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Mastering Asset Management in Multifamily Real Estate Investing with Jason Yarusi · The Academy Presents podcast

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  Did you know that 90 % of the world's millionaires
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  invest in real estate? Well, I'm Angel with the
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  Academy Presents Real Estate Investing Rocks,
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  and I'm here to help you if you want to go for
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  your piece of that pie. Are you new? Are you
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  new to this and you just don't know where to
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  start? It's okay. Are you someone that has invested,
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  but you feel stuck, you feel like you've lost
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  momentum, you don't know where to really head
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  from here? Are you a seasoned real estate investor
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  who is doing great but maybe you just want to
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  hone a few skills here and there? This is the
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  place for you. The Academy Presents Real Estate
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  Investing Rocks podcast will connect you with
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  industry experts so that you can save time, avoid
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  costly mistakes, and begin living the life you've
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  dreamed of all through real estate investing.
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  You're already taking the first step. just by
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  joining us here today. Hey guys it's Angel and
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  you are here at the Spring REI Rock Summit. I
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  am super excited these are my six favorite days
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  of the year because yes we do this twice a year.
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  So again these these are my favorite days I love
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  it and in addition to what you've got on this
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  side this is you know 30 -35 hours of content.
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  You could get that VIP subscription and join
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  us on the live side because we've got panels,
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  roundtables, master classes. We've got tons of
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  stuff you can do over there. But if you want
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  to stay on this side, this side is amazing too.
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  And just to add to that amazingness, we're about
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  to hear some crazy awesome stuff from Jason Uruse
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  here on asset management. So I'm going to hand
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  it over to Jason and let him kind of intro himself
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  and give us a little background information and
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  then we will get going. Awesome. Angel, excited
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  to be here. Congrats on another awesome REI rocks.
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  Just amazing to see you put on and continue to
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  see this grow here. So I'm going to dive in on
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  asset management. My name is Jason Yarusi. I'm
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  a multifamily investor now here in Tennessee.
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  Since 2017, I've acquired over 2 ,000 plus units
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  across a few markets here in the Southeast, about
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  $250 million of real estate. A lot of this really
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  comes down to our business plan of finding underperforming
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  assets that we can come in there and put together
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  a repositioning plan that fits our two teak.
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  So we'll talk to that a little bit today with
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  asset management. And again, I'm Jason, you're
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  received asset management, right? So asset management
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  is ideally the oversight of the property, right?
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  So we are not actively doing the property management.
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  That is another party. We'll speak that to the
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  next slide, but we're monitoring the economic
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  and operating performance of property, overseeing
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  the workflow, overseeing the property from acquisition
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  to disposition, right? So it's a fully engaged,
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  it doesn't pick up when you do close. and the
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  property, you're helping craft the plan, whether
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  it's you as one of the owners or you on behalf
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  of ownership to make sure the plan one can be
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  attained and two, make sure it can be put into
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  motion at the closing. Next piece is property
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  management. Now this is not property management.
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  Property management handles the day -to -day
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  operations of the property, works to achieve
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  the plans and goals of owners as well, along
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  with the asset management, but works with the
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  asset management on the... guidelines that we
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  do want to make sure the property is performing
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  accordingly. So here are some questions to ask
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  property management when we're getting involved.
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  What is your experience in the multifamily asset
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  class? How many units do you have under management?
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  What type of internal software do you use? And
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  what is your in -house team, meaning that do
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  you handle construction? If you do handle construction,
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  what are some of the pieces of construction that
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  maybe you won't handle? Maybe you won't do some
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  of the trades like HVAC or plumbing. So where
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  does your company or outfit pick up? So as an
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  asset manager, we want to understand that. We
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  also want to understand their experience in the
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  field we're investing in. So we're investing
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  in multifamily properties here. Ideally, if the
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  company is very heavy in single family, we're
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  very heavy with very large class save units,
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  and we're coming in to invest in. B or C multifamily
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  assets that may be 50 or 100 units. It might
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  not be the right fit, right? Because they may
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  have some learning lessons or some practices
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  or principles that are not set up for us in terms
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  of us and our business plan. And lastly, what
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  is their fee, right? Typically you find that
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  management fees may be anywhere from three to
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  12 % based on the units and their offering, right?
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  So if it's single family houses, it might be
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  10 or 12%. If it's a 300 unit property, it might
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  be 3 % of collection. of revenue on the property.
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  So understanding what is the fee structure and
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  making sure it's in alignment with the going
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  rates for property management. Next is part of
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  asset management is doing the initial inspection
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  to make sure our underwriting that has been done
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  with our underwriting team and our proposed or
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  planned construction plan or repositioning plan
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  is actually going to be able to be maintained
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  or sustained based on our property inspection.
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  We're also going to look at the income and expenses
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  that are actually occurring on the property as
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  part of our takeover and allow that to form our
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  budget, whether our budget is fully adapted based
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  on our prior analysis or if it needs to adapt
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  from our on -site inspection. This is also going
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  to include the takeover and repositioning plan.
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  So how are we going to engage with the property
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  manager to make sure that whether it be a transition
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  from the existing property manager of the seller
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  to our new property manager or keeping the property
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  manager, how are we going to do this takeover
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  proficiently so it doesn't have a high impact
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  on tenants and it can make this as seamless as
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  possible? And then our project or plan at day
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  one with the new management company, what will
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  be our main focus out of the gate. Lastly, making
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  sure that this is aligning with the owner's objections,
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  of course, where they want to go and meeting
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  the loan requirements for the loan we have on
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  the property. operations, we're going to evaluate
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  the performance of the property. In the beginning,
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  it's going to be on a week to week basis, right?
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  There's a lot of moving parts and things take
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  with a bigger property a long time to have effect.
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  So if we're having things that are happening
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  day in and day out, we're not tracking this for
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  a few months and say there's a leak or something
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  else, the ramifications are much larger than
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  it would be on just a single property or single
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  house. So we do have to keep a very high intent
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  focus on what's happening day to day. So we will
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  set up weekly meetings with our property management
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  company to make sure we're focused on, of course,
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  the collections, the leasing, any of the marketing
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  promises, construction, and then open items that
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  allows us to keep a clear read on what's happening
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  with the property. We're also going to look on
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  our team. That could be our internal team, property
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  managers, or others to look at other ways that
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  we could drive income to the property that will
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  meet the market or how we can curtail expenses.
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  What can be a fine -tuned turn process where
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  a lot of time can be lost? And how can we do
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  this and still need to facilitate the linear
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  needs and requests as they are written into our
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  little documents? Some of our account review,
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  we're going to review our cash and reserve balances.
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  We're also going to look at our account receivables
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  and payables on a month and month out, try to
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  forecast that accordingly so it can work in line
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  with our available working capital. This is going
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  to all bake into really the equity interest and
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  loan ratio of where we need to be within the
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  guidelines and how the owner is looking to have
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  their cash flow or their free cash flow be dictated
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  throughout the project. This also is going to
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  look forward on a yearly, monthly, quarterly
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  basis of how do we forecast potential renewals
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  or move -outs, or what would be our anticipated
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  need for move -outs to be able to meet our designated
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  term process to hit our new income rates. So
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  next. Some of the top income line drivers, of
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  course, can be rent increases. We're going to
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  go in there and either just increase rents for
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  existing tenants if the leases do fit, or can
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  we go out there and do specific things to the
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  renovation of the exterior and interior of the
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  property to be able to drive income? Are there
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  contracts that we can take advantage of? Could
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  be laundry contracts. It could be trash relay
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  contracts. Could be cable contracts that could
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  drive additional income to the property. have
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  a turn tenant process for implementation where
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  we can look at our tenants who are having good
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  tenants and give them maybe a lower renewal rate
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  so we can keep those tenants on board, but also
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  with quote unquote reward them for the short
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  for their long good nature on the property. And
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  then our other tenants been bad performing tenants
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  that maybe we're going to go in there and push
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  a different rental rate with the necessary need
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  that we may look to be able to turn that unit
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  to get the bigger rent increase into the. future.
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  And is there ability to gain other things? Can
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  we add on units? Can we turn an office into a
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  smaller office and one unit? Can we look at looking
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  at storage space and make that or additional
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  used or open space and turn that into storage
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  space? Is there additional things that we can
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  think of outside the box to drive additional
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  income to the property? So some of our due diligence,
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  we're gonna review current litigation, tenant
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  evictions, list of the current personal property,
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  including appliances, equipment, supply. What
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  is the list of outstanding maintenance items?
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  Is there a lot of maintenance requests that exist
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  in a property that potentially are not being
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  met or do need to be met accordingly, especially
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  any leaks or other pieces that are having a dramatic
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  effect on a property that need to be handled
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  in a routine fashion quickly as a takeover. Also
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  talking with our PPM attorney, making sure the
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  asset and entity is formed everything from incorporation
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  of formation of legal entity. Finally, finalizing
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  the ownership structure, noting if we are going
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  to gauge doing a cost segregation study and then
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  coordinating the closing. So if you are at a
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  state closing, you want to make sure that that's
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  been coordinated with all the necessary parties
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  from legal to title to to the lender to make
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  sure that everybody's in accordance of how you're
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  going to make sure that this transaction. is
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  highly successful in getting it from where it
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  needs to be over the line to closing so you can
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  take on the full role of the asset management
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  process. So some of the ways that you can easily
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  increase your bottom line, your net operating
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  income, renovation repairs. You can capture lost
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  lease by raising the rents to meet in the market.
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  You can find ways to proficiently reduce expenses
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  to meet the true nature of the property. Now
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  that doesn't mean cut expenses that are needed
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  to run the property efficiently. It means to
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  eliminate. undo expenses that can be maintained
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  in a more efficient manner. Next is, can you
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  add on additional fees, whether it be pet fees,
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  laundry fees, application fees? parking fees
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  or as we spoke earlier bring in other contracts.
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  Is there a way to save on your utility bills?
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  One of your highest expenses is your utility
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  bills. Can some of this be back to bill back
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  to tenants? Is there a way that you can add in
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  low -flesh toilets? Can you change out windows
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  to put high -energy saving windows in board?
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  Are there ways that you can save to reduce your
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  utility expenses for the overall property?