me getting involved with, okay, how do we handle this work order?

That’s not it. It’s team building. Make sure everybody’s on the same page, make sure everyone feels included, and again, it builds performance and loyalty and gives you a better idea of what’s really happening. Yeah. And I’m sure it’s great for employee retention, right? So people feel they get heard.

It’s great. So we talk to a lot of operators and we always have nuggets dropped in, in every podcast. And this I just want to reiterate what you said over here, this is probably the biggest cold nugget we’ve heard so far in, in the podcast, and that is, if you want to know what actually happens on site, you gotta talk to the people on.

Yeah. And that’s just phenomenal. Thank you for that. So you mentioned you’re working with third party property management. How did you go about finding them? How did you interview? What were you looking for when you were hiring a property management company? I found the best way to find a property management company is when you’re looking, when you’re talking with brokers and you can sub.

The, lender for broker and, lender, broker, whatever. So when you’re talking about lenders and brokers, and let’s say you’re looking at a property, maybe you’re in you’re in Dallas and you’re looking at a property and you’re new to the market and you need a need to find a management company.

What I did is I asked brokers and lenders, Hey, if you were gonna buy this property, who are the top two or three management companies you would hire to run it? And I did that over and over again, and I built a list of who kept coming. And what happened is I’m like the top, the same two or three companies came up over and over again.

I’m like, these are the three that I need to talk to. And so then I went to those top three and I built a list of 30 questions and I went through and I interviewed ’em all. And then one became, one really stood out above the. and then I flew out to Atlanta and physically met with the owner of the company.

We went and had dinner and I basically, we interviewed each other for an hour and a half to make sure it was a good fit. And then we hired them and we’ve kept, they, in fact, not only have we kept them on those properties, but in another state we had a different management company, which we eventually.

Fired and then brought the Alan the Georgia Management Company out to handle those properties for us. So that actually ended up, that ended up being a very effective way of finding a good management company. That’s great. So what are the two. Top two, three qualities you’re looking for in a property management company.

What made that one stand out above all others? There’s a couple. One is you want a management company that specializes in the same type of asset that you specialize in. If, you know in a company that primarily manages a class properties is not gonna run your C class deal the way it should be run they’re not gonna, they’re not gonna be good at the special tactics that need to be employed to actually get the rent paid on a C class property.

They’re probably gonna run it too expensive. They’re gonna do things that just don’t really apply to a c-class property and vice versa. Someone who’s a company that specializes in C-class properties is not gonna be really good at running an A. So they specialized in the C in the B space. And so we that we knew that’s where we were and we liked that.

The other thing was the two founders of the company, Had both had come from a fairly extensive previous background in property management and were very well known in the Southeast. Every single person that I came across that knew them, spoke very highly of them. They were also small enough where I’m working, I can reach out to the owners at any time.

I have their cell phone numbers and they. , but they were also big enough to have the resources and the depth needed to handle issues when they come up. So let’s say my manager gets in a car wreck and all of a sudden they’re gone. Our management company will just bring in another manager to fill the hole for a while rather than our property sitting there with no manager because they have floating managers that can, that are for that purpose of if, when there’s an emergency opening at a property, they can just fill it right away now and while we find a new permanent one they also, Charged us what we, they charged us a very fair rate for managing the properties.

Now at this point, it’s, we’re at a decent enough scale that helps. But even in the beginning they were, I think now we pay 3%. I think the first one we paid three and a half or four. And then once we kept adding properties at, and now it’s just three, three across the board.

And I could go on and on, and now I look at it and I say, they. Leverage that as a operator was just even a thousand or 2000. For us, you and I, it’s oh, 2000 units. Yeah. We’re, we feel pretty good about ourselves, but in the world of multi-family, that’s still really not much.

And so they can get leverage that I can’t get because they have suppliers who, when they when they go to those suppliers, they’re like, all right, hey, we’re we, we manage 25,000 units now they can. Incredible pricing, which they just pass on to us as the owner. And so there’s advantages there as.

That’s great. Thank you for that. So with all that you reached a scale of almost 2000 units. Did the thought of self-managing ever cross your mind? What are your thoughts about self-management? Generally speaking, I think it’s a bad idea and is and there’s a handful of reasons for that.

Now I will say if, if you’re buying a fourplex and it’s down in the street from where you. No, fine. I still would. I, we’ve got a single family rental a mile away. I don’t, so I don’t manage that myself. But I generally think self-management is a bad idea. Number one, there can, there’s just not a not a lot of money in it for one, it’s not a not-profit center.

It can be. A bit of a balancer in different in different markets, right? If you’ve got management income coming in. So as a I do understand that aspect as that, or that appeal as a business owner. But generally speaking, there’s not a lot of money in it. Another reason is, Who are you?

Are you a property? Are you a jack of all trades or are you an apartment owner and operator? So are you focusing on acquiring more properties and rapidly scaling that up to 1000, 5,000, 10,000 units? Or are you also gonna be trying to do property management and all these other things? And one of the, and then also what I just alluded to, is leverage.

For us, if you come, like for example, I came from flipping houses, right? And then first deal, 92 units oh wow, I got 92 units. I, that’s some leverage. No, it’s not really , for us it feels big, but granted, and really, especially in this economy, no one gives it, no one cares if you’ve got 90 units.

From the con so you can, again, just like leveraging broker relationships to get deals, you can leverage the property management company to get better pricing and better service and. And then higher level contacts and all of that. And one of the things I often hear is, oh nobody, no one cares about my property like I do.

So this is what I would say. All right, Joseph, you’re married, right? You still like your wife very much. All right, good. So let’s say heaven forbid, she gets a headache, goes into the hospital and they’re like you’ve got a brain tumor. It’s benign, but we have to get it out, right? You schedule the surgery.

Day the surgery comes, she’s on the table. They’re getting ready to, they’re getting ready to, put her under and remove the tumor. And Joseph, you walk in, you put your hand, shoulder, hand on the shoulder of the surgeon Hey buddy, you know what? I appreciate what you’re doing here, but I care about her more than you, so I’m gonna take care of this.

Caring doesn’t equal competence. That’s so true. It does. yeah. I can’t when I can’t tell you how many properties I’ve bought from guys who own a thousand or 2000 units and manage it themselves, and there’s so much management upside on that property cuz they candidly don’t really know what they’re doing.

It is easy. To do property management at a mediocre level. And that’s what most people do. It’s very hard to do it at an exceptional level. And there are operators out there that own a thousand, 2000, 5,000 units that do it. I could name a handful that do a fantastic job and they’re very vertically integrated.

And for them it does make sense and it does work. I would say for the average investor, especially someone. Who’s just getting started at 50, a hundred, 200, 300, 400 units. Your best bet is to hire a the right property management company and closely work with them. So that you can focus on scaling your acquisitions in your business and then learn the property management from them.

And if at some point down the road, you want to you wanna start your own property management company and all that, that, that’s fine. And I know that’s always the ongoing argument. Do some guys absolutely love it. A lot of guys don’t. It’s pretty obvious to tell where I land.

Again, I know some guys with five and seven and 10,000 units and they wouldn’t even think of touching property management. Cause like, why would I do that? I wanna go buy a 30 min, 30 million property. I’m not gonna waste my time, making three or four or 5% trying to manage it.

And then the final thing is too, when, as a syndicator. When you send out your offering memorandum and you’re self-managing and you’re taking, usually if it’s self-managing a four or 5% management fee, some of this, more student investors will look at that and say wait a second. So you’re getting gonna get four or 5% no matter what happens with this property, no matter whether I’m getting paid or not.

And you could just hire another company and pay 3%. That comes up too. That’s just another factor. Yeah. I like to just put it down very simple as a headaches to returns ratio. Yes. And that is just I don’t know how these guys do that for fee management. I do have a little bit of a different approach and we’ve had that conversation in the past of when we get to the size of 1200, 1500 units, Then we’ll reevaluate it if it’s the time to take over or not.

But it’s definitely not a financial decision. You’re not gonna make money out of it compared to the brain damage it generates. But it’s more of a brand control and quality control. And what I learned is if you work with the right property management company, you can still get that brand control and that Quality control without having to take everything in-house and bring the headache.

Yeah. And you’re absolutely right. And we should clarify, if what I’m talking about is not set it and forget it. Going back to our previous conversation about the weekly calls and the visits, we’re working very closely with that property management company.

We are not hiring them and then saying, all right, cool. Send us the monthly. That won’t work so well. No matter who’s managing your company you have to be a good asset manager and then third party can work really well if you hired the right one to start with. Yeah. I was talking about gold nuggets.

This is just another one right here, dropped by Andrew. Wait, I’m dropping money. Wait a second. property managing companies are, no matter how good they are, you can’t just hand over the keys and forget. It’s not gonna work cuz good companies go bad. Good managers goes bad. Just the wrong person at the wrong place could generate a lot of damage on your property.

So you can’t just set it and forget it. Like Andrew said, this is just, was worth repeating again and again. So I wanna segue a little bit over to your residents, right? The people that live in your properties. Do you do anything to encourage retention or leasing or any great ideas that you guys do let’s say events or specials or anything like that helps you attract and retain your residents?

One of the things that I try to impress on our managers, There should never be a day out of the year when the office isn’t decorated for some holiday. And that could be the typical ones, 4th of July, Easter, Christmas, whatever. But. Any excuse. It can be, St. Patrick’s Day, national Pie Day, national Chocolate Day, whatever.

We should be celebrating and decorated something at all times. Just for the festive attitude and the fun and, giving, have an excuse to give people treats and all that. But, we’ll we also run open houses. We’ve done stuff where local charities or groups or will bring Food to, to residents and part, or we’ll do the same thing, partner with local businesses.

We’ve opened up property and ha actually had a small carnival on it one time, and that was actually exceedingly popular. We got a ton of leases out of that. Didn’t cost us anything. Wait. Don’t. Don’t just jump all over it. What do you mean a little carnival? And how did it not cost you anything?

There was a it was a community thing and one of the, one of the big. This was in Texas, so it was a large local church. A lot of our residents went to that church and they partnered up and said, Hey, we’re gonna do like a Saturday carnival, and, and we said we agreed that they could do it at our property.

And so they set up fun ga, games and food and like bounce houses and all that kind of stuff. And they did it at our property. And of course all of our residents got to enjoy it. But it also brought in a ton of other people. . And that’s probably I don’t remember the exact numbers. That’s probably one of the most, most successful leasing days I’ve ever seen.

And so that, that worked out really well. But then, e even if it’s not just about the leases, it’s also just when people see the property partnering and being active with the community and other aspects of the community it builds your community and people just wanna stay.

People wanna be a part of that. That’s more that, that’s, that was a special thing. Now again, we do a lot of open houses. We try to, we, we do. Celebrations, we’ll do dinners, we’ll do breakfast on the go. So maybe there’s one property where every, was it, I forget what day of the week, but say every Thursday morning, our leasing assistant would be out there with little bags of, donuts and whatever.

So people just leaving for work could just grab it and eat breakfast and, while they sat in Atlanta traffic. And stuff like that. We try to do a lot of those type of things. That’s great. What would be an average budget for you for those activities? Yeah. I don’t know if I can actually really answer that que, I don’t think any particular activity costs usually costs more than a couple hundred bucks, if that.

Cuz candidly, a lot of times what we’re doing is we’re the ven we ask our vendors to donate the supplies and the material. We’ll have a vendor donate the materials and then our staff hands ’em out. And so really it costs our staff a little bit of time, but the actual financial cost is minimal.

Or maybe we do an open house or maybe we do a another thing we’ll do a frequently it’s some properties is like a movie night for, the kids. And so yeah, we might buy a. Hundred dollars worth of pizza and $50 worth of, desserts and soda or something like that. And so it may $150 for that event, which, depends once when you’re at a hundred or 150 or 200 unit dollar 200 unit property is fairly, is insignificant, especially for the return and goodwill that you’re getting.

So most of this stuff is at most a couple hundred dollars. In many cases it’s. Yeah so leveraging your vendors is a good point. We’ve done pool parties when we brought people from at and t showed up , and we had other vendors come in and they had gift cards and they had gifts and we did a back to school, so we had a hairdresser come in and did free haircuts for the kids.

So that was really like you said, engaging the community, engaging residents. That’s always great. Great. So we have a little bit more time. I wanted to kind of transition over to value add. I know almost everything you do has a value add component part of it. , can you give us like two, three things that you guys like to do that increase income that is not just raising rent?

Yeah, there’s a handful of things. One of ’em is, Washer dryers. I just saw a survey actually this past week that. , there there’s a, there’s demand for amenities and there’s supply of amenities, right? And this, it was the survey, it matched up the two.

And basically what I was saying, what do people actually want, and then what is actually supplied? And one of the ones was cat friendly apartments, right? Almost all apartments are cat friendly, but most residents actually don’t. So that was one where there was a mismatch. And on the flip side of that, the most in demand amenity is in-unit washer dryers.

Yet only about 13% of apartments have that. So that’s one of the things that we look for. Is there a way to supply that amenity, whether it’s. Now if we can buy a property that has the connections to begin with, that’s fantastic, but if we don’t, is there a way to add them? So we have one property that we purchased about a year ago.

That has the connections. Many renters can’t afford to buy their own set. So what we started doing is we started buying our own. And you can do, you can, there’s two ways to do this. You can sign up with a vendor and do a leasing program or you can do what we’re actually trying on this one is we’re just buying sets for $650 and then it’s an option.

Say, Hey, we have a laundry room you can use. , if you want for 40 bucks a month we will put these in and you can rent them. Those washer dryer sets pay for themselves in 15 months and then it’s just then it’s just, it’s re additional free in basically free income after that.

And even if they break in three or four years, we’ve still made multiples of our money on that investment. So that’s one is washer dryer connections. The other one really is, it gets overlooked, is just resident re. So going back to what you were asking me about the open houses and the parties and the fun stuff that’s good for, it’s great for drawing people in, but it’s also good for resident retention because, a vacant unit, you put somebody in that unit and they’re paying you rent, but then that’s also a unit that you don’t have to turn, you don’t have to repair, you don’t have to do CapEx on.

So the biggest thing really for income is. Reduce resident turnover. But again, you washer dryers, you can do preferred parking, you can do different things with cable billing. You buy it in bulk and then you sell it to the residents at a, slightly higher amount. Water billing is a big one.

We’ve gone through on some properties and just done individual metering and say, okay, you pay what you use, pay for what you use. There’s, and in each, and it can be very property specific. We had one property that we were looking at. It was right on the freeway, and it was it was a great candidate for putting up a billboard.

And then doing, for paid advertising. Some stuff’s very generic and you can look at it almost any property. Then there’s other stuff that, there’s some properties have unique opportunities based on their size and location and the. Awesome. Thank you. Let’s take a look at the other side of that equation.

Reducing expenses. Yeah. One of our favorite ones is water saving devices. I’d say five years ago. We could plan on doing that at almost any property Nowadays, it’s already been done at a lot of properties, so it’s not quite as a common thing as it used to be. But there’s been, there’s one property, we reduced the water bill by 60% just by going through and retrofitting all the toilets and the shower heads and just fixing all the leaks.

So water saving is a big one. I already mentioned turnover. Generally turnover is one. Outside of property taxes and. Payroll. Payroll, yeah. Thank you. That’s what I was looking for. Turnover is really one of your biggest expenses because number one, like I said before, it drops your income, but two you’re, you’ve got a unit just sitting there vacant.

Now you’ve got to even best case scenario, you’ve gotta, you’ve gotta paint it and clean it. But if, especially if you’re in C class properties, there’s very rare that all you gotta do is paint it and. Typically there’s some, CapEx involved. Especially on a harder sea, a normal turn might be 2, 3, 4, $5,000.

So that’s a huge expense. And so not only is it the monetary expense, but if your maintenance team or your contractors are spending time turning those units, they’re not spending time doing just the normal work orders and keeping the residents happy, and then that, and or they’re not address.

Deferred maintenance, or they’re not addressing routine maintenance, which becomes deferred maintenance. So turnover is a huge opportunity for for keeping expenses down. Let’s see. And then also one thing we do if we’re doing a renovation, we look at hardening the units, right? So if you put carpet in a property, especially again, a, B minus or C, that carpet, no matter how good it is, It doesn’t last long, right?

People just, they stain it, their dog chews it. They, it’s, I don’t, sometimes I still can’t comprehend what some people do to these carpets, but it is the way it’s, and so you end up replacing that all the time. So if instead of that carpet you put in a extremely, it’s more expensive the first time, but an extremely durable.

Let’s say like plank vinyl, plank forward flooring, not only does it look nicer and you can often get more rent for it, it’s much more durable. And if somebody damages it, you just pull up those couple of planks, put in new ones, and you’re good to go. You don’t have to replace the entire thing. Same thing with with countertops.

it’s very tempting to spend 150 bucks to resurface a countertop. The minute someone puts a scalding hot pan on that co, on that countertop, it’s ruined again. And now you’ve gotta either resurface it and you, it’s just an ongoing thing. So we’ve actually in some properties, started going with quartz or with the court’s material, which is harder than gran.

and it’s almost indestructible so that we know, we’re in that particular property, we plan to own it for 10 years. We’re not gonna have to touch those countertops for 10 years. We’re not gonna be resurfacing them. We’re not gonna be replacing them. They are done. So that’s another thing we do is if we’re gonna hold the property for more than a few years, which we typically are, we try to harden the units to just reduce long-term ongoing maintenance expense.

Thank you. This have been phenomenal so far, and I know you’re running out of time. Just to wrap it up, a couple of quick questions. I, if you could go back in time to Andrew in 2007 before you got started in apartments, what’s the best advice you would give yourself? ? I started the apartment, I started the apartments in 2011.

Sorry. And what so if I went back to 2011 I’d probably say, Hey, you know what, in 2019, you’re gonna invent time travel, and that’s gonna make you far richer than anything else. So don’t worry about all this real estate business. But no, I, I, what I would say is I would say, Number one, try.

Try to go straight to the, especially back at that point in the cycle, try to just go straight to the B properties. Don’t mess with the C stuff. It’s funny, if you look, almost every operator, they mi, they start and C, because the deals are easier to get and then they move up to B or, and sometimes higher.

So I would just, I would start in the B also, I would say, at those earlier points in the. Not only buy B properties, but in the beginning of the cycle, there’s, so I can’t tell you how many times where I’ve seen properties where in 2013 or 14, I didn’t buy it because I didn’t wanna pay an additional $500 a unit.

and now that would’ve meant absolutely nothing there. There’s one property in the Houston area where the seller wanted 24 unit for it, and it was a B minus property, a good area, and I had it penciled out at 23.5 a unit, and we just ended up not getting a deal done. And I think three years later I saw it come back on the market for 65 a unit.

how much did I lose because I just didn’t, wasn’t willing to pay market at the early part of a cycle. Now, today, I think that $500 a unit could end up being a lot more important, but when you’re early, early in the cycle I, wish I had just aimed a little lower on their returns and bought more, and it would’ve worked out exceptionally.

Awesome. Thank you so much. Today was awesome. A lot of really good information for our listeners, Andrew. Do you wanna take a couple minutes, tell our listeners where they can find you? If they have they wanna reach out, they want to network, they want to invest in one of your deals. Yeah. I’ve, I’m you can connect with me on bigger pockets LinkedIn if you actually want to reach out really connect.

Our website is short for Vantage point acquisitions. It’s v P. A cq.com. It’s not, definitely not a fancy website. We should probably about, about at the point where it should be redone and updated, but there is a contact us form on there and if you put any information that comes directly to my email inbox and I tried to get back with those as quickly as possible.

I do reply to all of them. It might not be within an hour, but I will get that and we’ll reply. So that’s generally the best. Awesome. Thank you so much for your time, Andrew, today. I appreciate it. All right. You’re welcome, Joseph. Good talking with you.