Working with Property Managers with Michael Gilman and Victor Morales



Episode 162 of the Diary of an Apartment Investor with Michael Gilman and Victor Morales. Transcript by Otter.ai – please forgive any errors.


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Brian Briscoe 0:00

This is Brian Briscoe, hosts the diary apartment investor, podcast and partner at four oaks capital. So we have something that we've been working on for a really long time we are building and we'll continue to build an educational community that we're calling the tribe of Titans. And it's going to be a community of multifamily investors based around education and his house on the mighty networks. What you're gonna find in there is a lot of events that are exclusive to the tribe of Titans members a tonne of educational content, and you're gonna find great people. So if you're listening to this podcast, because you're looking for community or you're looking for education, go no further the tribe of Titans is something you need to look into for the price of about $1 a day, you're going to be able to have access to everything that we have an elder content that we continue to produce for years to come. And just so there's no pressure and there's no obligation, the first month is free. So sign up first month free, and give it a test drive, if you'd like to keep hanging out and you'll continue to have access to Well, me and my partners are four oaks capital in a lot of other experience and aspiring investors. And where can you find it the tribe of Titans dot info, there's a link to that at the bottom of the show notes of every single episode right now. So if you're interested, type in www dot the tribe of Titans dot info or go down to this bottom in the show notes and just tap the link. Victor, we got Mike on the line here. What do you want to ask him


Victor Morales 1:22

with respect to asset management, what are some some some good resources to learn what what that is


Michael Gilman 1:28

the big thing there is active involvement and supervision. So because at the end of the day, especially if you're doing a value add or something that's just outside of the basics of collecting rent and fixing a faucet, the the property manager is just not going to be able to really handle that. So you really have to be quarterbacking and running point on kind of every aspect of your business plan. And unfortunately, knowing as much you're worrying more than your property manager about what's what's going on with the property and kind of just keeping them constantly on tasks, because they'll constantly be things falling through the cracks. So first and foremost, it's active management and then second, you know connected to that is his attention to the data.


Brian Briscoe 2:19

Welcome to the diary apartment investor podcast with your host Brian brisco. In this podcast, we bring some of the top professionals in the apartment investment field to discuss various aspects of the apartment investing journey with the sole purpose of educating listeners to make wise investment decisions. The Diary of an apartment investor podcast is sponsored by four oaks capital bringing you high yield returns through apartment complex investing. Welcome to the diamond apartment investor podcast. I'm your host, Brian brisco. With aurochs capital, very excited for today's show. It's another one of our Ask the Expert episodes, we have two amazing people along on the line with us today, we got Michael Gilman. And we got Victor mirallas. So first of all, you know, BIOS for both these gentlemen will be in the show notes. So if you want to learn more about them, or check out their bios in the show notes, you know, please do but that said Mike, welcome to the show. Ryan, thanks for having me. Yeah. Hey, thanks a lot. So tell us a little bit about yourself. Your give us a little bit of an idea of who you are and what your what your background?


Michael Gilman 3:20

Sure. So I started my career as an attorney went after law school straight in house investment banks, where I work on the legal side supporting trading desks, and some investment banking desks. And that's around the time I got into real estate, which was actually independent of anything I was doing and happy to kind of go into what what brought me there especially. Yeah, absolutely. On securities and trading and emerging acquisitions. I had come into banking, right on the back of the financial crisis in 2000 2008 2009. And I was working in Bank of America at the time. And so I was dealing with a lot of legacy toxic securities cases that make CEOs and mortgage backed securities. And these were supposed to be triple A, you know, super safe investments and ended up taking down the financial system. And you're kind of everywhere I looked there was deplete risk inherent in the products that I didn't see a way to mitigate. Whether because it seemed like something out of left field could just completely destabilise and derail. You know why, whether it was stocks or bonds, which provided just very low returns, perhaps you find bonds you get comfortable with on risk basis, but the returns weren't there. But every time I looked at real estate, it was seemed like a no brainer. And you know, what's funny is going to law school being on Wall Street, I actually ended up learning my real estate through bigger pockets through, you know, self study through books. And so it's kind of interesting that I found that so valuable, and that got me started, essentially. I was like, Alright, this is I think the The best investment, I think, investing for cash flow at the time, that seemed like a pretty solid strategy, right? And as opposed to speculation about investing for cash flows, you got to find a cash flowing market, which are tough to come by. And when you do find them, there tend to be secondary markets. But um, so yeah, I started investing in some secondary markets in northern New England, New York, and started building up a cash flowing portfolio. And that's, that's how I got started.


Brian Briscoe 5:29

So what what type of assets do you start with? I mean, are you looking at single family small multifamily what what is your start with, like,


Michael Gilman 5:36

just read about the different asset types I was trying to multifamily? Because it was safer having more units under one roof. And just the scale you could reach? So I started immediately with multifamily. Nice.


Brian Briscoe 5:49

So you're searching for cash flowing areas? What was the what was the size of your first multifamily?


Michael Gilman 5:55

So my first multifamily was a 20 unit. It was about 850,000.


Brian Briscoe 6:00

Nice. And did you tackle that by yourself? Do you bring in investors? How did you bring that one down?


Michael Gilman 6:05

So that one, I tackled myself, but I used a boatload of leverage, I leveraged it up about 95%. And I was able to do that, primarily because it was cash flowing Really? Well, it was about a 10. cap. You don't see that anywhere.


Brian Briscoe 6:22

What What year was this? By the way? This was, this was 20 2010 2011. Okay, so that Yeah, right after right after the collapse, and things are starting to pick back up, barely pick back up. So Alright, you picked up this, this 20 unit $800,000 very highly leveraged, but as cash flowing. Alright, so what were you planning on the market coming back up? Did you did you look at this financial crisis is like a real estate estate sale or what? What was going through your mind at the time? Besides, I mean, you already talked a little bit about that. But as far as this particular asset,


Michael Gilman 6:57

so this particular one, it was my first deal, I was super conservative. That's why I wanted a cap rate just I spread between my cost of capital costs of financing, you know, annual income. And I was essentially, I wasn't betting on any appreciation at all I just was doing for the cash flow. And then I factored in force appreciation through the a and this was a tertiary market, Northern New England, in Vermont. So I didn't factor in any kind of organic growth, just kind of noi efficiencies, which, in a cold climate like northern New England, you can really do a lot with energy efficiency, things like that. So even though this was 2011, it was I was when I was scouring for deals. Again, this is me still coming into the industry. All I knew was listed deals. And that's all I was looking at, you know, as well as calling broker trying to get on their radar. But, you know, I wasn't getting more major markets. And they were still, you know, even in 2011. I thought it was aggressively priced course, on hindsight, the way things took off, it was irrelevant. It was just a super safe deal. buy and hold strategy. That was how I went into it.


Brian Briscoe 8:10

Yeah, I mean, if I could turn back time, I would have bought everything I could have bought, you know, between, you know, 2011 and 2016. You know, it's a question, you know, that I think a lot of people look at, you know, people look at the market right now, interesting that you said that you looked at the market in 2011. And thought things were overpriced, you know, and think people were paying in premiums, because that's what you get right now from everybody who talks about real estate. And I think the question is, in a lot of people's minds are his real estate going to continue to go up? So I'm asking you that question. What do you think? Do you think do you think we're overpriced right now? Do you think real estate is gonna continue to go up?


Michael Gilman 8:48

I think you're seeing the rate curve, steepening. You know, the feds looks like starting to show some alarm at inflation. That's, it's been ramping, but now it's really, I mean, really taken off. So, to me, it's a function of how quickly they raise the raise rate. And even if they will do it, so I just can't, I found it impossible to predict, just cuz I've been wrong before on it. And, you know, one great example of some of the countries that have negative rates where I was just reading countries like Spain, there's people that get paid by their bank to borrow the money. Right. So it you know, think about that it's,


Brian Briscoe 9:28

it's a penalty on banks for for keeping money in house, you know, I think Japan, Sweden, Great Britain, and a couple of couple other European Union countries have, have had negative interest rates, and then just kind of, you know, for me, I don't know, I, my crystal ball broke, you know, so I'm looking at other countries and thinking, you know, can the us do that, or will the us do that? Are we going to eventually have a negative interest rate because potentially, you know, we could you know, if the Fed decides to put things in the negative and they really want to kick things into high gear as far as you know, stimulate the economy, but I think you hit the nail on the head. And that's that's the question. If I did have a crystal ball, that's what I'd be asking is what's happening to that February, you know, is it? Is it going to go up to curb inflation? Or are they going to keep it low to spur growth?


Michael Gilman 10:20

So the one thing I would speculate is like, couldn't really raise it too much, just because it's got the economy, everything has gotten so tied into low rates that they've seemed there's no appetite for that kind of correction.


Brian Briscoe 10:35

Yeah, yeah. And I think, I think we're going to be in a perpetually low interest rate environment, that's just me doing a lot of reading and, you know, kind of scratching my head thinking, but yeah, rate raising rates, right, right. Now, my opinion, you know, and I don't have formal education in economics, but if they raise rates, our economy is not doing extremely well, right. Now, if you take away the COVID stimulus, and everything that's coming come into play, you know, we haven't had a lot of economic growth recently. And to keep the economy growing, you have to keep the rates low, you know, the stimulus is propped up the economy. And, you know, without that stimulus, and without low rates, I think we're good economy is going to go the wrong direction. So my opinion is the feds gonna have to keep it low for the near term. And then you'll see what happens later. But anyway, yeah. So let's, let's shift gears slightly here. Want to talk a little bit about one of your properties. And in specific, I know, we talked a little bit about the 20 units already. But you got another property you want to tell us about?


Michael Gilman 11:34

We can talk about reasonability did it diverged 54 units, that was a syndicated deal. It's integrated property to dive into because it cover multiple aspects, including some syndication, which I know a lot of the stuff I do still is principle based, essentially, right, Colorado is a market what I love, personally, as well as from a fundamentals perspective. And its market I've been looking to get into for a while. And again, being here on the east coast. Incredible disadvantage, right? It's really a network game in commercial real estate, because just a lot of this stuff, you're not going to find it listed. And if you do find it listed, you're up against a lot of competition within those fields just rarely tend to be good ones, they just get pushed up to as well, you know, as far as I've seen. So, you know, on hindsight, 2011, when cap rates were like six 7% in Denver, that was the time but just been watching it last few years, especially as cap rates were like 4% going into COVID. And when COVID hit and rates dropped to 200 250 basis points. I thought, all right, this, this is really the time to enter this hot market. Things can get dislocated. There'll be some distressed sellers and financing sheet. So you know, I was wrong about the distressed sellers. I think most people were they certainly had not materialised or don't exist. And so we were just left with and the other thing I did, I forgot to mention was we commissioned an off market search, just to really try to find the right asset, which we're looking for heavy value add deal, great core location. So anyway, the distress didn't materialise. But we did find some some sellers. And I think they were a bit rattled by COVID at the time. And so we were able to land a pretty good deal in the middle of COVID. But you know, not I was hoping for a discount, and we didn't get one, I think we this was a heavy value added with a slightly north of 5% cap rate that closed end of January. And we've been looking ever since you know, have the off market campaigns going but things have dramatically tightened. Anyway, back to the 54 unit. You know, what can I tell you about it? It was we got it off market, which was great, because we were able to negotiate a nice long closing period, give us time to raise capital.


Brian Briscoe 14:04

Now when you're talking about your your off market plan, you're going direct to sellers, correct?


Michael Gilman 14:10

Yeah, so in this case, we hired a third party company that would reach out to owners, and essentially the company's called offered of er D, they have, you know, a database and kind of overlay it with analytics, and you can use it to mine properties. And then you give them a list, and they'll go out and, you know, hammer the phones. So it's kind of like it's a it's reonomy combined with or any of those platforms that will give you owner type information and analytics. Yeah. But then they combine it with actually the outreach part. So for you know, a small company like ours, we can't really retain a dedicated person to to knock on the phones. And it's you It takes a certain skill set because you know, these are Typically high net worth individuals or funds, and it's tough to get them on the phone. It's tough to


Brian Briscoe 15:04

get a lot of people have tried with no success to go direct to owners in the space. You know, I've recently heard a stat, you know, over 90% of the apartments to trade hands are brokered, I think I think the numbers like 93% nationwide, but you know, so so a lot of people don't even try the direct to seller, but I guess you're you're fitting into that seven 7% niche where you're actually making it work, which is something I think you're the first person I've talked to that has done this direct to seller campaign and actually made it work. I know, people who've built relationships with sellers, you know, and just pick stuff up from sellers that they know personally, not an outreach campaign where you're essentially hiring somebody to dial dial for dollars, essentially.


Michael Gilman 15:45

Yeah, and you know, so the typical stats, they would, you know, they would tell me is this company for what they're seeing is, you know, 1% Connect rate where someone will be open to offers, so you call 100 people one person talking to negotiate potentially negotiate. So, it you know, it's tough, it's a numbers game, and that's why we chose to try to get the company to do it, because we didn't think we can build it in house. You know, I have heard of shops out there that you don't have their in house team that does this, but certainly brokered way or traditional networks for promoting the sellers. That is your traditional off market. Don't get me wrong. Off market deals are Emporium. Right. So since that last deal, we've we've been knocking on doors, and we've maybe had two sellers we've spoken with, we have an ally out on one deal, and the other one the pricing or just can't make it work? Yeah, yeah.


Brian Briscoe 16:39

I mean, it's, it's it's definitely something that a lot of people have contemplated, I know, it works a lot better, and like the single family small multifamily space. But yeah, I gotta say, one of the obvious advantages is you're probably the only potential seller, you know, that they're talking with at a time, you know, so it's not like you're competing against 80 other people, you're just trying to sit down with the seller and negotiate something that works for the two of you for that one deal.


Michael Gilman 17:04

And I mean, that's also what makes it hard is, you know, what, you know, you have to overcome this presumption that you're looking for some kind of deal, because why would they take it off market basis, especially in a market like this when they know they can get a bit up? Yeah, and, you know, sure, they'll pay that broker's fee, but more likely than not, they'll get higher asking price. So that's why we found that, you know, working the phones and being able to build that kind of relationship and understanding was, it's a 90%, of being able to get the off market deals is overcoming that presumption that you're fishing for a deal.


Brian Briscoe 17:39

All right. Well, that's, that's super interesting. But because of time, we're going to shift gears a little bit here. One question, I'd like to ask everybody. And I think it's very telling, but what is your big burning? Why? What's your motivation for what you're doing?


Michael Gilman 17:53

essentially be able to enjoy living life on my terms, being able to control my schedule, spend time with my family, if I want to take a powder day, the conditions are good. Yeah, not feeling like I have to attend some some stupid meeting, right. So I work in big corporations is just you just dumbfounded by the amount of time that's spent pushing paper is remarkable. And we're nothing gets done. And you're just attending some steering committee or some meeting that leads to another meeting, like madmen, such as getting away from that sort of inaction and being your own boss, and to just come coming back down to passive income really, because, and the safety of it, because yeah, you can be your own boss, you could launch a widget business or an online startup, a social media platform, but there's a degree of risk there. Whereas with cash flowing real estate, it's again, going back to I don't see a safer or more tax advantaged investment, reason long,


Brian Briscoe 18:52

long, long, a lot of things that are similar there. I mean, I haven't worked in corporate America yet, but a lot of what you said reminds me of government, you know, I've been 20 years in the Marine Corps and my my last job was Pentagon, where there there's a lot of paper pushing, there's a lot of making sure your i's are dotted T's are crossed, and you know, you have two spaces after every period, you know, type stuff, but that said, you know, last question for you before we turned to Victor is what's next for you?


Michael Gilman 19:17

So, um, you know, we're finding that the multifamily space is really crowded, and sort of the marquee markets so we've been seeing really strong cash flowing deals. So we're, we continue to bring those to market. We've started some development that we're doing by ski resorts. Trenton and Killington. We've got some things planned, including prefab communities, some Tiny Homes and we've regrow Okay, bringing it back to there. So trying to think outside the box and get deals done that get really high returns and then we're that aren't where the trade is and to grab it, right because the kind of returns we like to do or we can't cross A 15% IRR right now conservatively, in any of these top markets, as far as I can tell, I mean, we of course continue to look. But that's, that's where we are in the near term until we see some kind of change. And then another thing I mentioned is hotel conversions. There's going to be an avalanche of auctions hitting the market. And the numbers work, you know, if you can get around the the zoning issues and yeah, just the complexity of it. It's very attractive converting these deals, you'll get much higher returns, you know, all in when you compare it to existing multifamily?


Brian Briscoe 20:43

Yeah, I know a lot of a lot of the multifamily value add people that are doing these hotel conversions, you know, you can get something for pennies on the dollar. And, you know, take, you know, what, essentially is a studio apartment with at least hotel room and, you know, maybe combine a couple here and there to turn them into one bedroom or two bedrooms. But I see a lot of people move in that direction right now. But anyway, let's one more shifted gears, you know, bring Victor on the line with us. So Victor, welcome. Thank you. Yeah. Hey, so do us a favour. Tell us a little bit about yourself, you know where you're coming from and lead us into what got you into multifamily?


Victor Morales 21:19

Yeah, yeah. So my name is Victor Morales. I am from the Central Valley of California, near Fresno. I graduated with my degree in construction management in 2003. So since since that point, I've been working in construction management. And now as a Senior Project Manager in commercial construction right now, specifically in healthcare, with my companies that the healthcare division work for a large, large general contractor on almost nationwide, more in several several states. And so about three years ago, I wanted to see if I could leverage my, my skill set and what I know and start getting into real estate investing. So I started off with the traditional approach, or I don't know how traditional IT IS or not, but going to, you know, purchasing homes. Me being in California, I lived in where I lived, and the numbers just weren't working out. And so I was at a friend who was a realtor, and he was helping me out and he said, Hey, you know, listen to this podcast, bigger pockets. And so that's that's kind of how my true learning really started, was through bigger pockets, and then to where I heard Michael Blanc get on his podcast there. And so since since then, like you're actually now probably closer to four over four years ago, I purchased a couple of duplexes in Pennsylvania. I held on to those for a couple of years. And then a year after purchasing those a little over a year, I purchased a couple homes in Decatur, Alabama.


Brian Briscoe 22:51

Now I've got to ask the question, you're you're in the Fresno area, you know why Pennsylvania? And why Alabama? And how did you how did you get those?


Victor Morales 22:59

Yeah, the Pennsylvania ones. I found those through bigger pockets weds website, they have a marketplace. Okay. And so one day just perusing through there, see what what the investors had, I saw this duplex there. I called the investor selling it. And he was at it was actually one one duplex, but there was another one side by side and he said hey, there's another one next door that the owner hasn't done anything with and it needs a lot of work. And so I said, well, I've got money for you know, for to put some into the one I'm purchasing. I'm gonna need some money for the other one. Do you know any private investors? And so he says, Yeah, I think I might. So I got a small private loan to help get me through that second one. So I got the purchase, got the private loan, did the rehab. And actually I just, I just sold sold all of all of those, you know, six units between Pennsylvania and Alabama, over the last two to three months. Nice.


Brian Briscoe 23:58

Yeah. Nice. You assume you got a little bit of appreciation out of those things over the time is that I had to do overall.


Victor Morales 24:04

Yeah, Yeah, I did. Okay. Not not big money. I you know, I actually haven't done the numbers on the Pennsylvania homes or duplexes, but on the Alabama ones, I think in about a year and a half. I made about 26,000


Brian Briscoe 24:18

Yeah, not bad at all. Yeah, my daughter actually, you should live in Decatur So, and she's the podcast editor. So she's gonna listen to this and think, oh, Decatur, Alabama. Awesome. And she's really gonna enjoy me, you know, mimicking her like that. So, you know, I can't wait for her to call me about this one. But anyway, yeah. Great. So good on you for reaching out to that. And, you know, taking that, that leap, I guess. And, you know, for a lot of people investing cross country is kind of a big, big hurdle. And, you know, I'm sure there was some, you know, it wasn't as easy as it sounds, but, you know, good job on getting over that hurdle. there anything else you want to talk about, specifically about your history, Victor?


Victor Morales 24:56

Yeah, I just want to say that and, you know, through listening, you know, Hearing of Michael block through bigger pockets, I found that he had a podcast as well. So listen to that because my goal is always apartment investing. That that just something that always attracted me for whatever reason. And then I realised that he had a mentorship programme. So lat in January of 2020. I went ahead and signed on with his with his mentorship programme and got my first deal a couple months ago. And I actually signed up for another mentorship programme one one that you know, Mike was just talking about off market deals. So this gentleman he peed, that's what he does off market deals. I've had a hard time finding stuff that works just because as Michael was saying, and everybody knows, it's just so competitive. Yeah. So trying to see if I could if I could learn that skill set as well. And try both approaches through PayPal market and the traditional approach to going through broker.


Brian Briscoe 25:59

All right, awesome. Hey, so real quick. One question I like to ask everybody on this show again, is your about your big burning? Why what what is your big burning? Why what drives you?


Victor Morales 26:10

Yeah, is three things. Faith family and community that faith drive strikes me wanting to spend more time with family as a project manager, you know, infrastructure management, we, you know, it's it's a guaranteed 5050 hours a week, I know, I know, when I wake up on Monday, it's going to be at least 50 hours, right that week, and sometimes more. And so so I want to be able to devote more time to them, I've got, you know, my daughter 17, she's headed towards 18. And my boy just turned 11. So I want to spend as much time with him as I can, working towards that. And then the second part of that is, I volunteer with Youth for Christ. And so I go into the other couple guys into our local juvenile hall. spend spend about an hour a week with with young men and ladies in there. And it's just at the point to where I just feel like it's not enough. We have them for an hour, but but then they leave and you can hear it in their voices. And what they say is, you know, when I get out, I'm just going back to the same thing. And for many of them that they'll return back to juvenile hall. So I want to be able to have some time to devote to them to where we can kind of receive them on the outside and maybe provide some mentorship.


Brian Briscoe 27:26

Yeah, help other people. I love it. I love it. All right. Now comes the favourite part of the show. Yeah, I got a lot of favourites, you know, favourite episodes, favourite everything and everything's my favourite favourite kids, too. So all five of them are our favourite. But here we go. Victor, we got Mike on the line here. What do you want to ask him?


Victor Morales 27:45

Yeah. Hey, Michael, thanks for for coming on, as well. And taking a few minutes to field some questions for me. You know, a couple of things you're already kind of touched on in with respect to the off market deals and the broker are seeing right now you're, you're approaching both ends. Is that correct?


Michael Gilman 28:09

Yeah. So absolutely, we we try to always keep an eye out on listing deals, try to work existing networks. And we have marketing campaigns running. And one of the best off market sources I've had for deals has been my commercial banker, you know, I've talked with one regional bank. And, you know, he essentially gives me a look into his portfolio and said, Well, you know, this guy's, you know, he kind of ageing out, doesn't have anyone to pass down to connect you to him. So I think bankers are great referral sources, probably the best, right? Because they have these portfolios, and kind of have a sense of who's coming in who's going through. So yeah, we just try to keep it active, you know, at all times, and, you know, had we more resources, I spend more money on off market deals and try to build that out in house.


Victor Morales 29:09

Yeah, one of the things since, you know, as I mentioned, I've I'm starting the approach as well, so the realtor friend that actually first I first started looking at deals with he now lives in Vegas and and he has a lot of time and he's approached me about wanting to get involved into what I'm doing now with with the apartment and so he was wondering how we can help out so I said well, with with what I'm learning through the direct to seller approach is Yeah, you got to do the dial for dollars part. So he so he's agreed to come on and, and I'm going to come up with a with a script and and kind of a pro programme for him to start doing that dialling. So he said a code kind of a couple things that I didn't have the time so I think I found someone that has the time and that we can benefit. Maybe help each other out that way. Then you also said, you know, looking at Colorado, which is, you know, I'm on the west coast. Right now, my focus has mostly been in Alabama and Georgia, which seems like everybody's in Georgia right now. But I do like those places. I have wanted to get closer, closer to the west coast and Keller, Colorado is one of them as well, if between myself and my friend, if we could, if we could solicit and find some deals, is that that that you're willing to look at as well?


Michael Gilman 30:30

Yeah, for sure. You know, given you are the West Coast day, there's no I'm sure. shortage degree markets. And yeah, I, especially when you look at Georgia, right, you have so much competition there. So sure, Brian will, will will tell you that because the Northeast is such a crowded, yeah, you know, so many natural buyers and developers, so much capital sloshing around there. Whereas you have the same, or even better fundamentals, and some of those tapes, which again, are probably just as competitive, you know, Idaho, Utah, Arizona, but I would I would fixate on one market, and then don't spread yourself, then.


Brian Briscoe 31:15

Yeah, and we, I would say the same thing. As far as picking a market. I mean, once once, you know, one market well and get a little bit of traction, it's a lot easier to move to other markets. But before you get a lot of traction in a single market, you know, I think if you're if you're bouncing around market, the market, you can be spinning your wheels. But you know, we focused in South Carolina, we've got one property in Georgia, and you know, we've got almost 500 properties in South Carolina alone. But yeah, the more the more you focus, I think that the more you're going to find good deals.


Victor Morales 31:48

Appreciate that. Yeah. Yeah, it was just one more question. Kind of switching gears, looking forward, toward towards the end Asset Management part of things. I don't have much experience there. I did, I did a acquire, through a general partnership, my first deal with Savannah Roy and her husband, at the network nurse who she was on just not too long ago. And so I'm just just beginning to learn there, or get that experience, but but it with respect to asset management, what are some, some some good resources to, to, to learn what what that is, and kind of what are some some bumps along the road that that maybe you've faced Michael?


Michael Gilman 32:36

Yeah, so you know, the, the big thing there is active involvement and supervision. So the, it's, you know, weekly, at least weekly meetings with the property manager, and I'm assuming most of your properties are these properties, your property manager. And because at the end of the day, especially, if you're doing a value add or something that's just outside of the basics of collecting rent, and fixing a faucet, the, the property manager is just not going to be able to typically, to really handle that, because in your property management's a tough game, they have tonnes of units under management, especially if you're a smaller player, then it becomes even more difficult, it's tough to get their, their attention. So you really have to be quarterbacking and running point on kind of every aspect of your business plan. And, you know, unfortunately, knowing as much worry more than your property manager about what's what's going on with the property, and kind of just keeping them constantly on task. Because they'll constantly be things falling through the cracks. So, you know, a recent example is we were doing a value add, we were we were, you know, wrestling with material pricing and trying to get the units in budget, and on time, we needed it. And finally, we we kind of polished off that part. And then the units are sitting there vacant. And, you know, we take a deep dive and we discover the property managers just not really apt and, you know, leasing new developments or new units, they're just trying to use their existing process. So we have to call them locators, you know, third party services to get people in there to lease it up. So I guess first and foremost, it's active management. And then second, you know, connected to that is his attention to the data, right. So they should be sending you reports. There's a kind of any number of platforms out there, folio building, so on and so forth, but have reporting functionality on delay MC vacancies, was Conrad ready. So just keeping track of that discussing that on a weekly basis. And then, you know, if you kind of be the property management, supervision of the property management part of it, the one on one, it can start getting more kind of complex involved if you're, if you're sort of dealing with investors and investor reporting. And that takes a different level of asset management where you might want to want a platform or definitely a CPA. Or what we do is we have like, we built a dashboard, through spreadsheets, which is compares the current performance of the property without pro forma, you know, side by side. So we've kind of bootstrapped it and built it in house, but there are third party vendors out there that handle more the asset management side, like essentially loading data and looking for patterned kind of lighting stuff, and I haven't used one, so I can't really recommend them. But I know they're, they're out there. And I've heard people use them to great success.


Brian Briscoe 36:04

Yeah, and we've had, I mean, obviously, you know, this, the property manager in the in the asset management is, you know, 90 90% of the deal, you always obviously have to buy, right and finance, right, but you're the management is where the rubber meets the road and where you're really going to make your money. But that that property managers a key part of that, and that's something that, that we've actually struggled with, we've we've had a couple of different property managers work for us. And looking back at it, I think the key is, you just got to know what your property managers are good at and what they're not good at. No. So depending on your business plan, you know, one property manager may be perfect for you. And another property manager could be, you know, the worst thing that could happen, so to speak, but so matching, matching property managers capabilities with your business plan, I think is huge. As far as that goes. Anyway, good.


Michael Gilman 36:59

I would just second what you said about the importance of the deal. And it's also the part of the deal that people often like the least because pay attention leads, because it's the toughest and kind of least glamorous part. You know, when you dig into the nuts and bolts of it, a lot of times you're dealing with really like basic issues, that you're pulling your hair out, like, you know, why am I sitting here, coordinating this I you know, I'm not the property manager. You know, well, so that I just can't stress that enough.


Brian Briscoe 37:33

Yeah, we, we, we had a property manager who wasn't giving, you know, solid financials, I mean, numbers were all over the place, we end up having to hire a bookkeeper to make sense of the financials. And you know, after four or five months of that, we started scratching her head and saying, why are we hiring a bookkeeper to you know, fix financials that should come out of a property management perfectly, but at the end of the day, you know, it's not as cool you know, I mean, if you're, if you're like social media popular, it's not as cool to post.


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