Learn the ins and outs about Asset Management
- Finding Lenders/Syndicators
- Due Diligence
- Increasing the Value of a Property
- Marketing an Asset
- Data Analysis
- Developing Capital
- Property Financing Strategy
About our Speakers:
Gary Lipsky
Gary is a real estate entrepreneur who has a focus on Multifamily Syndication and currently has $161MM AUM. He is the President of Break of Day Capital, whose mission is to positively impact the lives of their investors and the communities in which they invest through the highest level of transparency and fiduciary responsibility.
Gary is the host of the Real Estate Asset Management Podcast, where he speaks with various experts in the real estate industry to help educate asset managers. Gary also is the best-selling author of Best In Class, and founder of the Asset Management Summit.
Sandra Benenate
With over 25 years of experience in construction and renovation, Sandra has been at the forefront of single family, multifamily and commercial renovations.
Sandra, former COO of a regional property management company, oversaw the operations, acquisition, and sales of over 7000 units in the Gulf South; a portfolio valued at over 262MM (2012 values) and staff of 300+. Seeing a need in the industry, Sandy formed Strategic Property Consulting. A multi-platform company offering asset and due diligence consulting. With her skills and knowledge, she plans to bring her experience to new levels and assist others in their multifamily asset purchases.
VIDEO TRANSCRIPTION
0:00
welcome everybody to mfm live for those of you that have never participated in one um this is something that we started
0:07
about basically i think two months after covet kicked off so as you guys remember this thing called
0:14
covet happened and mfm for those that never heard of it you know it stands for multi-family masters it’s really meant to be a grassroots
0:21
level kind of brand where everybody you know across the country had different meetups about 50 at the time flying you
0:27
know all the same banner same goal same vision and really you know kind of building that camaraderie building that
0:33
ecosystem and so uh once covert happened we ended up going virtual and mfm live
0:39
essentially was the was where that came what was what we ultimately ended up doing and so we do
0:44
this every month same uh things the third monday of every month
0:49
and really with the goal of bringing on good speakers panels topics things people want to hear about listen about
0:54
and so you know i have two partners on this garrison and powell both of them are actually out
1:00
not available today so i ended up being the solo one here to host it but you know for those of those that don’t know me my name is ferris moussa i have a
1:06
company called disrupt equity uh we’re vertically integrated firm based in houston texas we have properties throughout texas and georgia and we do
1:12
have our own in-house management company that does first and third party management and it’s you know a lot going on in our
1:19
world so you know kind of rapidly growing and continuing to keep up that momentum and since garrison and powell aren’t on
1:25
i won’t even i won’t even let them introduce themselves right here so um but for those that are attending i guess
1:30
most of you probably already know what our topic is today right we’re talking about asset management and i think this is really a part of the business that is
1:38
i think highly neglected right because everyone really you know new to the business really focuses on
1:43
the buy side right what it takes to buy a deal and yes there’s a lot that goes into buying a deal but really once you close
1:51
i like to say that’s whenever the the easy part stops and the hard part starts right because you know performing is an
1:58
important piece and obviously asset management is all about how do you manage the asset and perform and so it’s
2:03
an area that again there’s not a lot of you know classes on there’s not a lot of educators on it and so most people don’t
2:09
really realize it so we figured we’d do a panel on and bring on some of our friends people that
2:14
have done asset management that understand what it is and really kind of have them speak about what it looks like
2:20
and you know i like to do q a and so i’m gonna go ahead and moderate and ask some questions and for those that are
2:25
listening please ask questions in the comments so i guess first thing go ahead and just type where you’re from just so people can know but if you have
2:32
questions topics ask them and i will moderate them kind of throughout the presentation and so with that said we have two
2:38
awesome speakers and friends that are on gary and sandra do you guys want to go ahead and introduce yourself gary you
2:44
want to go first sure thanks very much for having me um so uh gary lipsky with break up day
2:51
capital based in los angeles and we focus on two areas to invest only uh phoenix and
2:57
tucson um we uh within the last month we closed on a
3:02
59 million dollar deal and we just sold the deal last week for a little over 3x
3:09
to invest trevor’s raising his hand he was an investor in that one so um
3:14
yeah hit a grand slam you know they don’t you don’t uh you don’t have too many three
3:20
x’s um but uh i’ll make a plaque and hang that on my wall and uh pretty psyched about that and uh
3:27
wrote the amazon bestselling book best in class on asset management all right thank you very much gary
3:35
and sandra you’re going to introduce yourself as well yeah so my name is sandy benonade and
3:41
i’ve been in asset management property management construction for
3:47
many years going on 30 years handled about 7 000 units six states
3:54
that company has since gone gone out they the owner has passed
4:01
away all the assets were sold and so my husband and i started a company for uh
4:07
due diligence and uh asset reporting so we we would go around in and assist with
4:13
due diligence reporting or asset analysis going through if you need just a second set of eyes or somebody to poke
4:19
some holes in your asset management or your property management if you think perhaps that they’re not performing at
4:24
their highest levels and then most recently i uh joined the team at disrupt so i am now a
4:31
part of disrupt doing their asset management all right an asset to uh disrupt by
4:37
doing asset management so with that said i wanted to go ahead
4:43
and really you know i think the first question is really elephant in the room for people and so gary maybe you want to
4:48
go first which is ultimately the question i have is where does asset management stop and where does property
4:54
management begin right so let’s just go ahead and you know i think that’s the thing people
5:00
really from people interact with they just don’t really get it right what is the difference who’s doing what
5:05
yeah so saying i’m gonna ask you the same question so you know i’m gonna you may put gary on the spot and you know give you a layup
5:11
here well uh great question um so the asset manager manages manager
5:18
essentially they’re the ones that they punch in they punch out they monit they manage the
5:25
day-to-day uh of the property but they’re not an owner they what you as a good asset manager does
5:32
creates ownership thinking within within that on-site staff with with the regional manager with with the the
5:40
leasing agent the property manager the maintenance staff if you can instill that thinking that ownership thinking
5:46
that will pay huge dividends because they’re going to go that extra mile but getting back to that question of
5:53
asset management so you want you want to secret shop them you want to make sure they’re executing the business plan that
6:01
you came up with during due diligence and and obviously you’re able to pivot through throughout the whole time but
6:08
you’re you’re managing them and and that’s the uh you know that’s what happens at the end of the day you have
6:13
to go through the financials on a monthly basis and people make mistakes all the time you
6:18
see it on those financials and and you know they’re like 150 pages
6:23
at best usually a lot longer and you need to go through them and make sure all the expenses are for your property
6:30
and not not another property because that has happened many times and you know they you know
6:36
bookkeepers have multiple properties that they have to um work for and they work crazy hours
6:42
they’re under staff like every other department and company that you work with and
6:47
and it’s your job as an asset manager make sure that everything that is charged your property
6:54
uh is is actually for your property and then and manage every single income line and expense line and a lot of people
7:02
don’t go through the financials because they don’t understand it and certainly i am no expert going those through those
7:08
financials particularly in the beginning but you ask questions it’s it’s okay to ask questions and figure it out along
7:14
the way that’s what i love before i hop into it to that then all that standard same question right where
7:21
what is asset management where does it stop between asset management property management so it’s just what gary said so your
7:27
property management handles the day-to-day operations of the property and you hired your property manager team
7:34
because you are entrusting them with the daily operations of the property you as the asset manager you are overseeing
7:41
that the property manager or the team that you hired is performing at the
7:47
highest and the best levels and you are just auditing you are overseeing that
7:52
what they are doing is doing best and that if there’s any uh improvements that can be made
7:58
and so between the the property management and yourself
8:04
you are truly just an auditor you are a manager you are an overseer
8:12
so then maybe the question and if either you could answer this is ultimately are you managing the staff or are you not
8:18
managing the staff no gary yeah i agree i agree so then
8:24
you want to motivate them you want to find
8:30
ways to connect with them but you’re not managing them so then maybe then who’s the who are you
8:36
working with typically right who are you giving direction and guidance to
8:41
yeah that regional manager is is is everything um because
8:48
um they’re the ones that are going to hold your staff accountable which
8:55
i i’ve found one so far one regional manager that has like hit the box and all these different things they’ve held
9:02
their team accountable they’re a good project manager they have creative vision usually
9:07
there’s like one thing or the other but it’s rare to find something that can do all three you don’t necessarily need
9:13
someone to do all three but if you can find that that’s that’s fantastic
9:18
yeah and maybe i’ll add to that right ultimately we just look at it as asset manager really represents the owner’s
9:23
business plan right property managers doing the day to day and so as an asset manager you want to
9:30
respect the chain of command right because ultimately that manager is
9:35
being employed by that regional is being employed by that management company right and you know because we’ve had
9:40
this happen in the past where asset managers sometimes try to kind of overset the boundaries and then it becomes confusing to staff right who got
9:47
who who do they get direction from right you know gary wants to paint the wall blue but the regional says paint the wall green and they ended up painting
9:54
the wall blue green right and you know it’s a problem right i guess no no reason i said green my wall screen here
10:00
actually um but really you know that’s kind of the thought process for people right
10:06
so then maybe going through that same kind of thought process right you know you’re
10:11
working with the day-to-day the regionals do the day-to-day right you’re working with the regional how often do you meet with i’d say how often
10:18
should an aston martin visit the property how often should you meet with the regional and again that goes for either of you
10:26
so for me you i i like to visit properties quarterly
10:33
just to track unless there is something going on that needs more attention so
10:39
does is the property in in heavy renovation is it in a heavy capex do you
10:44
see something in a trend that’s good or bad is it is it trending to where there’s more delinquencies there’s
10:51
there’s some upheaval at the property then obviously you’re going to go to the property to see is is management not holding the line
10:58
there but i’d like to see properties quarterly that doesn’t always happen
11:04
it has to be at least once a year depending on the size of the portfolio you have got to be there at least once a
11:10
year for communication with your staff
11:15
you should be getting no less than monthly reports and i if you’re in a
11:20
rent up status if you’re in a capex then you need to have weekly just just touch
11:26
base it doesn’t need to be a big long meeting but you need to have weekly weekly touch base
11:31
got it so maybe to recap standard you’re saying weekly syncs with the staff monthly financials obviously
11:38
and whenever you know a property stabilized probably visiting quarterly just to kind of check on things
11:44
and whenever if it’s in lease up or big kind of capex projects you know as frequent as needed that summarize what
11:52
you okay correct gary anything to add to that yeah we’ll we’ll um
11:57
when it’s stabilized we’ll visit a property at least every two months and having our properties all in one area is
12:03
a lot easier because you know i could bang out you know all my properties and visit new ones but we’re we’re wanting to drop in on a much
12:10
more regular basis usually unannounced um i could just pop in and and and see
12:16
if it’s running the way i expect it to run without them knowing that i’m coming you know yep
12:23
actually good question so is it better to visit announcer unannounced unannounced
12:28
well you agree um okay well so you kind of said are you kind of alluded to this a little bit
12:34
about portfolio size so maybe my question is how many properties and this is a good question because ben and i
12:39
contemplate this and i hear different answers so curious to hear what each of you would say i mean how many properties
12:44
should an asset manager be able to handle
12:51
to me it depends on if the property is stable or if it’s in flux or if you’re
12:57
doing a lot of capex uh but if you’ve got relatively stable and you’re not doing
13:04
heavy renovations then at you know 10 12 easy
13:10
if you’ve got something where you’re you’re you just acquired or you’re doing heavy
13:17
capex projects then maybe bring it down or have somebody help but um there’s there’s no reason you can’t
13:24
handle you know 10 12 15 projects at a time gary
13:30
yeah i agree we’ve done something differently um
13:35
uh what i’ve done is i have an asset manager slash analyst and the reason i
13:40
do this um which i don’t think very few people do is because i want them
13:47
throughout the whole process they know the deal better than anyone by the time we buy it and they can help implement
13:52
that business plan so i’d rather give him five six properties and then have another asset manager slash analyst
13:59
because he there’s no skin in the game for that analyst that underwrites a deal and
14:06
you know if it fails or or does great i want that person to have skin in the game and i could bonus them on that
14:12
performance from finding me a great deal well usually i i find it because of
14:18
broken relationships but like underwriting it correctly managing it all the way through to to sale you know so
14:24
um so for for me it’d probably be closer to six but yes if i was doing it
14:30
the traditional way would probably be a 1012 if they’re stabilized there’s one large company i know of that
14:36
has i think they have about 24 properties or an asset manager so it’s interesting right because you
14:42
know they hear the different numbers right so gary yours do a little bit more workload outside of asset management sanders talk about civic asset
14:48
management you know and it’s ultimately the thing i always kind of think about too is you know a good regional can
14:54
handle you know six to eight properties right as long as they’re not all deep value
14:59
ads right you know you have some stabilized you have some capex suddenly the question is well the asset manager that’s kind of managing the
15:05
regional or alongside the regional maybe it’s a better way to put it right how many regionals can that person handle so
15:11
and i don’t think it’s a right or wrong i think again it depends on how much of a back office there is right what pieces
15:16
are systematized outside of it etc etc um it’s it’s well worth to invest
15:22
don’t spread someone thin there’s lots of money to be made and what we’re doing so don’t spread someone think it’s going to
15:29
cost you much more in the long run than investing in an extra person you know yeah i really agree
15:35
um so then continuing down i guess so you know what would you say the month-to-month duties of an asset
15:41
manager are actually let me write away i’ll say week-to-week and month-to-month
15:50
so week-to-week we we have our weekly calls like you know senator messen uh uh
15:55
said earlier and we we have um a very particular sheet that we go over that
16:01
really gives us a deep dive before we even jump on the call so we don’t have to waste time during the call to go over
16:08
certain things we’ll know all the different things that we need to know as far as occupancy new new rates
16:14
for the rentals um turns that we have to do all everything
16:20
we need to know is on that one sheet and and it’s a google doc so we’re not we’re not having to go pull up
16:28
files from like a month ago from that meeting like everything is right there and we could see we can go back 52 weeks
16:35
104 weeks to see where we where we stood at any one point which is really nice
16:40
um but monitoring that sheet we have a to-do list and to hold everyone accountable what
16:45
what needs to happen so we go through that um you know as long as there’s not a lot
16:51
of capex there’s you know there’s there’s the lender requirements that we have to submit on
16:57
on a monthly and quarterly basis which never used to be the case but the loans
17:03
these days are a lot more um paperwork intensive um and then
17:09
making sure the jaws get um submitted and whatnot so asset management is a lot harder these
17:16
days than it was you know even a year ago
17:22
sander you want to also uh add to that or answer the question yeah that’s exactly it so it’s your
17:28
weekly numbers and your reporting to track your your teams make sure that they’re on progress that they’re
17:34
following up with what they need to do it’s weekly calls to any of your subs to
17:40
make sure that they’re following up with what they’re doing and uh they’re on track for your capex it’s uh touching
17:47
base with ownership to make sure that they’re comfortable with all that’s going on
17:52
and then it’s monthly reporting following up with because just as gary said there’s uh
18:00
reserve draws there’s bank reporting there’s fannie mae reporting there’s insurance reporting there’s all these
18:06
lenders are very much watching you know we want you to do things at
18:11
these certain deadlines these certain benchmarks and they’re following up to make sure that you get that done so it’s
18:17
not just uh investors that you have to that you’re accountable to it’s the
18:22
lenders as well so yeah so so the so the managers managing the staff the regionals managing the
18:28
managers the asset manager is kind of managing the regional slash alongside the regional and maybe managing the
18:35
construction who the heck is managing the investors well the acquisition team
18:43
gary what do you think yeah invest investor relations i mean we provide in our monthly newsletters a
18:50
lot of information so rarely is someone saying hey what’s
18:55
going on what’s you know like how are we performing because we’ll say you know how we’re doing to you know
19:01
actual to budget if something is is is going wrong not everything goes perfectly you know
19:06
what’s what are we doing to fix it and um so we’re very communicative you know
19:12
when covet happened we were doing twice a month newsletters just to appease everyone you know everyone’s very
19:18
nervous in the beginning so it’s it’s how you present your information
19:24
to reduce investors reaching out and not that we don’t want to have those touch points but if you provide plenty of good
19:30
information then people aren’t going to be chasing you down you know excellent
19:36
so then you know i think that’s the thing for people right they hear the asset management fee right it’s not
19:41
going for just asset management and the in the what’s the word in the truest sense
19:47
right it also includes investor management investor relations all the things that
19:54
go into an investment right with any of these deals you might have 20 30 40 100 investors on it right that’s 100k ones
20:00
that’s 100 set of questions that can come up it’s 100 people to send things back and forth with manage et cetera so
20:07
you know i think i wanted to kind of really make sure we touched on that because that’s the other side of the business that people really
20:12
don’t think about right everybody starts okay demand is the asset but you also use stuff to manage the investors
20:18
so you don’t make any money on that two percent asset management fee no even for us even across that scale the
20:24
asset management fee i actually literally ran the numbers again the other day i think i’d disrupt
20:30
asset management fee once all the clothes that we have will still be probably negative 400k on
20:37
payroll just disrupt equity let alone the management side right but you make the money on the pro boats right which
20:42
you perform and do what you need to do so that’s the management really kind of keeps the lights on
20:48
at best so um so then you know maybe continuing
20:54
down what else do people maybe what else do people mistake with
21:00
asset management right and i’ll add two parts that’s one question the second question is what else do people tend to
21:07
overlook right of what an asset manager does or doesn’t do
21:16
so i think um [Music] there’s there’s a couple of basic things for asset management because i think
21:22
sometimes people overthink this too so there’s being proactive in how you
21:29
manage your property anyone can do that um there’s holding people accountable
21:36
which again anyone can do that and and having having uh you know a plan that you’re
21:42
that you’re executing so i’m just trying to like make it very simple for people you know um
21:50
to to follow because there isn’t a lot of information out there no one no one really teaches you
21:55
how to asset manage so it’s great that you’re having this panel but um
22:01
you know if people are are diligent and and and um trust but verify
22:07
um that goes such a long way in in asset management because i mean i’ve heard horror stories of
22:15
of people relying on their property management company not not following up
22:20
and and literally people have disappeared like the staff has disappeared from that property because
22:26
the lack of oversight and even you know you have your weekly calls and even if you’re performing well
22:32
don’t skip calls because and having have them on zoom because you you’ll find out a lot of information by having having it
22:39
on zoom what’s there are there personal problems that that you can see that’s affecting them and that’s going to affect their job
22:46
it’s just having that consistent call is is so so important
22:53
all right sandra so what what is something that
23:00
people believe asset managers should do that they that is really not an asset management
23:05
job is that is that the question maybe or something that they do that people don’t realize they do
23:13
so it could be their way okay so to me asset managers are what
23:19
pushed the project push the property into its highest and best performance
23:27
so ownership is always going to have the pie in the sky idea pushing the
23:33
needle this is what we think we can do property management is always going to
23:38
well we’re going to do our best i’m going to try they’re going to say all of what you want to hear but
23:45
they’re always going to qualify that and scale it back because they don’t want to have to put forth that many widgets
23:51
they’re going to scale it back to what’s easier for them it’s the asset manager’s job
23:57
to bridge the gap to see what’s reasonable from the
24:03
ownership side and to see what is expected from the property management side and to push for the highest and the
24:10
best and that’s a balancing act that’s well owner maybe you’re a little too
24:16
ambitious or maybe you under budgeted or property manager no
24:21
you’re slacking you’re you should have turned more units and and you’re taking too long and so it’s this constant back
24:28
and forth that that is not necessarily understood
24:34
and i i think also it’s it’s just an
24:39
overall awareness of every aspect going on with the property
24:45
so there is you have to understand everything you have to understand the
24:51
the occupancies and the delinquents and the capex and the performance and is
24:58
somebody just having a bad day or is there really something trending in the property
25:03
and was the are these kpis real or did somebody just enter a whole bunch of
25:09
invoices that were wrong or is our maintenance numbers really this or did they not put the capex in where
25:16
it needed to be and so you’re on every level checking every aspect of this property
25:23
so it performs best for the ownership got it you know i’ll add one more thing um
25:29
sandra alluded to it but you know it’s that that cash management is so so important making sure you have enough
25:37
obviously to pay your bills the capex all these different things if you
25:43
if you’re not paying attention to that and now all of a sudden you have to do a cash call you are toast you know like
25:49
you’ve got to be ahead of it um obviously good operators are
25:56
having tons of cash reserves because you need to be able to pivot if you want to change your business plan
26:01
um for for interest rates these days not with so much floating you just have to
26:07
you have to be well ahead of the game and manage manage that cash otherwise you’re going to be in big big trouble
26:13
absolutely cash is king and you know more reserves the better you can always give it back to investors once the dust
26:19
settles right and yet holders return slightly but you know safe investment is better than
26:24
no investment so um and so maybe another question and i just
26:30
totally lost my train of thought i was going to ask um let’s totally slip my my mind
26:37
um maybe i’ll ask okay i’ll shift gears i know i remember the question i was gonna ask now uh
26:43
two things right whenever you guys visit a property what is one of the most valuable things to do
26:49
right that most people don’t do i’ll add that little caveat right in terms of you know how do you
26:55
show up right sometimes they know you’re showing up they know who you are right how do you really sniff out the bs right
27:02
because there’s a lot of cya and property management and i mean honestly i like to say it’s a terrible business
27:07
because of really just the culture sometimes right it’s for us and our management has been about how do we
27:13
change that right and do something different but how do you know what are the things that you show up what should you do
27:20
well i uh i don’t like giving advance notice or if i give advanced notice i like to
27:28
show up early so if i’m going to be at a property on wednesday i’m going to show up tuesday
27:33
afternoon and i’m going to at very least drive the property i want
27:40
to see what it looks like i want to see how much trash is on the ground i want to see if everybody’s scurrying around
27:46
trying to make it look like oh corporate’s coming because i don’t want it to look like corporate’s coming i
27:52
want it to look like you know miss james is coming that’s right um if this is the first time visiting
27:59
the property i’m gonna secret shop i’m going to walk in and hi i’m trying to get an apartment and i want to see what
28:04
systems and protocols they have in place are they going to get my driver’s license are they going to offer me the best unit are they going to walk me
28:10
through what kind of sales pitch are they using i’m going to secret shop and i’m going to show up the next day and go
28:16
hey remember me and just blow their little brains but uh one of the first things i always
28:23
ask for when i go on a property when i when i do a property call is i want to get three things i want to get the
28:29
current rent roll i want to get a vacant unit list i want to get a delinquent list
28:34
i will walk every vacant unit because i want to see the condition of these vacant units and i want to know how long it’s been vacant and why it’s
28:41
vacant i want to get a delinquent list because i want to see is that unit delinquent or is it vacant you just
28:47
haven’t moved them off because you don’t want to show a vacant unit on your rent roll so i’m going to do a little walk
28:54
and try and do a little investigation there i want to look at a rent roll because i want to see are you moving in
29:00
people with tangible leases or are you just moving in people for funsies you know what
29:06
how does your delinquent list and your rent roll pair up you know that goes back to the accounting side of it are
29:11
you are you running delinquents are you shifting money around are you really is this your true occupancy are you hiding
29:17
it and then i want to poke around and i want to see all of your maintenance little corners i want to see this little
29:24
unit that you’re hiding you’re flooring in that your maintenance guys actually have a recliner and an old tv and
29:29
they’re watching soap operas in the afternoon been there seeing it um so
29:35
uh those are the things i look for i go for vacant units i look for rent rolls and i look for the delinquents and i
29:42
pair up the delinquents and the rent rule to see if there’s uh if there’s any hanky-panky going on there i hope people
29:49
are taking notes because that’s definitely very valuable stuff most people don’t realize for the record the soap operas
29:55
are usually in the mornings not the afternoons but underneath uh gary same question
30:02
yeah uh well i definitely i’m now gonna ask for the delinquents too son so thank
30:08
you for that we hadn’t been checking on that we got actually i’ll add one more on that same
30:13
thing which is kind of the same but i thought santa was going to say which is moving condition reports from tenants right like the last 10 just
30:19
our tenants complaining about things that are kind of half ready to move in or are they saying hey the floor was
30:24
dirty the wall had a dig in it etcetera all right just tell us you understand the quality of the asset that the
30:30
quality the the movement for that tenant yeah sorry good gary yep yeah yeah um
30:36
well i also you know one of the key things obviously you’re looking to make sure the property is clean and how how
30:42
they are how things are going in the in the office how are they interacting with residents
30:47
um answering the phones um obviously we’re going to walk all the vacant units all the all the capex any any kind of
30:54
work that’s getting done on the property our workers actually working like sandra
30:59
said you know um so you want to see you know if we are doing painting on the property how many painters do we have
31:05
you know if it’s a big property and they only have one or two guys that’s that’s a real problem it’s gonna take forever to get it done um if there’s eight guys
31:12
and they’ve been having lunch for two hours which we’ve seen before too like that that’s a problem you know so
31:19
um you just want to get a really good feel for the property i definitely recommend visiting the properties at
31:25
night too because that’s a whole nother story just to get a good feel particularly even during due diligence
31:31
you know drive the property at night is is everything well lit what kind of um
31:37
tenant base is there you learn a lot of things at night that it’s it can be completely different than than during
31:44
the day yeah my favorite is showing up on a property at night and there’s already cops there like ah awesome
31:49
you know you guys should definitely before you buy a property like always go check it out every time we do due
31:54
diligence we always you know come back we go due diligence leave five o’clock go grab dinner and
32:01
come back seven eight o’clock you know yes it’s late you’re tired but it’s definitely time well spent just to
32:06
really understand the asset and even understand again how much lighting is there is or not and you’ll be shocked
32:12
sometimes we find so yeah find the longest tenant find the tenant who’s been there the longest and go ask them
32:18
questions that’s actually a good idea yeah something someone should do during every due diligence right really spend
32:24
the time to talk to those tenants yep awesome well so for those of you that are on you know definitely ask
32:30
questions i see a few came in so i’ll moderate them so if you have questions please ask them and you know we’ll
32:35
probably we’ll probably do a q a for another 15 10 15 minutes and then we’ll i’ll break it out into breakout sessions
32:41
we’ll break up the audience into smaller groups and then i’ll just leave it on for the rest of the evening so um
32:46
but maybe one more thing before i kind of go off the questions people have what’s something people who haven’t
32:52
talked about people should know so i’ll leave it at that very loose
33:01
i i don’t i only know what i know i don’t i don’t know what other people are thinking but fair enough well maybe what’s
33:07
something that most people don’t realize that we didn’t talk about we should right
33:15
how important your property management team is it doesn’t it does not matter how good of an asset
33:22
how what what class a how spectacular those kitchens look how wonderful the
33:28
grounds are if you do not have the right property management team it will turn in
33:34
a heartbeat and when it turns it’s really hard to get it back you’ve gotta you’ve gotta just
33:40
constantly monitor and stay on top of it yeah all these things can shift on a dime and that’s why i like to say a
33:46
really good manager is worth the extra ten fifteen thousand dollars a year because that person will make you that a
33:52
month on the right properties so exactly all right that’s a good one i i was yeah i was going to say that
33:59
exactly and don’t be afraid like if you say you set your expectations from the very beginning and if they’re not
34:05
meaning that then they have another review and then after that if they’re not boom you don’t don’t wait like i’ve
34:12
made the mistake in the past i liked someone and they just weren’t performing and i
34:17
waited and it was it was foolish of me you’ve got you always pay the price
34:22
it makes you a little bit bitter as a person because you want to be a good human being but then you realize that
34:27
you know you’re the one that it comes at your cost yeah and you’ll you’ll over the next month or two you’ll find all
34:33
the other things that weren’t getting done or you know missed invoices stuff like that and actually that’s a big thing
34:39
that people miss out on is is you know the work that’s getting done so you should
34:45
pay attention to those invoices that monthly reports because there are times when property managers
34:50
want to to make your financials look better and so they’ll just hide invoices
34:55
believe it or not it happens all the time um so don’t be surprised when you know
35:01
you did work on on ten apartments and you’re not seeing the bills for them
35:07
um because they will they will come definitely yeah no matter when
35:13
and then you may lose a vendor you may get a bad reputation something may happen because
35:19
and uh the bills weren’t paid timely and then you’re having to rebuild that you’re having to rebuild
35:25
trust and reputation because you had a manager that flaked out or
35:31
you know a regional that was trying to meet a goal because property management
35:36
companies they set goals for their staff as well so if you perform at a certain budget if you get certain things done in
35:43
certain timelines then they’re bonused so if
35:48
they’re they’re looking out for their best interest not yours they get a paycheck from somebody else
35:54
you know you’re you’re just the big expensive landlord so if they’re they’re going to do whatever they can do to get
36:01
them paid they they’re not necessarily looking out for you they’re looking out for them
36:08
got it all righty so then that said i’m gonna go ahead and moderate some of the questions the first one this is for you
36:13
gary because you mentioned it actually you center you can also hop in too but as an asset manager how do you know when
36:18
an expense does not go with your property um yeah you don’t you only know what you
36:24
know but obviously you’re doing you know if you if you renovated 10 units that month and
36:30
you outsource for let’s say um countertops and you needed seven
36:36
countertops and you don’t see that bill that month like you know it better show up the next month or
36:42
or or ask for it there’s um things just add up quickly and if you’re
36:47
not see that’s what a good asset manager does they know what work is happening on that
36:52
property um so that i think logic and reason right yeah you ask it for invoice
36:58
numbers and well i saw you bought four stove for unit 102. like something doesn’t add up to that right so
37:05
that’s very important making sure every every um renovation every you know every
37:11
appliance everything matches up to a unit so the um you know the maintenance aren’t running
37:18
off with like microwaves and stoves and stuff like that and
37:23
it happens you know and there are times where i’m like hmm i wonder if he’s walking off with stuff
37:29
you know and so you’ve got to be very very detailed in in all your reports so that you there’s that um
37:37
um accountability correct
37:42
and also having a set plan with set fixtures so you know
37:49
i’m using you know accessible beige or modern gray or whatever paint i’m only using this
37:56
certain flooring i’m only using this appliance package i’m only using these certain toilets and so if you get a
38:02
sherwin-williams bill and it’s got china doll no that’s not mine why is this in mine no this goes or why why do i have
38:10
these appliances when i only use the stainless i shouldn’t have anything with black and so if you
38:16
have systems and you have a unit package and everyone knows that your package one
38:22
it’s going to streamline what you look for and it’s going to streamline what accounting looks for and
38:28
just as you said every purchase is tied to a unit the unit is static every
38:33
purchase is tied to a unit and i don’t care if you’re buying 10. i need 10 unit
38:39
numbers and those will be placed in that those 10 units if they need to be moved
38:44
for whatever reason then you need to tell me so that i can adjust it on my schedule otherwise it’ll be denied it’ll
38:51
be a denied purchase it’ll be a questioned purchase something also to watch for is a lot of
38:57
people a lot of good properties will have in-house hvac staff
39:03
that’s fabulous it’s absolutely wonderful if you have an in-house hvac staff
39:08
watch your materials because if you’ve got somebody who knows how to do ac he knows how to do ac for all of his
39:14
friends and family too and so you may be buying all of his materials so that he could go get side work
39:20
so just make sure everything is accounted for okay
39:26
perfect um let’s keep going then gary there’s one for you specifically can you share the document that you do for the weekly
39:32
calls yeah we can um what i can do is do like a screenshot um and send it to everyone
39:39
gary will give us content yeah he’ll give us confirmation at the end and he sent him an email yeah yeah and then
39:45
send me you know i’ll take 10 of the other commissions there let’s keep going
39:51
uh just preet asks are you saying that the asset manager should be in touch with the on-site property managers even
39:57
though they usually rely on the regional managers for updates generally
40:04
no i wouldn’t go direct to a property manager i go to regionals
40:09
because there’s a hierarchy involved all right the next question how do you keep the pm
40:14
accountable especially in cases when you are small fish in a large pond within their portfolio that’s tough one
40:21
that is a tough one you’ve got to stomp your feet and demand it you’re paying them the same fee you’re paying them
40:28
and work that relationship but this everyone this is a relationship business so
40:33
take your your regional out for lunch and get to know that person and like i said
40:39
that ownership thinking for all the staff goes such a long way
40:44
you want to make them feel their decisions matter that what they do matt everything they
40:49
do matters and they’ll they’ll go that extra mile and that extra mile will put lots and lots of extra money in your
40:55
pocket and your investors pocket all right next question uh what would you say are
41:02
the top three key point indicators to measure as an asset manager
41:08
so what are the top three kpis well noi
41:17
you gotta know uh vacant units you know you’re
41:22
rented versus vacant you need to know
41:27
how you’re performing versus your budget
41:33
i don’t know there’s i don’t know there’s probably about six that i would i would trail i would i would track
41:38
every month and it would just be you know your income your expense which would produce your noi you need to know
41:44
how much you’ve spent in your capex versus how much you’re drawing against your capex because that could be
41:51
problematic you need to know um what is your collections versus build
41:57
you need to know what is your cash collections not just you know accrual collections yes cash
42:05
every month i had to explain this three times to a property manager i don’t want to know what the bank balance is
42:11
how much did you collect this month how much did you get from tenants
42:17
um and um let’s see
42:24
uh oh and and available units you know like what’s your turn what’s your make ready
42:30
turn ratio so that i i know which what’s maintenance doing is maintenance actually
42:35
getting units ready are we uh are we able to turn units quick enough and are
42:41
we turning them quick enough and then are we getting a good return on our investment
42:46
with um higher lease trades all right
42:51
let’s go to the next one i like this one uh is it okay to have a separate bonus incentive program outside of what the third-party pm company has
42:59
and not tell the pm ooh no you you can certainly have other
43:05
bonuses but it’s you’ve got to work with your regional it’s it’s a team effort you you know like they are your right hand
43:12
man or woman so work work with them yeah make sure though sorry what was that not a god
43:19
yeah make sure that you’re you’re incentivizing the right thing because but you know let’s say you’re um if your
43:27
leases are down and and so you’re you’re incentivizing them for leases but other things you know
43:34
all the focus goes to that on the on them making the bonus and it could be all these other things that they’re not doing now so
43:41
uh noi really kind of plays into this you know the whole thing if you’re focused on noi
43:47
then they’re going to reduce expenses look for it to maximize income and and that’s a really good one um because if
43:55
you have these little things that you’re going for like work orders or whatnot it just it just throws off the balance of
44:02
things so you want to make sure that um they’re focusing on all the right things
44:08
and not focusing on one thing yeah now there’s a whole r into incentivizing the right things
44:15
um and i’d say ultimately unless you’re handing them cash like the pm company is going to know one way or the other and you know i
44:22
mean we do first and third party management and trust me i have no problem if an owner says hey i want to give an additional bonus if they do x
44:29
like i mean why would the manager company say no to that right you’re ultimately you’re basically providing more money to
44:36
help make their job easier right if you go to the extreme if you came and said hey i want to incentivize the manager a million dollars for getting
44:43
this thing 99 occupied why would i ever say no to that yeah that managers can be as motivated as
44:48
could possibly be and so i think it’s a good idea we do do we do on our problems
44:53
like to do bonuses outside of what the property major company has in place right it helps motivate people it gets
44:58
people kind of going in the right direction and again most major companies actually i don’t even know why a major
45:04
company would say no let’s keep going this is maybe a harder one
45:10
but i’ll ask it anyways in a partnership typically what percentage of the gp does an asset manager receive
45:17
um um go ahead and do it son i don’t know two percent i mean it
45:24
varies it’s just it’s really hard yeah i mean it depends on a million things that i take and ask the manager fees too or for doing the
45:30
asset management are they probably not um are they doing more than just the asset management
45:36
that’s a hard one to weigh a lot of times people try to argue the asset management fee for doing the asset management but then there’s usually
45:42
other things outside of the asset management need to happen too so you have to give up some of that um
45:48
let’s begin do you visit occupied units on your visit
45:54
we we typically don’t you know it’s a disruption to
45:59
uh the residents now um they’ll be spot checks by our property management company but we typically won’t um unless
46:07
we need to get into a unit or like walking a lender or something like that but typically not
46:15
all right so if it’s the first time for me visiting a property that i want to see one of every unit type just to
46:21
familiarize myself with an asset pass that i’m not going to go into an occupied unit unless there’s been a
46:28
problem or i suspect that there’s possible like that very high delinquency for no
46:36
apparent reason may not match up to the rent roll kind of situation like let’s let’s make sure that there’s actually
46:41
somebody living in this um but other than that no i’m i’m not going to disturb an occupied tenant
46:49
all right uh what system or tool do you use for managing multi-family appfolio building rather do either of you use an actual
46:55
system app manager system or just your kind of your own reports on top of the property manager
47:01
yeah our property management company that we work with uses yardy so we’ll we’ll interface with that
47:09
we’ve used real page before to connect to yardy and to spit out kpis
47:15
um it’s pretty cost effective we’ve had
47:20
um i haven’t loved the the service that real page provides um even when i’m
47:26
trying to give them money sometimes it’s it’s hard to get an asset uh loaded up to get our kpi so um but
47:34
there’s other other tools out there as well so yeah i use the the management
47:42
software that’s in place and then build out uh just our own software
47:48
all right and i’m gonna ask one last question and we’ll call it another already over time who sets the schedule for renovation so
47:55
like this one so it’s going to be a joint
48:00
collaboration between um multiple parties so
48:06
like with disrupt it’s going to be a collaboration between ownership
48:12
asset management and um you know the pm the management company
48:19
or on-site staff um plus you have to remember your lender is also going to set a schedule for
48:26
renovations they’re going to come back and say oh well you’ve got 60 units that you
48:32
have to get done in 24 months and you’ve got to get x y z done within a certain amount of time and some lenders are very
48:39
specific you know you’ve got 3 6 9 12 they’re very hardcore on your your
48:44
schedule for improvements so you don’t have a lot of leeway for that but it’s it’s definitely a collaboration
48:51
between um ownership management any third parties that you use for
48:58
improvements and whatever lender relation you can work all right perfect
49:04
well guys thank you very much definitely appreciate it um but for those that are on how can
49:10
anybody get ahold of you guys um you can email me
49:17
at uh sandra b at disrupt equity.com
49:24
and i can put it in the chat if anybody needs it yeah that’d be great and gary yeah um you can go to my website
49:31
breakupdatecapital.com and my email is gary break of day capital.com
49:36
awesome well thank you guys very much for taking the time super valuable source information for those who are listening to call it was
49:42
recorded it will be posted onto the multifamily masters facebook group and channel you know really appreciate
49:48
everybody taking the time and so that said hopefully you guys will stick around maybe maybe not but you know i’m
49:53
gonna go ahead and shift this into breakout rooms and so for breakout rooms we’ll break up the audience the group’s about seven or eight and then i’m just
49:59
gonna leave it all the rest of the evening so you know feel free to run as long as short as you’d like to in your
50:04
in your group like i said like gary said this is a relationship business this is how partnerships happen so definitely
50:11
network get to know somebody you know and get out of your comfort zone it’s all about you know seeing who you meet
50:16
and who knows you and how do you all add value and grow together and so with that said
50:23
thank you guys very much and let’s get this loaded up
