Episode 105: Hands-On Ownership with Jason Pero - The Apartments Operators Podcast

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July 10, 2020    aptopradmin   19 Comments

Episode 105: Hands-On Ownership with Jason Pero – The Apartments Operators Podcast

Jason is President of his local REIA/Apartment Association, a real estate mentor and coach, and has appeared on numerous podcasts. Jason self manages all of his properties through his own property management company and has experience in everything from single family homes to large 200 unit complexes. 

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Show Transcript

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. Hey everybody. Welcome back to The Operators podcast.

My name is Joseph Golan. I’m your host, and today we have a very special guest, Jason Perot. Jason, welcome to the show. Thanks for having me, Joseph. Happy to. Awesome. Well, Jason is one of the most awesome operators I know. He’s got a lot of units under his belt and he self-manages and he is doing everything.

He’s a one-man. Empire, really. And he is gonna tell us all about it. Give us a few minutes, a little bit about you, what you’re doing, and how your organization looked like, just so the audience will get a feel for your who you are. Okay. Started buying property in 2001. Was graduated college in 1999.

Started working you know, started buying rental property. Bought my first duplex in oh one. Next year, my wife and I, we bought a duplex and a quad. And then the year after that, you know, we just kept building it the old fashioned way, just saving up one person’s income, living off the other, and just putting down payments on smaller real estate, just trying to build up a little bit of cash flow.

During that time, I worked as a medical sales medical device sales rep. At which time, in 2012, I was able to leave that job had about 290 units at that time, just my wife and I know partners. And since that time, we’ve grown to about 900 units today 600 of those units. My wife, Nadia, and I own just ourselves, no partners, just a hundred percent her and I.

And then we’ve syndicated. 300 units. So we’ve done two syndications over the last year an 86 unit and a 205 unit. Both went really, really well and that, that’s where we are today and we still self-manage you know, everything in house and all all in the Erie, Pennsylvania, Northwest Pennsylvania geographic area and how.

people are in that town. Just so everybody will get an idea. Sure. So the, the city of Erie is a hundred thousand people, but the greater metro area, so all the suburbs and everything is about 350,000 people. Okay. So, so you’re not in a huge metroplex and you were still able to accumulate a very significant amount of, I’m gonna imitate Mark Cuban from Shark Tank for a second and just do this.

Oh, thanks. You guys deserve every bit of it. Get into. Hundreds of units all by yourselves without without any partners, is incredibly impressive. And then you also added a syndication aspect to your business that, that is really impressive. So thank you. Let’s talk, let’s just jump straight into it, 900 units.

How, how does your organization look like? How many people do you have? Do you self-manage? Do you use a third party? Tell us a little bit. Yep. So we self-manage. And that was probably the hardest part of leaving my day job and still growing the business and, and creating a, a company. So I think it’s really easy to buy rental properties, you know, whether you buy a single family home or a 500 unit complex, but to actually operate it and hire people and, and build a team that was the hard part for me.

So I feel like we finally have it. So I have a main property manager who also is an acting asset manager. He he oversees a a junior property leasing agent, property manager for. For about approximately 6, 5, 500, 600 units. And he so he, and this, this individual handle all the leasing and then he oversees our site manager.

So I have a about 120 unit portfolio in a small town south of Erie. It’s a small college town called Edinburgh, Pennsylvania. So we have a a branch office down there where we have a property manager, an office manager. You know, and then, and then a ma you know, maintenance personnel. So, you know, we have it, it’s a really I I’ve really learned that you have to staff properly.

So I have a full-time accountant on staff. You know, I also have you know, my C P A, who I work with very closely, that is you know, not on payroll, but, but part of the team so we, you know, make sure all of our taxes and financial documents are in aligned at the end of the year. Hired an office manager that really, really is, is invaluable.

I mean, she keeps the, you know, everything moving from, you know, helping the prop, you know, the property manager, the maintenance guys you know, keeping inspections on, on schedule and on tasks. So that was probably one of the best hires I’ve made just because she’s kind of the glue, she’s the organizer of, of everything because there’s so much going on at once.

But we have, so we, you know, we have, like I said, we have site managers at, at our larger properties, but then, you know, in-house property managers that manage the site managers and, and kind of the overall leasing part of the business. So they work closely with our maintenance manager and maintenance team.

And so We will subcontract certain things out, but I’ve found it’s way more cost effective to hire a guy on payroll that say is, is a great at flooring or hire a guy full-time who’s a wizard with drywall repair and painting. And if you can keep these guys full and, and keep their schedules full, just better to continually have work for them and we just go a lot further.

That was our biggest challenge is finding the, the quality work. The guys that actually wanna show up be part of a growing company. And that’s, You know, that’s probably content for a whole other conversation. But really attracting the, like, learning how to attract quality people, but also keep quality people and help them grow and achieve their goals.

And so and so we have a whole maintenance staff, you know, and, and we even from like our bottom entry level guys that might go out and cut grass and clean out vacant apartments and things like that. We try to attract people that have a growth mindset. So, you know, maybe they come in and they’re at $10 an hour and they’re cutting grass and they’re, you know, doing this menial work.

But if they. Maybe they’re not highly educated, but they wanna come in and learn a trade. You know, they can learn and, and apprentice under some of our senior guys. And over a period of time can, can really elevate their career and, and have some nice benchmarks for them to be able to, you know, up their income you know, be, maybe get some more benefits you know, through the company and things like that.

So we try to plot a plan for their future so that as I grow, these guys can grow and then we can hopefully promote from within. And that’s, that’s how we sort of have. You know, now this guy who’s rolling into the asset management mode, because we’re getting to that unit account where we really need to manage, manage our managers.

And that’s been me, you know, all these years. And so my time’s getting pulled in all these directions. So I, I’ve really started to think about. My next steps and what does that look like and who do I need to either promote from within or attract from the outside to come in the organization to you know, to kind of help that fill that role.

Because it ultimately, when, when it started out, just my wife and I, we did it all ourselves. And so we’ve learned that, you know, we really need to hire people that are better than what, you know, they can do these things better than I can. But that also freezes up for the growth, you know, the growth part of the.

Oh yeah. We’re, we’re so gonna dig into that one, . But first I, I wanna ask a little bit about the beginning. Right? Okay. So did you always self-manage or did you have third party at some point? A lot of our people that we talked to in operations, there’s the ones that believe in third party management.

There’s the ones that believe in self-management. There’s the people that have gone through the transition. But wh where did you start? What was the thought process behind? Do I get a third party or do I self-manage? So when we started out you know, the people that I was buying property from and people that mentored me, they all self-managed.

I didn’t really know any different. So I bought a duplex and, and. I couldn’t think of, I was buying it for cash flow, so I didn’t think any differently, like, Hey, I’m gonna go hire somebody to run this for me. So unfortunately, like when things would break, I’m not handy at all. I’m still not handy. So I, I learned who to call, you know, who to delegate certain tasks to, but, you know, my wife Nadia and I would go and paint the apartment.

We would clean it out, we would get it ready for rent, and we would advertise the rental and, and then you know, le lease the property up. So that’s how we did it. Say four years in the business. 2005, I, I was at 23 units. Then we acquired a 56 unit portfolio from a guy who was my first real business mentor in, in the, in the, in the real estate business.

And he had built up at the time what I thought was an amazing portfolio, 128 units. I ended up buying all of that from him over the years, but he I was so impressed with this guy and he, he ran such an awesome business, taught me a ton, and I said, wow, I can do that. But I also had a full-time job that was really demanding.

And my, my son was born in 2005, so going from like 23 to 79 units, I was able to hire in the maintenance guy that worked for my mentor. And then, What I found over a period of months was that there was a tenant that had she was retired, long, retired, but had experience in property management. And I said, well, great, she’s looking for a part-time job.

I can have her start showing apartments. And, and when they started taking all these tasks off of my plate, I said, oh, wow. Now I have more time to go buy more property and, and I have time to, you know, dedicate to my job to make more money, to buy more properties. So I didn’t really know any different. I, I had a third party company call me at one time.

And this is, you know, 13, 14, 15 years ago, and they said, Hey, would you be interested in, in US managing your property? You know, they wanted 10%. I said, man, that that’s, that’s my profit. I can’t give up 10%. So I just stuck with self-managing and I, I thought there was a big need, and at least in our market for a quality third party management company sounds like that’s in most markets, that it’s really hard to find, you know, good property management companies and kind of dabbled in it, but it was, you know, d class properties, stuff that was really hard to manage.

Owners that really didn’t wanna pony up the money to put into the prop, you know, put the work into the properties that was needed. Mm-hmm. . So I quickly got out of that. I dabbled in that for a few years and it just I felt like any money we made just, you know, like wasn’t worth a headache and heartache.

So that’s a brain damage man. The brain damage. It’s not worth it. No. But you know, we’ve evolved our portfolio, so we did have a lot of, you know, smaller properties. But I’ve, I’ve ended up selling off a lot of those and, and really transitioned into the bigger. The bigger property. But even at that, I found that it’s and again, not that I’m the best at or anything like that, but I think when the owners involved you know, one of the, one of the things that I learned from one of my, my first real mentor in the business his name was Dick.

Dick, had said to me that, you know, no one ever takes his. Good of care of it as the owner. And that’s, you know, whether that’s true or not, you know, I some third party companies would probably debate that. But what I thought was that if I have my touch on, on the business, you know, whether that’s just managing the manager or providing my input, that I’m gonna get ultimately what I want out of the properties, which is something that’s, Attractive to own.

It’s well managed, well run. We treat our customers fairly, treat our employees fairly. And then you know, look, if if kind of the you know, the, the stuff hits the fan then I can roll my sleeves up. And not that that has to happen a lot, but I know that I’m willing to jump in and do whatever’s needed, especially now that we have.

Passive investors in our deal and, and, and our syndication deals, they need to know that I, you know, I’m out there raising money, but I’m also kind of running the show with with the company. And I think, and that’s not for everybody, but I think that is a nice selling point, especially in a small market, to know that the owner is involved in the day-to-day operations.

And that, again, that’s, for me, it’s at a high level. I’m not showing apartments anymore. I’m not doing a lot of that basic work, but I. You know, I’m working with our managers and, and, and kind of have, you know, our, our folks who have the boots on the ground to give my input and, and direction on how, how I wanna see things go.

Yeah. And, and that’s something I learned is, is true for any kind of business. It’s not just property management, right? Even if you own a shoe store, if you’re gonna sit down thousands of miles away, it’s not gonna operate as well as you’ve been. There and visiting and, and guiding the, the people. Yeah. On site.

So, so I get that totally. So how do you develop the skill to. Manage hundreds and hundreds of units. Right. So you mentioned earlier one of the common challenge that all property management companies have, whether they’re just manage a person that manages their own units or it’s a third party they all have hiring challenges.

Yeah. Right. Hiring the right people. What I learned is, is a. In this business. And if you don’t have the right people, it doesn’t matter what the size of the property management and what infrastructure they have and what technology they have installed. If they’re onsite people, the maintenance, the, the managers, they’re not the right people.

Right. It’s just not gonna work. So I, I do want you, you mentioned earlier that that’s a whole topic for another conversation, but let’s make it a topic. because I think it’s super critical on the operation side, and it doesn’t matter if you self-manage or if you have a third party, how to pick the right people is, is super critical.

So I’d love to hear your insights about that. Sure. And honestly, that, that’s something that I, I think I struggled with for so long. I, I, I would be so happy that I had an employee. and, and that made me feel good. , you know, whether they were effective or they were an a player was a different story. And you know, it just, it became something that I think I had to work on myself to be a better leader.

And, and I don’t know what that really looks like, but I know that I’m, you know, to be an authority in the business. I’m president of our local ria. I’ve done this all myself, so I know what I’m doing. But I found that oftentimes I, I put an advertisement out there. We try to hire somebody and they’d, they’d want to come in and work, oh, you know, oh, you own this many units.

We’d love to work for you. And then you put ’em on the job and 3, 4, 5 months later you find out that, you know, they’re a drunk or they, they’re sleeping on the job, or they’re just not putting the product out there that you want. And I, I just had a shift in mindset a couple years ago, probably around the time that we met.

You know, I started thinking about, you know, is it skills or mind? Like what, what’s teachable? And, and I feel like you can teach somebody how to lay carpet. You can teach somebody how to paint a wall the way you want it done, but it’s really hard to teach mindset. Like you can lead people in personal development and growth, but, but to have a growth mindset, people kind of have to come to that on their own.

So I really started focusing on hiring people and attracting people that have like a growth mindset and a positive attitude. . I will not hire anybody that’s like a Debbie Downer. All, you know, those people that see the negative. I want, I want problem solvers. You know, I don’t want excuse makers. And so like, as an example, in our, our most recent syndication, it was a 205 unit complex.

The site manager, she was there for 13, 14 years. And, you know, they consistently were at 90% occupancy, but they weren’t advertising properly online. They, she. Very much comfortable being the queen bee on on the job, but not. Not really trying to make, make the property run as efficiently as possible. And so I knew I was going to have to replace her.

It just, it, I, I knew it wasn’t gonna be a fit for my personality because she had her ways of doing things and she wasn’t open to, to change. And, and for me, it’s not that my. Right. And it’s not that my way is, is the only way. I mean, I’m, I’m constantly changing how we do things to adapt and grow and, and, and, and, and, you know, better our process.

So I knew there was gonna be some conflict that if they’re not willing to change, I don’t really want them on, on, on my team. And, and, and again, not changing to the way I want doing things, just being open to, continually open to growth and learning new things. So we ended up hiring. And she’s, she was probably the fastest l learn or quickest study I’ve seen in this business from my own experience.

But she was a nanny for 23 years. Our kids had gone to school together and she had had left that job at the end of the school year, which is about a month. We closed on the property on June 28th, and the light bulb went off. I said, my gosh, she’s dealt with like, so she had triplets and. , there’s four children right now.

And then she had these older kids. I said, oh my gosh, she dealt with, and the kids are really sweet. My, my, you know, my, I I know them and so I’m not, but, but that’s hard. I mean, like, that’s a lot of, you know, they’re, they’re sixth graders now, and the other one’s a fifth grader. So this girl, you know, this, you know, the ex nanny was, you know, leaving her house at, you know, 4 35 in the morning, going and getting these kids ready for school, going home and picking up her, her own daughter and just solving problems, you know, and getting, and she’s managing.

Other kids’ lives and her own daughter’s life, always with a smile, always with a positive attitude. The parents that she nad for were, were probably a little bit difficult to deal with and I saw that, you know, property management’s just the people business and it’s about solving problems. I mean, you know, I always tell.

People, you’re not, you know, you might be their landlord, but you’re also gonna be their financial counselor, their marriage counselor, their life coach, you know, their, their business coach, all these, all these hats that you wear as a property manager. And, and so she had that mindset. And so my wife and I talked to her, told her about a possible, you know you know, the possibility of, of, of a job, and really explained to her what it looked like, had her shadow, one of my property managers for a couple days.

To see if this is the type of job that she would, you know, that, that she would, you know, this would be a mutually beneficial thing. But she came in and, and. Learned the job so fast because it’s just systems and procedures. I mean, we, you know, so we, we taught her the systems and the procedures and in that first couple weeks she was a little unsure of herself, but now she’s, you know, she’s hustling.

She’s got the property damn near full, which is awesome. Like way, way ahead of schedule. So I, I kind of knock on wood, I’m like, it worked out better than expected. But she was just an example of like hiring for the mindset because she was growth oriented, wanted to grow as a person, you know, really. Really good with people and wants to learn new things.

If I did the opposite and had this person who was a stick in the mud, we’d, we’d still have a 10% vacancy rate and not, not really making any progress at the property. And that kind of goes like even our, on the maintenance side of things, we’ve hired guys that, you know, they may not have a ton of skill, but you could tell they’re quick learners, they’re mechanically inclined, and, and so we’ll let them apprentice alongside one of our flooring installers, or we’ll let them apprentice with our painting team.

And then, you know, over a few years they can get some nice raises and they. You know, they can kind of come into their own to where they have more responsibility. So I’ve really focused on that. I don’t know that that’s the be all, end all answer, and I’m sure you know the next. Acquisitions will pose new hiring and firing problems.

But that’s sort of where we’ve evolved to today as far as like the type of people we try, try to attract, which makes my life easier so I can focus on growing the company and not, you know, not just getting mad at people, not doing , doing the apartments turn, apartment turns properly, or not dealing with customers properly.

So so I just found that, you know, empowering them, you know, but also, Getting those types that are growth oriented, because they’re gonna be self-led and self-managed more so than having to like, just give them like, you know, fire out punchless every day. That, that’s like miserable for everybody. So, yeah, I know I, I didn’t think about that before.

About a nannys basically very similar to your property manager, right? Cuz you gotta be the mom. You gotta be kind, but you gotta be firm, right? Yeah. So with kids it, it kinda work. It’s very transferrable kinda skillset. I didn’t even think that, but I totally agree with you about hiring for talent and teaching skill.

Yeah. Because I can see the difference between a property where we have a maintenance, a lead maintenance guy that walks around smiling. And communicates with the residents, and the residents love him, and he is joking around with them in between and, and he’s, you know, he’s got that mentality of, I’m here to work and contribute and, and take care of my residents, versus the people that just come to punch the clock, the people that, that are, you know, walking around with a moi face around it’s, the attitude is a huge, huge factor.

In in all these things, but I do have to give it to you. It’s a pretty big gamble to take a person that from outside the industry and give them 205 unit problems. Yeah. Oh yeah. Yeah. Right. So, so what did you do to kind of hedge that bet? So Her daughter and my son went to elementary and middle school together.

So we, you know, we knew her and her husband you know, fairly well from school events and, and things like that. You know, explained to her the job and said, look, this is a two-way street. I mean, the my risk you might be a month into the job and Miss Nannying so much that. You know what? You go back, you go back and do it for somebody else, or you leave the job.

But you know, what we did is, you know, we made sure that we had one of our senior property managers spend the first couple weeks on the job upon closing the acquisition onsite with her. And so she always had somebody there to support her and teach her the ropes. But I knew that, you know, buying that property, we were going to replace the site manager anyways.

And, and I know, I mean, in my mind, I’m think. Like, how bad can it get? I mean, if, if we went from like 10, like it could get really bad, it could get really bad , but you know, they’re a1 percent vacancy rate. And, and I knew that the I knew that the old property manager and maintenance manager didn’t get along too well.

And I, I spent a lot of time sort of vetting the different employees that we were gonna hire and the ones that we were gonna let go from the old, the old business. So so this individual Tammy so she came on and I. I thought, well, yeah, it is, it is a, it is a risk. But I just, I had faith that she would be able to do the job, and I personally spent a lot of time with her as well.

I would, I would show up every, every day on, you know, for the first week or two, you know, now I check in with her every couple days. You know, we have phone conversations and she’s still working with, you know, my, my asset manager spends a morning a week with her and just to kinda really get her up to speed.

He goes to eviction hearings with her. He, he’s giving her that confidence, but she really, Know, but we give her input and we give her a say. I mean, she feels as, as though she’s a part of something bigger. So so for our syndication, my I have a, a co-sponsor on that on these larger deals. So he and I and our C F O do a monthly meeting where we involve, You know, the head maintenance guys and the property manager, we, we share the financials.

We, we really give her input into, Hey, here, you know, tell us how things are going. We, we see how it’s going financially, but give us your input. Let’s, let’s try different things out. And I think that giving her that sort of, that that feeling that she of ownership and her job has gone a long way to, to kind of creating a happy, you know, happy environment for her.

And we’ve let her experiment with things. We said, Hey, you know, I said I’d love to do things for our tenants. What do you think? And she said, well, I’d love to try a game night. Can I, you know, can I buy some pizzas and, and do like board games? And we have like 20 residents show up. So 10% of the residents showed up for this game night a few weeks ago, and, and it wasn’t expensive.

So so it’s not just us dictating how her job has to go. It, it’s, here’s what we expect, but you can have a lot of fun with this and do things that you think are gonna be great for your community. And she’s sort of embraced that. Now. Look, if it didn’t work, we would’ve. We both knew going in that there was that possibility that it wouldn’t be a fit.

And I think we’re both lucky that it was a fit and that that that she loves it. But if it wasn’t, we would’ve, we would’ve went back to the drawing board and figured out, you know, how to attract somebody that was a better fit. So, do you, have you, you mentioned systems and processes, so do you have like manuals and, and everything?

You hand over so she knows how to do, like you said, evictions and notices, fair housing rules. How do we train that from someone that is completely new to the industry? Give us a little bit of, because again, it’s a very high risk Yeah. To bring someone from outside. But I also believe in finding the right talent like we talked about.

So for example, on larger property, when you have an assistant manager, that they’re usually more logistic oriented. Then I always advocate to find someone that has been an assistant manager of a big department store, like a JC or a Macys or, or one of these. Big ones because these guys are phenomenal.

Right. Right. They, they get things ticking and they, they’re the logistics person at the store. Yeah. They’re proce process oriented. Right. So, exactly. So, so I, I, I believe in bringing people from outside the industry, but there’s still that Yeah. Concern of how do you get them up to speed with. The industry rules, regulations, laws, and so on.

Well, and that’s been a growth area for me. So so the short answer is that it’s a work in progress. So we, you know, part of me hiring in my office manager slash business manager I had hired her eight years ago as assistant office manager for our local RIA that I’m now president of. And when I was vice president, I was in charge of personnel and I always said if it didn’t work, With our organization that I would hire her in my personal business.

And so that evolved, you know, in, in about a year ago, she approached me and said, Hey, I’m looking for a change of pace. So she’s, she’s very has experience in with property management before coming over to to the re a ria. And part of her job is, is creating the manual. So in the past when my wife and I did it, and then we’d hire property managers, it was a lot of verbal training and, and on the job training, , but I realized that, that that’s great.

But how long do I want to continue to do that, ? Yeah, so so we have all the forums and we have like, you know, our, our standard lease and our addendums and all these, all these things. But really what we you know what I’ve tasked her name’s, Yvonne is our office manager creating the calendar in the manual.

That Okay. Here. You know, here’s how each month should go from a workflow perspective. You know, first through the fifth, rents are coming in the sixth. Check the delinquency, you know, the delinquency chart people who are delinquent and, and, you know, then post, you know, post five day notices. Kinda create a calendar of all the tasks that need done in a given month.

But then, then the forms. And process spelled out within the manual and how we, how we do that. She’s also working on that for apartment terms and maintenance, you know, like, like maintenance policies and how, so everybody kind of follows that certain that certain process. So it’s, it’s like McDonald’s.

I mean, it’s not, not, I’m not franchising per real estate, but you know, if we add on a, a maintenance. Guy, then they know, okay, here’s how I handle this type of situation. And, and look, it’s a, it’s a tough business. I mean, there’s not, it changes every day. There’s, there’s a thousand different things that can go wrong.

And just when you think you’ve seen it all, something new, like some new scenario pops up, we learn something new ever . But, but it’s more like so, so we’ve got that for both sides of the business and that that’s what we’re working on. And so it’s, so we do have that. System on paper to show how we handle, right.

And, and but we have that for the property management is what, you know, so it’s like, yeah, that monthly task list, but also how we onboard. Tenants and how we screen tenants and then, you know, how we store that information. And so, so they do it consistently. And, and so I mean our, our property managers follow a script, but we let them be themselves too.

I mean, the biggest thing is, you know, not, I don’t want them to be a robot. Yeah, if I need that, I can hire a VA from, you know, from halfway across the world to do that. But we want that human element. So we let the, let them put their personality into it. But, you know, ver make sure that they’re very very in tune with you know, fair housing you know, HUD rules, all, all these things because, you know, we don’t wanna get say the wrong thing or do the Yeah.

Or do the wrong thing. So so we just, you know, we try to make sure that, and I mean, but our, but again, our most recent property manager, she was a program administrator for. Prior to coming to work for us. And, and so again, hiring for hiring for mindset. You know, she ha has the mindset, has the experience of dealing with customers, but also knows the law.

We just have to train, you know, we just have to train her on how to lease units and how to sell. But she, but she has that, the other, the other part of the business there. So so that’s a huge asset because she’s, she’s training our other folks on like, Hey, you can say this, but you can’t say that. And here’s how we, you know, here’s how we wanna mar market our things so we’re not.

Doing something, you know, inadvertently doing it wrong. Like something as simple as, you know, like, you know, brand new apartment’s great for a young family. Well, you can’t say that. Yeah. You know, and, and people don’t realize oftentimes that they’re, they’re giving the appearance of discriminating even though they’re not intending to d discriminate.

Right. So, yeah. That’s the thing. So great for a young family with kids. Well, you know, what if it’s a same sex couple with, with, you know, dogs, I mean, you know, they’re. There’s testers out there on the market as you know, that that can come in and then just you know, find your company for saying or doing the wrong thing.

So just beyond testers, right? There are also professional scammers. Oh yeah. That, that try to trip your leasing agents. And we’ve had that we’ve seen that before, thank God. Not on my property, but on one of our customers. And They sue them, right? Yeah. Because somebody tripped and, and like you said, not intentional.

So that’s why at least Fair Housing Rules is super critical to make sure that your team is well versed in, in what they can hundred percent cannot do and what to say. Yeah. Yep. Okay. So I wanted to touch a little bit, you, you kind of talked about that in brief about what do you do for your residents?

Yeah. Because in. My experience, the number one key in operations is retention. Yeah. Because if you don’t have good retention, then it’s a revolving door and everybody is working harder. Yeah. The maintenance guys have to do more, make credits. There’s more work orders. The leasing agents needs to lease more units.

The expenses obviously skyrocket. So what do you guys do for re. Yep. So I’ll, I’ll, I’ll tell you what I do and I’ll also share with you, you know, I, I, one of the challenges with growing so much and self-managing is. The, the retention can get away from me really easily. And so I, I, over the years, I became so obsessed with growing my portfolio and I would, I would just add property and add property without taking care of the tenants that were, were making me money.

And, and again, I mean, being a nice guy and all that, all that stuff that, that helps. But, but I mean you know, you want people to, to know that you’re responding to their needs in a timely manner. You wanna you want people to know that you care and that you’re. Appreciative of, of their business. So so I think that’s one of the challenges as the growth is that that can get away from you, especially when you’re like a solo operator because you’re just focused on growth and, and not realizing that, you know, there’s other things you have to tend to your garden too.

So So what happens then is people will you know, they’ll end up like just putting any tenant, they won’t screen properly. And so so then you’re putting bad tenants in somewhere. They’re, like you said, then the, the make readys increase, the maintenance guys workload increases. So it all comes first down to attracting the proper tenant.

And, and so, you know, we, we try to give a, a clean, attractive apartment. At a, at a price that’s not at the high end of the market or the low end of the market. So something that’s a very, like, people feel like they’re getting a good deal for what we offer. So. So, you know, that, that we’ve kind of gotten back to the fundamentals of, you know, giving a high quality product.

But as, as our tenants, you know, run through a life cycle of running a unit, so year two and three, you know, we’re trying to, Hey, you re-sign your lease, we’ll give ’em a, you know, a $10 gift card to, you know, to the gas station and do these little, little giveaways and, and they feel like, okay, hey, great, I’m getting something back and it’s only $10, but what if I’m increasing the rent by $20 a month?

I mean, it’s a, I mean, that pays for. Over and over again. But it’s a little token of our appreciation. We used to do it I got away from it for about three or four years, started doing it again last year. But we would get everybody a ho, a Christmas card and you know, just, you know, again, just be happy Holidays.

I mean, we’d, you know, include every, everything but around, you know, December, they all got a Christmas card and a box of chocolate and. You know, and, and there was a point in time where I, I would get a, you know, not offended, but I’d get a little down all, I’d see all these boxes of chocolate in the dumpster, you know?

And then, but then like we, we stopped doing it and people are like, wait, you’re not, you know, what, what happened to the, you know, the Christmas you know, the, the Christmas chocolate? And I’m like, okay, well, you know, we, so, so we wanna go back and do these little things for tenants then, like let ’em know that we care.

And you know, even if it’s a, like a card from the company signed by my wife and I, you know, I think it’s important just to have that personal contact, but, You know, we, you know, in terms of retention at tenants, so it’s, you know, making sure our, our, you know, our maintenance guys and our property managers are professional.

They’re nice, even to the difficult tenants, you know, the people that, that can make you have a bad day really quickly. just, you know, keeping it professional, keeping it, keeping it positive. We’re actually at our recent syndication, we’re doing a tenant appreciation night tomorrow, and we’re bringing in a couple food trucks and every tenant’s gonna get you know, they’re.

Get a couple coupons and they’ll be able to, you know, just to have some food and drinks and, and hang out and, and we’ll do that once a year at that complex. And then, but we’ve invited all of our employees to come and then we’re going to we’re gonna start doing that and like at a, find the location, but do that for all of our other scattered properties.

And, and just little things like that don’t cost a lot, but people feel like, okay, well, you know, my landlord cares. It’s, it’s, it’s a small amount on the bottom line at the end of the year. But I can guarantee you no other, no other property management companies are doing that in town. And, and you know, I have fun doing it.

So so selfishly I’ll enjoy and I’ll get the free, we have like a grilled cheese food truck and an ice cream food truck. I mean, I’ll be, I’ll be fat and happy tomorrow night, . Um, So I’m, I’m happy, but I, it’s really cool to see the tenant and it’s a chance to like, you know just to get to know your tenants a little bit out outside of, you know, outside.

You know, signing the check or, or, or seeing, seeing their leases. And so you know, it is a people business and, and I enjoy that. That’s not for everybody. I know our investors in that syndication, a lot of them don’t want the, you know, they don’t want anything to do with, with tenants. So we’ll stay far, far away why their investors.

Right? Right. No, but you, you had so many. Nuggets in there, and I’m definitely gonna get back to this recording and steal some of your ideas uh, to do on our properties. Yeah. But I wanna touch back and, and reemphasize something that you said earlier about telling your team how to treat with respect and, and curious to the residents.

And that’s what I like to tell all of our employees is. I, I’m not the one paying your salaries. Yeah. The, the property manager, if it’s a third party property management, they don’t pay your salaries. I don’t care what the paycheck says. The people that actually pay your salaries are the guys and girls and, and families that live in those units.

A hundred percent. Yeah. So, so you gotta treat them with respect. You gotta give them a good feeling. And I also I have a lot of background in, in the retail world, and I tell ’em, look, when you walk around on the property and you see trash on the floor, pick it up. Right? Clean doesn’t cost money if a resident come.

Get your eyes up right. Smile at them and say, hi, how are you doing today? Or, have a great day, or good morning, whatever it is. If, if you walk into a JCPenney or a Macy’s and you walk down the Islanders and associate guaranteed a hundred percent, they will raise their head from whatever they’re doing and ask.

Did you find everything you were looking for today? Yeah. Right. They will acknowledge you and they will offer service. Yep. And that’s what we expect our onsite teams to do exactly the same because it’s a different feeling when you, you know, you leave your apartment and you go to your car and there is a maintenance guy walking with his head in the you know, looking at the ground, not acknowledging you versus someone raising their head, looking at you, smiling and saying, good.

And people are way more receptive when they know you and your team care than if they’re, if they’re just punching a clock or they’re just in it for the money and it’s you just see a time and time again that, like, if you have that just a positive attitude and inspire that in employees, I mean, it’s, it’s hard and, and it’s hard to be positive some days.

I mean, do you see how some tenants can ruin, ruin a unit and, and things like that. But You know what you know, you, you turn it, you turn lemons into lemonade. And that, that’s how I, I try to tell my kids to you know, to look at things. Always look for the positive, you know, the, the positive spin on something.

And, and you know, and look, and we, we, sometimes we’ve had tenants where they’re, you know, they’ll test every bit of patients. You, you have. But I always say, tell my team. I’m like, well, what could we have done differently there? I know this person’s a maniac and, and they’re, they’re like, terrorizing us with, you know, like, I mean, you know, some people, you know how, how just some, some customers can be.

But what could we have done differently? Should we have not rented to them? Or how do we, did we not, were we not clear in, in our expectations of how they communicate with us? You know what, like just constant self-assessment so we can get better at. You know, if it’s a pain in the butt, well, how do we get better at it so we, so we can like, remove that pain in the butt in the future?

Or how do we respond better so it doesn’t, a problem doesn’t escalate and, and you know, just you know, things like that. Yeah. I also like to remind our team that if a team comes in screaming or upset it, it might have nothing to do with them. Right, right. Yeah. Because they might be upset cuz their boss was writing them all day at work.

Right. And, and they might be upset because something happened in the family, whatever it is. Right. You, you gotta be a human being on the other side and it’s kinda like, I’m sorry you feel that. Whether he, the, the, the resident is right or wrong with whatever they’re complaining about, you should be sorry as a, as a fellow human being that they feel that bad, whatever the reason is.

So just because you, you feel sorry that they feel that bad does not mean you admit to be at fault of anything. Right. Right. So, so I, I try to remind every. I wanna be conscious of your time. So I want to kind of switch over to a few rapid questions that we ask most of our guests. You do value at, right?

I know you do syndications and, and most of the properties you bought, you fund some element to improve. So give us two, three ways that you guys like to do to raise. And we’ll talk about expenses in a second that is not the conventional raise rent or, or stuff like that. Sure. So our new acquisition, we did we’ve offered a concierge trash service.

So there’s several buildings on, on the property, and there’s they’re all three stories. And, and so I know a lot of people that they would put their trash on the third story , and then, you know, and again, it’s attracting critters or it’s just unsightly. . So instead of, you know, in the past we would just post, you know, five year notices and you’d be hitting people with a hammer and, and, and they just wouldn’t respond.

So I said, well, why don’t we, you know, why don’t we think about. You know, just adding that as a service because, you know, maybe they’re not doing it to be disrespectful. Maybe they’re just lazy and maybe they, they’d be happy to pay an extra $25 a month for this, for this concierge service. But so we offer that up and we’ve already got about a dozen people that have taken advantage of it.

And again, I know on, on the scheme of things, that’s not a huge income thing, but over the, over the course of time, that’s that’s a nice that, that can be a nice little boost of, of income. Even, even if it’s not a big boost of income, it, it’s, it could be a retention thing, right? Yeah. Yeah. So a resident thinking twice, well, if I’ll go to that place, there’s not gonna be the person that’s gonna pick up my trash.

Right? And like I said, I’m lazy. I want somebody to take the trash for me. So, so it could be a retention item as well. What else? So, so we also, at our places where we have parking, we’ll, we’ll do a resident of the month. So we’ll do a reserve parking spot, and then we’ll we’ll just kind of randomly like pick, pick my favorites or whatever.

But we’ll say, Hey, you know, resident of the month and then they get the best parking spot for that month. And that’s kind of a nice little, people feel appreciated. So again, it doesn’t, it’s not a direct like, hey, they’re paying extra for that spot. But it goes to the retention aspect of the business. The other thing we do, you know, which, which helps raise rents is that you know, when, if somebody’s been there five years or seven years, say, Hey, we’ll come in and you pick the color of paint, or you, you know, you pick this and we’re gonna go in an upgrade in your apartment.

And then when we’re asking for that $50 a month rent increase, but they’ve just got a brand new backsplash in their kitchen or they’ve gotten like a new countertop. And they might be things that we would’ve changed. Anyways, if they moved, we were gonna change it anyhow. So so then they’re like, oh, wow, I’m paying more rent, but I, it looks like I have a brand new apartment.

So they, they feel better about us asking for more money. And, and so ultimately it gets us, it gets us more money because we haven’t you know, we haven’t had that have to turn the unit yet. Turnover cost, right? So, so yeah, you might go throw in a back splash or you might change the light fixtures, but it becomes well that’s a heck of a lot cheaper than having to go through and do everything.

So no Absolut. If you can get away with cleaning the carpet, it’s a lot cheaper than having to replace it and turn the unit and do paint and change fixtures and whatever you have to do. If they will have moved out. Exactly. Okay. So, so let’s look at the other side. What do you do to get reduced expenses?

Yeah, so on, on the expense side, I, I look at expenses every month. So we, you know, I’ll look at my utilities and so that’s one of the biggest The biggest drains is, is, is utility bills. So even as we’ve grown so big, I make sure that my financial team is, is always giving me the rundown of all, all the bills, and I know which properties, how many te, how many residents there are things like that.

And, and I, I, especially the water bills. Oh yeah. You know, we, we kind of know, you know, per person how much wa water’s gonna be utilized. So we have that in our lease though, that we will charge back for anything above and beyond like normal, normal use. And so we’re pretty clear about defining that to te to residents what that looks like.

So on, on, on that side of things, you know utilities can be just a. Like money suck. And if you don’t, and if you’re not paying attention to it, it gets away from you really fast. So there’s, there’s U Utilities, the second side on, on the like, like the make readys and the maintenance stuff. So we, I try to shop around for everything.

I mean, whether it’s paper towels, like, you know toilet paper holders, you know, toilet seats, you know, we’ll look through, you know, your lows and Home Depot, but your HD supply and appliance warehouses and things like that. And just try to. Chisel down the price where we can, because if you save a nickel here and a dime there, and we’ll buy our batteries from Amazon uh.com, that, you know, I can get batteries for a third of the cost off of Amazon as opposed to the local hardware store.

But when you’re changing smoke detectors and things like that on a regular basis, that that could be a. A thousand or 2000 a year, and that’s, that’s money outta my pocket. So, so I really look at, look at the supply side. And then is is also on expenses. It comes back to retention because if I can retain, you know, one tenant, what does that make ready gonna cost me?

You know, is that gonna be a a thousand dollars turn or a $5,000 turn? So, yeah, so I’ve really focused that on how do I run my business. It’s not just about, Buying units and just get, keeping them full. It’s also about reducing that amount of time that we have to spend turning over those units. So getting, attracting and keeping a better quality tenant.

And when those higher quality tenants leave hopefully they leave that unit in better shape. So yeah, I had a few this week security deposits that are going out this week back in full, and I checked with my property manager to make sure that that was accurate. I said I haven’t had. All of them in a month, like in a long time where they were all a full refund.

He said, you know, everybody left it in perfect shape. And, and I said, that’s, that’s like music to my ears because that’s less work that we have to do. It always costs us more money to turn the apartment than it does to give a full deposit back. So So I, we’ve really, so that’s, I guess the other thing is educating our tenants.

What does a full deposit refund look like? Because they’ll get in and they’ll scrub that inner part of the stove and they’ll get in and clean all the cracks and crevices in the refrigerator and behind the toilet, and all those things that we’ve gotta do to, you know, to, to make that unit, you know, make ready.

So. Okay. Great. What would be a good advice for a new operator? Right. Somebody that is just getting started in. Yeah, I think again, whether they’re gonna be a self-manager or a third party, you know, operator, whatever it is, find find a mentor in the business and find multiple mentors. So I, I think for me, my, my career sort of started to, to snowball when I started working on personal development working on myself, but also seeking out guys in the business.

Been where I want to go. You know, maybe I was at a hundred units and this guy’s had 200 units, or when I was at 10 units and I saw somebody that had 50, I thought, oh my gosh. Like, you know, it was mind blowing to me. So you know, just finding, you know, searching out friends and mentors because our industry For the most part compared to other industries, has a lot of people willing to help and willing to share information and ideas.

And so and that doesn’t cost any money. I mean, I would also curse you, that is a testament for that. Yeah. And so go out. But, but yeah. Listen to podcasts, read the books, but you know, go, even if it’s just the local meetup, Those are usually very cheap. That that’s a, at a minimum, but, you know, as, as a career evolves, you know, or, or your investing career evolves, you know, spend a little bit of money and go to these conferences and boot camps and things like that and see what, see what fits because you may you may be able to accelerate your career that much more once you kind of get around people that, more people that are doing what you wanna do.

And so I just, I think that’s the biggest thing, just is. Because it’s most, most of it’s mindset. So, yeah. You know, like we can, we can read a, you know, you can, you and I can talk for 20 minutes and figure out how, how to underwrite or teach somebody how to underwrite a deal, but they’re only gonna learn that through practice.

And, and that comes easy. But what’s the mindset of going from one units to 10 units to a hundred units to a thousand units and, and, and things like that. It’s just learning how to, learning how to be a millionaire, not just become a millionaire. So, Yeah, absolutely. That’s a phenomenal advice. A little twist on that question.

If you could go back in time to a younger Jason, right. What would you, what And no, you cannot tell yourself that 2009 is the parliament by everything you can, right? Other than that what would you tell yourself? You know, I, I, I would tell myself to relax. I mean, I don’t have any regrets. I’m very pleased and not grateful for where I’m at right now.

I know that, I mean, you can tell yourself different things and you to go bigger and whatever. I mean, that’s fine. I’m, I’m, I’m, I’m, Extremely blessed and happy with where I’ve, where I’ve come from. But I think early on when I was working my day job, I was so obsessed with money and, and career and, and building this business that I feel like I, I feel like that put strain on my friendships and my, my marriage and, and just wasn’t the best version of myself till I stopped caring about that stuff.

That, or I stopped realizing that nobody else cared. I, I didn’t need to prove how good I was to anybody else. It was, you know, and just learning, learning that it’s, it’s not a competition just. , you know, just give it up and, and I just was so obsessed. I would work hours and hours and hours in, in the business, and I think that you know, if I was a little bit more free and relaxed about it, maybe things would’ve come a little easier in the early days.

Yeah. Oh, that’s awesome. So I, I want to thank you for a time. It’s been a phenomenal and a lot of really, really good information. Can you tell our audience where they can find you? If they want to send the referral away, if they wanna reach out. How can they find you? Sure. So Jason Perro, you, you know, you can find me on Facebook and LinkedIn.

My e you can put my email in the show notes if you want. That’s jason perro yahoo.com. And I, and if anybody wants to schedule, you know, a quick 15 minute phone call with me they can get on my Calen Calendly schedule, which is just Calendly slash jason Perro. That’s very generous of you. Thank you, Jason.

And we’ll make sure to put everything in the show notes. Awesome. Great. And for you, the audience, if you want to hear more of our podcast, just go and subscribe on iTunes or Stitchers or anywhere else where you consume. We also post all of our videos on YouTube on our channel, and we would really appreciate if you can go online and give us a rating.

That helps a lot. Until next time, thank you so much. I’m your host, Joseph Golan. Thank you so.