Episode 114: Operating a 3,000 units portfolio with Brian Burke - The Apartments Operators Podcast

Welcome to the Apartment Operators Podcast, where you can learn from experienced operators what it really means to be an apartment operator. No fluff, no sugarcoating, just the raw, unfiltered truth of the ups and downs of operating multifamily communities. Welcome everybody to The Operators podcast. My name is Joseph Golan, and I’m your host.

Today we have Brian Burke from Praxis Capital. Brian, welcome to the. Thanks for having me on. It’s great to be here. Awesome. Brian is one of the best operators I know. He’s got a huge portfolio. He’s done a lot of things over the last few years. Brian, why don’t you take a couple of minutes and tell our audience a little bit more about your organization and a little bit about your history of what you’ve been doing.

Yeah, I’m the president and c e o of Praxis Capital. We’ve been in business now geez, I’ve been doing this for 30 years now. Bought about a half a billion dollars worth of real estate. Our current portfolio is around 250 million, a multi-family. We got about 3000 units in several states across the country.

You know, our model is to acquire underperforming multi-family assets, fix ’em up and. And, and run ’em for a while, and then ultimately we re we we sell ’em. So, you know, kind of not an unheard of strategy. I’m sure a few of people that you’ve talked to have done that. Right, Joseph? Yeah, well, we hear the story over and over, but the, the reason we created this podcast is because there’s a lot of podcasts out there that talk about how to buy, how to raise money, right?

How to put these deals together. But not a lot of podcasts out there that actually talk about, okay, you closed the deal. Now what? Right. Yeah. You know, it’s funny that you say that because there, there’s, there’s books, if you look at books, right? There’s hundreds of books about how to acquire real estate.

But very few books about how to operate it and manage it properly. And it’s a, I always tell people it’s like the, the acquisition phase will take you, you know, maybe two months, maybe six months, but the operation phase could be six years or 60 years. So it’s that’s really where the rubber meets the road.

So it’s kind of cool that you’re doing this podcast. Yeah, the, the way I like to say it, it’s kinda like getting to the closing table is a sprint and then it starts the marathon. That’s it. Right? That’s exactly right. It’s kinda like if you get to, if you get to the closing table thinking you’re all done with your sprint, it’s like, wait a second, we’re gonna start a marathon here.

Oh, I know. It’s funny cuz people will be like, oh gosh, I finally closed on this deal. I just, you know, it wore me out getting all the way through and it’s like, oh, you just wait. You haven’t even gotten worn out yet. There’s no time to be tired cuz this is just where it’s getting started. . Awesome. So let’s jump into it.

3000 unit portfolio. That’s a massive portfolio. That’s very impressive. And I know that along the way you sold some, you bought some right. , you probably have a lot more unit under your belt over the. How did you get started? Well, I got started like, like any new real estate investor would start, I got started flipping houses.

I I was buying single family homes, fixing ’em up and reselling ’em. At, at first I was doing it, you know, I bought my first deal with a hundred percent financing. I had a. A loan company, you know, a lender made me the first loan. The seller carried back the down payment. I fixed it up and rented it out for a while and then ultimately resold it.

My second deal, I bought by cash and financing all my credit cards, , and using that to, to, to buy a property, subject to the existing financing. And then, then I, then I figured out, wait a. I could actually get other people to partner with me and then, and bring money to the table so I could close. So that’s when I started, you know, using other people’s money, so to speak, and started just, you know, buying houses and partnerships with other people that would bring some cash and we’d fix ’em up and resell ’em.

And, you know, the business grew over the course of about a decade and a half, and then, And then we started getting into that crazy time in the market around 2000 5 0 6. You know, the market was just getting really bizarre and I’m like, you know, I gotta get outta here because nothing makes any sense. So basically stopped buying for a few years, maybe about two years, almost stopped buying, and then the market was just, Collapsing around us.

And it was great because all of a sudden there was just opportunity everywhere. It was like drinking from a fire hose. So the business just really grew as a result of all the foreclosures. You know, we had been buying foreclosures for years and so we just started you know, we went from doing, you know, a dozen houses a year pri pre-crash to over a hundred houses.

Host crash. And you know, in conjunction with that, we were raising a lot of money to acquire all these houses and said, geez, you know, what’s gonna happen when all these foreclosures are gone? What are we gonna do? And, and I thought, you know what? Multi-family, I, I bought my first multi-family property almost 20 years ago and I said, you know, I know that business, we can, we can move all these investors into multi-family investments and really scale this thing.

And, and that’s what we’ve done. So, you know, the last. Geez, I guess you know, 15 years have had a, a pretty heavy focus on multi-family in the last 10 years, especially a very very large focus on multi-family. That’s phenomenal. It’s kind of like it’s growth, growth, growth. Wait a second, something’s gonna happen.

Let’s pause for a second. And you guys are, are out in California, right? Yeah, that’s right. So obviously everything went completely bananas over there in the big clash of oh eight, right? So, oh, I was buying properties. I would, it was funny. I would look at the transaction history of a property that I would buy and there were properties I was purchasing and I’d look back in the transaction history and.

I’ve just paid less for this property than the guy that bought it in 1982. I literally, we set the clock back 30 years when that happened and stuff was like, you know, a good market was 30% off. A bad market was 70% off. And, you know, we were just buying stuff pennies on the dollar. It was a once in a lifetime opportunity.

We’ll never see it again. Everybody wonders like, is this next crash gonna look like that? Is Covid gonna cause you know, the market to do that? And I don’t think so. I think we had our shot at that and you know, now we, now we gotta work for a living . Well, I, I actually agree with you a lot on that one, but I have my reasoning.

What is your reasoning? I think that’s a subject a lot of our listeners would want to hear your insight. Well, what do you think? We’re never gonna see another 2008. Well, well, we’re certainly not gonna see it now. You know, maybe, maybe, you know, a hundred years from now we will, or something like that.

But in our lifetimes, I don’t expect it. One of the, the main reasons is that there’s so much money. Chasing real estate right now there’s literally hundreds of billions of dollars in dry powder waiting for real estate opportunities. And if the prices were to drop even 10%, that capital is gonna flood into the market.

You also have the the fundamental support for, for real estate, especially in the reside. Asset class because you know, there’s a lot of, you know, the population growth and you know, people are having babies and you know, there’s more and more people, but there’s development restrictions. It’s not like you can just go slap up, you know, a hundred thousand units in a day.

It takes a long time to get projects approved. They’re very expensive to build. And you know, construction loans aren’t the easiest thing to get either. So you’ve got supply side constraint to some extent. that helps buoy pricing. And I think, you know, with those two factors, you know, residential real estate’s gonna hold up really well.

Now if, if you’re in the hotel business or you own restaurant properties or you own retail maybe even if you own a lot of office, I’d be a little bit more worried right now. But if you’re a residential owner, I think residential is gonna be the shining star. Residential and industrial, industrial properties also will be the shining stars through, through this pandemic reset.

So, Yeah, I, I totally agree with you. The way I look at this is in no way the real estate crash was kind of like a, a fallout from the job market crash, right? It started with lemon markets and all that falling apart, and then stocks drop and then layoffs, and then real estate got impacted right? In 2007 and eight, if you got laid.

that’s it. You, you had no way to find a job cause nobody was hiring and, and no way to pay your mortgage. Right. But today there’s so many other opportunities that have been created since then that were not available then. Right. So for example, everybody can jump in and drive an Uber. Yeah. Everybody can take their house, Airbnb it while they’re renting a smaller unit.

Right. A smaller apartment and try to make the mortgage. . There is websites like Upwork and Fiber that allows you to do small jobs, basically micro entrepreneurial kind of things that can get you income even in a world where nobody’s hiring. So I think just that alone is never gonna allow us to see the big massive impact that we saw in 2007 and eight.

It’s kinda like funny how technology changes the word sometimes. And I’m spot on with you on the industrial right. I think Covid basically skyrocketed all the E-com and even the people that were very hesitant about online shopping before are now basically forced into online shopping. So all that e-com is gonna need more warehouse space, more manufacturing space, more, a lot more space in the industrial.

I think you’re spot on, on the industrial. Yeah. Transportation, logistics, storage. You know, the retail used to be the corner of Maine and Maine, you had to have high visibility. You’d have a lot of square footage to store your inventory that’s for sale. You know, now your inventory’s tucked into some, you know, non-descript, unlabeled warehouse on a corner that you probably couldn’t even find without gps.

Yeah. And, and that changes the face of, you know, kind of the retail slash. Industrial sector, and it’s, it’s gonna create a little bit of a reset there. So I’m glad I’m not in the retail space. Yeah, yeah. Well, but I have faith in, in humanity that will find a way to repurpose Yes. Right. That. piece of real estate is not gonna go away.

It’s still gonna be there because you can’t get a haircut online and you can’t get your nails done online, right? So there’s certain things that are still gonna require physical access. But I also think that we’re gonna see a lot of repurposing of, of the retail space for other purposes. Right?

Yeah. I’ve heard about people that take like anchor stores that used to be at Kroger or used to be an Albertsons and convert them into Big Gs or convert them into climate control storage units and all. Repurposing. Right. And I think that’s still gonna help boost commercial real estate in the next few years.

There’s no limit for creativity. That’s true. Somebody’s gonna think of something. Yeah. Well, we’re kind of diverting here from the main podcast. I know I can speak four hours with you. We’ve done that before. So I’m gonna try to reign us back in 3000 units. Right. Do you guys self-manage or do you guys use third party?

Yeah, we are now vertically integrated. We. we started, you know, most people should start with third party management. You know, you need third party management companies experience market contacts you know, network, all that stuff to, to kind of get yourself off the ground. And that’s what we did originally.

And about four years ago, we vertically integrated, we created our own management company. It has its own organizational. You know, I’m, I may own all the stock, but it has its own c e o and you know, now I’m, I’m just the chairman, so I, I don’t have much say in it. I let them run it. My goal as an asset manager is to make sure that they’re achieving goal and to provide guidance and direction to ensure that you know the plan.

Is tracking according to what we want. Now having said that, the team at our management company is enormously more experienced than even I am. The c e o of my management company has 40,000 units and 40 years of property management experience. He started national multi-family management companies for institutional investors six times in his career.

And. You know, we had this tremendous advantage that we could build a management company and almost instantly at the flip of a switch we had a 40 year operating history. You know, we had all of the policy and procedures manuals, and I mean, everything that you could imagine we had that at our fingertips almost right away.

And so we’ve got a great team there. And, you know, that’s, that’s our management division. And, and we now have control the entire process. from start to finish by by doing that vertical integration. Yeah. That, that’s great. So what was the trigger? What was the point where you said, no more third party, it’s time to set up my own?

Well, the trigger, interestingly enough you know, the, the, there was an undercurrent that had been festering for a while. And the undercurrent was we wanted to attract large. Investors. In other words institutional partners large family offices, people who could write multimillion dollar checks.

And the sophisticated investors in that space have come to understand that operators that. are vertically integrated, produce better results than operators that manage via third party. That’s their experience. This is them talking, not me talking. This is the feedback we were receiving when we had third party management.

Hey, you’re, you guys sound like you’re experienced, that’s great. We’d love to work with you, but you know, if you guys don’t manage your own you know, call us when you do, basically was what the message we were getting. So that was the undercurrent that was going for a while. That wasn’t what drove the decision though.

What drove the decision was just a, a fortunate and random and unplanned meeting where I got a call from a guy that said, Hey, me and two of my Competitor colleagues have been in the institutional space for between 20 and 40 years working for a variety of shops. We would like to be more entrepreneurial and, you know, kind of have a stake in the outcome.

And so we’re looking for a new opportunity and a friend of mine knew you and said, we should talk to you and see if you wanted to do something together. So after a number of months we ultimately, Found that there was a good match here, and if they joined our organization we could take this company to the next level.

Well, one of the three colleagues is the c e o of our management company. You know, his, his specialty was management and it’s like if these guys join. Not only do I have a C F O and an acquisitions specialist, I also get a property management specialist. And between the three of ’em, it was like a company in a box.

It’s like, you come in and join the company and now we can create all of these things. And that was the real catalyst was it was finding the right person. And you know, you can say, oh, I’m gonna create a management company all you want. , but if you don’t have the right person in place to run it for you, you’re just, you know, you’re shooting in the dark, you’re fumbling around, you’re trying to figure it out for yourself.

I didn’t want to do any of that stuff. I hate property management. There’s, there’s, there’s no business I wanted to be in less than property management, but if I can have. Full control over our assets. And I have an expert at the helm that’s fielding all that day-to-day property management garbage that I don’t want to field

That is the time and that was the catalyst. And that’s really what set this plan in motion. Yeah, I, I can definitely relate. We postpone as, as far as we could the decision to take over self-management. But we. Pushed into it mostly because of the performance of the previous property management companies.

So yeah, we had to do the same step. And, and you’re right, you’re absolutely right with finding the key player. And this is probably my best advice to anyone thinking about setting up their own company management. Don’t look for a number two, look for a number. , right. Just like you figured out this is gonna be my number one, he’s gonna be the ceo, he’s gonna run the show, and I can trust him.

Right? That’s what we did when we were looking for our VP of of operations. Find me a number one, find me someone that at some point I’ll be able to hand over the keys and not deal with that. Because you’re right property management is more brain damage than anything else, but it’s a necessarily evil, necessary evil i in our business.

And how retrospectively, right. Looking backwards to all the properties that you basically took over from third party to the in-house management. What do you see in the performance? What do you see in the outcomes of those properties compared to what it was before? Well, here’s what’s really interesting, and this may take you a little bit by surprise.

We didn’t, we didn’t convert any of them. So what we did was we, we had a few properties that were ready for disposition, and this was just all kind of right in that fortuitous timing, right? So so what we did is we started acquiring a lot of property and we were putting all the properties we were acquiring into the vertical integration platform and all the properties we had existing, we left on third party management.

And our third party management companies were doing a great job. You know, it was the, the decision had nothing to do with you know, their performance and, you know, or sliding them in any way. They were really doing a good job for us. For us it was really just about having full control over the process.

We we made that change within about a year of creating our property management company. We only had I think two properties left on third party management. And we sold one of those this year. And so we still do have one property left on third party management. And you know, the reason we don’t take it over really is because it’s the only property we own in that.

And for us, our, our management platform is a lot more efficient if we can build some scale in the markets where we are. So if we started acquiring additional properties in that market, for example there’s a likelihood then maybe we would take that property over. But we, we weren’t buying more assets in the markets where we were.

One of the big reasons I brought these guys on is because we wanted to buy in markets where we were not. And so, you know, originally we were 100% in Texas. Everything we owned was in Texas. We wanted, I wanted , I wanted out of Texas and it’s, you know, nothing wrong with Texas, it’s just that it was getting hyper-competitive to the point where ridiculously so, and I thought, you know, if there’s a lot of other really good markets, That we should also be looking in.

We can’t rely on only Texas to supply us all of our acquisition deal flow. Let’s go national and, and look everywhere. And so that’s what we did. And, you know, we were able to expand into Arizona, Georgia, Florida you know, and these markets because, you know, the team that that joined us had experience in all those markets.

So as we were adding on properties, we were adding them in new markets and we were basically selling outta Texas. . So that’s kind of how the transition played out. And it was a little bit weird. You know, most companies, they might go in and, you know, the last company. The CEO of my management company worked for, he literally created a management company and then took 25,000 units from third party management to in-house management in 90 days.

Jesus. And, and to me, that’s just, that is crazy. I don’t know how he did that. I didn’t want to create that kind of disruption. I wanted to have like a smooth and organized transition, kind of build a platform and scale into one and out of the other system and not just make a switch. . Well, I guess that’s where the experience comes in place, right?

It’s like 25,000 units in 90 days is insanely hard, even for national level property management companies. So sounds like you got a real, a player over there that you brought on board. So I want, I wanna talk about before and after, right? Or even now that you still have a third party property management.

How does the organization work with them as an asset manager? How do you work with them? How often do you talk? What kind of reports are you asking for? How does that integration work today? Yeah, on, on our third party, it’s kind of funny, our third party management, we have one property left and we have a weekly phone call with that property manager.

And, and periodic visits at least once a quarter visits, sometimes monthly visits to the property on the third party management or on the vertically integrated side of the platform, which is, you know, now 90 something percent of our portfolio. We, we have biweekly operations. The the operations team, of course, they talk all the time.

They’ll have weekly manager calls. They, they have daily check-ins between our area vice president, our chief operating officer. And our c e o, you know, they’re in constant communication. We use like a RingCentral system where they don’t even have to dial full numbers. Everybody is just an extension.

No matter where in the country you are three digits and you have ’em on the phone. So, you know, there’s, there’s constant communication there. My focus is kind of threefold. My focus. Acquisitions, capital capital stack and asset management. So you know, we’re looking for new opportunities to buy.

We’re looking for new money to be able to advance them. And then looking for, looking at the performance operations team to ensure that. You know, we’re, we’re tracking according to plans. So we have a, a biweekly operations call where we talk about every property and you know, what’s going on and that sort of stuff.

But most importantly is we have a really incredible technological infrastructure, and this is what is a real advantage to being vertically integrated over non vertically integrated. You know, within our, you know, this is enterprise grade software where we literally, I can go in anytime day or night 24 7, and I have a dashboard where I can see the performance up to the minute of every asset in our portfolio, I can see what our occupancy is.

I can see how many pieces of traffic came through the front door. I can see how many leases were signed, how many of those pieces of traffic were called back you know, how how many leases were denied or canceled. Move-ins and move-outs how much money was collected today and how what was put in the bank.

All of this stuff is available 24 7, 365. Anytime portfolio widen. I can look at that either as a portfolio as a whole or as a property individually and, and you know, so that coupled with weekly reports that, that are generated and automatically sent out by the system. Plus another weekly report that’s generated by our managers and sent out.

There’s literally almost a daily and constant communication flow from me and our operations team to know exactly what’s going on at the property. Not to mention that we have full video security camera at every property that I can log in anytime and see almost every corner of the property from anywhere that I am.

At, at any time I want to. So, you know, we’ve got a, a great technological backbone and that’s the big advantage of vertical integration is you can put all that stuff and wrap it all together. Yeah, it definitely makes it a lot simpler because especially at your portfolio size. Other operators that have that size that we talk to sometimes have to deal with one third party that has Entrata and one of them has RealPage and the other one has one site and it’s kinda like it’s all over the place and.

Creating an aggregated report becomes a real nightmare. Right. So what’s the platform you guys are using, if you don’t mind saying, yeah, we, we use RealPage. So we have one site at the properties. We have RealPage Business Intelligence for the asset management side and the RealPage accounting suite.

So the whole thing kind of wraps up all together so that, you know, if a, a manager. Sign a lease, put it into one site collect the rent payment, goes right into RealPage accounting so that the, all of that stuff is all interconnected with one another. And so from property management to accounting to reporting is all within one package.

Yeah, RealAge is a great software. We use some of their modules as well. It, you and I participate in the I M N Speaker Circle. Every once in a while it’s like I always find it funny to go watch the property management software panel. Because you, you look on the panel and there’s like six people and it’s like, okay, what are you using?

Well, we used to use RealPage. We’re now using trada. Next guy goes, we used to using Trada. Now we’re using Yardi. It’s kinda like people always kind of flip and they always have their opinions. Every software has its benefits and it’s, it’s not so great aspect. But the important thing is to be able to leverage and use all the tools and the capabilities, the software.

Right. Yeah. And, and you know, it’s, it’s interesting that you say that. And everybody, everybody has a preference for a reason, you know, and sometimes they switch because, oh, that guy gave me a better price, or something like that, you know, that might be one reason, or I was frustrated with this component. I couldn’t get it to work.

So, you know, I switched I switched companies. You know, our reason for using the one that we use is because, you know, the, the head of my management company has been using this. At all of the companies that he’s been with, he’s used this platform. So it’s going on almost 30 something years that he’s used the RealPage platform and our chief operating officer was actually one of the beta testers.

For a number of components for the RealPage platform. So, and it was also a corporate train the trainer. So, you know, we’ve, the, the staff, the team that I have has such an intimate level of knowledge of all of the intricacies of this system that we know how to use it to its maximum capability. And it’s difficult.

There’s a. Pieces to this that if you just come in and go, okay, I’ve never used this before and I’m gonna come in and try to use it, it will boggle your mind how complicated it is. But if you’ve been using it your whole life, and it’s almost like, you know, reach if you go to reach for a bottle of water on your desk, , you just go grab it, right?

Yeah. But you don’t have to think about, okay, I’ve gotta move my arm to the left. I need to open my fingers. You know, put, put the hand around the the bottle, grasp it. You know, you don’t think about all those pieces, you just reach your hand out and grab it. And that’s how it is for my team. When they use RealPage, they just reach out and grab it cuz they know where all the, where all the pieces are.

Yeah. And, and I think I, I have a background in software development, right? And we’ve built software for multiple companies, and the software is only as good as the user’s ability to use it. Yes. Right? If you use 10% of the capabilities, you will feel that you’re not getting enough value. Right. But every single day I would swing by and you know, see one of my team members bang the head against the wall.

It’s like, well wait, did you know you could do it that way? It’s like, oh my God. It’s kinda like, it’s just, if you take the time, you learn the software and you actually use what they offer. All those property management software platforms out there are pretty robust, and again, they all have their pluses and minuses, but they’re pretty robust and capable of doing a lot of.

and my experience is most people don’t use, don’t even use half of the capabilities. Yeah, that’s right. I would agree with you. And you know, they all kind of do the same thing. You know, really when you boil it down and they’ll all do the same stuff. If you know how to use it and you know, if you don’t know how to use it or it’s just not intuitive to you for whatever reason, then you know you make a switch, right?

Yeah. Or you get more training, that’s another option. Yeah. Right. . Right. Either one of those would be would work for sure. Okay. So when we started talking about third party versus your own, you, you had the comment of everybody should start using third party thinking hindsight, right on your entire history.

Would you start your own sooner? Would you go later, and we’re gonna take a side for a second. The coincidence of putting all four of you together in a room, right? If that didn’t happen, but you had control over it, would you start your own management company earlier? I don’t think so. You know, it’s funny that you asked that question cuz one of the things I was looking at as I thought, well, until we get over 1500 units, it kind of didn’t make financial sense because there wasn’t enough money there to.

A full-time staff, really, I mean, and a, and a management company requires some staff. You’ve gotta have an accountant or a corporate controller you know, at least an AP and AR person. And you gotta have somebody that’s in charge of the organization. And you need to have you know people in charge of the operations, you know, the properties themselves.

So as a, as a small operator, I couldn’t. that to make any financial sense really when we were small. But you know, really for me, I think back to my story of my first rental property. And I bought this condo as a from a, a guy that, you know, a friend of a friend. And I was gonna rent it out. And I I, I put an ad in the newspaper.

This tells you how old I am. I, I put an ad in the newspaper to find tenants. And I got a call from a couple of girls that were in school and were looking for a place, and I showed ’em the unit and they were really nice girls and, and they they had jobs and they were going to school and you know, their parents lived locally and this was gonna be their first place together and all this other stuff.

And I thought, great. I found my tenant. They filled out applications. There was nothing negative on the credit report that I, I ran the credit report through a thing, I, nothing, no red flags. Came back and, and I said, okay, the apartment is yours. Meet me here. I’ll give you the keys. Just bring me a cashier’s check for the deposit.

and we meet at the place and, and we exchange keys and sign the leases and, and they say, oh, you know, we, we just didn’t have time to get to the bank to get the cashier’s check for the deposit. Here’s a, we’ll give you this personal check. I’m like, okay, fine. You know, I read never to do that in the book.

Always says, you know, get cashier a cashier’s check. But what do the books know? You know, I’m out here in the field. This is the real world, and in the real world, this is how things are done. So I take the, the personal check. I deposited about five days later. I get the notice that the check bounced. And so of course I call ’em up and no answer and you know, call ’em again and no answer and serve a three day notice and no response, and finally have to go all the way through the eviction process.

I had to evict him. They never responded to any of the eviction notices. I had to have the sheriff come out and, and and conduct the eviction. They never even came back for their. after they were evicted and you know, in sorting through their stuff, you know, about two, about two and a half, three months went by before I finally got ’em out.

And you know, I’m, there’s like writings throughout the apartment that, you know, you can see, like when they first moved there, their handwriting was really neat. But by the time they were gone, it was completely sloppy. You could tell they were just started using drugs. Their motor skills had declined and you know, I ended up having to conduct a public auction to have their stuff sold off and you know, and it was like the, this long story that’s already too long to go short now was that I realized.

I am a horrible, and I mean, horrible property manager. I should never be a property manager. I was too nice. You know, I, I didn’t, I, I didn’t want to be like, oh, you know, I’m the mean landlord and go get me the cashier’s checker. You can’t have the keys. I wanted to be accommodating. I wanted to trust people and that that’s just the wrong characteristics for a property manager.

Yeah. And. You know, I never wanted to be a property manager, so would I have started on a management company sooner if I didn’t have somebody to run it? Absolutely not. Would should a new investor start managing their own? Well, I guess if you’re a better manager than I am, go for it. But I feel like you need to have somebody that’s already learned their lessons the hard way on somebody else’s dime and you know, knows what they’re doing to come in and guide you as a new investor who hasn’t learned your lessons yet on how to do this right.

And people say, oh, nobody’s gonna manage it better, my probably better than I will. Hogwash somebody who knows what they’re doing will do better than somebody who doesn’t know what they’re doing. No matter how many books you read, or how many podcasts you listened to, or how well you think you know, the business.

It is a complicated hands-on tactical sport that requires experience and people skills. And and you know, there’s, there’s my soapbox . Yeah. Now just to touch to a couple points that you mentioned that are super critical for everybody to understand, anybody that’s considering starting their own management company have to understand that there’s, first of all, there’s a legal aspect of.

You gotta know fair housing, you gotta hire people that know fair housing And if you don’t understand all this and you don’t have the experience or the knowledge of all the rules and regulations and a way to keep up with them cuz they constantly change then you can get in real hot water real fast, right?

So, so that’s one thing. Obviously there’s a difference between the eviction process in Texas versus the eviction process in California. But you gotta know where you are. You gotta know the rules, you gotta know the regulations. The other aspect of, of the property management is, is spot on what you just said.

You need people skills. People have that misconception that we’re in the buildings business. We’re not in the buildings business, we’re in the people business, right? Because the empty buildings are not me bringing in the money. It’s the resident. It’s the people that live in those buildings that actually bring the, the money.

And when you have people involved, Everything can change it on time and they’re gonna surprise you every single day. Right? So you’re absolutely spot on. I just wanted to highlight those two little things that are pretty critical for anybody thinking about their own management company. We ask all of our guests to, to get a few of ideas from them about how they turn you turn properties, right?

So the usual story of buying something that can have a value add, do the value add and, and, and increasing the. So other than increasing rent, right? Or upon rubs, what are two, three things that you guys like to do in your organization to increase revenue? Yeah, there’s a, there’s a lot of different things you can do on the what do you the, the ancillary revenue side.

One thing that we’ve done and had some really good success with is when laundry service contracts expire, have the laundry service people come and take all their machines, and then we go in and renovate the laundry room and we buy our own. And we get the, now that you have the card reading machines you know, the people can they use a not a credit card, but like a special card for the laundry machine.

So we don’t have the cash collection problem where you have, you know, the managers taking all the coins and putting ’em in their pocket. You know, you don’t have the theft issue. . So we, we dramatically increase the income at a property that we have in Florida when we converted over to to owned laundry machines versus the laundry lease system.

That was a big success for us. Another one is is putting laundry machines in units that have connections. Residents that don’t have their own laundry machines. Sometimes you can get 25 to $50 in additional rent if the unit comes with laundry machines versus them having to supply their own laundry machines.

Other things that we’ve done we’ve added covered parking to properties that don’t have covered parking spots, especially in warmer climates like Arizona, Texas. It’s nice to have covered parking and you can rent those covered parking spaces out. We’ve gotten anywhere between 25 and $40 a month for covered parking.

Another one is assigned parking. This one’s interesting. It doesn’t cost you a dime but you can say, look, we’ll give you an assigned parking space that’s near your front door. That’s reserved for you. And it’s $15 a month, you know, so you can you can do a sign parking. That’s almost a no cost, just the cost of the sign.

Other things valet trash where they pick up the trash from the front porch for an added fee instead of them having to go to the dumpster. That’s another one. Solar is another one. And, and one interesting twist with covered parking is what about using solar panels for your covered parking?

And then you can get a little bit of utility savings for your house electric meter at the same time that you’re getting revenue for the. Car parking space underneath it. So that’s another interesting one. You know, converting garages to storage or closets to storage units, adding storage units or closets.

The list goes on and on. There’s all kinds of ways. That’s fantastic. There’s a lot of really great ideas here. What about the other side of the no. Why, right. Saving on expenses. Yeah. You know we don’t, I don’t place a lot of focus on expense savings. You know, the, the the improvements are so limited.

You know, with, with revenue, the sky’s the limit. You can, you can increase revenue exponentially, but you can only decrease expenses incrementally, so you don’t ignore it. , but you certainly aren’t going to get a huge swing out of expenses no matter what you do. But there are some things to look at. Number one is property tax protests especially in areas where property taxes are increased to reassessed market values periodically, once a year, once every three years, once every four years, whatever the case may be.

Protesting those assessed valuations with the tax author. Can oftentimes result in substantial expense savings or at least keeping the taxes where they were instead of having an enormous increase. So that’s probably the biggest one you can do. The other one is of course, you know, water saving modifications.

You know, changing out to low flow toilets and showerheads and faucets is a, is a common one. We like to go into properties and change out the lighting to l e d lighting and, and it’s one of the first things we do when we take over our properties. You go and you change all the lighting and it’s like, it’s incredible because the residents are like, wow, there’s new owners here.

It’s all bright now, you know? Almost instantly, like there’s a new sheriff in town. It’s cool what lighting can do and the new l e D lighting is much more energy efficient than the older style. And you can save a little bit of cost there. Personnel is another one. A lot of times properties are overstaffed.

You know, and looking at the staffing matrix and making sure that they’re appropriately staffed is another one to get some expense savings there. Anything else that you can do as pennies, but you know, every penny you can save it matters a little bit. Of course. Well, it, it’s the way the n y is calculated, right?

A dollar saved and a dollar added is the exact same dollar to same value, right? Yeah. So, so that’s phenomenal. Okay, so if you could just it’s a question we ask everybody. If you could go back in time to young Brian. And the one thing you can tell yourself is like 2009 is the bottom by everything you can, right?

What, what advice would you give yourself? ? I did exactly that. In 2009, I started buying up rental houses. We bought 120 rental houses in the San Francisco Bay area for about, I think, Less than 15 million and we sold them for about 45,000,005 years later. So we did exactly that. We bought everything we could get our hands on.

So geez, I mean, you know, what would the older self tell my younger self? I, I think I, I would say, you know, get, get to know more investors sooner. You know, when I first started in real estate, I was focused on how can I develop my own resources to, to get started in this business. Cash advancing credit cards, you know, seller financing, you know buying subject two, all those different kinds of things.

And I didn’t put any energy on getting myself out there. For people to know who I was and what I was doing, so they would be attracted to what I was doing and want to supply funds to help grow that. Had I done that sooner, I probably, well, actually, you know what? It probably would’ve happened. I probably would’ve built a huge portfolio and lost it all in the big crash because, you know, you would’ve been so heavily invested.

Instead, I had limited resources. I only had so much to. That I was able to actually scale out of the business before the crash happened to a great extent. But I would like to think that I would’ve been smart enough to survive the same way I, I did survive even if I had gone big. So I think I would’ve liked to have gone bigger a little bit faster.

It, I’m a slow bloomer. Took me 15 years to really grow. Well, and, and I think that this is something that we see over and over in, in all the people we interview. It’s kind of, there’s very, very few that went zero to 90, right? Yeah. It’s kinda like it, it’s usually, it’s, it’s an exponential growth. You start with one and then two, and then five, and then seven, then 10, then 20, then 80 then, and so on and so on, right?

So it’s kinda like, it, it, it’s a 20 years overnight. That’s what people say. So thank you for that. I appreciate that insight. So for our listeners that wanna reach out, maybe some of them want to invest with you. Maybe some of them want to get advice. How can they find you? And we’ll put all of that in the show notes.

Of course. Well, there’s there’s lots of ways. If they want to invest with us, the easiest way is to go to invest with praxis.com and they can watch the webinar on our fund that’s open and accepting investors. Now, if you’re accredited, you can do that, and I can say that because it’s a 5 0 6 offering that allows me to advertise, but we only accept proven accredited investor.

So if you’re an accredited investor, You can go to invest with praxis.com. Read about and watch the webinar on our, our latest fund offering. If you’re not accredited investor you know, you gotta get to know us and we gotta get to know you before you can invest in any of our future offerings. So the best way to learn more about us is to just go to our website.

It’s prax cap.com. It’s P R A X c.com. Learn about us there. You can find me and follow me on bigger pockets.com. I’m. Answering questions in the forums from time to time. You can catch me on Instagram at investor Brian Burke or at Prax Cap or catch me at one of the conferences once we can actually start getting back together again in person which hopefully won’t be too long.

Yeah, that sounds great. Well, Brian, I wanna say thank you so much for being on the show. You brought a lot of value to our listeners. Thank you so. Thanks for having me as part of it. Joseph, it’s great to see you again. Awesome. And for you, the listeners, thank you so much for listening again for us.

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