Episode 120: The Real Math Behind Self Management with Feras Moussa – The Apartments Operators Podcast

Feras is an entrepreneur at heart with a tech background. Feras graduated from the University of Texas with a Computer Science degree, and worked at Microsoft straight from college. Feras later resigned from Microsoft to ‘bring tech to industries that lack it’, where he later found his passion for real estate. Feras quickly built a portfolio of rentals, completing 9 closings in his first 12 months. 

Watch the Podcast Here

Help Us Out

Help us reach new listeners and reach a wider audience by leaving us a rate and review on iTunes. It’s quick and easy to do.

Thank you for your help!

Learn More About Feras Moussa

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. Welcome everybody to the Apartments Operated podcast Today we have another wonderful guest for us.

Musa is with us for us. He’s the partner of Ben Settle, that used to was a guest on our podcast about a year. and would love to hear how you guys are doing today and what’s been going on in the last year. But before that, give our audience just a quick minutes about who you are, what you’re doing, how your portfolio look like, looks like today.

So they’ll have a background. Awesome. Thanks for having me, Joseph. Definitely appreciate it. Glad to be here. For those that don’t know me, my background’s actually software and I’ve been doing software all my life ever since high school. Had my own little web company and.

College happened. Then I went, worked at Microsoft and left Microsoft had a software company and now I do real estate. I tell people, I started really, I was looking to invest my own money, right? And learned a lot more about real estate and learned about syndication and loved it cuz it’s people’s numbers and systems and so that’s where fast forward a little bit, right?

Started disrupt equity. Clearly the name Disrupt is a tech spin, right? That’s where that originated from. And I left Microsoft with a vision of building software in industries that don’t have it like real estate. And I’ve since learned the opportunity is more about tying everything that is the Norman Tech and applying it to industries like real estate.

And so that’s big part of what we do and how we’ve done it right at Disrupt equity in terms of just leveraging most of the stuff that’s out there, but tie it in a way to really make a compelling package. And so today disrupt equity. We’ve done many deals full cycle. We currently have about 1500 units that we own and manage right throughout Texas and Atlanta.

And then we also have disrupt management that does third party management, and that’s about 2,500 units as well. So that’s maybe a very short, quick two minute bio. So happy to drill in anything. Awesome. Perfect. I heard you say you have your own management company and I heard you say you have 2,500 unit under management versus 1500 that you guys currently control, which means you’re doing third party for other people.

So we’re definitely gonna bid into that one in a few minutes. But let’s get started with have you always had your own third party management? No, we honestly started ours outta necessity. We, like I said, we’re in Texas and Atlanta and we’ve had throughout our history, five different management companies.

So we’ve seen the good, the bad, the ugly, and ultimately to me, management is a very dated business, right? There’s not a lot of. Companies that have really thought through management and modernizing it. And so for us, we started management out of necessity just from the pure neglect that we saw happen on our own properties.

Just, clear negligence. And so that’s really the, and it’s something that we knew we would need at some point, right? You’ll outgrow third party management if you’re not happy with it. And. That kind of accelerated things and really just brought on our own management.

So we met someone that had our own management company, Joseph, you’ll know as well as I do, management’s a hard business, let alone a bad business. But we’ll get to that. But it’s a hard business in the sense there’s so much going on and you really, it’s hard to just, if you’re a syndicate or an operator, it’s not trivial to go start your own management company, I’ll be honest.

And so for us, we had someone that had her own management company took it from zero to 10,000 units before, right? So it’s not her first rodeo. And , that’s the brains behind that. We just jet fuel it and really build up a lot more of the systems and processes. So yeah, we started ours out of necessity right before Covid hit back in January.

So that was a, the, maybe the right time, because honestly, sometimes I cringe thinking what would’ve happened if we were stoned to third party management? So it, it’s amazing how our stories. Similar. . But we took over management February 1st, 2020, and then Covid happened, and then for the first few months you look around and you think to yourself, so that’s just the worst possible timing to choose to take over management.

That was the worst decision. It’s the worst timing. And then you look back at it and you say, the best thing that could have happened, because with the third party, there is no way we would’ve. No, I mean they just wouldn’t have cared for things, right? There’s no thinking outside the box and some of these companies are borderline criminal too, right?

They would bleed you to death. It’s easy and I tell people, and I see this because whenever now there be third party managers really interesting cuz we take over from other management companies and you see the same pattern where the owner puts pressure on the management company. , the management company reacts and does a heads in bed, goes, gets temps, goes, gets, whatever.

And really jacks up between temps and locators, spends a hundred grand, gets the property occupied. Most people can pay for a month or two. It’s hard to find people that’ll pay for 12 months. And, you just see that. And so then you just see this pattern where like you can literally see it in the financials, right?

And then in the delinquency and in the ap and then, a few months later, they’re pissed. Everybody’s pissed. That’s whenever they bring us in and then we’re having a mop up. And, that’s what we saw on our property. That’s what I’m saying on other people’s properties. And this is where you as a property management company, have to give the owners cold hard truth.

Like literally you have to give ’em the information they don’t want to know sometime or who want to hear, they need to know, but don’t want to hear it. And really just talking to them about the fact. Hey, here’s the right way to do it. It’s gonna take time. It’s not a quick situation.

And here’s the data that shows it. Yeah, it’s hard to realize that when you’re on the outside, but when you have a hundred or 200 in the property, it can spin out of control and drop 20, 30% occupancy in no time in a matter of months. But it can take over a year or sometimes. To recover from that 34 months of spiral.

Yes. So it’s hard to see that from the outside. No it’s so true. And then I’ll give you a real case study, right? A deal that we third party managed, took a portfolio for this client and, and one of the deals, they closed on it in the spring, right? Four months later they took, we took over and I ran the numbers for them.

I’m like, so here’s the numbers, and this I ran these numbers four months after takeover. So about. After they close on it, and I’m like, the previous management company moved in 54 people. Of the 54 people, 23 of them are, large have been evicted or skipped. The other 23 of them are large balanced delinquent.

So 80% of it is garbage. And I can’t really say, look, our occupancy. It’s not as high as it was before because we’re having to cycle all that people, but we’re collecting more money, right? So the numbers speak for themselves and really, and just explain, hey, it’s not trivial to replace 54 people on top of renewals, on top of leasing.

So it’s a whole system and it takes, to your point, it’s easy to destroy a property two, three months. It really is. And also destroyed in a way that as an owner, right? Like I felt like we did a good job in asset management. We were all over things. And what I realized in hindsight is most management companies don’t even track what they’re spend.

And you don’t realize it until two months later. Whereas for us, I’m manal about the team creating pos, creating invoices, and we know beforehand, right? And even on that same deal, there was about $200,000 of new AP that came in after we took over. That was never on any books. And so as an owner you think, hey, they’re doing an okay job.

They’re not spending that much money. But then as the dust settles, you see all these problems. And yeah. And again, when it’s not their money, then the spend is. The maintenance guy said we need a host. This is a true case, right? The maintenance guy said, we need the new host, so we’re gonna go buy a new host.

Oh, but we just bought one last week. What happened to it? The other maintenance guys have it, and I don’t know where they are, so I’m gonna get a new host. It’s no, that’s not how it works. But that’s when it’s not your money and it’s not, nobody cares then yeah, get that on, on a two jetting machine.

So yeah, I know what you’re talking about. Yes I have stories like that as well, but what I like hearing from you in, in, and this is really echoes with our experience, is, The care. Now, what I found is that the industry compensation model for property management is just wrong. Now, I’ll be honest with you, I don’t have the solution, right?

Because I’ve been trying to rack my brain around what’s the right way to do it, and I don’t have a solution. If I had a solution, I would be a billionaire. I’m guessing, right? But the challenge is that they get paid off the. And they get paid a very small percentage, but as an owner, the interests are not there.

So for example we had a property where, long story short, $25,000 a year were not billed or collected. Of course, if it’s not billed, you can’t collect. For us, $25,000 a year at a six cap is about half a million dollars worth of value to the. So the ownership, look at this is oh my God, it’s $25,000 a year.

It’s a lot of money for the management company. $25,000 a year at 4% is a thousand bucks. It says hundred bucks. It’s 80 bucks a month, three hours of work for one employee. So if that, in order to get that $25,000 a year requires more than three hours worth of work for an. , it’s not worth their time. No I agree with you this and this is the problem.

Okay, so this is, I still struggle with this because, for us, we’re super transparent on our fee structure. That’s by design, right? Like I’m an owner and it’s got the disrupt name to it. So I really care a lot about the brand and everything else. And what I’ve seen is that, The industry sucks because the margins are razor thin and therefore most managed companies will pack anything and everything.

That’s pretty questionable into the financials, right? Because again, 300,000 comes in, 200,000 goes out, it’s right. And, they’re they’re really making their revenue on other things other than the management fee. And whenever you’re very transparent and your revenue really is the management.

It’s a hard, sometimes a hard to explain owners like, look, yeah, we’re maybe a quarter of a point higher, but really that is all we’re taking. Like we’re not, taking all these other points that these companies make up a marketing fee and this fee and not doing anything for it, right?

Yeah. It’s a weird business in the sense that I’m surprised the margins are as tight as they are because it really, it, the margins are razor thin for a business that is, really so complicated. Honestly, it’s complicated, but there’s so many things that have to happen. Yeah.

But it really it’s, the margins are where they cut the corners. Unfortunately, that’s the problem. Instead of having a qualified account. Doing the work. They have somebody that is not certified, that does not have accounting education, and a lot of the time they mess things up. One of the things that one of the property management companies we fired before we took over they, I used to say they’re playing pay.

It’s every month they spin the wheel to figure out where they’re gonna put the pays fees under which ledger account, and you would find them randomly across all the ledger accounts. So it’s kinda like that’s the kind of things where they cut corner to make a little bit more money. And like I said, I think the compensation model should be different.

I wish I could had the formula for now. There’s not a clear way to do it, yeah. It’s tough because even on, okay, everyone says the golden thing is noi, but it’s also easy just to say everything is capitalized and now you’ve fudged with that, or you know you’re doing it property that needs 10 times more focused.

Cuz it’s a big turnaround. I mean that also can’t be an, a wide treatment. It’s not fair to the management company. And if you’re also focusing on, in Hawaii, nobody would ever take over at distress. No, that’s exactly it. That’s what I mean there, there, those things need so much work, right?

So why was negative was zeros like. You’re not gonna take it over cause you’re not gonna make Yeah. And then that’s where even as a management company, there’s the big difference between getting a property brand new that just got acquired and having a clean slate versus taking over from an, a previous management company.

The client’s already been as, Ja as the Jackie, the president of our management company. Say they’ve already been burned by their girlfriend. So now you know you’re the next one up and they’re already antsy and they’re, questioning everything and just, they, you start off with an uphill battle of everything.

They’re probably in a payable situation. They’re probably cash neglected. They’re probably, gonna have, just delinquency problems and turning units and getting, just cycling tenant base. Plus, they’ve already lost trust and confidence in management. So you have to regain that.

It’s to me, those are very different situations and it’s really hard. To jump into one, whereas the other one’s a lot more straightforward. So yeah, it’s a weird business. All I’ll be honest. . Yeah. Awesome. So I get to ask you questions that I don’t usually get to ask. Most of our guests, cuz they don’t have their own management company it’s usually we found that once our guests have crossed a thousand or 1500 units threshold, that’s where they’re starting to think or implement it.

Their own property management company. But you have that perspective, so it’s awesome. So we can start talking about that. So we had a similar situation to what you described earlier. We had a property that in a certain period of time I don’t remember, four or five months, we moved in 58 people.

We moved out 55 people. At an average of about, let’s say $2,000 a turn, if you include payroll and everything into it that’s a hundred thousand dollars invested for a net positive three. Yeah. That’s a lot of churn. That’s a lot of trying to, you have that nice ocean background.

I’m scared to go. Yeah. And I’m scared to go do that same number on deals that we had before. We did over management too, because I’d probably cry a little bit. Yeah. Yeah. So you look at this then and you say, what are we doing? We spent a hundred thousand dollars for net positive three.

That doesn’t work. And that usually happens because everybody’s looking at the front door and what comes in and traffic and leasing, but nobody watches the back. . All right, so there’s a little bit on the front door, making sure that you screen a little bit better and you qualify a little bit. But there’s a lot on the back door right’s, a lot.

I That person that made it to that and that person that made it to that back door has already proven themselves. They already, they’ve already been there for 12 months. Yep. No, I think a lot of these companies are very reactive about just renewals, man. I’m pretty particular about renewals and we track that in our weekly report and just front and center.

Because to your point, if I could save that, I and some owners, it depends on what the strategy is, right? But for guys that are in it, for the cash flow, they’re gonna be in the deal for many years. They’re not in it to just to show look. The top dollar lease in my market for the last five leases.

Therefore, the next guy can hypothetically get that right. Take that off the table, I mean to your. , I can not have a unit vacant for a month and have to go release it and save the two grand, right? Yeah. And maybe I, I don’t go up an extra $25 a month of rent, but guess what, 25 times 12, that’s $300 a year.

I’ve already saved four x then on the turns. And so yeah it’s painful. And this is where I tell people there’s a cost to moving in low quality people. The time that is the property, the unit sits vacant and the just the headache of. Getting that personality, getting the unit turned. Because the other thing too, and I’m sure you’ve experienced this, cause again, I’ve experienced it on our own assets, is it’s so much work to get a property from 85 to 95.

But if you, but staying at 95 is cruise control, right? Because again, you’re psych. Cuz now you have so many more turns, so many more leases, so many versus, hey, once it’s stabilize, You’re just renewing, you’re moving in a few people, you’re cycling a few units. It’s less work for everybody. And there’s a cost to that too.

Exactly. Yeah. So let’s talk about that. How do you guys, in your organizations, for your own properties and for your third party, what do you guys do to watch the back door? The, or in other words, to increase retention? Yeah, we ab I, I’m pretty particular. They start renewals three months in advance and we grill them every, it’s literally front and center data point.

And I even have property level report cards internally that we go through all these key metrics. And every time I think of something I’m like, Hey, that’s actually a good data point and get that added to their report card. But really tracking the stuff three months in advance, working the renewals, and then figuring out different incentives, right?

And really letting managers know, Hey, you have the flexibility to close this. Here’s your range to get it done. Because there really is a mathematical, mid and max that you need to renew that person at. And so they just need to land in there somewhere, right? Everybody’s happy.

And so you start at the top and then you just taper down. But to me though, it’s, you can’t re, you can’t do renewals 30 days out. You already lost that person, man. People that are. Quality people are gonna already have a plan within 30 days. They’re not gonna, Hey, 20 days.

Yeah, I know. I’m supposed to move out in 20 days. Yeah. I’ll stay. That’s not gonna happen. So really working it early on, getting the managers to have that range and incentivize the managers too. We pay for renewals. Cuz again, there is a cost to that. And even educating the staff at how much life they’re.

How much life they’re easier how much easier their life will be if they get the renewals right? Yeah. Because again, that means, hey, guess what? That’s one less thing for you to turn. Hey, guess what? Maintenance guide. I That’s one less thing for you to turn, right? It’s just easier for everybody. And so we put a big focus on it in general, right?

In terms of just really working it and every week going through, Hey, what’s our renewal and what’s the status on each one of these guys? Okay, so our philosophy is that. Renewal doesn’t start 30 days or 90 days out, right? Renewal is something that is a full year thing. If they had a shitty moving experience, they’re not gonna renew.

It doesn’t matter what you do 90 days out, I right. If they don’t get their maintenance request done on time, they’re not gonna renew. If the maintenance guy came in once in the entire year, but left the apartment dirty with mud on the floor, right? They’re gonna have really bad taste in their mouth and it’s gonna be hard to.

The way we look at it is like from the moment they move in, we work on the renewal, right? We focus on retention. You bring up a good point, and that’s actually probably something I just glossed over. You’re absolutely right. It start it’s about, in the end of the day, you are providing a service to the tenants.

You have to realize that, right? The renewal is the carrot. But again, if they’re already pissed off, it’s already a uphill battle. And it’s funny you mentioned the movement. I learned that trick from our first asset manager that we had many years ago, right? Whenever he would go on. He would actually, this is whenever we’re the silver third party, he would ask them for their last 10 move-in condition reports.

Because guess what, if a tenant is complaining like, I got a hole here, this doesn’t, their move-in condition shows the quality of the unit. You already started that relationship on a sour footing. Yeah. And so for us we actually do have a process for basically, after people move in 30, 60, 90 days, we do follow ups to figure out just what’s going on, what’s painful, what’s not, and then just tracking those work orders and just really being particular about that.

Cuz yeah, I you hit it on the head, right? If they’re. , the price is the last thing that kind of really, you gotta go home run, but you gotta keep it them satisfied beforehand. Okay, awesome. You started to mention that in, in the last few minutes about reports and KPIs. So how does it look like for you working with your team as I’m guessing you still do the asset manage management side of things.

So take off your manager hat off and put your asset manager off for a second. And how does it look like working with your team? How often do you talk to them? What are you looking at and how do you encourage them or steer them? Yeah. So for us, it’s a good question for us, we started our management company with the plan of it being third party, and I treat it as an independent entity really in the sense that our asset manager’s offices over there, property managers down this way.

And they are two different. And they very much, they still get on the weekly calls. The calls are all recorded. I still listen to them whenever I feel like it and expect them to still have that separation. It’s not a big blur and I really don’t want it to be a blur because I want this guy picking on this guy if he needs to, and vice versa, right?

, there needs a healthy banter, healthy candor there, and so it’s very much the asset manager has the things that he’s focused on. What are we getting on renewals? How much did we get on renewals? What did we get on premiums? What are we spending to get these upgrades? Like really, doing asset management level.

All the property managers focusing on property management things, are we collecting what we’re supposed to do? We have the processes for anything and everything, right? And really, doing operation level thing. And so they are two separate things. And then, we sync, Ben, and it’s funny, me and Ben have divided it up too, right?

Where he syncs with the asset managers helping lead that. While I’m unfortunately stuck on the property, I didn’t really help him build that out. Cause that business got, there’s so much process and stuff to build there. And yeah. That kind of keeps it separated to some sense too.

And then, me and him can be the continuity of, where we gotta make everybody happy, keep everybody aligned kind of thing too. Gotcha. Okay. , you mentioned you do, you have about a thousand, if the math is at about a thousand units, you do third party four third party, I mean by the, so I guess one thing I didn’t mention is we do not manage our Atlanta portfolio.

So that is, we have not taken over Atlanta or anything like that. So that, so we third party about 2000 and that’s, have a few more coming up here in the pipeline. And then of that, 2003rd party, a thousand are first party, I guess that’s what you call it, right? Why

Why third party? Why take ok. That’s a good question. Why take somebody else’s headache? I know we got corners. The question, we got cornered to do own management and, I took the pain because I had to, right? It’s our property is our investors. I’ll do whatever I have to do, but why take other people’s headache?

It’s a good question. I ask myself that every day, almost, and I’m like, man it’s a hard business in a lot of ways, but it helps me manage my properties better, right? And what I mean by that is it gives me scale of resources, scale of, backend and being able to have more reach across the ecosystem, right?

I can see more deals. I know what deals are having problem, more, you hear more just by the access you have. And so it gives me operational efficiencies, right? In terms. Hey, if we’re doing an upgrade instead of buying, I’m the kind of guy that once we have enough scale in a market, rather than buying, 150 faucets to upgrade 150 units, I’ll go buy a container of faucets and do it across, get a couple of other buy-ins from other owners saying, Hey, here’s what we’re gonna do.

We’re gonna buy a container, it’s gonna cost this, we’re gonna charge this premium for doing this. Being very candid, transparent, but ultimately you’re, set up paying Home Depot 20. You’re getting over for 15. Are you happy with that? Yay, nay, let’s go do it, kind of thing. So I think it gives us economies of scale.

I can go get, to your point, if you’re managing 400. , that’s what, three properties? Maybe three, four, and I don’t know the size, but ultimately you can only get a landscaper to bid three, four properties. Whereas if I have 15 properties in the market, I can have a lot more influence, which ultimately results in.

better management for my own assets, right? Better performance, better pricing for my own assets, as well as third party. So it’s almost it’s like I say, it’s a necessary evil sometimes because with scale it gives you other both problems, but other benefits. And if a manager leaves, you can shuffle people around a lot more effectively.

Whereas if you only have three properties, a manager leaves, you’ve lost one third of your leadership. Yeah. Things like that to think. because the other problem too, actually I’ll say this and I think this is funny, and you’ll probably appreciate that. The problem with management is really a good manager quickly becomes a supervisor or regional, right?

And a bad manager doesn’t stay there very long. And so that role is always a role That’s like a, the good, very rarely do people stay in managers, right? They’re good, they go, they’re bad, they’re gone. And so it’s a one, one little trick that we found is good for a manager position is to.

An older supervisor that wants to take a step down, you hit it right on the head. And we have two exact situations of those. That’s the best, that’s the best for property manager position. No, and it’s funny because we did that and then that manager, now we talked her into being a super, cuz she’s really good, right?

And so now we’re like, look, we’ll keep it, we will reduce the travel, but like that’s, that worked out amazing on one of our properties. And now we have that again. And then there’s a question of can you have. A person that is a manager, but you know, regional material, they supervise another manager to where they’re almost like a remote Yeah. Site manager, supervisor. Yeah. So yeah, I, I’m multi-site, I’m trying to figure those dynamics out. But to your point, that is the best one. The one that, they don’t need to make as much money, they just want stability, simplicity. Yeah.

And. Don’t wanna take dump travel. They just wanted, no, we had one that just whipped the property like night and day and 60 days. Amazing. What, what was done on that property? So just cleaned it. So yeah, that’s send her our way, . So I’ll trade you one . No, that, that’s, yeah. That’s funny that you said that cuz little that’s been, that was in the back of my head last week.

I’m like, this is the best kind of supervisor or manager. Yeah. No and again it’s a, it’s like a a. Weird situation in our business, right? We buy five, 10, 15 million properties and we end up putting a 40 or $50,000 pay grade to run the show. Yeah. Eh, but the finances can’t afford having it a hundred thousand cause making 50, 67, $800,000 decisions each month.

And one, like it’s crazy to me and. Yeah, but that’s just across the industry, that’s the standard, right? I haven’t seen a lot of properties where you have a hundred thousand dollars managers on them. Definitely not in Texas. No. No. And that’s the kind of things again, more of the challenges of the industry.

Let’s switch to some of the questions that we ask all of our guests, right? You guys do a lot of value add right from the eyes of an. and now, and you have both the manager and the asset manager and the property manager perspective. We’re gonna look at income and we’re gonna look at expand separately.

So let’s focus on income for a second. What are your go-to methods to increase income that is not increasing rates and applying ropes, everybody does that. Give us a few creative ways where you guys found you can add value and charge more. Yeah, no, so there is, there’s some things that people like.

Like one property, we got this idea from a property we bought and took over, like simple things like a tech package, man, you spend 150, $200 and some people will pay $50 a month for that. That is a very good roi. What is that? What’s in the package? Oh, you’re putting in like an Nest thermostat.

You’re putting in August door front lock and. What’s the third thing I’m missing? Oh, like USB outlets, like very simple things to do. Takes a maintenance guy, 45 minutes, an hour, all in. It’s really the equipment, but then people will pay you that premium and I’ve seen that. Other things, that are easy are carports, right?

Like really being smart and really, we like to do three tiers of parking, right? of Having, I forget the terms that we use, but essentially, There’s cover, there’s premium, and there’s standard. So premium is that spot that everybody always wants. It’s right next to the Yeah. The, their apartment.

It’s, I can see it from their balcony, whatever. People will pay for that spot. Right. Even if it’s nominal. I think what we are good at is actually really pushing the other income piece. And you hit the easiest ones are the rubs. Like that one is just easy, right?

Yeah. But then really digging in and I like to really look at what else can I do? What CapEx can I put in, what can I get out of it? There’s other, there’s other nominal fees that you do see here and there, right? Like valet trash. I’m starting to see more of that even on the BBC properties.

And I think it’s, as an operator, it’s valuable because, the thing I hate the most is going to properties and people with their trash all over the dumpster. It’s just a, and then the dumpster company, they do their own, they really be anal with them because those guys will just throw whatever, and they’ll charge you premiums because, oh, we did an extra.

And I think there’s actually, as an operator, there’s a way to structure that to where it’s a win-win, right? You get a much better, cleaner property. You’re maybe making a few bucks on it as well. And then for tenant, hey, it’s a much more simple process, right? That’s another one we’re looking at a lot more closely.

Even simple things, man, just rebidding the contracts, right? Like we literally did that big push this past couple of months and like the, even the trash contract, we got it. 17% lowered. just by spending the, three hours to do it or the laundry contract that they say they’re paying you.

And then you go and you realize there’s a big lawsuit against the company. And then once you send them a demand letter, all of a sudden they send you 15 checks for what you owed. Things like that people don’t track, and all this stuff starts to add up. I’m trying to think of other big NOI boosts that I’ve seen.

The really, the tech one is the one I like the most lately, right? Where it’s very cheap and very quick banging for the. and you see any other big ones that you like. I’m gonna ask you the same question that I’m missing here. I will listen to our podcast and you’ll find a lot of those Uhhuh , right?

Yeah, no, it’s What we’ve seen is that a lot of the time people just split the reins based on layouts, right? This is a two bedroom. This is a one bedroom. This is a three bedroom. This is the price for one, two, and three. . But there are not only tiers, but there is like first floor, second floor.

Yes. Does it have a patio? Doesn’t have a patio. Does it have washer dry connections? No. Dry washer, dry connections, right? , all those little things allows you to set different prices for different. And that, and again, goes back to what we talked about ear earlier. A third party doesn’t take the time to do all these things.

No, they don’t because it takes time and they don’t see the roi with the way the compensation is structured. But for us, doing something like this can really help us push the rents. . And again, it’s not because it’s first floor, it’s $500 more than the second floor. Oh. But it could be as simple as $10, $20.

It absolutely adds up. No, We do the exact same thing. The first floor, I mean you hit the key one. I’m trying to think of the different, we even have like ones that are like one, ones with a study that are really like two ones and not, I and I don’t know how you guys do it, if you do it as a floor plan or you do it as a an amenity on the unit.

For us, we’ve played with both because as an owner I like to see what am I getting an upgrades for them, right? So seeing it as a separate floor plan is a lot easier than seeing, okay, our ones have these different checks, but then each one is a little different. You have to drill in we have a combination.

Yeah, I’ve struggled with what the best way to do that is, but I to your point, that’s low hanging fruit, right? Doing those kinds of things. And even other, I guess it’s thought of another one, just I like properties where I could figure out a way to add a bedroom , right? Like the converge is those are the best.

I’m not even kidding you. Like we have one where it’s literally these one bedrooms with a study and literally I had a freaking thing. I put a corner closet and boom now, and it’s actually already got a window. So it’s really a. Yeah. So now I’ve gotten that, premium for getting a two, but really it’s, it was a one to start with.

One other one I do and it only works on certain properties. We’ve done this a few times now, is getting, properties all have balconies, but finding balconies for you actually can get the enclosure right. And give them essentially a little bit of a yard. People pay up for that. We’ve got hundred $25 premiums for that.

Yeah. And. The way I like to look at where do I spend the money is the, by looking at the researchers that tell me what are people looking for. Up until last year, look the number one search item was pet friendly. So if you go on any of our property website and you look at amenities for the community, Pet friendly is the top one.

Why? Because that’s what everybody care about. Having a little yard is super important for people that have pets, right? Because you can let the dog out or the cat out without being afraid that, they’ll just run away or get hurt somehow. So again, I tell the girls in the office, when you.

For this property that have, or for this unit that have the balcony. Make sure you talk about pet friendly. Make sure you talk about the fact that it has a private backyard. So it comes down to all the little things across the board. And you men you made me think of a really good one actually, that we do.

It’s also auditing who, who’s really paying the pet feed, who. That one is an easy revenue source, right? Where like audit everything. It’s not just auditing everything, but the pet one is easy where we do quarterly inspections. As part of that, you make a note if there’s a pet, and guess what?

Someone that already has a pet, you hit ’em with a pet fee. They’re more likely to pay the pet fee than get rid of the pet . Of course, there’s always the conversation like, I don’t have a. Here’s the picture. Yeah. No, because I walk the property, I take pictures, and you always find a cat or a dog in the window, with the face smushed.

, so we also have, so we have of course, quarterly pest control. So when the pest control guy comes in, there’s always one of our guys walking with them to open the doors. We don’t send a vendor to the units without one of our, with one of our team members. So we give our team member a.

To check the boxes. Who has pets? Who’s neglecting the unit, who has a, any major issue that we don’t know of? Because unfortunately what we learned is that some residents will take a lot of pain and not talk and will not complain. And even when you ask them, they will not tell you. So we had a slab leak in one of our proper.

And we sent messages, text messages, and emails cuz we couldn’t find the leak outside. So we knew it’s in under one of the units. And we asked anybody, if you have a leak, let us know. And nobody said anything. And then eventually we found it in one of the units. They literally lived with a soaked, warm water soaked carpet and said nothing for over a week.

It’s kinda are you kidding me? . . We encourage our residents to tell us, we always do follow up on all of the work orders to make sure that we’re done. We have quarterly surveys. We talk to every resident once a quarter to get their, the feedback, general feedback about the property. And then we send our guide with the pest control guy to check the boxes, right?

If the smoke alarm is chirping, if there’s a pet in the unit and all that. But what. , especially if you are an operator that works with a third party property management audit. Everything that $25,000 a year I mentioned was a fee that was not charged. Even though it was in the lease. It was just not put into the system and without doing your ledger audits every month to make sure that everybody got charged everything then you won’t be able to get that.

and wood. Tens of thousands of dollars a year. Yeah, and it’s funny because like on the buy side you do see the discrepancies, like some deals and you’re like, man, these guys are minting other income. Whereas like other properties you’re like, this is a very similar property and there’s a $300,000 discrepancy in.

So yeah, pennies adds up into real money and I agree with you a hundred percent. Absolutely. So let’s flip the conversation to the expense side, right? What do you guys do in order to reduce expenses in your portfolios? So the biggest thing I like to tell people, Is you can spend, I’m making up numbers, 40 hours on expense control and you can spend 40 hours on income control and nine times outta 10 income is easier to get your pop than the expense side.

That’s the biggest thing we do on the expense side. That I think makes a huge difference cuz we’ve been burned by this with management companies is requiring, and I have this weekly and it’s in our report requiring pos to get. Independent of the invoices coming in, right? Because you don’t want managers just reacting, oh, I’ve got invoice.

I’m gonna go create the po. It doesn’t make sense. . But really forcing that, and then the other piece tied to that is really forcing our maintenance. Whenever a unit, someone leaves a unit, they have to go in and basically take a photo audit of the whole thing. Then they have to go put in their po.

So what they want to do, , a back office person gets to see, okay, here’s what they a we also tie that to, what did we charge on security deposits, right? Because it’s easier for someone to give back security deposit than actually try to fight for, right? We have a separate team that actually audits, security deposits tied to the photos, the condition of the unit, right?

But more importantly though the maintenance guy puts together the po I wanna buy new flooring. I wanna do a new microwave. I don’t wanna paint the walls. Back up a season and says that flooring does not need to be replaced. Like where’s the, it looks fine, right? Okay, maybe you replace one piece, but you don’t need to spend 15, 200, $2,000 to replace the whole thing, right?

So that’s one immediate way to save it. And then also, whenever the unit’s ready, they have to go do the same photo audit. So yeah, before and after of every single unit and you have pos and what should have been spent on. And even on the after, you can see did the microwave get installed or did it get stolen?

Yeah. And then that’s its own set of problem. So really, To your, it’s what you said earlier, right? The really tapering down the back door problem. Not just from a renewal, but even whenever you do have to go do the turn, really controlling that story. That’s one thing. Another one that we do is actually just across, looking at T 12 s have a separate report.

We’re looking at just variances, right? And just seeing are we seeing an uptick in water for utilities like we. Like literally have that situation right now where we’re seeing a increase month to month, which doesn’t really tie to occupants. It’s been the same occupancy, so there’s something else going on there.

And so just being aware of those, cuz utilities is where you really can get killed as well. That’s a big area that actually is worth focusing on the expense side of things. . Yep. Maybe those are some of the biggest ones that kind of come to mind that I like. Or maybe the most exciting ones.

I’ll leave it at that . Yeah. So when you mentioned the water and what one thing that we like to do is we track the meters every week because if you are waiting to see the uptick in your water bill, you’re about a month and a half too late. , right? So if we start seeing an uptick in one of the water meters, then we know we have a slab leak, or we have a leak somewhere, and we go and we hunt it down so we can shut it down as soon as possible.

So worst case, we have a weak week and a half loss of water versus. A month and a half loss of water. Yep. Not to mention all the damage that I agree. Water can create digital water meters with internet access are worth their weighting gold. They’re pennies and I log into them cuz there’s one property where we have a serious water leak somewhere and it’s killing us.

Like it’s, mean it’s a thing that, we knew the property had it when we bought it. Cause we have two properties not far from each other. One’s got 50 more units, but it’s got. 2.5 x the water bill, like it is just there. Literally the per unit on that is like $150 a unit of water.

I, and we’ve been, we’ve gotten water leak detection companies and all sorts of stuff, but I, it’s been fun to, cause I log into that thing like every two days. I just think about it. I’m like, let go see what it’s, and it’s been nice to see the trend down because we’re fixing random leaks. Just any and every league that we can find.

, but there’s still something bigger somewhere happening that’s separate problem. But yeah, those things are cheap and absolutely. . Yeah. We can talk after the show. I’ve had so many plumbing lessons learned in the last year and a half. , I’ll be happy to share with you.

Yes, too. Awesome. Can I be conscious of your time? Again, a question we ask all of our our guests on the show, if you could go back 10, 15 years ago to the software engineer for us and say, Hey, Yeah, I got a really good tip for you, right? And the obvious one, 2009 is the bottom by everything.

That’s off the table. So if you can’t say that, what do you give younger you as a No, I would say it’s more of a general thing. I don’t wanna tie it to real estate, but it’s really be leery of building your brand and your crm. Throughout your life. You in the syndicator side, you start to build your database once you want to go into that.

But sometimes I’m like, man, I wish I had done this 10 years more in my life. Especially me. I was exposed to so many tech people so much in that space and I, just, I wish I had been better at building that brand, continuing to build that database throughout my life. Yeah.

That’s maybe the easiest one, right? I There’s a million other things that could say, oh, this stock, that stock. But a real life tip is that one, I think, I no better times of today tip. That’s something someone can start today, right? I don’t need to know when the next Google is.

This is a totally different thing, right? Yeah, no, that’s a great tip. That’s a really great tip building your brand and start building your. Potential investor database and your, and I say it’s your audience of whatever you do. Whether it’s could be investors, it could be customers, right?

If I decide to go sell cupcakes Yeah. I a database. I go sell cupcakes, do whatever. Absolutely. Awesome. Thank you so much. Where can our listeners find you? If they want to WeChat, they want to invest you with you, or they want to hire you as a third party manager, where can they find you? And we’ll put all the links in the.

Now, please disrupt equity.com or send me an email at ferris f e r a s disrupt equity.com. Awesome. Thank you so much for being on the show. I think you brought a lot of value. Thanks for having me. Absolutely. And for you, the listener, if you wanna listen more to our episodes, go to iTunes stitchers, SoundCloud, whatever, you take your podcast and subscribe and leave us a feedback that is really important for us.

Thank you so much, and we’ll see you soon again. Thank you for listening to our show. If you wanna enjoy more episodes, please subscribe on iTunes, YouTube, Stitcher, or SoundCloud. For questions or feedback, please visit our site@www.aptopr.com.