Episode 127: Zero to over 90 units while still working a W2 with Steven Nguyen - The Apartments Operators Podcast

Welcome to the Apartment Operators Podcast, where you can learn from experienced operators what it really means to be an apartment operator. No fluff, no sugarcoating, just the raw, unfiltered truth 📍 of the ups and downs of operating multifamily communities.

Welcome everybody to the Apartment Operators podcast. My name is Joseph Gaza and I’m your host. And today we have Steven. And Steven is a very interesting guest.

He still has a day job. And Steven, welcome to the show. Hey Joseph. Thanks for having me on and excited to share my story. Yeah, absolutely. It’s a pleasure. Give the audience like 30 seconds to a couple minutes of who you are, what’s your story, how is your portfolio looking like? And then we’ll dig into it.

Awesome. So as you kinda alluded to earlier, I still work a full-time w2. I’m a pharmacy director by day trade. So I’m a pharmacist director at a hospital manage around 40 pharmacists. Been doing this for about 10 years. Came out of pharmacy school of $250,000 of student debt. I’m the very traditional W two high income route.

you know it, it’s a great profession, but I quickly realized that you hit a ceiling very fast. I’ve been making the same income since, 2019. And obviously everything’s more expensive since 2019. Houses, gas, food, everything. And from there I just naturally progressed into real estate.

I aggressively paid off $250,000 of student debt in about four years. Wow. After that, I just said, what’s next? What’s after paying your student loans and the natural progression is to buy your own house? So I started off house hacking. I’m not sure if your audience knows what house hacking is, but basically I lived in the master bedroom and I had to rent out the other three to four bedrooms for about a thousand each, and that helped cover my mortgage.

So that helped reduce my cost of living. I’m in California over here, so rent’s very expensive. I was living in San Francisco where a one bedroom, one bath is about 4,500. So just through house hacking, I lowered my living expense to around 1500, which is one third while making a high income w2.

And honestly, my goal was to buy one of these house hacks a year in California for 10 years. and then hopefully retire. But I quickly realized that in California, since the houses cost so much, about a million dollars on average, to be honest, I’m at best breaking even while self-managing these single family homes.

That’s, I can’t leave my day job. I don’t have cash flow, but I did have insane, appreciation and inequity, which is more of a California market. . know, Once I learned about out-of-state investing and apartment complex, specifically when I learned that as you increase your cash flow, you increase your net operating income, you force appreciation, you can have both cash flow and appreciation.

I just said I need to learn how to do apartment complexes. So from there I learned how to do a direct mailing campaign. , know, I sent around 1800 letters over six months, and I closed on my first two apartment complexes. So I got a 26 unit and a 20 unit in Oklahoma. And after that I kind of dive into mobile home parks.

So I have a 200 lot mobile home park in Alabama. So that kind of puts my portfolio at around 90 units current. . I have no partners in the deal. It’s just myself and I did all this while working a full-time W two job. So that’s just a high level about my story. Wow. There’s so much to dig into over there.

First of all yeah, when you were starting to say, it’s kinda I would rent a room for a thousand bucks a month, and it’s kinda okay, we gotta tell everybody he’s from California. Otherwise everybody wouldn’t understand that. So that was the first thing. But the most impressive thing you started with was.

You paid off $250,000 a quarter million dollars in four years. That is discipline. That is impressive. Absolutely. And that is one of the smartest thing I believe you’ve done as a young person coming outta school. because a lot of people don’t realize that debt has three categories. There is good debt, bad debt, and really bad debt.

and really bad debt has only one line item in it, and that student knows Yes. And the reason it’s get a separate category is because every other debt, good or bad, we’ll get wiped off if you file ba. Really bad debt. A k a student loans don’t wipe off even if you file for bankruptcy. So good on you to get that.

I just wanted to get it out of the way because I know we have a lot of younger audience and younger listeners that want to get started and look, If the choice is between investing in real estate or wiping off your student loan, wipe off your student loan. There’s a famous video of Warren Buffett that a lady came to him and said, I got some money to invest.

And then he was asking some questions and she realized she has a high credit card debt at 18%. He did. He said, pay off the credit card. Cuz there is nothing I can tell you that makes 18% annually. Absolutely. Great. Started. So let’s get started with your statement of I realized I’m barely breaking even, so I decided to go outta state straight to multifamily, kinda like

That’s a big leap over there, right? So how’d you find out about apartments and what made it, interesting to you? And then we’ll talk about operating outta states and operating two different asset. . Yeah. So with my single family homes, I have to self-manage them. I didn’t mention that earlier, and despite me self-managing it, I.

Barely breaking even, or slightly negative, but just for some context, for those who don’t live in California, I got my first single family home in 2017 for about $800,000. It’s worth around 1.2 to 1.3 million today in about five years. . So that’s half a million dollars in equity over five years, which is a hundred thousand dollars per year.

And in some states, that’s just the prices of a home. Yeah. So would you take negative $200 a month to make half a million dollars in equity? I think everyone would, but it’s not scalable. . Yeah, it’s true. I, but quickly becomes not scalable and it ties you to your job, and that’s what you’re alluding to.

And that’s what I quickly realized. , right? . So that’s why I just started consuming a lot of YouTube content, a lot of podcasts there’s a lot of courses out there, a lot of people you can learn from. So for me, once I just understood that basic concept, I mentioned earlier that the value of apartments is based on the net operating income, which is in your control, right?

The, you can control the expense and you can control the. that’s fully under your control and then you divide by the market cap rate, you can force the appreciation. So example I like to give is, if you have two single family homes, one rents for 5,000, one rents for 10,000, they’re both worth the same cuz they’re both based on sales comps with, take that same example where you have an apartment complex that gets 5,000 versus the apartment that gets 10,000, the one that gets 10,000 is worth.

So that’s more of in your control than you can force appreciation. So you can, it, it’s more open your control. So that’s what really appealed me up to me. So what I, why I learned out-of-state investing was because I invest in Oklahoma City and literally my 26th unit apartment complex, I got that for half a million dollars that.

Cheaper than the single family home I bought for about $800,000 in California. It’s cheaper than a condo. So that completely blew my mind. So that’s why I made that huge pivot from single families in California to add a state multi-family in Oklahoma. Yeah. And then I think you repeated the key word multiple times is control control.

We, when we invest in single family, . And let’s say the entire street is averaging half a million dollars and something happens and everybody gets divorced. Now everybody’s worth $400,000. You have no control. It doesn’t matter if you rented for half a million dollars a month to Elon Musk, it doesn’t matter if you gold plated the faucets or Diamond crested the wallpaper.

It’s still gonna be $400,000 versus in an commercial property. At apartment complexes, we have control. We can push rents, we can add a vending machine. We can get a better contract for the waste management to reduce expenses. We. Not full control, right? Because there’s still things the world happens around us, right?

But there is still a lot more control and I can navigate and like I said, force appreciation in a world where I don’t have to be worried if the neighbor gets divorced. . Exactly. So the control thing, you said it multiple times and it’s right on the money. That’s really one of the main reasons we switched to commercial real estate is that element of control.

So Oklahoma City, Alabama how do you get. Management out there that you can trust, that you can work with. Are you still with the first property management you hired, te Tell us a little bit about the we pride ourself of being the no sugar coating. No, no fluff kinda podcast. So tell us the truth the cold hard truth.

How hard was it? Or how easy was it? The day-to-day of running stuff out of state with a third party, I’m guessing third party manager, right? Yeah. You hit the nail in the head and to be honest, I had a good property manager in Oklahoma City before I bought any real estate there, and that’s why I chose Oklahoma City.

So many people and a new investors asking me, Steven, why’d you invest in Oklahoma City? It’s not a sexy market. I know that it’s next to Texas, which is very sexy, very appealing. But I just said, I have a strong property manager, so that’s why I’m gonna start sending letters to Oklahoma City to get a deal.

Cause I know. apartment or property managers, especially for apartment complexes, it’s a different mentality of managing apartments versus single family homes cuz they’re watching my expenses, they’re seeing my rent, they’re minimizing my expenses, they’re trying to maximize my rent. So it’s a different mentality.

So you cannot use your property manager from single family homes to manage your apartment. It’s a completely different mindset. I’m repeating this multiple times to hit a point. As you can tell. So for me, I had a really good property manager in place. That’s why I chose Oklahoma City. But just for some context, most people do it their other way where they choose a market first and then try to scramble to find a property manager.

And the harsh reality is nine out of 10 property managers are terrible and it’ll take you about six to 12 months to figure out that they’re terrible. And what I always say is, , and by then things can go real bad, real fast, right? Yes. So what I always tell How’d you find that manager? Oh yeah. So for me, I was fortunate.

I had a referral from another investor who owned a few apartment complexes in Oklahoma City, so that’s the best way that I’d recommend people to do it. But if you don’t have that referral, honestly, even despite getting that referral, I called around 10 to 20 property managers. I literally just Googled it and went down the list.

And what’s nice is when you interview 20 property managers, it does one or two things. The first thing it does is it gives you a nice roster. For me, I always, cuz I know most property managers are gonna be bad, I wanna have a backup and a backup with my backup. So I have three property managers in the queue in case my first one does not perform.

So I interview 20, I’ll rank ’em number one, number two, number three, number one doesn’t work out. I’m gonna queue number two. Number two doesn’t work out a Q number three. And from there I go through a pretty rigorous interview process. and after the interview 20 of ’em, what’s amazing is that you start to learn how they think.

So by then you know you can kinda take the best traits of all our property managers in your mind, visualize what the best property manager becomes. And I will say, on personal experience, I, I’ve been fortunate, I’ve had the same property managers for both of my apartment complexes.

I’ll call my one for my 26 unit, my A player. , my 20 units, kinda my B player. And let me tell you, there’s a huge gap between an A player and a B player. Yeah. And the reason for that is the A player will tell me what to do and be proactive about it. Hey Steven, we just finished renovating five units.

I put a signout to advertise your units, your newly renovated units. They told me, yeah, my B player, I have to tell. So just that subtle difference. Can make or break your operations. , right? Yeah. So that was my mindset and my shift there. So hopefully I answered your question over there,

Yeah. So I wanna repeat something that you said is don’t take residential property managers. And it sounds crazy and I have seen firsthand residential property management companies that manage hundreds of single family. Can’t handle a 20 unit property. Yeah. And it’s just, like I said, it’s a different mindset.

It’s a different way of operation. They’re the single family people, usually, not all of them usually would just call a retail technician. Everything, something, every time something breaks. It’s oh, let’s call an AC technician. Let’s call a retail plumber and so on. That’s really kinda challenging for your cash flow because you can’t just keep calling retail technicians for every little thing.

And then the multi-family guys, usually they have their own crew and their HVAC certified and saves you a lot of time and money on all these things. The other thing that I wanted to touch base on is your A player right? Versus your B player. , I we have a saying on the podcast that you make your money when you buy, but you lose your money on operations.

Yes. And it’s as simple as that. If you don’t have somebody that has tight control over the expenses and tight control over collections, then your entire N NOI can go out the window. It doesn’t matter how nicely you renovate it, it doesn’t matter. Paint you put on the outside or flower beds you’ve planted right tight control of the collections and tight control of the expenses is what makes you profitable.

So in the same city you have an A player and a B player. So why do you have the B player? Yeah, so my A player unfortunately has a smaller radius, so about an hour radius of Oklahoma City. My 20 unit is probably about two hours away. For me, that’s why I had to kind of branch out. But, My mindset and having another property manager is, you always need a backup, right?

Yeah. So for me, I wanna test them out before I scale around them. So Gotcha. Because I know who my A player is, and as a referral, I wanna scale around them. So after I’m done doing my value add strategy, pull out all my down payment, all my renovation costs, extra money on top. , guess where I’m gonna scale?

I’m gonna start sending letters and hit around my A player property manager. And like I said, the only way to know if they’re an A player is you have to use them. And I do make it very known to them that I’m in this for the long run and I wanna buy more. And I’m testing you to see if you’re a great operator or not, or a great property manager.

And if you are, I will scale around. Gotcha. And how do you work with them? Is that a weekly phone call? Is that a daily phone call? Tell us a little bit about how you operate your management. Yeah, so a as I alluded earlier, I still work a full-time W two. So for me, I touch base with my property managers once a week.

Honestly, for the. , maybe three to six months. Usually I have heavy renovations going on, so I will touch base once a week. I have a template that I go over with my property managers. Kinda like a weekly update sheet. So like how much rent was collected or expenses how many units are rent ready, what’s assess the renovations, just a lot of basic, metrics that we hit.

But on top of, It’s just more for me to help remove barriers. Cause sometimes the property manager, they’re stuck with a decision that they didn’t realize they’re stuck with. But when they talk to me on a weekly cadence, they realize that, oh, I actually had a question for the owner about this and I can help answer that and remove that time delay as fast as possible.

Cuz you know that when you involve other people. property managers and they’re outta state. Things get delayed significantly, and my job is to remove those barriers as fast as possible. , so an example is I, my, my last week I had a Cobra property manager and she didn’t know I was open to short term leases of maybe six to nine months.

And I just said, honestly, at this point, since I have a hard money loan on my 20 unit, I want it to fill up those units, but make it known that I do accommodate short-term leases, but we’ll add on additional fees on top of. . So typically it’s about 50 to a hundred dollars to pay in your market. So I’m open to that cuz to me I had 13 units to fill up and if they qualify I don’t mind that.

And from experience, people usually end up staying longer. They usually don’t stay there for six to nine months cuz they get comfortable. Maybe they’re saving for a house. and houses getting more expensive still. Yeah, so renter, mentality’s different than being a homeowner, so I know by higher probability if they like the area, it’s nice, it’s well maintained, they’re gonna stay.

And we like to ask them why, right? Yeah. Cuz like I said, if they plan on buying a house so there’s two things. One, like I said, plans change. Life change, the market changes, right? So they might stay longer. The other thing is we started offering at some point a program that. offered them to get into a 12 month lease, pay a $300 one-time fee, which guarantees to them that if they do buy a house, we will release them from the lease with no penalty.

, so that gives you a little fee up top. Yes. And then instead of having a six months contract, you have a 12 months contract and. They’re gonna actually have to buy out, show you that they bought a house in order to get out of their lease. So that helps them with the worry about committing for too long and helps you with having a more stable contract.

In case you, like you said want to go to a refi, right? So the lender doesn’t like to see six months leases, right? So they want to 12 months Lisa. So that helps you over there. So it’s like it’s a win-win for. That’s really smart. I’m glad you shared that . I didn’t think that far.

I was more thinking when we analyze tenants, we see their bank statements and we’ll know if they have a down payment in there, , or worse towards it. Yeah. But again, life changes. Life happens. . And then some people are transient, right? I don’t know where yours are located, but we’ve had our own properties and we’ve had other operators that we talked to do like a midterm leasing in their apartments for traveling nurses and stuff like that.

In around Oklahoma City, there’s a Oklahoma City. There’s a lot of oil and gas, right? So you can find linemen and you can find people from the energy company that are coming out for six months, eight months and they just need uh, A place to stay that is furnished. So for you, the cost of furnishing a unit is negligent compared to the increase in rent they pay just to be in a transient unit.

So just little strategies that you can think of working over there. Sorry, do you have a software you have access to so you can see reports in real time or is. Paper reports or emails where this is the numbers. You said you go through a template on a weekly basis, just trying to see you get out of your day job.

Do you go check in on everything on the software? Yeah one property manager uses Rent Manager, which is very common. And what’s nice about Rent Manager is you can automate the reports emailed to you on a monthly basis. So my property manager, usually by the third Friday of every month, they’ll send me the last month’s reports, but.

That’s still a three week delay. So even beyond that, I do check the bank accounts. So some we share a bank account, some we have an escrow account. But even on top of that, I can always just email my property manager and say, Hey, can you show me what the current escrow account looks like?

If it’s a bank account, I will log in. So my 26 unit, they use Rent Manager and my 20 unit, they use AppFolio and I always make sure that. , know, they send me my reports on a monthly basis on time, cuz after a while people get very comfortable, they get very lax, especially with you after they feel like they got over that, oh, I impressed them already phased, they might start to slip here and there.

So you have to keep ’em on their toes where if I don’t see my report, I will email them and say, Hey didn’t see my report for this week. Can I get an update for that? Unfortunately, even if you have an A player, human nature. Once you understand human psychology, people will get lax and they will find your blind spots and they will try to cut corners in those blind spots.

And unfortunately the squeaky wheel does get the grease. So you kinda have to be a squeaky wheel sometimes to make it known that you’re still watching it and you still expect to have a high standard of how your property’s operated. So that’s just been my experience. Gotcha.

Cool. Your next property was a 200 unit mobile home park in Alabama. Yes. Like, how does that live to a different state and a different asset class come about? Yeah, honestly it was shiny object. In retrospect, I wish I would’ve just doubled down in Oklahoma cause I had such a strong system there.

And just for like peace of mind. Because honestly, once you scale to more units, a lesson that I learned is that simplicity scales, fancy fails. I’d rather be really great at apartments in Oklahoma versus be good at apartments in Oklahoma and like mobile home parks in Alabama. So that’s just some context that I went through recently, but what kind of appealed me to mobile home parks is, once again, This is a 200 lot mobile home park.

Not all 200 are full. I think it had about maybe 30 homes filled, about half were park owned homes, half were tenant owned homes. When I took over the park a lot of tents were not paying, so it’s a highly distressed park. A lot of vacant park owned homes that need to be renovated.

But what really appealed to me was it was selling for about a million dollars. 55 acres, 10% down, and seller financing at 5% interest only. So the terms were very impressive. I got it for $6,000 a lot, and it takes around. maybe 20 to $30,000 just to establish infrastructure to one lot. Yeah. So to me, I knew I was buying, right?

So even if I was struggling operating it, and maybe I put in CapEx, cuz mobile parts is crazy amounts of CapEx. Like literally whatever amount you think you’re putting in, it might be double or triple that amount is because just by the nature of only 55 acres, there’s a lot of fixed cost that you have.

Yeah. I just knew I was buying right day one and I knew that I had really good seller financing terms, like where can you get 5% interest only fixed for six years. Yeah. I I did that about a year ago, but to this day, that’s impossible. If you, for this part, you have to do a hard money loan, which is probably gonna be around 12 to 14% at this point.

. So I knew that I could easily fix and flip this if I wanted to. So I was looking for multiple exit strategies, but obviously if I could fill up this part to even a hundred outta 200, it’s worth about five, 6 million if you can fill it to, full capacity, it’s, you’re talking 10 to 12 million.

So I knew that I had my wrists, my downside slightly mitigated, and then my upside was exponential to the point where I could lead my. . It, it was definitely shiny object syndrome, like I said, but I’m glad I bought it. And I did learn a lot from that. So at this point I’m pivoting to see if, do I want to sell it or do I want to continue?

So I am looking at my options at this point. Cuz like I said, it’s a lot I, I. Good chunk of the CapEx that I allocated by undershot it . Yep. And I’m slightly disappointed in my property management cuz I have an onsite manager and then I have an offsite manager and I manage the offsite manager. So let’s try level.

And they’ve been in the industry for about 30 years. . And I, they probably knew that the expense I allocated was a little bit less cuz they’d been in the operations for that long. So it disappointed me a little bit in the sense of, number one, they should set the expectations up front, being more experienced in the industry.

So it signified to me that they’re trying to market the deal to me. , know, obviously because, cuz they make money when I buy, right? Yep. They’re trying to market the property and then number two is they underestimated the expense cuz they we work on a plan together, a perform a plan and they grossly underestimate those expenses for me.

So that kind of signified to me that okay, they’re not the greatest operator out there. So that’s what’s making me lean towards maybe unloading it, lock some profits. , make, get paid to learn a lesson. It’s all good. And then at that point I can get my money back and pivot to see, okay, do I wanna do mobile home parks again or do I just wanna double down Oklahoma City?

And I’m looking towards doubling down Oklahoma City cuz I have a player there where I wanna scale around them. . And then once all my assets are stabilized, I can leave my W2 job and at that point I can reevaluate if I want to do mobile home parks. Yeah, so I wanna dig in a little bit about the lessons over there.

Yes. So the property manager were part of the sale when you bought it? Yeah. So they actually serve as mobile home park consultants. So they help you do the offset management and the onset management, and they’re already doing that for the prior. Okay, so they, yeah. So they had a vested interest in helping the seller over the new buyer, correct?

Correct. And so that’s kinda, that’s a good lesson right there, right? We’re brokers, right? So I keep helping people understand that it doesn’t matter if your dealer is on the market or off the market, if there is an agent involved from the sellers side, you. Another person that is not that person working for you.

Exactly. You want another agent or another property manager or somebody else that is gonna be your person, that their fiduciary responsibility is to you, that their loyalty is to you. And we’ve represented sellers before and we try to be fair, with whoever is coming and talking about the property.

We are, it’s in the Texas Real Estate Commission bylaws, right? And rules and regulations is that I have a fiduciary responsibility for the seller if I represent the seller. . So my job is to make sure that my seller is protected and my seller is getting the most for his property. . Like I said, we try to be fair, but we do have a responsibility for our sellers.

I think that’s a very good lesson from this, kind, from this experience is make sure there’s always somebody that represents you and not the other side and not shared between the two organ the two sides. Exactly. You set together and you did a performer you mentioned. So that’s another, sounds like another lesson over there.

A lot of the time we’ve seen some brokers put performers out there that are, I like to call it sprinkled with rainbows and lollipops all over it. Yeah. And they’re just absolutely unreasonable. Most of the time we see that on the income side of things and it’s yeah, just put some paint on it and you can.

$1,500 for one bedroom in southwest Oklahoma cities that n no you can’t. But the CapEx is a very important component in understanding. Where are you going? How much are you gonna have to spend? Cuz CapEx usually you don’t get as part of the deal. Or if you do, usually it’s in a reserve account with the bank and it’s a pain to work with them to get that money.

The CapEx component, if you don’t mind sharing a little bit more about where do you guys were off and how far off you were on some things that would, I think that would be a great valuable lesson for our. Yeah, so fortunate for me I had all the CapEx up front by doing a cash out refi. I, one of my high equity single family homes, so I was able to leverage that equity for the CapEx of my mobile home park.

But like I said, what really threw me off was that’s 55 acres. There’s a lot of trees, just the trim. 10 trees, it’s like $7,000. Yeah. And that completely blew my mind. I was like, I didn’t realize trees are that expensive. Like I said I think they know what the cost is. Cause when I asked them, they said, yeah, it’s about 700.

But I just wish they primed me a little bit in advance. And, when I bought my mobile home park, I consumed the malls, the whole podcast about mobile home parks. But even despite that, you still learn by doing it. And I was leaning a lot on my property management, who’s been in the industry for 30 years to guide me, but I felt like they just weren’t very strong at communicating that front.

So my expectations are very wild or off. And on top of that, you yet to understand your property manager’s personality type. So the type that I had for my mobile home park, she’s very people pleaser. So they say what they want you to hear, but that’s not exactly what they can. . But for me, that creates a discrepancy and that creates frustration.

Yeah. I said you said we could fix up whatever, two or three homes per month. It’s gonna cost roughly eight to $10,000 per mobile home to fix up, and then we’re gonna rent out those three every month. But we were consistently not hitting that. And another lesson was, they recommended to pay some contractors.

on an hourly basis and quickly, you realize when you pay in a contract on an hourly basis, there’s no motivation to go fast. It’s just like any hourly worker, regardless if I work fast or slow, I get paid the same. Yep. So they get very complacent. Versus contractors, if you negotiate $10,000 to fix it, whether it’s fast or slow, it’s up to them.

And if they go slow, They’re gonna lose more money if they go fast, they make more money. Yeah. So you have to align the interest. So that’s another pitfall that I fell into and lesson I learned with my mobile home park and with my apartment. I never paid by the hour. It was always by the unit.

Yeah, this is my unit. How much is it gonna cost to renovate this unit? So even despite doing it over here, I let my guard down my mobile home part. Cause I thought it was a different asset class. I thought this was more standard. , right? Yeah. That’s where I fell. That’s why I said it’s better to be great at one asset class versus be okay at two or three.

Yeah. So that’s another thing with the third party property management that we’ve noticed is we no longer do third party management, but when we do, or the operators that do, you gotta insist on getting three separate. From three different contractors on anything they do. It doesn’t matter if it’s street dreaming or renovating a mobile home park or renovating a, single family.

And the reason for that is especially the veteran ones that’s been on the market for more than 10 years, they have relationships. And they have contact and they have a lot of time, unfortunately, family. My cousin does that. My uncle does that and. If you don’t get the bids, you could end up paying a lot more than you should, just because I’ve always worked with Steve.

Steve does a great job. But Steve costs double what everybody else does, right? Yeah. So making sure that your property managers give you at least three bids for every project that is more than, let’s say 500 bucks. Then that makes. Work a little bit harder and make sure that they save your money.

Because at the end of the day, and this is what we’ve heard from every operator that have grown to scale, is that we can’t just let them do what they want cuz they don’t care. It’s not their money. Yes. They’ll spend your money gladly. It’s not theirs. So that’s the kind of thing that we’re.

Cautioning or with letting everybody know that they used third party is just, you gotta stay on top of it, or they will spend your money really fast and not always for the right things. No, I’m glad you said that cuz it’s very true cuz for them they just wanna solve the problem as fast as possible and the first solution is just the easy solution and it may not be the cheapest solution.

Yeah. And it’s not always about speed, it’s about I have a million different things I’m doing for five or 15 or 50 different clients. Exactly right. So calling Steve, because Steve always comes and help me is a lot easier. Then, okay, now let’s go get three bits. Exactly. So yeah. And one other thing that you mentioned, and I think didn’t go as, as pronounced as I thought it should be is the 55 acre thing.

A lot of the mistakes we see people doing underwriting at the beginning is they use industry. Landscape should be 120 a door or $80 a door, or but I can have a 200 unit apartment complex on four and a half acres of concrete. Or I can have it on 50 acres of grass and landscape.

And there’s gonna be a huge difference in your contracted services between this one and that one, even though they’re both 200 unit apartment complexes. The, I have seen a 200 unit on over 20 acres, and they had to have a full-time landscape person that starts at the beginning of this the property on Monday and works his way through the property all the way through the week and ends over there on Friday.

And of course, the payroll increase just jumps up, right? Paying attention to these things is critical. Otherwise you learn that the hard way. Exactly. You hit the nail right in the head. I had to get a new lawnmower and just one guy spending all day to, or all week to mow 55 acres.

And on top of that, when it’s rainy season in Alabama, the crab weed grow rapidly, like insanely tall, very fast. Yep. So it’s definitely underestimated. All performs, I will say that all performs are understanding the landscape. Yeah. But you did something that we’ve done too in the past and it’s, I believe it’s the smart move.

Instead of having a landscaping company come and do the work, you actually bought the equipment, hired a guy, and now it’s your guy. Does that. , right? Yes. And the huge advantage of data from operational perspective is if your maintenance guy needs something to do that needs four, right? Lift something heavy, something like that guy can get off the mower for 10 minutes, help and come back to the mower.

So you have another set of hands on the property that normally is dedicated for landscaping. But when. , they can help with something else, which if you were hiring a company, they would come in once a week, do whatever they do and run away within a few hours or a day. I think that was a very smart move on your end to just buy the equipment.

I know it’s painful to do that expense upfront, but you buy the equipment and you hire the guy, it pays off more in the long. Exactly, and I was actually able to finance that lawnmower over four years of zero interest. So some people don’t realize that, that you can finance it, have not much interest, and still get the equipment you need.

Yeah we’re a little bit more frugal. We just go to Craigslist and Marketplace and we buy a used one for maybe a third or fourth of the cost.

Okay. I wanna be conscious of your time, cuz I know you have a day job to get to. If you could go back a couple of years before you got started with all real estate before you bought your first home, what advice would you give yourself? that’s a great question. I feel.

Just getting started in real estate earlier would be advice that I gave myself, surround yourself with the right people, continue to self-educate yourself every day. . I started investing in 2017, but I graduated from school back in 2013. If I invested back, then I could have bought new properties a lot cheaper, especially in California and then apartment complexes.

So I’d just say, surround yourself with the right team. And fortunately in this day and age, there’s a lot of communities out there that you can join. You can pay for a course or mentorship and just surround yourself with people who take consistent action. because for me it was just very eye-opening to know that things were possible.

I didn’t know it was possible to have 90 units while working a full-time job. If you told me five years ago that in five years I’d own 90 units, I’d probably be thinking, oh, I quit my job and said, f you , to my boss. But that’s not the reality, right? . Yeah. I wish I would taken that and I wish, what someone told me earlier back then was focus on the process, not the.

I think in the beginning when I, especially when I was scaling, I was so fixated on how many units I wanted to own. I was so fixated on I wanna hit 20 K a month in cash flow and then retire. But the problem is when you’re so fixated on this outcome, you become unhappy. If, let’s just say you make $5,000 a month in cash flow, oh, I’m unhappy cuz I’m not 20.

But in reality, $5,000 a ca a month in cash flow, that’s more than most people’s. Like that can pay for most of your living expenses, except if you’re in California. But any other state, you could cover most of your living expenses there. So I think just focusing on the process and making it a long-term process.

So for me, I did three heavy value add deals out the gate, two apartment complexes, one mobile home park. I’ve probably renovated about close to 40. Units between all that in one year in my first year doing apartments and mobile home parks with no partners. All outta your pocket. Yes, all in my pocket.

And I’ll tell you, writing large checks every month has a psychological burden. Even though the money is there In allocating the bank account, when you start writing 25,000, $50,000 checks on a monthly basis, the psychology of it, cause our brains are very fear-based. Yep. It does not feel good at all, right?

I felt very good of a lot of money in my bank account, but when you’re just writing checks monthly and seeing that dwindle, just the psychology around it messes with you, and when you get stressed out, you don’t make the best decisions as an operator. So that’s why I just said going back do something that’s sustainable for a long period of time.

And what I should have done was if I bought a bunch of units, I should have just bought it in Oklahoma City and scaled around my a-player. Or wait for one deal to finish. Pull all your money, buy your next deal. Wait for that deal to finish, pull out your money, buy another one. Cuz real estate’s a long term game.

Yeah, I’m only in my thirties. I already have 90 units. and honestly, you’ll be surprised how it compounds. Once I finish cash out, refi both my apartment complexes, I can go buy a 50 unit. There you go. I just doubled my portfolio. Yep. Then after that, you stabilize those three. Now pull all your money, you go buy a hundred unit, you just doubled again.

So you have to think about it long term and what’s sustainable at a good healthy rate. Like you don’t wanna go too fast. , but you also don’t wanna take inaction. There’s always like this happy medium in the middle where that’s a sweet spot and that’s how you can organically scale. So that’s why I would go and tell myself, from a couple years ago.

That’s a solid advice. So if our audience wants to reach out to you and talk to you, how can they find you? Yeah, so you have the link for my link tree that has a link to all my socials. So I’m on YouTube at Mickey Multifamily money, Instagram TikTok at Mickey Multifamily Money. And they can also shoot me an email as well at sdt win Typically pretty responsive there. Awesome. Yeah, we’ll put all the links in the show notes as well for our audience. Thank you so much, Steven, for coming on the show. That was really inspiring. All right, Joseph. Hopefully people found some nuggets and learned from my success on my apartment side and some failures I had on my mobile home park side.

And hopefully they just, like you said, found value and don’t make the same mistakes as I did. Sounds good. And for you, the audience, thank you so much for listening to our podcast. We’ll appreciate if you can give us a review, one star, five star, whatever you feel is right. Just go to iTunes or Stitcher, wherever you consume your podcast and give us a review and stay tuned for another.

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