Episode 137: Finding a Hybrid Approach to Property Management with Aaron Ford - Apartments Operators Podcast.

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Welcome everybody to the apartments operators podcast today. We have aaron with us aaron. Welcome to the show Hey, how you doing? Glad to be here excited to be hanging out with the big dogs Thank you for the compliment. But really we start the show every show with giving our guests the opportunity to introduce themselves take a couple of seconds and just You know, how’d you get to where you are right now where you are right now?

How does your portfolio look like? How many units what kind of multifamily you guys like to do? Just so the audience will know who we’re talking about. Yeah for sure So I am a 50 or 100 owner and around 250 units. Midwest kansas city area and we the niche that it fell into didn’t start out intentionally but the niche that it fell into is 10 unit to 75 unit 70 unit complexes stuff that’s Probably too small for the institutional investor and a little bit too big for the normal single family type of duplex person.

And this, most of the stuff, source, direct seller. The reason behind that was just the niche that felt that I fell into, when you get in this game, a lot of this stuff is broker relationships and it takes a little bit of time to develop those relationships. So as a.

You know a mover and shaker that I tend to be I wanted it now I wanted out of my day to day job and I wanted it today. So I Went the direct to seller route and it allowed me to Cultivate relationships directly with them and get in the game quicker. To be honest That’s what it was all about.

It was a 200 I read a book 200 per unit per month and profit And if I could get to 20 units, that’d be 4, 000. And it was literally just a unit stack in game. And since then I’ve learned, obviously that is. Not what it’s all about, but we could get into some of the pitfalls of that.

But that’s how it started. How do I get out of this grind? How do I enjoy life with my family? And how do I replace that income? And, you’ve heard, which is true, but I’ll add to it when you’ve heard that you make money when you buy real estate, but I would argue you really make money when you operate real estate.

That’s the key. Yeah, we say it a little bit different we say you make your money when you buy You lose your money on operations Yeah, that’s just another way to say the same thing, right? So so really this is why we created this podcast is because All the other podcasts I’ve seen out there when we started were, was all about buying and raising money and underwriting, but this is just a sprint, right?

We need to get to the closing table and then you start a marathon of operations. And there was nothing out there that was talking about operations. There was nothing out there that talked about the horror stories, the challenges, the things that, that we meet every day when you’re actually. With the boots on the ground.

So that’s how we started this podcast is about that. What is your total count of units right now? 256 I believe currently. Okay. So no syndications. Those are 50% or a hundred percent ownership. Yeah, that’s fantastic. And are they’re all in the same kind of geographical area or they’re spread out?

Yeah it’s about, Kansas City, take Kansas City, you got a few hours one direction, a few hours the other direction. Honestly, they could be states away and the management or the operational management is the same. I think it’ll get into one of your questions, but we use.

management, but it’s like a hybrid situation. And the reason really is because it I feel there’s multiple reasons, but I feel more comfortable moving and scaling to a different city or MSA if I can vet a property management company and then our system overlaying their system, right?

The current portfolio is all in linear markets in the Midwest. C to B minus class assets. So yeah you really got into our first question that we always ask is third party versus self management And you mentioned some sort of a hybrid model.

So tell us a little bit more about that. Yeah. So let’s, let me start with saying, so let me run you through how this came about. So I mentioned this was a unit stacking game in the beginning. It was all about relationships, finding the deal, purchasing the deal. And repositioning it, quote unquote, stabilizing it, handing it over to a third party manager that we worked with through that process, but then pull out the money and totally focused on the next property.

So that was, yes, I would look at so hear me out here. We had a 16 unit. We started out with a 32, a 36, and so on When that 16 unit was done. It was placed with management and the mistake was focusing on the next deal due diligence repositioning it, right? All of the new stuff that came with the other property and totally disregarding that first property and then the second property and then the third property that you got a 21 and we got a 10 and a 14 and literally just kept filling up this conveyor belt of properties And not asset managing at all.

To be honest, I missed the whole podcast on asset management, the entire book, the entire chapter. I was like, that’s a, that’s a pretty interesting, saying or word. I’m sure the property managers do that. We vetted them after all. So let’s just trust them. Yes. We’ll look at a report once a month, a report comes across and if that’s all you’re looking at, you are behind on any active decision making that would fix the problem. And you look at we just found ourselves with this big conveyor belt of properties and everything was not meeting the metrics that it should. And that’s when we began going back and looking, okay.

What are we missing here? Obviously, it is, it was the asset management side of the deal and by that time we had four or five different property managers in different areas and those property managers, we had to actually let go, almost all of them, because when we revamped and implemented this system, it was just too far gone, right?

They were doing their own thing. And we had to move on. So now the system, to answer your question, the hybrid system is basically a system where we require them to follow our system, which it is not a property management system, but we require. Weekly meetings, we require interaction from them with our shared dock per complex, and we have it just get into the meat and potatoes of the actual process.

We, each complex has yearly goals. We have quarterly priorities. We have weekly to do’s that I, as the owner set for each property management company in each complex. And then we go through all the other metrics that are pretty common, We’ve got all the financial metrics the leasing metrics and all those things but the goal is to be able to take a look at a property from a distance and See the yellow lights flashing before they become red lights and address them quickly, right?

Yeah And how do you go about finding those property managers that will come in and they’ll take over? A small property because a lot of the big ones, they don’t want to deal with the 16 units and the 20 units and still convince them that while they take over management of this property, they still going to have to step into your system, even though they might be experienced with years of experience and having their own systems and processes.

Now they have to work with you. So how do you go about finding those property managers? Yeah, for sure. It really helps them. And once I can gain their confidence that we’re a team here, and that we’re more organized, and that I’m here to help, as then it goes a little better sometimes, but I will give it to you the lot of these property managers that have this a type of personality where Oh you don’t trust me, then you know, I’m gonna do it my way.

And that’s fine. They can be that way. But we’re gonna move on to the next one. And we, we just want to make sure That and they’re out there people will be happy about following a system. That’s more organized and this and in our experience, but you just have to continue to look, you’re right these smaller properties are a little different because as you alluded to the larger complex So let’s say a hundred plus you need a resident manager and it becomes a totally different management play or a little bit different.

And then you have these, let’s say 16 or 32 units or 36 unit. So long as our asset management system I feel like is functioning, we can take Maybe a property manager who has more experience in just the smaller multi and really plugged them into our system and still be effective. So that’s just what we’ve found so far.

Okay. So when, let’s say you found a new 30 something, 40 something unit property, which in my opinion, by the way, 40 is just about the worst, hardest kind of property to manage. But it’s not small enough to be able to run like a mom and pop. It’s not big enough to afford full time staff. So you find yourself somewhere in the middle there.

And it’s 1 of the hardest sizes. I think to manage. So let’s say you’ve got 1 of those properties and you put your plan in process. What do you care about? Or what are you looking for in that property manager that would be willing to step into your program? What kind of questions are you asking? What kind of referrals are you looking for?

How do you just if it’s a new city and you ever say you’ve never been in. How do you go about finding them and what are you asking? Yeah, that’s a good question. So we’re really just rolling the dice, finding managers and setting appointments. And we’d like to meet with people, management, potential managers, as if we can in person while we’re there, boots on the ground and, just the typical management questions, we want to go through what their process looks like, do they have any systems in place?

What do they do when evictions come up? Are they legitimate property managers? And if they are, great. Then we say one of our requirements is to follow our system, right? Basic, it’s real basic. But it is a little bit more than probably they’re used to. Are you willing to send us metrics on a Friday to update the Google docs on a Friday and then have Monday morning meetings with us weekly meetings to just touch on the touch points?

And move through this together. So we really don’t have any new questions or any new processes that when it comes to that, it’s just some of these management managers are totally in over their head. They literally are at capacity with 12 single family houses, and those are not the ones we’re looking for.

They ideally they have a team in place. Ideally. They know they have a good systems and operations already. Gotcha. What kind of asset classes you’re in right now? So is that c class b class? A class Yeah, it’s pretty much all c to b minus which there’s a lot of negatives with that, but there’s a lot of positives.

We’ll start with some positives, that asset class, you cannot build any more of, right? So if we can provide clean, safe functioning, lower rate home, communities, then theoretically we will have demand, for those in any market cycle. But the, there’s the negative is the CapEx and the work costs the same as it does in an A class property.

So the HVAC system is the same price and you’re going to get less of a return on your investment in the graphic. And then we all know how C class tenants are, right? So sometimes that’s the negative as well, but it’d be great to, to roll into some larger properties and upgrade the the current properties, but we should be able to cashflow.

We should be able to hit that mark, that metric of 200 per month. Profit in c class assets that’s not over leveraged Yeah I’m not going to skip the fact that we’re recording this in August of 2023. So we have the end of August. So we have interest rates that are skyrocketing up at least 3% since last year.

We’re in an environment where I haven’t seen this in our market. Haven’t seen the sellers come to term with those higher interest rates and they’re not budging on their prices. So how does your world look like today? Are you in acquisition mode? Are you in? Let’s hold and see what happens. Are you a seller?

What is your outlook with what’s going on with the market right now? Yeah, that’s a good question we are continually continuing to market, to direct to sellers and we are currently in negotiations with a 28 unit apartment owner so a small Mom and pop the guy built them himself you know the perfect candidate for what?

We like to buy from, but the only way this pencils out is he is going to hold the note himself. So it’s an owner finance deal. So do a down payment directly to through the owner and have a five year term on a 30 year amortization. But other than that it’s, we are a lot, a long way away from the sellers when we’re looking at, when we’re looking at new acquisitions.

And you hit it on the head. It’s the interest rates and it’s still a divide in the market here, but, you mentioned what do I see coming up? I do look at this pretty deep and I do study and I do have some ideas. I don’t think that this, what we’re going into is going to quite be like 2008, but you got to remember in the multifamily sector, we, Fannie Freddie had less than a 1% default rate in the financial crisis of 08, nine and 10.

It wasn’t a multifamily crisis. It was a single family crisis. We are multifamily investors. So what do we see coming in our sector for me? I believe this could get a little shaky and If interest rates stay high, there’s a stronger chance that People will have to do cash in refinances. The hottest thing, what for the last four or five, six, 10 years was to cash out, refinance and roll.

And I’m afraid that there may be some liquidity crisis is ahead. So we’re trying to prepare, although we want to continue looking, we are trying to prepare for higher interest rates for a longer time. Yeah, no, I agree with you. And I’ve been vocal on. Social media and lifting and so on about what I think is coming.

The challenge is for multifamily. The way I see it is that in the last 10 years, we’ve been in a world where rents are skyrocketing every year, 5, 10, 20% year over year in some cases, and inflation has been steady to 3%. But in the last two years, we’ve seen inflation go out of control and hits the six and seven and eight percent mark.

And I know people say the CPI is now down to back to four, four and something. But the CPI includes stuff like cottage cheese, right? And we don’t buy cheese for our properties. We buy sheetrock and paint and metal and lumber and our labor. And all these things have gone a lot more than 4% in the last couple of years.

So we get into a situation in the next at least couple of years, in my opinion, where rent growth is now slower than expense growth. Which means you can have a beautiful class saying 98% occupied, stabilized, and you’re losing value every year. And that’s really where, what’s going to really make the difference.

And this is where our podcast kicks in, is it’s only the top operators that’s going to survive this. If you were, if you are a mediocre operator, if you are inefficient in your operations then the, and the last 10 years would have easily over, compensate or hides those inefficiencies by the rate of the rents growing up, but without parties over, I think there’s going to be some murky waters ahead for the people that are not operators, not strong operators.

I think some of these people are going to struggle even if they don’t have a liquidity event ahead of them. Yes, I agree. And this is all cycles. These are not new. These just may be new to the newer operators, even like myself. But, you may have been through the last cycle, and I really wasn’t investing then.

I started in 2018, 2019. But I do study history, and I don’t think most people do that. These are cycles, and the only people who lose in cycles are the ones who have to sell. Or, in our sector, have to refinance or have a term, a liquidity event come where they have to roll over debt. So that’s what’s different between the single family world is there are a lot of terms that will be coming due in this world or in this sector, but it’s a cycle.

So we’re looking at it like how do we just make it to the next cycle and continue our rent, stabilize our rent or, keep it stable, if not increased, which if you look back to the last crisis. The rents actually continued to go up. There was a spike in vacancy, but rent rates never technically went down.

So that tells me if you can operate effectively, your rents are going to hold steady, so you should be able to easily weather the storm, right? Here’s an analogy if I bought a McDonald’s franchise, or any franchise, and I paid a million dollars for it and that business, generated 250, 000 in true profit every year.

And I’m moving along with my business. Everything’s great. Some event happens in the fast food market over here and some guy comes up to my, comes up to my door and says, Hey, you’re not gonna believe this because of what happened over here. Your McDonald’s is only worth 500, 000. I’m going to say, why do I care?

I’m not selling. It continues to make 250, 000, right? It’s only for the people who sell, have to sell. So how do you position yourself in a way where you won’t have to sell? And that’s through exactly what you said, operational systems. And for us, we chose to operate other managers as opposed to create it in house.

But we have looked both ways. I know you, your team and you guys do your own in house management and I’m I’m sure that works great. I’ve looked at this and I kinda, I might like to get your opinion here. It seems like it’s a huge headache and it really, like you say, really fries the brain, right?

And for little reward, I’m wondering, for 10%, maybe increase on the NOI. Would bringing it all in house really work right now? It’s not worth it for us. But do you think that’s a fair metric? 10%? Is that what you think you’d see? Here’s the real reality check on this, right? Yes, you’re right.

It’s more of a brain damage than a profit center. But as a property management company, if they don’t collect 25, 000 a year, The meaning for their income is about a thousand bucks a month, which is not a, I’m sorry, not a thousand bucks a month. It’s a thousand bucks total. It’s about 80 bucks a month at a 4% rate.

But for you as an owner, if you take the bullet and you spend a little bit more than what you’re getting for the management fee and you get the 25, 000 out of five, six cap rate, that’s 50, 000 to 100, 000 value to your property. Is it worth it for the money that comes as a management fee? No, but can you impact the valuation of your property?

Yes. That’s one thing. The other thing is you mentioned people that have to sell. I’ve seen some really interesting things going on recently because right before everything went sideways at the end of towards the end of 2022 people were, like you said, cash out refi, they were doing those refis with maximum leverage and those lenders would let them go maximum leverage.

which means they were barely scraping the 1. 25 DSCR. What we’re seeing right now is we’re seeing multiple properties or loans going on the watch list of those lenders. Even though the properties are 93 94% occupied and you look at it and you go, why is that property which is fully stabilized going on the watch list and you realize is because they dipped from the 1.

25 DSCR. That’s really where even properties that are again, fully stabilized operating. I would say 94% occupancy is stabilized. Can still get on the blacklist with the lenders, the watch list and even go to receivership if it dips under a certain DSCR ratio.

And you know what? It’s surprising how easy. It is for a big property or even a small property to cycle down to a lower D S C R with just a few people leaving, right? It’s even worse on the smaller properties, right? Because if you have a 20 unit property four people leave, now you’re at 80% occupancy.

And your D S C R could take a major. So that’s the kind of things that we’re also brokerage, right? So we talk to clients all the time and we tell other operators right now, if you’re at 1. 5, 1. 6 DSCR, hang it, right? Brace for impact. Watch your dollars, watch every penny that leaves your pocket.

You can weather the storm if you’re below 1. 5 dscr today Honestly, we tell our clients sell and get out of it because what we see coming up down the next two years If you’re barely on the dscr these days chances are you’re not going to survive it That’s again my opinion. That’s what we tell our investors that what we advise our investors right now, but it’s Not pretty It’s just not pretty.

Yeah, I agree with you. And that’s you know, that’s admiral We need to be proactive in that because there’s a lot of people still out there Bye, bye. Bye as much as you can and i’m not trying to be negative, but I want to be prepared Yeah, and you just gotta increase your safety margins and increase your buffers, right?

When you underwrite when you approach things like this and that’s really where it is the other side is, of course, you might buy it on a thin raise of margin. But you find a great opportunity for value add. And assuming that the refi is gonna be there is a very high risk assumption at this point.

We’ve seen, what I see is, and I have been around the last cycle, we see a very similar situation to what happened in 2008 and 2009, where it’s kinda like a race to the bottom and on one end you’re getting better prices. And on the other hand, you get less and less funding sources.

The funding sources are drying up. So like at the end of 2009, there were great deals out there, residential, commercial, it doesn’t matter, but there were no funding resources. So if you were hoarding cash, you were kink, right? You bought phenomenal deals, but if you didn’t have cash, finding a lender that will give you the loan was very challenging back at the time.

So that’s what we’re seeing right now. It’s people that are coming in better have a strong, a very strong plan with emphasis on the financials. So I’ll give another example. I have a mentor of mine, a somebody that’s been doing that for over a decade very strong operator.

And he just bought a 35 million property. But he raised over 20 million dollars and we were having a conversation and I go you realize that two years ago If you raised over 20 million dollars, you were buying like 80 to 90 million dollar properties And he goes, yeah, I know but this is what today’s world allow us to do.

This is how we safeguard This is how we’re gonna make sure everything is done And yes, the cash and cash is gonna suck for the next few years But we’ll be there on the other end of the cycle with strong irrs Great value add. So it’s just a different strategy. As long as you’re conscious about that, there’s no reason why not to buy.

You just gotta buy it, right? Yeah. Yeah. I was just going to add to your comment about the loose and tight monetary policy. So like in, in 2000 and eight and nine the rates dropped to zero basically, and by all intents and purposes, if you look back at a chart, everybody should have been refinancing.

But to your point, There’s no, the banks were tight. No one was lending no matter what the interest rate is. So I’ve caught myself thinking about, man, if rates go down, I’m gonna refinance. I’m gonna pull some cash and add some liquidity reserves over here. That’s not how it’s gonna work. That, when something, if rates go down, something in the economy is broken, and it doesn’t matter what the rates are.

The banks won’t be lending. And so that’s what we’re trying to prepare for and but you’re right I don’t think if i’ve learned anything It doesn’t ever get quite as bad as you think it’s going to and it’s never quite as good as you think it is Yeah, no, I think you’ve hit the nail on the head, right?

A lot of people say interest rates are going to go down. They’re going to go down And it’s be careful what you wish for because if you’re thinking it’s just they’re going to go down It means we’re going to hit something really hard on the bot Right before we get to the quantitative easement, the drop of the interest rate, that means the Fed was able to annihilate a ton of jobs.

It means the Fed was able to basically slow down the economy. To the point of now they have to turn around and re incentivize the economy. Yeah it’s not pretty. Let’s talk a little bit about value add. What do you guys like to do? We always ask our guests give us some ideas of how you increase income.

We’ll turn around and talk about decreasing expenses in a bit. That is not the usual. Okay. We come in, we raise rents and we apply rubs. So that’s like a given, but if you have a few more examples, that would be great. Yeah. Yeah. I don’t have a lot of earth shattering ideas, but, it really, the income level, in my opinion it centers around cultivating a community.

And having actual people who want to live there and would like their neighbors, and they want, they’re willing to accept the rent increase, they’re willing to take some, to stay, go the extra mile to stay, right? We could go through storage and parking and things like that, but most people know that.

I do think that cultivating that community feeling is lacking and we are looking into that ideas, tenant appreciation days, it doesn’t cost much to cook some hot dogs and hamburgers and have a something where people can come by and Halloween is a good time to have some giveaways for whoever decorates their balcony the best, or maybe a trunk or treat whoever decorates that the best.

Thank you. Just something that gets people out of their units and mingling as a community. It really helps morale in the community. Another thing that I would say is, we’ve heard, we’ve been looking at this. We haven’t tried yet, but we’ve heard about some people moving to move in fees opposed to security deposits.

And those move in fees, I go directly to the NOI, the income line. They don’t have to be held in a separate account. And you know all of the turmoil or all of the problems that happen from time to time when a tenant thinks they’re getting back a certain amount and then they’re really not. And, so there’s a lot of back and forth there sometimes when people move out.

But if they know in the beginning this is a move in fee and not a security deposit. And we can put it directly toward our top line, then we’re looking at that, yeah, and there are products out there like Rhino and stuff like that is basically like the tenant pays 20 30 bucks a month and it’s like an insurance.

It adds a little bit more of a hustle for the operator when somebody’s moving out and there’s a damage, you gotta file a claim and so on. But it helps with not asking for a big deposit moving in. So that’s something that you can work together with the moving fee to compensate.

Make sure you cover your basis, right? Now you mentioned a community. But you also mentioned earlier that you have small communities like 16 20. How do you get a 16 unit property? Give them the sense of community. That’s hard, right? We have a 22 unit that we manage and it’s not that easy to get.

We don’t have a pool area. We don’t have stuff like that where we can do all these activities, parties or whatever. Like the little things that we do, and you mentioned Halloween, is we’ll do a little little baggie with candy and stuff like that, and we will leave it on everybody’s doors on Halloween and stuff like that.

Any other ideas where you help get that smaller community, get them the sense of know your neighbor kind of thing? Yeah you’d be surprised how many people already know their neighbors. And it’s, the return on investment for that effort is just less for the smaller community.

Because you’ve still got to pay somebody and you’ve got to, set up a little tent or whatever you do the giveaway, your return on investments less, but it’s still cultivates the same community feeling. So it might just feel like it’s not worth it with a 16 unit or a smaller complex but we’re on the side thinking that it’s still worthwhile.

And and try to put something together. But you’re right. There’s actually something that I had heard from one of your podcasts before apartment life is a company that helps cultivate this community. And so actually had a call with them. And so they have are in our area and they’re.

I think we’re thinking about enlisting their services to go around and help us with all the complexes as a whole in one general vicinity to help with that problem right there, the small communities not being, the return on investment not being worthwhile. Yeah. And that’s another factor to your question earlier of getting and moving into self management, you got to have a critical mass, right?

You got to have enough units. in one location. If your 250 units are across four different states and the biggest concentration you have in an area is 40 units, it’s really hard to justify self management. But that’s we had when we pulled the trigger, 500 units in one city. So the greatest distance between two locations was like three months.

So we were able to put together the team, build that functionality that can service the multiple locations. So we were able to pull the trigger but when you have multiple smaller ones and the spread thin you’re right. It’s challenging to make that decision of, okay, I’m going to move to self management a hundred percent.

Yeah, sure. You mentioned earlier, It’s not always rainbows and lollipops, right? It’s not always super easy. It’s not always, oh yeah, 200 per door every month, like clock. And I’m good. Tell us a little bit of the challenges you’re facing as operator, as an operator of multiple small properties, because I’m sure those challenges are not the same challenges as the guys that operate the two and 300 unit properties.

Yeah, so I would guess my biggest hurdle currently is the fact that I’m doing about the same amount of work on a small complex as far as asset managing as I would with a large complex. So I almost feel like I, I have six to eight different properties that I have to asset manage separately in different scenarios that really just drain me.

But, these C class tenants, as the economy changes and shifts. They’re the ones that usually feel that first. And so therefore us as owners in C and B minus assets potentially feel that and then, as things get worse in the economy, historically, the people who maybe lose their house or lose their job and have to downsize will come back in.

But there’s a delta there. That I think we’re going through now where maybe the C class tenants are starting to get a little more squeezed with the with the cost of living and like I said, it hits them harder. So we have that hurdle to to move through. And then mainly it is the the fact that I alluded to earlier that the CapEx and all of the.

Expenses are the same as if you’re in an A class property, for the most part. You mentioned Rhino. We are looking into moving to Rhino because of this reason. For instance, we have a, let’s say we have a complex that’s average rent’s 900 a month, but our average turn is 1, 800 a month or 1, 500 a month.

We collect a security deposit that doesn’t cover in the event that they lose their entire security deposit, right? That it’s tore up or just a basic term. So we really, that’s my day to day is staying on those numbers, right? We cannot go negative when someone moves out and we’re averaging 25 to 30% churn rate, which is another thing that wasn’t calculated really correctly in the beginning by me.

That needs to be allowed for. And so it’s a lot of the little things, but that’s the nuances of apartment management. Operating the operators, that’s what you’re alluding to that. That’s what this, what you do is trying to bring the light that a lot of people aren’t talking about this stuff.

It’s go stack units. Life’s great. I’ll see you on the beach. Really, it’s maybe you’ve got it figured out. Send me an email, this is like that game that you play where. Where the little heads pop up and, the kids play where you just keep popping down the little heads and then that’s what my life is, but it’s just the phase and as you get through it, the properties go through one property is great for six months and then one property is gosh, what is going on?

But that’s the reality for us. Yeah. And you know what the smaller properties and we talked to a lot of. Of operators from all different kind of sizes. The smaller properties have advantages and disadvantages, right? On one hand your expenses are actually higher because you don’t have an on staff maintenance technician.

That is a certified. So if when you have an AC, you got to call an AC technician or hope that the guy that you have managing the apartment complex Has someone on staff that is a certified. But at the same time, what I’ve learned on the smaller properties is that normally they are easier to turn around than the big properties.

And I compare that to the 2030 unit property turns around like a speedboat, but the 200 unit property turns around like a tanker. And it takes a lot more radius and a lot more time, a lot more money to turn a large property. There’s pros and cons, but I agree with you. It’s That’s why we do this podcast is to let everybody know.

It’s hey It’s not all rainbows and lollipops and if you’re taking somebody else’s money to buy an apartment complex You need to be willing and ready to actually be the one that, that puts their eyes and puts their hands on everything and control this because otherwise nobody’s going to care as much as you do about your property.

Yeah, exactly. And you mentioned the smaller properties, I’ll just add a little story. So I purchased a 10 unit apartment building, and it was by all intents and purposes a great tenant base. Really excited about the property. The only thing that really there was to immediately add value with was to implement rubs.

And we went in as a team and implemented rubs and they had a community meeting and every single person moved out of this complex. It was crazy. Little events like that. What’s the answer? Just always have a little bit of extra liquidity. That’s the thing that’s done me the best so far is just, you never know when the rainy day is coming.

Have a little bit of extra liquidity. You don’t have to put all your cash into the next deal. You’ll feel okay sitting on a little bit. Yeah. A reserve account. In other words. Every property should have a reserve account. Yes, absolutely. Okay. We’re getting up to the top of the podcast. Tell us in a few words, it’s if you went back in time, and met younger Aaron, what would be the best advice you would give yourself? Yeah, for sure. So I look, turn the radio off and start feeding yourself with educational material, focus on whatever it is, younger me and. Decide what you want to do and then focus and educate yourself, turning off the radio was one of the most basic things to do for me that probably catapulted me into a new realm in this thing.

And I know it sounds basic, but if I’m feeding myself with podcasts like yours, with audio books, with educational material on how to underwrite and how to do this that is what I’m going to inherently give, get, in return is what I put into myself, right? That’s probably the most important thing.

Focus on whatever it is. And educate yourself, but a practical piece of advice is to turn off the radio and turn on podcasts, I haven’t listened to the radio in I don’t know how long, so just trying to keep that drive and move and shake. Yeah, I’m exactly like you. It’s funny that you said that because I used to commute to work but let’s say two hours a day on the road, back and forth.

And I did the exact same, decision you did. I turned off the fictional, the entertaining podcast, the radio station, and I turned on the business podcast, the audio books. And, you can get a lot of content done in two hours a day which again, it’s the right decision. It gets you the information that you wouldn’t otherwise consume and it will open up opportunities that you wouldn’t otherwise know they even existed.

So that’s a good advice. What would, what advice would you give now, at the end of August, 2023? For someone that hasn’t started their multifamily career, and they’re interested in, getting in there, right? They’ve heard some podcasts, they read the books, they participated in the Facebook group now what?

What’s the best advice you can give someone like this? Yeah, go find the deals. Don’t sit idle. There are people that are going to need to sell and there are people who have paid off assets, just retiring. There are always that demographic, no matter what the market cycle’s doing. You have to hustle.

Find the deal, you’ll find partners. Send me an email, you find a deal. I’ll underwrite any deal that you send over, we can go through it. But go find the actual deals instead of being scared to make any moves, right? This, the people, as they get more and more, as there’s more and more pain potentially, if what we think actually comes to fruition the operators aren’t going to be on podcasts saying, hey, my whole world’s falling apart over here.

I need to sell. But they might talk to you if you have the hustle to go find them, right? So who knows? It may be a little bit harder than before, but there’s always deals. Yep, you’re right. And everybody’s looking at social media and it’s guys, the people that need to get rid of it, they’re not putting it on social media.

And it’s you’re only going to see celebrations, whether they’re real or fake on social media. There’s not a lot of people that tell the stories of this is how I almost blew up or this is how I lost all the money. There’s a handful of honest people that do that, but for the most part, everybody’s just celebrating whatever they can celebrate out there.

So that’s a that’s a good point. So Aaron if our audience wants to reach out, figure out where you are, if they can send you an email with a deal to look at, a partner or something, how can they find you? And we’ll make sure to put everything in the show notes. Yeah, the easiest way is just go to my website and send me an email securemultifamily.

com. And you can find me on social media all over as well. Awesome. Aaron, it was a pleasure. Thank you so much for joining the show. We appreciate it. Yeah, I appreciate it, Joseph. You’re the man. Awesome. And for you, the audience, if you want to listen to more great podcasts like this with a strong operators like Aaron, feel free to subscribe to our YouTube channel to Stitcher, SoundCloud, iTunes, and leave us a feedback.

We appreciate it. Thank you. And we’ll see you on the next one.

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