Latest / MPI Multifamily Commercial Real Estate Investing / What to Look for When Evaluating Your Multifamily Deals

Transcript

What to Look for When Evaluating Your Multifamily Deals · MPI Multifamily Commercial Real Estate Investing

• 1:13
  Foreign.
• 1:16
  You're
• 1:17
  listening
• 1:17
  to
• 1:17
  the
• 1:18
  Master
• 1:18
  Passive
• 1:18
  Income
• 1:19
  Podcast
• 1:19
  Network.
• 1:23
  Hey,
• 1:23
  guys,
• 1:23
  this
• 1:24
  is
• 1:24
  Charles
• 1:24
  Seaman
• 1:25
  here
• 1:25
  with
• 1:25
  Erica
• 1:25
  McNew,
• 1:26
  and
• 1:26
  we're
• 1:26
  hosting
• 1:27
  the
• 1:27
  Master
• 1:27
  Passive
• 1:28
  Income
• 1:28
  Multifamily
• 1:29
  Podcast.
• 1:30
  And
• 1:30
  today
• 1:30
  we're
• 1:31
  going
• 1:31
  to
• 1:31
  be
• 1:31
  talking
• 1:31
  about
• 1:31
  a
• 1:32
  very
• 1:32
  exciting
• 1:32
  topic,
• 1:33
  evaluating
• 1:34
  multifamily
• 1:35
  property
• 1:35
  potential.
• 1:39
  Welcome
• 1:40
  to
• 1:40
  the
• 1:40
  Master
• 1:40
  Passive
• 1:41
  Income
• 1:41
  Multifamily
• 1:42
  Podcast,
• 1:43
  where
• 1:43
  we
• 1:43
  guide
• 1:44
  you
• 1:44
  to
• 1:44
  invest
• 1:44
  in
• 1:45
  commercial
• 1:45
  real
• 1:45
  estate
• 1:46
  with
• 1:46
  a
• 1:46
  special
• 1:46
  focus
• 1:47
  on
• 1:47
  raising
• 1:48
  money
• 1:48
  from
• 1:49
  others
• 1:49
  to
• 1:49
  buy
• 1:50
  bigger
• 1:50
  and
• 1:50
  better
• 1:51
  deals.
• 1:51
  And
• 1:51
  now,
• 1:52
  here
• 1:52
  are
• 1:52
  your
• 1:52
  hosts,
• 1:53
  Charles
• 1:53
  seaman
• 1:54
  and
• 1:54
  Erica
• 1:55
  McNew.
• 1:58
  So
• 1:59
  what
• 1:59
  does
• 1:59
  that
• 1:59
  mean
• 1:59
  in
• 1:59
  a
• 2:00
  nutshell?
• 2:01
  So
• 2:01
  when
• 2:01
  you're
• 2:01
  looking
• 2:02
  at
• 2:02
  what
• 2:02
  potential
• 2:03
  multifamily
• 2:04
  property
• 2:04
  to
• 2:04
  purchase,
• 2:05
  there's
• 2:05
  several
• 2:05
  different
• 2:06
  factors
• 2:06
  that
• 2:07
  you
• 2:07
  want
• 2:07
  to
• 2:07
  take
• 2:07
  into
• 2:07
  consideration
• 2:08
  when
• 2:09
  you're,
• 2:09
  when
• 2:09
  you're
• 2:09
  purchasing
• 2:10
  and
• 2:10
  acquiring
• 2:10
  multifamily.
• 2:11
  So
• 2:11
  we'll
• 2:11
  go
• 2:12
  over
• 2:12
  some
• 2:12
  of
• 2:12
  those
• 2:12
  key
• 2:12
  ones.
• 2:13
  I
• 2:13
  think,
• 2:14
  for
• 2:14
  starters,
• 2:15
  understanding
• 2:15
  your
• 2:16
  key
• 2:16
  metrics.
• 2:17
  So
• 2:17
  like
• 2:17
  getting
• 2:17
  very,
• 2:18
  very
• 2:18
  familiar
• 2:19
  with
• 2:19
  the
• 2:19
  verbiage
• 2:20
  and
• 2:20
  the
• 2:20
  lingo
• 2:21
  that
• 2:21
  people
• 2:21
  use
• 2:21
  within
• 2:22
  the
• 2:22
  multifamily
• 2:22
  asset.
• 2:23
  Some
• 2:23
  of
• 2:23
  those
• 2:23
  key
• 2:24
  metrics
• 2:24
  being
• 2:24
  like
• 2:25
  cap
• 2:25
  rate,
• 2:26
  your
• 2:26
  cash
• 2:26
  on
• 2:26
  cash
• 2:27
  return,
• 2:27
  your
• 2:27
  net
• 2:28
  operating
• 2:28
  income.
• 2:29
  What
• 2:29
  do
• 2:29
  you
• 2:29
  look
• 2:29
  for
• 2:30
  typically,
• 2:30
  Charles,
• 2:30
  when
• 2:30
  it
• 2:30
  comes
• 2:30
  to
• 2:31
  like
• 2:31
  your
• 2:31
  cap
• 2:31
  rate,
• 2:31
  your
• 2:32
  cash
• 2:32
  on
• 2:32
  cash
• 2:32
  return?
• 2:33
  You
• 2:33
  know,
• 2:33
  it's
• 2:33
  a
• 2:33
  great
• 2:33
  question.
• 2:34
  So
• 2:34
  the
• 2:34
  answer
• 2:34
  to
• 2:35
  that's
• 2:35
  probably
• 2:35
  going
• 2:35
  to
• 2:35
  vary
• 2:36
  a
• 2:36
  little
• 2:36
  bit,
• 2:36
  depend
• 2:36
  on
• 2:37
  depending
• 2:37
  on
• 2:37
  the
• 2:37
  size
• 2:37
  of
• 2:38
  the
• 2:38
  deal
• 2:38
  I'm
• 2:38
  looking
• 2:38
  at.
• 2:39
  Most
• 2:39
  deals
• 2:39
  that
• 2:40
  I've
• 2:40
  looked
• 2:40
  at
• 2:40
  in
• 2:40
  the
• 2:40
  past
• 2:41
  have
• 2:41
  been
• 2:41
  larger
• 2:42
  deals
• 2:42
  like
• 2:42
  50
• 2:42
  units
• 2:43
  and
• 2:43
  above.
• 2:43
  So,
• 2:44
  you
• 2:44
  know,
• 2:44
  in
• 2:44
  a
• 2:45
  perfect
• 2:45
  world
• 2:45
  where
• 2:45
  I
• 2:45
  love
• 2:46
  to
• 2:46
  see
• 2:46
  an
• 2:46
  8
• 2:46
  in
• 2:47
  8
• 2:47
  cap
• 2:47
  and
• 2:47
  a
• 2:47
  12%
• 2:48
  cash
• 2:48
  on
• 2:48
  cash
• 2:49
  return.
• 2:49
  Absolutely.
• 2:50
  But
• 2:50
  for
• 2:50
  anybody
• 2:51
  who's
• 2:51
  looked
• 2:51
  at
• 2:51
  deals
• 2:51
  in
• 2:52
  the
• 2:52
  list
• 2:52
  5,
• 2:53
  6,
• 2:53
  7,
• 2:53
  8
• 2:53
  years,
• 2:54
  there
• 2:54
  probably
• 2:54
  haven't
• 2:54
  been
• 2:55
  too
• 2:55
  many
• 2:55
  of
• 2:55
  those.
• 2:56
  Matter
• 2:56
  of
• 2:56
  fact,
• 2:56
  there's
• 2:57
  next
• 2:57
  to
• 2:57
  none
• 2:57
  of
• 2:57
  them.
• 2:57
  Rephrase
• 2:58
  that.
• 2:58
  So
• 2:59
  I
• 2:59
  think
• 2:59
  it's
• 2:59
  important
• 2:59
  to
• 3:00
  be
• 3:00
  realistic
• 3:00
  with
• 3:01
  the
• 3:01
  market
• 3:01
  you're
• 3:01
  looking
• 3:02
  at
• 3:02
  and
• 3:02
  what
• 3:02
  the
• 3:02
  expectation
• 3:03
  is.
• 3:03
  A
• 3:04
  lot
• 3:04
  of
• 3:04
  times,
• 3:04
  you
• 3:05
  know,
• 3:05
  like
• 3:05
  people
• 3:05
  ask
• 3:05
  you,
• 3:05
  what
• 3:05
  cap
• 3:06
  rate
• 3:06
  do
• 3:06
  I
• 3:06
  want
• 3:07
  and
• 3:07
  what
• 3:07
  cap
• 3:08
  rate
• 3:08
  do
• 3:08
  I
• 3:08
  want?
• 3:08
  Well,
• 3:08
  the
• 3:09
  answer
• 3:09
  is
• 3:09
  as
• 3:09
  high
• 3:09
  as
• 3:09
  I
• 3:09
  can
• 3:10
  get,
• 3:10
  but
• 3:10
  ultimately
• 3:11
  it
• 3:11
  depends
• 3:11
  on
• 3:11
  the
• 3:12
  market.
• 3:12
  So
• 3:12
  if
• 3:12
  I'm
• 3:12
  looking
• 3:13
  at
• 3:13
  a
• 3:13
  property
• 3:13
  in
• 3:13
  Charlotte
• 3:14
  versus
• 3:15
  a
• 3:15
  property
• 3:16
  in
• 3:16
  Salisbury,
• 3:17
  North
• 3:17
  Carolina,
• 3:18
  which
• 3:18
  is
• 3:18
  about
• 3:18
  an
• 3:18
  hour
• 3:18
  outside
• 3:19
  of
• 3:19
  Charlotte,
• 3:19
  I'm
• 3:20
  going
• 3:20
  to
• 3:20
  have
• 3:20
  a
• 3:20
  different
• 3:20
  expectation
• 3:21
  because
• 3:21
  there
• 3:22
  are
• 3:22
  different
• 3:22
  markets.
• 3:23
  And,
• 3:23
  you
• 3:24
  know,
• 3:24
  to
• 3:24
  think
• 3:24
  that
• 3:24
  I'm
• 3:25
  going
• 3:25
  to
• 3:25
  find
• 3:25
  the
• 3:25
  same
• 3:25
  cap
• 3:26
  rate
• 3:26
  in
• 3:26
  Charlotte
• 3:27
  versus
• 3:27
  a
• 3:27
  tertiary
• 3:28
  market
• 3:28
  that's
• 3:28
  an
• 3:28
  hour
• 3:29
  outside
• 3:29
  of
• 3:29
  it's
• 3:29
  probably
• 3:30
  very
• 3:30
  unrealistic.
• 3:31
  So
• 3:31
  for
• 3:31
  anybody
• 3:31
  here,
• 3:32
  you
• 3:32
  want
• 3:32
  to
• 3:32
  have
• 3:33
  certain
• 3:33
  parameters
• 3:33
  of
• 3:34
  what
• 3:34
  you're
• 3:34
  looking
• 3:34
  for,
• 3:34
  but
• 3:34
  you
• 3:34
  also
• 3:35
  want
• 3:35
  to
• 3:35
  adjust
• 3:35
  them
• 3:35
  to
• 3:36
  be
• 3:36
  realistic
• 3:36
  with
• 3:37
  the
• 3:37
  markets
• 3:37
  you're
• 3:37
  looking
• 3:38
  in.
• 3:38
  So
• 3:38
  that
• 3:38
  way
• 3:38
  you
• 3:39
  don't
• 3:39
  just
• 3:39
  have
• 3:39
  a
• 3:39
  fruitless
• 3:39
  endeavor
• 3:40
  of
• 3:40
  looking
• 3:40
  and
• 3:41
  not
• 3:41
  finding
• 3:41
  anything.
• 3:42
  Right.
• 3:42
  Location,
• 3:43
  location,
• 3:43
  location.
• 3:44
  Right,
• 3:44
  Charles,
• 3:45
  that's
• 3:45
  actually
• 3:45
  the
• 3:46
  next
• 3:46
  one.
• 3:46
  Yeah.
• 3:47
  When
• 3:47
  you're
• 3:47
  evaluating
• 3:48
  the
• 3:48
  property
• 3:49
  potential,
• 3:49
  you
• 3:49
  know,
• 3:50
  three
• 3:50
  very
• 3:50
  important
• 3:50
  words
• 3:51
  that
• 3:51
  Erica
• 3:51
  just
• 3:51
  mentioned
• 3:52
  in
• 3:52
  real
• 3:52
  estate.
• 3:52
  Right.
• 3:52
  Whether
• 3:52
  it's
• 3:53
  single
• 3:53
  family,
• 3:53
  multifamily,
• 3:54
  shopping
• 3:54
  centers,
• 3:55
  whatever
• 3:55
  it
• 3:55
  is,
• 3:56
  you
• 3:56
  need
• 3:56
  to
• 3:56
  have
• 3:57
  location
• 3:57
  in
• 3:58
  mind
• 3:58
  and
• 3:59
  you
• 3:59
  want
• 3:59
  to
• 3:59
  understand
• 4:00
  what
• 4:00
  you're
• 4:01
  buying.
• 4:01
  Now,
• 4:01
  a
• 4:02
  lot
• 4:02
  of
• 4:02
  the
• 4:02
  properties
• 4:02
  I
• 4:03
  bought
• 4:03
  have
• 4:03
  been
• 4:03
  in
• 4:04
  rougher
• 4:04
  areas.
• 4:05
  Now,
• 4:05
  going
• 4:05
  forward,
• 4:06
  I
• 4:06
  may
• 4:06
  change
• 4:06
  that
• 4:07
  strategy
• 4:07
  because
• 4:07
  I
• 4:07
  don't
• 4:08
  know
• 4:08
  that
• 4:08
  I
• 4:08
  want
• 4:08
  to
• 4:08
  keep
• 4:08
  buying
• 4:09
  those.
• 4:09
  But
• 4:09
  it's
• 4:10
  important
• 4:10
  to
• 4:10
  at
• 4:10
  least
• 4:10
  know
• 4:11
  what
• 4:11
  you're
• 4:11
  getting
• 4:11
  into
• 4:11
  and
• 4:11
  to
• 4:12
  understand
• 4:12
  it
• 4:12
  because
• 4:12
  there's
• 4:13
  different
• 4:13
  risks
• 4:13
  associated
• 4:14
  with
• 4:14
  each.
• 4:14
  If
• 4:15
  you're
• 4:15
  buying
• 4:16
  in
• 4:16
  a
• 4:16
  major
• 4:17
  city
• 4:17
  in
• 4:18
  an
• 4:18
  A
• 4:18
  class
• 4:18
  area,
• 4:19
  there's
• 4:19
  probably
• 4:20
  minimal
• 4:20
  risk.
• 4:20
  I
• 4:20
  mean,
• 4:20
  there's
• 4:21
  always
• 4:21
  risk,
• 4:21
  but
• 4:21
  there's
• 4:22
  a
• 4:22
  lot
• 4:22
  less
• 4:22
  risk
• 4:23
  because
• 4:23
  you
• 4:23
  generally
• 4:23
  have
• 4:23
  a
• 4:23
  demographic
• 4:24
  that
• 4:24
  has
• 4:24
  more
• 4:24
  affluency.
• 4:25
  They
• 4:25
  generally
• 4:26
  pay
• 4:26
  the
• 4:26
  rent
• 4:26
  on
• 4:27
  time.
• 4:27
  If
• 4:27
  they
• 4:27
  get
• 4:27
  laid
• 4:28
  off
• 4:28
  from
• 4:28
  their
• 4:28
  job,
• 4:28
  they
• 4:29
  usually
• 4:29
  have
• 4:29
  a
• 4:29
  few
• 4:30
  bucks
• 4:30
  in
• 4:30
  savings
• 4:30
  that
• 4:31
  they
• 4:31
  can
• 4:31
  use
• 4:31
  to
• 4:32
  pay
• 4:32
  rent.
• 4:33
  Where
• 4:33
  if
• 4:33
  you're
• 4:33
  buying
• 4:33
  in
• 4:34
  a
• 4:34
  C
• 4:34
  or
• 4:34
  a
• 4:34
  D
• 4:35
  area,
• 4:35
  you
• 4:35
  know,
• 4:35
  oftentimes
• 4:36
  you
• 4:36
  want
• 4:36
  to
• 4:36
  see
• 4:37
  higher
• 4:37
  returns
• 4:37
  in
• 4:37
  those
• 4:38
  areas
• 4:38
  because
• 4:38
  there's
• 4:38
  more
• 4:39
  risk.
• 4:39
  You're
• 4:39
  dealing
• 4:40
  with
• 4:40
  a
• 4:40
  rougher
• 4:40
  tenant
• 4:40
  base.
• 4:41
  You
• 4:41
  deal
• 4:41
  with
• 4:41
  a
• 4:41
  riskier
• 4:42
  tenant
• 4:42
  base
• 4:42
  because
• 4:43
  a
• 4:43
  lot
• 4:43
  of
• 4:43
  times
• 4:43
  that
• 4:44
  demographic
• 4:44
  doesn't
• 4:44
  have
• 4:45
  any
• 4:45
  money
• 4:45
  in
• 4:45
  saving.
• 4:46
  So
• 4:46
  not
• 4:46
  even
• 4:46
  if
• 4:47
  they
• 4:47
  lose
• 4:47
  their
• 4:47
  job,
• 4:47
  but
• 4:48
  if
• 4:48
  they
• 4:48
  lose
• 4:48
  five
• 4:49
  hours
• 4:49
  a
• 4:49
  week
• 4:49
  at
• 4:49
  that
• 4:50
  job,
• 4:50
  at
• 4:50
  their
• 4:50
  job,
• 4:50
  they
• 4:51
  may
• 4:51
  struggle
• 4:51
  with
• 4:51
  the
• 4:52
  rent.
• 4:52
  So
• 4:52
  it's
• 4:52
  a.
• 4:53
  It's
• 4:53
  a
• 4:53
  different
• 4:53
  demographic
• 4:54
  altogether,
• 4:54
  and
• 4:54
  you
• 4:55
  need
• 4:55
  to
• 4:55
  just
• 4:55
  understand
• 4:56
  what
• 4:56
  you're
• 4:56
  buying
• 4:56
  and
• 4:56
  set
• 4:57
  clear
• 4:57
  parameters.
• 4:58
  That
• 4:58
  is
• 4:58
  such
• 4:58
  a
• 4:58
  good
• 4:59
  point.
• 4:59
  I
• 4:59
  absolutely
• 5:00
  agree.
• 5:01
  And
• 5:01
  as
• 5:01
  far
• 5:02
  as,
• 5:02
  like,
• 5:02
  I
• 5:02
  guess,
• 5:02
  the
• 5:03
  location,
• 5:03
  when
• 5:04
  you're
• 5:04
  looking
• 5:04
  at
• 5:04
  what
• 5:05
  location
• 5:05
  you
• 5:05
  want
• 5:05
  to
• 5:05
  be
• 5:06
  purchasing
• 5:06
  in,
• 5:07
  even
• 5:07
  if
• 5:07
  you're
• 5:07
  purchasing
• 5:08
  in
• 5:08
  a
• 5:08
  market
• 5:09
  that
• 5:09
  is
• 5:09
  outside
• 5:09
  of
• 5:09
  your
• 5:10
  own,
• 5:10
  it's.
• 5:11
  You
• 5:11
  can
• 5:11
  do
• 5:12
  so
• 5:12
  as
• 5:12
  long
• 5:12
  as
• 5:12
  you're
• 5:13
  familiar
• 5:13
  with
• 5:13
  particular
• 5:14
  data
• 5:14
  points,
• 5:14
  especially
• 5:15
  for
• 5:15
  multifamily
• 5:15
  on
• 5:16
  a
• 5:16
  location
• 5:16
  economic
• 5:17
  analysis,
• 5:17
  some
• 5:17
  of
• 5:18
  the
• 5:18
  key
• 5:18
  data
• 5:18
  points
• 5:18
  that
• 5:19
  I'll
• 5:19
  look
• 5:19
  at
• 5:19
  for
• 5:19
  my
• 5:19
  investors
• 5:20
  is
• 5:21
  the
• 5:21
  growth
• 5:22
  rate
• 5:22
  of
• 5:22
  that
• 5:23
  area,
• 5:23
  estimating
• 5:24
  the
• 5:24
  future
• 5:24
  population
• 5:25
  based
• 5:25
  on
• 5:25
  that
• 5:25
  growth
• 5:25
  rate,
• 5:26
  new
• 5:26
  household
• 5:27
  formation,
• 5:27
  new
• 5:28
  rental
• 5:28
  formation.
• 5:29
  Right.
• 5:29
  Because
• 5:29
  if
• 5:29
  you're
• 5:29
  buying
• 5:30
  a
• 5:30
  multifamily
• 5:30
  asset
• 5:31
  and
• 5:31
  it's
• 5:31
  an
• 5:31
  apartment
• 5:32
  building
• 5:32
  and
• 5:33
  you're,
• 5:33
  you
• 5:33
  have
• 5:33
  leases.
• 5:34
  You,
• 5:34
  it
• 5:35
  matters
• 5:35
  then
• 5:35
  to
• 5:36
  know
• 5:36
  how
• 5:36
  many
• 5:37
  new
• 5:37
  renters
• 5:37
  are
• 5:38
  coming
• 5:38
  into
• 5:38
  the
• 5:38
  area
• 5:39
  annually.
• 5:39
  Your
• 5:39
  growth
• 5:40
  rate,
• 5:40
  number
• 5:40
  of
• 5:40
  units,
• 5:41
  your
• 5:41
  growth
• 5:41
  rate,
• 5:42
  percent
• 5:42
  of
• 5:42
  units,
• 5:43
  and
• 5:43
  then
• 5:43
  your
• 5:44
  rent
• 5:44
  versus
• 5:44
  household
• 5:45
  income
• 5:46
  so
• 5:46
  that
• 5:46
  you
• 5:46
  understand
• 5:47
  that
• 5:47
  like
• 5:47
  you
• 5:47
  can
• 5:48
  go
• 5:48
  in
• 5:48
  and
• 5:48
  buy
• 5:48
  class
• 5:49
  A
• 5:49
  asset
• 5:50
  in
• 5:50
  an
• 5:50
  area
• 5:51
  that
• 5:51
  the
• 5:52
  rent
• 5:52
  versus
• 5:53
  household
• 5:53
  income
• 5:53
  doesn't
• 5:54
  actually
• 5:54
  support
• 5:54
  it.
• 5:55
  And
• 5:55
  so,
• 5:55
  and
• 5:56
  then
• 5:56
  you're
• 5:56
  putting
• 5:56
  yourself
• 5:56
  in
• 5:57
  a
• 5:57
  position
• 5:57
  of
• 5:57
  higher
• 5:57
  vacancy.
• 5:58
  So
• 5:59
  still.
• 5:59
  Okay,
• 6:00
  but
• 6:00
  you
• 6:00
  definitely
• 6:00
  want
• 6:01
  to
• 6:01
  make
• 6:01
  sure
• 6:01
  that
• 6:01
  you're
• 6:01
  calculating
• 6:02
  that
• 6:02
  stuff
• 6:02
  correctly
• 6:03
  on
• 6:03
  pro
• 6:03
  forma
• 6:04
  and
• 6:04
  making
• 6:05
  sure
• 6:05
  that
• 6:05
  that
• 6:05
  way
• 6:05
  you're
• 6:06
  able
• 6:06
  calculate
• 6:06
  in
• 6:06
  the
• 6:07
  correct
• 6:07
  amount
• 6:07
  of
• 6:07
  vacancy
• 6:08
  versus
• 6:08
  occupancy.
• 6:09
  And
• 6:09
  all
• 6:10
  of
• 6:10
  these
• 6:10
  data
• 6:10
  points
• 6:10
  are
• 6:10
  gonna
• 6:10
  be
• 6:11
  really
• 6:11
  important.
• 6:11
  So
• 6:12
  economic
• 6:13
  analysis,
• 6:13
  absolutely.
• 6:14
  And
• 6:15
  like
• 6:15
  the
• 6:16
  single
• 6:16
  family,
• 6:16
  those
• 6:16
  things
• 6:17
  are
• 6:17
  important
• 6:17
  too.
• 6:17
  So
• 6:17
  for
• 6:18
  anybody
• 6:18
  listening
• 6:18
  who's
• 6:18
  only
• 6:19
  done
• 6:19
  single
• 6:19
  family,
• 6:19
  yes,
• 6:20
  location
• 6:20
  matters.
• 6:21
  But
• 6:21
  here's
• 6:21
  the
• 6:22
  thing.
• 6:22
  You
• 6:22
  can
• 6:22
  buy
• 6:23
  a
• 6:23
  single
• 6:23
  family
• 6:23
  home
• 6:24
  and
• 6:24
  be
• 6:24
  wrong
• 6:24
  on
• 6:24
  your
• 6:25
  analysis
• 6:25
  and
• 6:25
  get
• 6:26
  lucky
• 6:26
  to
• 6:26
  fill
• 6:26
  one
• 6:26
  unit.
• 6:27
  It's
• 6:27
  a
• 6:27
  lot
• 6:27
  tougher
• 6:27
  to
• 6:28
  do
• 6:28
  when
• 6:28
  you,
• 6:28
  when
• 6:28
  you
• 6:28
  have
• 6:28
  100
• 6:29
  unit
• 6:29
  building,
• 6:29
  you
• 6:30
  may
• 6:30
  not
• 6:30
  get
• 6:30
  as
• 6:30
  lucky
• 6:30
  and
• 6:31
  you
• 6:31
  may
• 6:31
  not
• 6:31
  fill
• 6:31
  those
• 6:31
  units.
• 6:32
  So
• 6:33
  you
• 6:33
  really
• 6:33
  have
• 6:33
  to
• 6:34
  be,
• 6:34
  you
• 6:34
  know,
• 6:34
  more,
• 6:35
  more
• 6:35
  focused
• 6:35
  when
• 6:35
  you're
• 6:36
  doing
• 6:36
  the
• 6:36
  analysis
• 6:36
  of
• 6:36
  the
• 6:37
  areas
• 6:37
  and
• 6:37
  making
• 6:37
  sure
• 6:38
  that
• 6:38
  you
• 6:38
  really
• 6:38
  know.
• 6:39
  So
• 6:39
  like
• 6:39
  all
• 6:39
  those
• 6:40
  points
• 6:40
  that
• 6:40
  Erica
• 6:40
  says,
• 6:40
  they're
• 6:41
  really
• 6:41
  important.
• 6:41
  You
• 6:42
  need
• 6:42
  to
• 6:42
  know
• 6:42
  what
• 6:43
  the,
• 6:43
  what
• 6:43
  the
• 6:43
  median
• 6:44
  income
• 6:44
  is
• 6:44
  for
• 6:44
  the
• 6:44
  area.
• 6:45
  You
• 6:45
  need
• 6:45
  to
• 6:45
  know
• 6:46
  what
• 6:46
  rents
• 6:46
  are.
• 6:47
  So
• 6:47
  one
• 6:47
  pitfall
• 6:48
  that
• 6:48
  I've
• 6:48
  seen
• 6:48
  in
• 6:48
  the
• 6:48
  industry,
• 6:49
  and
• 6:49
  admittedly
• 6:49
  one
• 6:50
  that
• 6:50
  I
• 6:50
  made
• 6:51
  myself,
• 6:51
  is
• 6:52
  a
• 6:52
  lot
• 6:52
  of
• 6:52
  times
• 6:53
  for
• 6:53
  my
• 6:53
  rent
• 6:53
  targets,
• 6:54
  I
• 6:54
  look
• 6:54
  solely
• 6:54
  at
• 6:54
  rent
• 6:55
  comps.
• 6:55
  But
• 6:55
  the
• 6:55
  issue
• 6:56
  with
• 6:56
  that
• 6:56
  is
• 6:57
  it
• 6:57
  doesn't
• 6:57
  take
• 6:57
  affordability
• 6:58
  into
• 6:58
  account.
• 6:59
  And
• 6:59
  you
• 7:00
  know,
• 7:00
  for
• 7:00
  like
• 7:01
  an
• 7:01
  A
• 7:01
  class
• 7:01
  demographic,
• 7:02
  that's
• 7:03
  probably
• 7:03
  not
• 7:03
  as
• 7:03
  relevant
• 7:04
  because
• 7:05
  that
• 7:05
  that
• 7:05
  demographic
• 7:06
  has
• 7:06
  disposable
• 7:06
  income.
• 7:07
  I
• 7:07
  don't
• 7:07
  want
• 7:08
  to
• 7:08
  say
• 7:08
  that
• 7:08
  they
• 7:08
  don't
• 7:08
  care
• 7:08
  what
• 7:08
  they
• 7:09
  pay
• 7:09
  in
• 7:09
  rent,
• 7:09
  because
• 7:09
  that's
• 7:09
  not
• 7:10
  true,
• 7:10
  but
• 7:11
  they
• 7:11
  don't
• 7:11
  care
• 7:11
  as
• 7:11
  much.
• 7:12
  So
• 7:12
  they're
• 7:12
  less
• 7:13
  likely
• 7:13
  to,
• 7:14
  you
• 7:14
  know,
• 7:14
  really
• 7:15
  look
• 7:15
  into
• 7:15
  it
• 7:15
  because
• 7:15
  they're
• 7:16
  probably
• 7:16
  looking
• 7:16
  at
• 7:16
  a
• 7:16
  lot
• 7:16
  of
• 7:17
  apartment
• 7:17
  complexes
• 7:18
  that
• 7:18
  are
• 7:18
  charging
• 7:18
  the
• 7:18
  same
• 7:19
  rents.
• 7:19
  And
• 7:19
  you
• 7:19
  know,
• 7:20
  they
• 7:20
  realize
• 7:20
  that's
• 7:20
  just
• 7:21
  kind
• 7:21
  of
• 7:21
  what
• 7:21
  the
• 7:21
  going
• 7:21
  rate
• 7:22
  for
• 7:22
  the
• 7:22
  area
• 7:22
  is.
• 7:22
  But
• 7:23
  if
• 7:23
  you
• 7:23
  deal
• 7:23
  with
• 7:23
  the
• 7:23
  lower
• 7:24
  end
• 7:24
  demographic,
• 7:24
  like
• 7:24
  a
• 7:25
  C
• 7:25
  or
• 7:25
  even
• 7:25
  a
• 7:25
  D
• 7:25
  class,
• 7:26
  you
• 7:26
  know,
• 7:26
  what
• 7:27
  happens
• 7:27
  is
• 7:27
  if
• 7:27
  you
• 7:28
  price
• 7:28
  your
• 7:29
  assumptions
• 7:29
  solely
• 7:30
  on
• 7:30
  the
• 7:30
  comps,
• 7:31
  the
• 7:31
  issue
• 7:31
  is
• 7:31
  you
• 7:31
  may
• 7:31
  not
• 7:32
  be
• 7:32
  able
• 7:32
  to
• 7:32
  collect
• 7:32
  those
• 7:33
  rents.
• 7:33
  And
• 7:34
  that's
• 7:34
  where
• 7:34
  the
• 7:34
  median
• 7:34
  household
• 7:35
  income
• 7:35
  comes
• 7:35
  in
• 7:36
  because
• 7:36
  seeing
• 7:37
  what
• 7:37
  it
• 7:37
  is
• 7:37
  within,
• 7:38
  you
• 7:38
  know,
• 7:38
  ideally
• 7:39
  a
• 7:39
  1,
• 7:39
  3
• 7:40
  and
• 7:40
  5
• 7:40
  mile
• 7:40
  radius
• 7:40
  of
• 7:41
  the
• 7:41
  property,
• 7:41
  but
• 7:41
  really
• 7:41
  that
• 7:42
  1
• 7:42
  mile
• 7:42
  radius
• 7:42
  is
• 7:43
  the
• 7:43
  most
• 7:43
  important
• 7:43
  because
• 7:43
  that's
• 7:44
  your,
• 7:44
  that's
• 7:44
  your
• 7:44
  renter
• 7:45
  base.
• 7:45
  You
• 7:45
  know,
• 7:45
  if
• 7:46
  it
• 7:46
  doesn't
• 7:46
  line
• 7:46
  up
• 7:46
  with
• 7:47
  what
• 7:47
  the
• 7:47
  comps
• 7:47
  are,
• 7:48
  there's
• 7:48
  a
• 7:48
  good
• 7:48
  chance
• 7:48
  that
• 7:49
  a
• 7:49
  lot
• 7:49
  of
• 7:49
  properties
• 7:49
  in
• 7:50
  the
• 7:50
  area
• 7:50
  probably
• 7:51
  have
• 7:51
  a
• 7:51
  lot
• 7:51
  of
• 7:51
  collection
• 7:51
  laws.
• 7:52
  So
• 7:52
  you
• 7:52
  want
• 7:52
  to
• 7:52
  keep
• 7:52
  that
• 7:52
  in
• 7:52
  mind
• 7:53
  because
• 7:53
  that's
• 7:53
  going
• 7:53
  to
• 7:53
  help
• 7:53
  you
• 7:54
  evaluate
• 7:54
  these
• 7:54
  properties.
• 7:55
  Such
• 7:55
  a
• 7:55
  good
• 7:56
  point.
• 7:56
  I
• 7:56
  think
• 7:56
  too
• 7:57
  it
• 7:57
  shows
• 7:57
  that
• 7:58
  how
• 7:58
  these
• 7:58
  data
• 7:59
  points
• 7:59
  play
• 7:59
  into
• 7:59
  the
• 8:00
  real
• 8:00
  life
• 8:00
  scenarios
• 8:01
  that
• 8:01
  you
• 8:01
  will
• 8:01
  live
• 8:01
  out
• 8:01
  as
• 8:02
  the
• 8:02
  landlord.
• 8:02
  If
• 8:03
  you're
• 8:03
  not
• 8:04
  cautious
• 8:04
  and
• 8:05
  really
• 8:05
  looking
• 8:05
  at
• 8:05
  these
• 8:06
  data
• 8:06
  points
• 8:06
  up
• 8:06
  front,
• 8:07
  it's
• 8:07
  hard
• 8:07
  to
• 8:08
  predict
• 8:08
  those
• 8:08
  real
• 8:08
  life
• 8:09
  scenarios
• 8:09
  that
• 8:09
  are
• 8:09
  going
• 8:09
  to
• 8:09
  play
• 8:09
  out
• 8:10
  as
• 8:10
  a
• 8:10
  landlord.
• 8:10
  I
• 8:11
  think
• 8:11
  so
• 8:11
  often
• 8:11
  people
• 8:12
  get
• 8:12
  into
• 8:12
  assets
• 8:13
  thinking
• 8:13
  that
• 8:13
  it's
• 8:13
  going
• 8:13
  to
• 8:14
  be
• 8:14
  easy
• 8:14
  value
• 8:14
  add
• 8:15
  before
• 8:15
  realizing
• 8:16
  that
• 8:16
  the,
• 8:17
  you
• 8:17
  know,
• 8:17
  the
• 8:18
  demographic
• 8:18
  of
• 8:18
  tenants
• 8:19
  is
• 8:19
  a
• 8:19
  lot
• 8:19
  different
• 8:19
  than
• 8:19
  they
• 8:20
  thought
• 8:20
  it
• 8:20
  would
• 8:20
  be.
• 8:21
  And
• 8:21
  so,
• 8:21
  and
• 8:22
  it
• 8:22
  becomes
• 8:22
  a
• 8:23
  little
• 8:23
  bit
• 8:23
  more
• 8:23
  difficult
• 8:23
  of
• 8:24
  a
• 8:24
  project
• 8:24
  than
• 8:24
  they
• 8:24
  thought
• 8:24
  it
• 8:25
  would
• 8:25
  be.
• 8:25
  So
• 8:26
  really
• 8:26
  find
• 8:27
  is
• 8:27
  so
• 8:27
  important.
• 8:28
  Totally.
• 8:28
  You
• 8:29
  know,
• 8:29
  the,
• 8:29
  what
• 8:29
  I
• 8:29
  always
• 8:30
  hear
• 8:30
  most
• 8:30
  people
• 8:30
  looking
• 8:30
  for
• 8:31
  is
• 8:31
  they
• 8:31
  want
• 8:31
  the
• 8:31
  C
• 8:32
  property
• 8:32
  in
• 8:32
  the
• 8:32
  B
• 8:32
  area.
• 8:33
  It's
• 8:33
  kind
• 8:33
  of
• 8:33
  like
• 8:33
  the
• 8:33
  unicorn
• 8:34
  that
• 8:34
  everybody
• 8:35
  searches
• 8:35
  for.
• 8:36
  And
• 8:36
  miraculously
• 8:37
  I
• 8:37
  hear
• 8:37
  so
• 8:38
  many
• 8:38
  people
• 8:38
  saying
• 8:38
  they
• 8:38
  find
• 8:38
  it.
• 8:39
  Now
• 8:39
  I
• 8:39
  think,
• 8:39
  you
• 8:40
  know,
• 8:40
  the
• 8:40
  C
• 8:40
  property
• 8:40
  in
• 8:41
  the
• 8:41
  B
• 8:41
  area,
• 8:41
  you
• 8:42
  know,
• 8:42
  you
• 8:42
  really
• 8:42
  have
• 8:42
  to
• 8:42
  look
• 8:43
  at
• 8:43
  it
• 8:43
  a
• 8:43
  little
• 8:43
  bit
• 8:43
  closer
• 8:44
  because
• 8:44
  sometimes
• 8:44
  people
• 8:45
  that
• 8:45
  say
• 8:45
  they
• 8:45
  find
• 8:45
  it
• 8:46
  may
• 8:46
  not
• 8:46
  have
• 8:46
  found
• 8:46
  it
• 8:46
  quite
• 8:47
  as.
• 8:47
  Quite
• 8:47
  as
• 8:47
  well
• 8:47
  as
• 8:47
  they
• 8:48
  make
• 8:48
  it
• 8:48
  out
• 8:49
  to
• 8:49
  be.
• 8:49
  It
• 8:49
  is
• 8:49
  a
• 8:49
  little
• 8:50
  more
• 8:50
  of
• 8:50
  a
• 8:50
  unicorn.
• 8:50
  But
• 8:50
  yes,
• 8:51
  if
• 8:51
  you
• 8:51
  illegitimately
• 8:51
  find
• 8:52
  one
• 8:52
  of
• 8:52
  those,
• 8:52
  that's,
• 8:52
  that's
• 8:53
  definitely
• 8:53
  a
• 8:53
  great
• 8:53
  thing.
• 8:54
  One
• 8:54
  thing
• 8:54
  I
• 8:54
  learned
• 8:55
  in
• 8:55
  this
• 8:55
  business
• 8:55
  a
• 8:56
  long
• 8:56
  time
• 8:56
  ago
• 8:56
  from
• 8:56
  people
• 8:57
  who
• 8:57
  were
• 8:57
  further
• 8:57
  ahead
• 8:58
  of
• 8:58
  me
• 8:58
  is
• 8:58
  that
• 8:59
  you
• 8:59
  can
• 8:59
  take
• 8:59
  a
• 9:00
  C
• 9:00
  property
• 9:00
  and
• 9:00
  try
• 9:01
  and
• 9:01
  convert
• 9:01
  it
• 9:01
  to
• 9:01
  a
• 9:01
  B.
• 9:01
  But
• 9:02
  there's
• 9:02
  a
• 9:02
  lot
• 9:02
  more
• 9:02
  risk
• 9:03
  in
• 9:03
  doing
• 9:03
  that
• 9:03
  than
• 9:03
  just
• 9:03
  taking
• 9:04
  that
• 9:04
  C
• 9:04
  property
• 9:04
  and
• 9:04
  making
• 9:05
  it
• 9:05
  be
• 9:05
  the
• 9:05
  best
• 9:05
  C
• 9:05
  property
• 9:06
  in
• 9:06
  the
• 9:06
  area.
• 9:06
  I
• 9:07
  generally
• 9:07
  would
• 9:07
  prefer
• 9:08
  less
• 9:08
  risk.
• 9:09
  So
• 9:09
  I
• 9:09
  would
• 9:10
  rather
• 9:10
  just
• 9:10
  go
• 9:10
  with
• 9:10
  that
• 9:11
  strategy
• 9:11
  because
• 9:11
  it's,
• 9:12
  it's
• 9:12
  a
• 9:12
  lot
• 9:12
  easier
• 9:13
  to
• 9:13
  execute
• 9:13
  in
• 9:14
  my
• 9:14
  opinion.
• 9:14
  It's
• 9:14
  a
• 9:14
  lot
• 9:15
  safer.
• 9:15
  Unless
• 9:15
  it's
• 9:16
  just
• 9:16
  an
• 9:16
  absolute
• 9:16
  slam
• 9:17
  dunk
• 9:17
  that
• 9:17
  is
• 9:17
  like,
• 9:17
  oh,
• 9:18
  I
• 9:18
  can
• 9:18
  take
• 9:18
  this
• 9:18
  and
• 9:19
  convert
• 9:19
  from
• 9:19
  a
• 9:19
  C
• 9:19
  to
• 9:20
  a
• 9:20
  B.
• 9:20
  Then
• 9:20
  yes,
• 9:21
  do
• 9:21
  it.
• 9:21
  But
• 9:22
  when
• 9:22
  you
• 9:22
  really
• 9:23
  think
• 9:23
  about
• 9:23
  it
• 9:23
  like
• 9:23
  retenanting
• 9:24
  a
• 9:24
  property,
• 9:24
  that's
• 9:25
  some
• 9:25
  serious
• 9:25
  work
• 9:26
  and
• 9:26
  if
• 9:27
  things
• 9:27
  go
• 9:27
  wrong,
• 9:28
  you
• 9:28
  could
• 9:28
  have
• 9:29
  a
• 9:29
  lot
• 9:29
  more
• 9:29
  vacancy.
• 9:30
  You
• 9:30
  could
• 9:30
  Have
• 9:30
  a
• 9:30
  lot
• 9:30
  more
• 9:31
  money
• 9:31
  going
• 9:31
  out
• 9:31
  than
• 9:31
  coming
• 9:32
  in.
• 9:32
  So
• 9:33
  you
• 9:33
  want
• 9:33
  to
• 9:33
  be
• 9:33
  cognizant
• 9:34
  of
• 9:34
  that
• 9:34
  and
• 9:34
  make
• 9:35
  sure
• 9:35
  you're
• 9:35
  using
• 9:35
  that
• 9:35
  as
• 9:35
  part
• 9:35
  of
• 9:36
  your
• 9:36
  analysis.
• 9:37
  So,
• 9:37
  you
• 9:37
  know,
• 9:37
  aside
• 9:38
  from
• 9:38
  location,
• 9:39
  using
• 9:40
  all
• 9:40
  those
• 9:40
  location
• 9:41
  points
• 9:42
  to
• 9:42
  be
• 9:42
  able
• 9:42
  to
• 9:42
  determine
• 9:43
  really
• 9:43
  how
• 9:44
  valuable
• 9:44
  the
• 9:44
  property
• 9:45
  is
• 9:45
  and
• 9:45
  how
• 9:45
  much
• 9:46
  rent
• 9:46
  can
• 9:46
  you
• 9:46
  get
• 9:46
  and
• 9:47
  what
• 9:47
  can
• 9:47
  you
• 9:47
  be
• 9:47
  using
• 9:47
  for
• 9:48
  vacancy.
• 9:49
  So
• 9:49
  not
• 9:49
  every
• 9:49
  market
• 9:50
  is
• 9:50
  going
• 9:50
  to
• 9:50
  be
• 9:50
  identical.
• 9:51
  You
• 9:51
  know,
• 9:51
  even
• 9:52
  markets
• 9:52
  that
• 9:52
  I
• 9:52
  own
• 9:52
  in,
• 9:53
  there
• 9:53
  are
• 9:53
  some
• 9:53
  that
• 9:53
  consistently
• 9:54
  are
• 9:54
  full
• 9:54
  and
• 9:55
  there's
• 9:55
  others
• 9:55
  that
• 9:55
  are
• 9:55
  consistently
• 9:56
  a
• 9:56
  struggle.
• 9:57
  And
• 9:57
  that's
• 9:57
  the
• 9:57
  difference
• 9:58
  from
• 9:58
  one
• 9:58
  market
• 9:58
  to
• 9:58
  another.
• 9:59
  And
• 9:59
  it's
• 9:59
  like
• 9:59
  you
• 9:59
  have
• 9:59
  to,
• 10:00
  you
• 10:00
  have
• 10:00
  to
• 10:01
  factor
• 10:01
  as
• 10:01
  much
• 10:01
  of
• 10:02
  that
• 10:02
  in
• 10:02
  as
• 10:02
  you
• 10:02
  can
• 10:03
  reasonably
• 10:03
  on
• 10:03
  the
• 10:03
  front
• 10:04
  end.
• 10:04
  So
• 10:04
  that
• 10:04
  way
• 10:05
  you
• 10:05
  keep
• 10:05
  yourself
• 10:05
  out
• 10:06
  of
• 10:06
  bad
• 10:06
  deals.
• 10:07
  Love.
• 10:07
  It's
• 10:07
  like,
• 10:08
  don't
• 10:08
  get
• 10:08
  too
• 10:09
  optimistic
• 10:10
  on
• 10:10
  your,
• 10:10
  you
• 10:11
  know,
• 10:11
  your
• 10:11
  value
• 10:11
  add.
• 10:12
  Don't
• 10:12
  get
• 10:12
  too
• 10:13
  optimistic.
• 10:13
  Make
• 10:14
  sure
• 10:14
  that
• 10:14
  the
• 10:14
  value
• 10:14
  add
• 10:15
  that
• 10:15
  you're
• 10:15
  trying
• 10:15
  to
• 10:15
  do
• 10:15
  is
• 10:15
  reasonable.
• 10:16
  Like
• 10:16
  you
• 10:17
  said,
• 10:17
  if
• 10:17
  you
• 10:17
  can
• 10:17
  make
• 10:17
  it
• 10:17
  the
• 10:17
  best,
• 10:18
  you
• 10:18
  know,
• 10:18
  C
• 10:19
  class
• 10:19
  property
• 10:19
  in
• 10:19
  the
• 10:20
  C
• 10:20
  class
• 10:20
  area,
• 10:20
  it's
• 10:21
  like,
• 10:21
  yes,
• 10:21
  that's
• 10:21
  the
• 10:21
  best
• 10:22
  option.
• 10:22
  Absolutely.
• 10:24
  Just
• 10:24
  from
• 10:24
  a
• 10:24
  conservative
• 10:25
  standpoint.
• 10:25
  So
• 10:26
  I
• 10:26
  love
• 10:26
  that
• 10:27
  mindset.
• 10:27
  Very
• 10:28
  neat.
• 10:28
  Another
• 10:28
  thing
• 10:29
  to
• 10:29
  talk
• 10:29
  about
• 10:29
  is
• 10:29
  unit
• 10:30
  mix
• 10:30
  and
• 10:30
  layout.
• 10:31
  So
• 10:31
  what
• 10:32
  is,
• 10:32
  what
• 10:32
  does
• 10:32
  that
• 10:33
  mean?
• 10:33
  Well,
• 10:33
  the
• 10:33
  unit
• 10:33
  mix
• 10:34
  is
• 10:34
  the
• 10:35
  breakdown
• 10:35
  of
• 10:35
  the
• 10:35
  floor
• 10:36
  plans
• 10:36
  that
• 10:36
  you
• 10:36
  have
• 10:36
  at
• 10:36
  the
• 10:36
  property,
• 10:37
  right?
• 10:37
  So
• 10:37
  like,
• 10:38
  let's
• 10:38
  say
• 10:38
  if
• 10:38
  you're
• 10:38
  looking
• 10:38
  at
• 10:38
  a
• 10:39
  25
• 10:39
  unit
• 10:39
  property
• 10:40
  and
• 10:40
  you
• 10:40
  say,
• 10:40
  okay,
• 10:41
  it's
• 10:41
  got
• 10:41
  101
• 10:42
  bedrooms
• 10:42
  and
• 10:43
  102
• 10:43
  bedrooms
• 10:44
  and
• 10:44
  53
• 10:44
  bedrooms,
• 10:45
  so
• 10:45
  that's
• 10:46
  your
• 10:46
  unit
• 10:46
  mix
• 10:47
  at
• 10:47
  that
• 10:47
  property.
• 10:48
  Now
• 10:49
  that's
• 10:49
  just
• 10:49
  a
• 10:49
  random
• 10:50
  unit
• 10:51
  mix
• 10:51
  I
• 10:51
  came
• 10:51
  up
• 10:51
  with,
• 10:51
  but
• 10:52
  that's
• 10:52
  not
• 10:52
  a
• 10:52
  bad
• 10:52
  one.
• 10:53
  General
• 10:53
  rule
• 10:53
  of
• 10:53
  thumb,
• 10:54
  a
• 10:54
  lot
• 10:54
  of
• 10:54
  people
• 10:54
  like
• 10:55
  to
• 10:55
  see
• 10:55
  twice
• 10:55
  as
• 10:55
  many
• 10:56
  two
• 10:56
  bedroom
• 10:56
  units
• 10:56
  as
• 10:57
  they
• 10:57
  do
• 10:57
  one
• 10:57
  bedrooms.
• 10:58
  In
• 10:58
  most
• 10:58
  markets,
• 10:59
  two
• 10:59
  bedroom
• 10:59
  units
• 10:59
  usually
• 11:00
  are
• 11:00
  the
• 11:00
  most
• 11:00
  in
• 11:00
  demand.
• 11:01
  And
• 11:01
  especially
• 11:01
  in
• 11:01
  the
• 11:02
  C
• 11:02
  class
• 11:02
  demographic
• 11:03
  right
• 11:03
  now,
• 11:03
  it's
• 11:03
  probably
• 11:03
  good
• 11:04
  having
• 11:04
  two
• 11:04
  bedroom
• 11:05
  units
• 11:05
  because
• 11:05
  it
• 11:05
  allows
• 11:05
  for
• 11:06
  a
• 11:06
  roommate
• 11:06
  or
• 11:07
  a
• 11:07
  couple
• 11:07
  situations.
• 11:08
  So
• 11:08
  you
• 11:08
  get
• 11:08
  two
• 11:08
  incomes
• 11:09
  in
• 11:09
  there
• 11:09
  instead
• 11:09
  of
• 11:09
  one,
• 11:09
  which
• 11:10
  makes
• 11:10
  it
• 11:10
  a
• 11:10
  little
• 11:10
  bit
• 11:10
  easier
• 11:11
  for
• 11:11
  people
• 11:11
  to
• 11:11
  qualify
• 11:12
  and
• 11:12
  transparently
• 11:13
  a
• 11:13
  little
• 11:13
  bit
• 11:13
  easier
• 11:13
  for
• 11:13
  you
• 11:14
  to
• 11:14
  collect
• 11:14
  the
• 11:14
  rent.
• 11:14
  So
• 11:15
  sometimes
• 11:15
  that
• 11:15
  can
• 11:15
  be
• 11:15
  a
• 11:15
  good
• 11:16
  thing.
• 11:16
  The
• 11:16
  more
• 11:16
  studios
• 11:17
  and
• 11:17
  the
• 11:17
  more
• 11:17
  ones
• 11:17
  you
• 11:17
  have,
• 11:18
  there's
• 11:18
  a
• 11:18
  good
• 11:18
  chance
• 11:18
  you're
• 11:19
  getting
• 11:19
  a
• 11:19
  more
• 11:19
  transient
• 11:20
  workforce
• 11:20
  type
• 11:20
  of
• 11:21
  demographic.
• 11:22
  Now
• 11:22
  if
• 11:22
  you're
• 11:22
  buying
• 11:23
  a
• 11:23
  property
• 11:23
  that's
• 11:23
  like
• 11:23
  in
• 11:24
  a
• 11:24
  city
• 11:24
  center,
• 11:24
  well,
• 11:25
  okay
• 11:25
  then,
• 11:25
  then
• 11:26
  you
• 11:26
  might
• 11:26
  be
• 11:26
  getting
• 11:26
  the
• 11:26
  young,
• 11:27
  single
• 11:27
  professional.
• 11:27
  So
• 11:28
  that's
• 11:28
  a
• 11:28
  different
• 11:28
  crowd.
• 11:29
  But
• 11:29
  anywhere
• 11:30
  outside
• 11:30
  of
• 11:30
  like
• 11:30
  that
• 11:31
  center
• 11:31
  City,
• 11:31
  you're
• 11:32
  probably
• 11:32
  looking
• 11:33
  more
• 11:33
  transient
• 11:33
  tenants
• 11:34
  when
• 11:34
  you
• 11:34
  have
• 11:34
  those
• 11:34
  smaller
• 11:35
  floor
• 11:35
  plans
• 11:35
  and
• 11:35
  small
• 11:35
  unit
• 11:36
  mixes.
• 11:36
  Do
• 11:36
  you
• 11:36
  agree,
• 11:36
  Erica?
• 11:37
  I
• 11:37
  absolutely
• 11:38
  agree.
• 11:39
  And
• 11:39
  I
• 11:39
  think
• 11:39
  that
• 11:40
  I
• 11:40
  love
• 11:41
  even
• 11:41
  how
• 11:41
  you
• 11:41
  kind
• 11:41
  of
• 11:42
  demonstrating
• 11:43
  how
• 11:43
  your
• 11:43
  data
• 11:44
  points
• 11:44
  when
• 11:44
  you're
• 11:44
  doing
• 11:44
  your
• 11:44
  location
• 11:45
  economic
• 11:45
  analysis,
• 11:46
  it's
• 11:47
  very
• 11:47
  important
• 11:47
  that
• 11:47
  it
• 11:48
  be
• 11:48
  that
• 11:48
  hyperlocal
• 11:49
  because
• 11:50
  the
• 11:50
  property
• 11:50
  that
• 11:50
  you're
• 11:51
  purchasing,
• 11:51
  say
• 11:51
  near
• 11:52
  city
• 11:52
  center,
• 11:52
  is
• 11:53
  going
• 11:53
  to
• 11:53
  be
• 11:53
  much
• 11:53
  different
• 11:54
  than
• 11:54
  the
• 11:54
  property
• 11:54
  you're
• 11:54
  purchasing,
• 11:55
  like
• 11:55
  for
• 11:55
  instance
• 11:56
  in
• 11:56
  South
• 11:56
  Charlotte.
• 11:57
  And
• 11:57
  it's
• 11:58
  based
• 11:58
  mostly
• 11:59
  the
• 11:59
  data
• 11:59
  point
• 11:59
  that
• 11:59
  I
• 12:00
  see
• 12:00
  for
• 12:00
  this
• 12:00
  one
• 12:01
  is
• 12:01
  your
• 12:01
  average
• 12:02
  household
• 12:02
  size.
• 12:03
  So
• 12:03
  like
• 12:03
  in
• 12:04
  certain
• 12:04
  parts
• 12:04
  of
• 12:04
  Charlotte
• 12:05
  market,
• 12:05
  the
• 12:05
  average
• 12:05
  household
• 12:06
  size
• 12:06
  is
• 12:06
  like
• 12:06
  3.2,
• 12:07
  which
• 12:08
  would
• 12:08
  mean,
• 12:08
  you
• 12:08
  know,
• 12:08
  if
• 12:09
  I'm
• 12:09
  purchasing
• 12:09
  a
• 12:10
  almost
• 12:10
  completely
• 12:11
  studio,
• 12:11
  one
• 12:12
  bedroom
• 12:12
  multifamily
• 12:13
  complex
• 12:13
  in
• 12:14
  that
• 12:14
  area,
• 12:14
  I
• 12:15
  probably
• 12:15
  am
• 12:15
  going
• 12:15
  to
• 12:16
  have
• 12:16
  issues
• 12:16
  with
• 12:16
  vacancy.
• 12:17
  And
• 12:18
  so
• 12:18
  that's
• 12:18
  just
• 12:19
  something
• 12:19
  to
• 12:19
  consider.
• 12:20
  Also
• 12:20
  when
• 12:21
  it
• 12:21
  comes
• 12:21
  to
• 12:21
  those
• 12:21
  properties
• 12:22
  that
• 12:22
  are
• 12:22
  like
• 12:22
  mostly
• 12:23
  studio
• 12:23
  one
• 12:23
  bedroom,
• 12:24
  what
• 12:24
  I
• 12:24
  see
• 12:24
  a
• 12:24
  lot
• 12:24
  of,
• 12:25
  especially
• 12:25
  in
• 12:25
  my
• 12:25
  market
• 12:26
  is
• 12:26
  people
• 12:27
  partnering
• 12:27
  with
• 12:27
  nonprofits
• 12:28
  to
• 12:29
  do
• 12:29
  some
• 12:29
  type
• 12:30
  of
• 12:30
  nonprofit
• 12:31
  housing,
• 12:31
  subsidized
• 12:32
  housing,
• 12:32
  and
• 12:32
  that
• 12:33
  kind
• 12:33
  of
• 12:33
  helps
• 12:33
  offset,
• 12:34
  you
• 12:34
  know,
• 12:34
  through
• 12:35
  tax
• 12:36
  deductions
• 12:37
  and
• 12:37
  certain
• 12:38
  benefits
• 12:38
  of
• 12:39
  the
• 12:39
  program,
• 12:39
  it
• 12:40
  can
• 12:40
  help
• 12:40
  facilitate
• 12:41
  filling
• 12:42
  in
• 12:42
  multifamily
• 12:43
  complexes
• 12:44
  that
• 12:44
  otherwise
• 12:44
  you
• 12:44
  maybe
• 12:45
  would
• 12:45
  have
• 12:45
  higher
• 12:45
  vacancy
• 12:45
  rates
• 12:46
  on.
• 12:46
  So
• 12:47
  that's
• 12:47
  like
• 12:47
  one
• 12:47
  of
• 12:47
  the
• 12:47
  strategies
• 12:48
  I
• 12:48
  see
• 12:48
  people
• 12:48
  use
• 12:49
  for
• 12:49
  those
• 12:49
  mostly
• 12:50
  like
• 12:50
  Studio
• 12:50
  one
• 12:50
  bedrooms
• 12:51
  in
• 12:51
  particular
• 12:51
  here.
• 12:52
  Totally.
• 12:52
  And
• 12:53
  another
• 12:53
  thing
• 12:53
  to
• 12:53
  take
• 12:53
  into
• 12:54
  account
• 12:54
  when
• 12:54
  you're
• 12:55
  evaluating
• 12:55
  multifamily
• 12:56
  property
• 12:56
  is
• 12:56
  what
• 12:57
  type
• 12:57
  of
• 12:57
  amenities
• 12:58
  does
• 12:58
  the
• 12:58
  property
• 12:59
  have,
• 12:59
  both
• 12:59
  in
• 12:59
  the
• 13:00
  community
• 13:00
  and
• 13:00
  in
• 13:00
  the
• 13:00
  units.
• 13:01
  So
• 13:02
  you
• 13:02
  know,
• 13:02
  do
• 13:02
  you
• 13:02
  have
• 13:03
  a
• 13:03
  property
• 13:03
  that
• 13:03
  has
• 13:04
  washer,
• 13:04
  dryer
• 13:05
  appliances
• 13:05
  either
• 13:06
  in
• 13:06
  the
• 13:06
  units
• 13:06
  or
• 13:06
  in
• 13:06
  a
• 13:06
  common
• 13:07
  area?
• 13:07
  People
• 13:07
  like
• 13:08
  having
• 13:08
  that
• 13:08
  on
• 13:08
  property.
• 13:09
  So
• 13:09
  that
• 13:10
  can
• 13:10
  be
• 13:10
  a
• 13:10
  plus.
• 13:11
  Does
• 13:11
  the
• 13:11
  property
• 13:12
  have
• 13:12
  a
• 13:12
  swimming
• 13:12
  pool?
• 13:12
  Does
• 13:13
  it
• 13:13
  have
• 13:13
  a
• 13:13
  dog
• 13:14
  park?
• 13:14
  Does
• 13:14
  it
• 13:14
  have
• 13:15
  a
• 13:15
  gym?
• 13:15
  Now,
• 13:15
  if
• 13:16
  you're
• 13:16
  dealing
• 13:16
  with
• 13:16
  a
• 13:17
  20
• 13:17
  unit
• 13:17
  apartment
• 13:18
  building,
• 13:18
  let
• 13:18
  me
• 13:18
  be
• 13:18
  clear,
• 13:18
  you're
• 13:19
  probably
• 13:19
  not
• 13:19
  going
• 13:19
  to
• 13:19
  have
• 13:19
  a
• 13:19
  gym
• 13:20
  or
• 13:20
  a
• 13:20
  door
• 13:21
  park
• 13:21
  or
• 13:21
  things
• 13:21
  like
• 13:21
  that
• 13:21
  because
• 13:22
  you
• 13:22
  just
• 13:22
  don't
• 13:22
  have
• 13:22
  the
• 13:22
  space.
• 13:23
  If
• 13:23
  you're
• 13:23
  buying
• 13:23
  a
• 13:23
  hundred
• 13:24
  unit
• 13:24
  apartment
• 13:24
  complex,
• 13:25
  you
• 13:25
  know,
• 13:25
  there's
• 13:25
  a
• 13:25
  good
• 13:25
  chance
• 13:25
  you
• 13:26
  may
• 13:26
  see
• 13:26
  those
• 13:26
  things.
• 13:27
  So
• 13:27
  that
• 13:27
  will
• 13:28
  vary
• 13:28
  a
• 13:28
  little
• 13:28
  bit
• 13:28
  based
• 13:28
  on
• 13:29
  the
• 13:29
  size
• 13:29
  of
• 13:29
  the
• 13:29
  property
• 13:30
  you're
• 13:30
  looking
• 13:30
  at.
• 13:30
  But
• 13:31
  ultimately
• 13:31
  what
• 13:31
  you
• 13:31
  want
• 13:31
  to
• 13:31
  do
• 13:32
  is
• 13:32
  look
• 13:32
  at
• 13:32
  what
• 13:33
  the
• 13:33
  property
• 13:33
  has,
• 13:33
  but
• 13:33
  also
• 13:34
  look
• 13:34
  at
• 13:34
  what
• 13:34
  the
• 13:34
  surrounding
• 13:35
  properties
• 13:35
  have,
• 13:35
  because
• 13:36
  that's
• 13:36
  going
• 13:36
  to
• 13:36
  let
• 13:36
  you
• 13:36
  know
• 13:36
  if
• 13:37
  you
• 13:37
  have
• 13:37
  an
• 13:37
  advantage
• 13:37
  or
• 13:37
  a
• 13:38
  disadvantage
• 13:38
  or
• 13:38
  if
• 13:38
  you're
• 13:39
  kind
• 13:39
  of
• 13:39
  on
• 13:39
  par
• 13:39
  with
• 13:39
  them.
• 13:40
  If
• 13:40
  you're
• 13:40
  the
• 13:40
  only
• 13:41
  property
• 13:41
  in
• 13:41
  the
• 13:41
  area
• 13:42
  that
• 13:42
  doesn't
• 13:42
  have
• 13:42
  a
• 13:42
  swimming
• 13:43
  pool,
• 13:43
  there's
• 13:43
  a
• 13:43
  good
• 13:43
  chance
• 13:44
  that
• 13:44
  people
• 13:44
  may
• 13:44
  not
• 13:44
  want
• 13:44
  to
• 13:45
  go
• 13:45
  to
• 13:45
  your
• 13:45
  property
• 13:45
  as
• 13:45
  much.
• 13:46
  So
• 13:46
  something
• 13:46
  just
• 13:47
  to
• 13:47
  be
• 13:47
  aware
• 13:47
  of
• 13:47
  because
• 13:47
  that
• 13:48
  may
• 13:48
  make
• 13:48
  it
• 13:48
  a
• 13:48
  little
• 13:48
  bit
• 13:49
  more
• 13:49
  difficult
• 13:49
  for
• 13:49
  you
• 13:49
  to
• 13:50
  attract
• 13:50
  tenants
• 13:50
  and
• 13:50
  for
• 13:51
  you
• 13:51
  to
• 13:51
  attract
• 13:51
  quality
• 13:51
  tenants.
• 13:52
  So
• 13:52
  things
• 13:53
  that
• 13:53
  you
• 13:53
  want
• 13:53
  to
• 13:53
  evaluate
• 13:53
  as
• 13:54
  you're
• 13:54
  looking
• 13:54
  at
• 13:54
  deals.
• 13:55
  Absolutely.
• 13:56
  And
• 13:56
  from
• 13:57
  a
• 13:57
  standpoint
• 13:57
  of
• 13:58
  evaluating
• 13:58
  deals,
• 13:59
  each
• 13:59
  of
• 13:59
  those
• 14:00
  amenities,
• 14:00
  when
• 14:01
  you're
• 14:01
  looking
• 14:01
  at
• 14:01
  a
• 14:01
  particular
• 14:02
  complex,
• 14:02
  comparing
• 14:03
  to
• 14:03
  others
• 14:03
  in
• 14:03
  the
• 14:03
  area,
• 14:04
  each
• 14:04
  of
• 14:04
  those
• 14:04
  amenities
• 14:05
  typically
• 14:05
  will
• 14:06
  have
• 14:06
  a
• 14:06
  dollar
• 14:07
  per
• 14:07
  door
• 14:08
  value.
• 14:08
  And
• 14:09
  so
• 14:09
  kind
• 14:09
  of
• 14:09
  getting
• 14:10
  familiar
• 14:10
  with
• 14:10
  that
• 14:10
  dollar
• 14:11
  per
• 14:11
  door
• 14:11
  value
• 14:12
  of
• 14:12
  like,
• 14:12
  what
• 14:12
  is
• 14:12
  that
• 14:12
  swimming
• 14:13
  pool
• 14:13
  going
• 14:14
  to
• 14:14
  add
• 14:14
  to
• 14:14
  the
• 14:14
  value
• 14:15
  overall
• 14:15
  of
• 14:15
  this
• 14:15
  complex?
• 14:16
  What
• 14:16
  is
• 14:16
  that
• 14:17
  clubhouse
• 14:17
  or
• 14:18
  that,
• 14:18
  you
• 14:18
  know,
• 14:18
  gym
• 14:18
  going
• 14:19
  to
• 14:19
  add
• 14:19
  overall?
• 14:19
  You
• 14:20
  can
• 14:20
  find
• 14:20
  some
• 14:20
  just
• 14:21
  general
• 14:21
  numbers
• 14:22
  that
• 14:22
  kind
• 14:22
  of
• 14:22
  help
• 14:23
  you
• 14:23
  with
• 14:23
  your,
• 14:23
  with
• 14:24
  your
• 14:24
  analysis
• 14:24
  of
• 14:24
  pricing
• 14:25
  also,
• 14:25
  as
• 14:25
  you're
• 14:25
  doing
• 14:26
  that
• 14:26
  kind
• 14:26
  of
• 14:26
  underwriting.
• 14:27
  Right.
• 14:27
  Another
• 14:28
  one,
• 14:28
  and
• 14:28
  probably
• 14:29
  a
• 14:29
  very
• 14:29
  common
• 14:29
  one
• 14:30
  for
• 14:30
  everybody
• 14:30
  here
• 14:30
  who
• 14:30
  listens
• 14:31
  to
• 14:31
  other
• 14:32
  podcasts.
• 14:32
  Not
• 14:32
  that
• 14:33
  there
• 14:33
  are
• 14:33
  multifamily
• 14:34
  podcasts,
• 14:34
  but.
• 14:35
  But
• 14:35
  it's
• 14:36
  value
• 14:36
  add
• 14:36
  opportunities.
• 14:37
  Right.
• 14:37
  So
• 14:37
  that,
• 14:37
  that's
• 14:38
  a
• 14:38
  very
• 14:38
  common
• 14:39
  term
• 14:39
  we
• 14:39
  hear
• 14:39
  in
• 14:39
  the
• 14:39
  industry.
• 14:40
  So
• 14:41
  what
• 14:41
  is
• 14:41
  value
• 14:41
  add,
• 14:42
  Erica?
• 14:42
  So
• 14:43
  value
• 14:43
  add
• 14:43
  is,
• 14:44
  for
• 14:44
  me,
• 14:44
  I
• 14:44
  think
• 14:44
  of
• 14:44
  it
• 14:45
  as
• 14:45
  two
• 14:45
  different
• 14:45
  parts.
• 14:46
  You
• 14:46
  have
• 14:46
  your
• 14:47
  operational
• 14:47
  value
• 14:48
  add
• 14:48
  where
• 14:49
  you're
• 14:49
  going
• 14:49
  in
• 14:49
  and
• 14:49
  you're
• 14:49
  looking
• 14:50
  at
• 14:50
  the
• 14:50
  line
• 14:50
  item
• 14:51
  expenses,
• 14:51
  and
• 14:51
  you
• 14:51
  are
• 14:52
  analyzing
• 14:53
  where
• 14:53
  can
• 14:53
  you
• 14:54
  optimize
• 14:54
  this
• 14:55
  property
• 14:55
  and
• 14:56
  optimize
• 14:56
  the
• 14:56
  net
• 14:56
  operating
• 14:57
  income.
• 14:57
  And
• 14:58
  it
• 14:58
  can
• 14:58
  be
• 14:58
  through
• 14:58
  a
• 14:58
  variety
• 14:59
  of
• 14:59
  different
• 14:59
  things.
• 15:00
  I
• 15:00
  think
• 15:00
  you're
• 15:00
  pretty
• 15:01
  well
• 15:01
  versed
• 15:01
  on
• 15:01
  those
• 15:02
  line
• 15:02
  items.
• 15:02
  And
• 15:02
  how
• 15:03
  to
• 15:03
  optimize
• 15:03
  the
• 15:03
  other
• 15:04
  side
• 15:04
  would
• 15:04
  be
• 15:04
  the
• 15:04
  construction
• 15:05
  side.
• 15:05
  So
• 15:05
  when
• 15:06
  you
• 15:06
  have
• 15:06
  a
• 15:06
  particular
• 15:07
  rent
• 15:07
  bump
• 15:07
  per
• 15:07
  door,
• 15:08
  that
• 15:08
  can
• 15:08
  happen
• 15:08
  and
• 15:09
  you're
• 15:09
  able
• 15:09
  to
• 15:09
  go
• 15:09
  in,
• 15:09
  do
• 15:10
  some
• 15:10
  slight
• 15:10
  renovations
• 15:11
  to
• 15:11
  each
• 15:11
  unit,
• 15:12
  and
• 15:12
  increase
• 15:12
  the
• 15:13
  lease
• 15:13
  rate
• 15:13
  based
• 15:14
  off
• 15:14
  of
• 15:14
  that.
• 15:14
  So
• 15:15
  those
• 15:15
  are
• 15:15
  the
• 15:15
  two
• 15:16
  kind
• 15:16
  of
• 15:16
  sides
• 15:16
  of
• 15:16
  value
• 15:17
  add
• 15:17
  that
• 15:17
  I
• 15:17
  typically
• 15:18
  see.
• 15:18
  But
• 15:18
  tell
• 15:18
  us
• 15:19
  how
• 15:19
  you
• 15:19
  do
• 15:19
  this,
• 15:19
  Charles,
• 15:19
  because
• 15:20
  I
• 15:20
  know
• 15:20
  you
• 15:20
  really
• 15:20
  are
• 15:21
  very
• 15:21
  skilled
• 15:21
  at
• 15:21
  the
• 15:21
  operational
• 15:22
  side,
• 15:22
  for
• 15:23
  sure.
• 15:23
  Well,
• 15:23
  you
• 15:24
  know,
• 15:24
  I
• 15:24
  think
• 15:24
  you
• 15:24
  nailed
• 15:24
  it.
• 15:25
  I
• 15:25
  mean,
• 15:25
  those
• 15:25
  are
• 15:25
  really
• 15:25
  the
• 15:25
  two
• 15:26
  sides.
• 15:26
  So
• 15:26
  value
• 15:26
  it
• 15:26
  is
• 15:27
  anything
• 15:27
  that's
• 15:27
  done
• 15:27
  to
• 15:28
  increase
• 15:28
  the
• 15:28
  value
• 15:28
  of
• 15:29
  the
• 15:29
  property.
• 15:29
  Right.
• 15:29
  So
• 15:29
  regardless
• 15:30
  whether
• 15:30
  it's
• 15:30
  operational,
• 15:31
  whether
• 15:31
  it's
• 15:31
  capex,
• 15:32
  you
• 15:32
  know,
• 15:33
  you
• 15:33
  want
• 15:33
  to
• 15:33
  see
• 15:34
  where
• 15:34
  can
• 15:34
  you
• 15:34
  extract
• 15:35
  more
• 15:35
  value.
• 15:35
  So
• 15:36
  commercial
• 15:36
  real
• 15:36
  estate,
• 15:37
  keep
• 15:37
  in
• 15:37
  mind,
• 15:37
  is
• 15:37
  valued
• 15:38
  oftentimes
• 15:38
  on
• 15:38
  the
• 15:39
  net
• 15:39
  operating
• 15:39
  income.
• 15:40
  So
• 15:40
  because
• 15:41
  of
• 15:41
  that,
• 15:41
  as
• 15:41
  a
• 15:41
  general
• 15:41
  rule
• 15:42
  of
• 15:42
  thumb,
• 15:42
  if
• 15:42
  you're
• 15:42
  increasing
• 15:43
  the
• 15:43
  net
• 15:43
  operating
• 15:43
  income,
• 15:44
  you're
• 15:44
  probably
• 15:45
  increasing
• 15:45
  the
• 15:45
  Value.
• 15:45
  Now,
• 15:46
  I'm
• 15:46
  not
• 15:46
  going
• 15:46
  to
• 15:46
  say
• 15:46
  100%.
• 15:47
  You
• 15:47
  know,
• 15:47
  there
• 15:48
  are
• 15:48
  other
• 15:48
  factors
• 15:49
  like
• 15:49
  market,
• 15:50
  market
• 15:50
  components
• 15:50
  like
• 15:51
  cap
• 15:51
  rates,
• 15:51
  which
• 15:51
  we
• 15:51
  can't
• 15:52
  necessarily
• 15:52
  control,
• 15:53
  but
• 15:53
  at
• 15:53
  least
• 15:54
  the
• 15:54
  part
• 15:54
  that
• 15:54
  you
• 15:54
  can
• 15:54
  control.
• 15:55
  And
• 15:56
  you
• 15:56
  know,
• 15:57
  you're
• 15:57
  either
• 15:57
  pushing
• 15:58
  income,
• 15:58
  reducing
• 15:58
  expenses
• 15:59
  or
• 15:59
  some
• 15:59
  combination
• 16:00
  of
• 16:00
  both.
• 16:00
  So
• 16:01
  on
• 16:01
  the
• 16:01
  income
• 16:02
  side,
• 16:02
  you
• 16:03
  know,
• 16:03
  for
• 16:03
  me
• 16:03
  personally,
• 16:03
  I'll
• 16:03
  give
• 16:04
  you
• 16:04
  some
• 16:04
  of
• 16:04
  the
• 16:04
  value
• 16:04
  adds
• 16:04
  that
• 16:05
  I've
• 16:05
  actually
• 16:05
  done.
• 16:06
  And
• 16:06
  this
• 16:06
  is
• 16:06
  my
• 16:07
  favorite
• 16:07
  type
• 16:07
  of
• 16:07
  value.
• 16:08
  This
• 16:08
  is
• 16:08
  the
• 16:08
  one
• 16:08
  I'd
• 16:08
  rather
• 16:09
  do
• 16:09
  all
• 16:09
  day
• 16:09
  long
• 16:09
  because
• 16:09
  I
• 16:10
  personally
• 16:10
  see
• 16:10
  it
• 16:10
  a
• 16:10
  lot
• 16:10
  less
• 16:11
  risky.
• 16:11
  I
• 16:11
  bought
• 16:11
  a
• 16:11
  property
• 16:12
  In
• 16:12
  South
• 16:13
  Carolina,
• 16:13
  September
• 16:14
  2020,
• 16:14
  the
• 16:15
  average.
• 16:15
  So
• 16:15
  that
• 16:15
  was
• 16:16
  a
• 16:16
  smaller
• 16:16
  property,
• 16:17
  48
• 16:17
  units.
• 16:17
  The
• 16:18
  rents
• 16:18
  at
• 16:18
  that
• 16:18
  property
• 16:19
  were
• 16:19
  between
• 16:20
  575
• 16:21
  and
• 16:21
  700
• 16:22
  bucks
• 16:22
  when
• 16:22
  we
• 16:22
  bought
• 16:23
  the
• 16:23
  property
• 16:23
  and
• 16:23
  there
• 16:24
  was
• 16:24
  only
• 16:24
  one
• 16:24
  at
• 16:24
  700.
• 16:25
  Most
• 16:25
  of
• 16:25
  them
• 16:25
  were
• 16:25
  between
• 16:26
  575
• 16:26
  and
• 16:26
  650.
• 16:27
  And
• 16:28
  even
• 16:28
  for
• 16:28
  a
• 16:28
  smaller
• 16:29
  market
• 16:29
  like
• 16:29
  Sumter,
• 16:30
  those
• 16:30
  rents
• 16:30
  were
• 16:30
  pretty
• 16:31
  low
• 16:31
  by
• 16:31
  2020
• 16:32
  standards.
• 16:32
  The
• 16:33
  thing
• 16:33
  is
• 16:33
  that
• 16:33
  the
• 16:33
  property
• 16:33
  was
• 16:34
  owned
• 16:34
  by
• 16:34
  a
• 16:34
  mom
• 16:34
  and
• 16:34
  pop.
• 16:35
  It
• 16:35
  wasn't
• 16:35
  really
• 16:36
  a
• 16:36
  priority
• 16:36
  for
• 16:36
  them
• 16:37
  because
• 16:37
  they
• 16:37
  had
• 16:37
  a
• 16:37
  successful
• 16:38
  furniture
• 16:38
  business,
• 16:39
  they
• 16:39
  had
• 16:39
  a
• 16:39
  third
• 16:39
  party
• 16:40
  management
• 16:40
  company
• 16:40
  managing
• 16:41
  the
• 16:41
  property
• 16:41
  that
• 16:42
  to
• 16:42
  be
• 16:42
  honest,
• 16:42
  really
• 16:43
  didn't
• 16:43
  give
• 16:43
  it
• 16:43
  any
• 16:43
  attention
• 16:44
  at
• 16:44
  all.
• 16:44
  And
• 16:45
  the
• 16:45
  owner
• 16:45
  was
• 16:45
  very
• 16:45
  hands
• 16:46
  off
• 16:46
  because
• 16:46
  you
• 16:47
  know,
• 16:47
  it
• 16:47
  was
• 16:47
  an
• 16:47
  investment
• 16:47
  they
• 16:48
  had,
• 16:48
  but
• 16:48
  it
• 16:48
  wasn't
• 16:48
  a
• 16:48
  high
• 16:49
  priority
• 16:49
  for
• 16:49
  them.
• 16:49
  So
• 16:50
  the
• 16:50
  property
• 16:50
  had
• 16:51
  very
• 16:51
  low
• 16:51
  rents
• 16:51
  because
• 16:52
  of
• 16:52
  that.
• 16:52
  So
• 16:53
  initially
• 16:53
  when
• 16:53
  I
• 16:53
  looked
• 16:54
  at
• 16:54
  it
• 16:54
  and
• 16:55
  kind
• 16:55
  of
• 16:55
  did
• 16:55
  my
• 16:55
  first
• 16:55
  pass,
• 16:56
  you
• 16:56
  know,
• 16:56
  just
• 16:56
  looking
• 16:57
  at
• 16:57
  the
• 16:57
  area
• 16:57
  and
• 16:57
  looking
• 16:58
  at
• 16:58
  what
• 16:58
  I
• 16:58
  saw,
• 16:58
  I
• 16:58
  felt
• 16:59
  pretty
• 16:59
  confident
• 17:00
  you
• 17:00
  can
• 17:00
  get
• 17:00
  750.
• 17:01
  Now
• 17:01
  admittedly
• 17:02
  my
• 17:02
  property
• 17:02
  manager
• 17:03
  told
• 17:03
  me
• 17:03
  950.
• 17:04
  I
• 17:04
  didn't
• 17:04
  believe
• 17:05
  her.
• 17:05
  I'm
• 17:05
  glad
• 17:05
  she
• 17:05
  proved
• 17:06
  me
• 17:06
  wrong.
• 17:06
  But
• 17:07
  that
• 17:07
  being
• 17:07
  said,
• 17:08
  we
• 17:08
  didn't
• 17:08
  do
• 17:08
  anything
• 17:09
  to
• 17:09
  those
• 17:09
  units.
• 17:10
  There
• 17:10
  was
• 17:10
  no
• 17:10
  upgrade
• 17:11
  whatsoever.
• 17:12
  So
• 17:13
  it
• 17:13
  was
• 17:13
  a
• 17:13
  nice
• 17:13
  property,
• 17:14
  decent
• 17:14
  submarket.
• 17:15
  And
• 17:16
  what
• 17:16
  happened
• 17:16
  is,
• 17:17
  out
• 17:17
  of
• 17:17
  the
• 17:17
  48
• 17:18
  units,
• 17:18
  while
• 17:18
  the
• 17:18
  occupancy
• 17:19
  was
• 17:19
  strong,
• 17:19
  when
• 17:19
  we
• 17:20
  closed,
• 17:20
  27
• 17:21
  of
• 17:21
  those
• 17:21
  units
• 17:22
  were
• 17:22
  leased
• 17:22
  by
• 17:22
  month
• 17:23
  to
• 17:23
  month
• 17:23
  tenants,
• 17:23
  which
• 17:24
  means
• 17:24
  that
• 17:24
  they
• 17:24
  don't
• 17:24
  have
• 17:24
  a
• 17:25
  full
• 17:25
  term.
• 17:25
  So
• 17:25
  they
• 17:26
  could
• 17:26
  basically
• 17:26
  all
• 17:26
  leave
• 17:27
  in
• 17:27
  one
• 17:27
  month.
• 17:28
  Some
• 17:28
  people
• 17:28
  look
• 17:28
  at
• 17:28
  that
• 17:28
  and
• 17:29
  say
• 17:29
  it's
• 17:29
  a
• 17:29
  risk
• 17:29
  and
• 17:29
  it
• 17:30
  can
• 17:30
  be.
• 17:30
  I
• 17:30
  also
• 17:31
  look
• 17:31
  at
• 17:31
  it
• 17:31
  and
• 17:31
  say
• 17:32
  it's
• 17:32
  an
• 17:32
  opportunity.
• 17:33
  So
• 17:33
  the
• 17:33
  opportunity
• 17:34
  was
• 17:34
  in
• 17:35
  the
• 17:35
  first
• 17:35
  three
• 17:36
  months
• 17:36
  after
• 17:36
  takeover.
• 17:37
  We
• 17:37
  were
• 17:37
  working
• 17:38
  on
• 17:38
  getting
• 17:38
  as
• 17:38
  many
• 17:38
  of
• 17:39
  those
• 17:39
  people
• 17:39
  signed
• 17:39
  the
• 17:39
  leases
• 17:40
  as
• 17:40
  possible.
• 17:40
  So
• 17:41
  we
• 17:41
  were
• 17:41
  successful
• 17:41
  at
• 17:42
  keeping
• 17:42
  24
• 17:42
  of
• 17:43
  them.
• 17:43
  We
• 17:43
  only
• 17:43
  lost
• 17:44
  three
• 17:44
  out
• 17:44
  of
• 17:44
  the
• 17:45
  24
• 17:45
  we
• 17:45
  kept.
• 17:46
  We
• 17:46
  got
• 17:46
  most
• 17:46
  of
• 17:47
  them
• 17:47
  right
• 17:47
  around
• 17:47
  that
• 17:47
  750rent
• 17:48
  pretty
• 17:48
  quickly.
• 17:49
  So
• 17:49
  just
• 17:50
  think,
• 17:50
  we
• 17:50
  literally
• 17:51
  increased
• 17:51
  the
• 17:51
  rent
• 17:52
  roll
• 17:52
  by
• 17:52
  thousands
• 17:53
  of
• 17:53
  dollars
• 17:53
  a
• 17:54
  month
• 17:54
  within
• 17:54
  three
• 17:54
  months
• 17:55
  of
• 17:55
  buying
• 17:55
  the
• 17:55
  property
• 17:56
  and
• 17:56
  not
• 17:56
  doing
• 17:56
  any
• 17:56
  capex
• 17:57
  to
• 17:57
  it.
• 17:57
  So
• 17:57
  that
• 17:57
  was
• 17:58
  evaluated
• 17:58
  because
• 17:59
  we
• 17:59
  bumped
• 17:59
  up
• 17:59
  the
• 18:00
  net
• 18:00
  operating
• 18:01
  income
• 18:01
  by
• 18:01
  being
• 18:02
  aware
• 18:02
  of
• 18:02
  the
• 18:02
  market
• 18:03
  and
• 18:03
  simply
• 18:04
  paying
• 18:04
  attention
• 18:04
  to
• 18:04
  the
• 18:04
  management,
• 18:05
  which
• 18:05
  the
• 18:05
  prior
• 18:06
  ownership
• 18:06
  and
• 18:06
  management
• 18:06
  didn't
• 18:07
  do.
• 18:07
  So
• 18:07
  we
• 18:07
  had
• 18:08
  an
• 18:08
  advantage
• 18:09
  there
• 18:09
  and
• 18:09
  that
• 18:09
  gave
• 18:09
  us
• 18:10
  a
• 18:10
  lot
• 18:10
  of
• 18:10
  value
• 18:10
  that
• 18:10
  we
• 18:10
  added
• 18:10
  to
• 18:11
  the
• 18:11
  property.
• 18:11
  So
• 18:11
  it
• 18:11
  was
• 18:11
  good.
• 18:12
  Wow.
• 18:12
  And
• 18:13
  you
• 18:13
  don't
• 18:13
  find
• 18:13
  those
• 18:14
  too
• 18:14
  often.
• 18:15
  No,
• 18:15
  that
• 18:16
  one
• 18:16
  strictly
• 18:17
  of
• 18:17
  all
• 18:17
  my
• 18:17
  deals,
• 18:17
  that
• 18:18
  was
• 18:18
  my
• 18:18
  favorite.
• 18:19
  I
• 18:19
  wish
• 18:19
  I
• 18:19
  found
• 18:19
  one
• 18:19
  like
• 18:20
  that.
• 18:20
  One
• 18:21
  of
• 18:21
  my
• 18:21
  fellow
• 18:22
  commercial
• 18:22
  brokers
• 18:22
  in
• 18:23
  Florida
• 18:23
  found
• 18:23
  120
• 18:24
  unit
• 18:25
  property
• 18:25
  in
• 18:25
  Destin,
• 18:25
  Florida
• 18:26
  that
• 18:26
  had
• 18:26
  about
• 18:27
  250,
• 18:28
  300
• 18:28
  rent
• 18:29
  bump
• 18:29
  per
• 18:29
  door
• 18:30
  without
• 18:30
  any
• 18:30
  capex.
• 18:31
  And
• 18:31
  then
• 18:32
  with
• 18:32
  the
• 18:32
  capex
• 18:33
  about
• 18:33
  5
• 18:33
  to
• 18:34
  550
• 18:34
  per
• 18:34
  door.
• 18:35
  And
• 18:35
  so
• 18:36
  they
• 18:36
  were
• 18:36
  able
• 18:36
  to
• 18:37
  do
• 18:37
  approximately
• 18:38
  about
• 18:39
  $4
• 18:39
  million
• 18:40
  worth
• 18:40
  of
• 18:40
  value
• 18:40
  to
• 18:40
  the
• 18:41
  property
• 18:41
  within
• 18:42
  six
• 18:42
  months
• 18:42
  based
• 18:43
  on
• 18:43
  that.
• 18:43
  So
• 18:43
  those
• 18:43
  rent
• 18:44
  bump
• 18:44
  per
• 18:44
  door,
• 18:45
  like
• 18:45
  that's
• 18:45
  the
• 18:45
  one
• 18:46
  that
• 18:46
  I
• 18:46
  look
• 18:46
  for.
• 18:46
  But
• 18:47
  you
• 18:47
  know,
• 18:47
  they're
• 18:48
  more
• 18:48
  unicorn
• 18:48
  deals.
• 18:49
  It's
• 18:49
  harder
• 18:49
  to
• 18:49
  find
• 18:50
  for
• 18:50
  sure.
• 18:50
  Absolutely.
• 18:52
  Well,
• 18:52
  let's
• 18:52
  talk
• 18:52
  about
• 18:53
  the
• 18:53
  other
• 18:53
  side
• 18:53
  of
• 18:53
  that
• 18:53
  equation,
• 18:54
  Erica.
• 18:54
  So
• 18:55
  increasing
• 18:55
  income
• 18:55
  is
• 18:56
  one
• 18:56
  part,
• 18:56
  but
• 18:56
  how
• 18:56
  about
• 18:57
  expenses?
• 18:58
  That,
• 18:58
  that
• 18:59
  part's
• 18:59
  not
• 18:59
  as
• 18:59
  sexy.
• 19:00
  So
• 19:00
  you
• 19:00
  don't
• 19:00
  hear
• 19:00
  people
• 19:00
  talk
• 19:01
  about
• 19:01
  that
• 19:01
  one
• 19:01
  as
• 19:01
  much.
• 19:02
  But
• 19:02
  it's
• 19:02
  kind
• 19:03
  of
• 19:03
  an
• 19:03
  important
• 19:03
  piece
• 19:03
  of
• 19:03
  the
• 19:04
  puzzle.
• 19:04
  What
• 19:04
  do
• 19:04
  you
• 19:04
  see
• 19:05
  there?
• 19:05
  I
• 19:05
  agree
• 19:06
  it
• 19:06
  is
• 19:06
  an
• 19:06
  important
• 19:07
  piece,
• 19:07
  especially
• 19:08
  if
• 19:09
  you
• 19:09
  are
• 19:09
  in
• 19:10
  a
• 19:10
  category
• 19:11
  of
• 19:11
  like
• 19:11
  what
• 19:12
  I
• 19:12
  find
• 19:12
  for
• 19:12
  instance,
• 19:13
  anywhere
• 19:13
  from
• 19:13
  like
• 19:14
  12
• 19:14
  to
• 19:14
  50
• 19:15
  units
• 19:15
  in
• 19:15
  my
• 19:16
  market
• 19:16
  those
• 19:17
  are
• 19:17
  many
• 19:17
  times
• 19:17
  self
• 19:18
  managed.
• 19:18
  And
• 19:19
  because
• 19:19
  they're
• 19:19
  self
• 19:20
  managed,
• 19:20
  what
• 19:20
  I
• 19:21
  find
• 19:21
  is
• 19:21
  a
• 19:21
  lot
• 19:21
  of
• 19:21
  times
• 19:22
  there's
• 19:22
  lots
• 19:22
  of
• 19:23
  value
• 19:23
  add
• 19:23
  opportunity
• 19:24
  on
• 19:24
  reducing
• 19:25
  operating
• 19:25
  expenses
• 19:26
  because
• 19:26
  there's
• 19:26
  just
• 19:27
  a
• 19:27
  lot
• 19:27
  of
• 19:27
  oversight,
• 19:28
  you
• 19:28
  know,
• 19:29
  when
• 19:29
  they're
• 19:29
  self
• 19:29
  managing
• 19:30
  sometimes.
• 19:31
  So
• 19:31
  going
• 19:31
  through
• 19:32
  each
• 19:32
  line
• 19:32
  item
• 19:33
  expenses
• 19:33
  and
• 19:33
  looking
• 19:34
  at
• 19:34
  things
• 19:34
  for
• 19:34
  instance
• 19:35
  like
• 19:35
  the
• 19:35
  property
• 19:36
  management
• 19:36
  fee,
• 19:37
  how
• 19:37
  much
• 19:37
  is
• 19:37
  being
• 19:37
  paid
• 19:38
  to
• 19:38
  the
• 19:38
  property
• 19:38
  managers,
• 19:39
  are
• 19:39
  they
• 19:39
  performing
• 19:40
  or
• 19:40
  not?
• 19:40
  Based
• 19:40
  on
• 19:40
  KPI
• 19:41
  metrics,
• 19:41
  you
• 19:42
  have
• 19:42
  your
• 19:42
  utilities,
• 19:43
  you
• 19:43
  have
• 19:43
  your
• 19:43
  maintenance
• 19:44
  fees,
• 19:45
  how
• 19:45
  many,
• 19:45
  you
• 19:45
  know,
• 19:46
  your,
• 19:46
  your
• 19:46
  work
• 19:46
  order
• 19:47
  times,
• 19:47
  how
• 19:47
  many
• 19:47
  work
• 19:48
  orders
• 19:48
  a
• 19:48
  month
• 19:48
  and
• 19:49
  what
• 19:49
  did
• 19:49
  the
• 19:49
  maintenance
• 19:50
  fees
• 19:50
  look
• 19:50
  like
• 19:50
  on
• 19:50
  the
• 19:50
  property?
• 19:51
  Which
• 19:51
  also
• 19:52
  helps
• 19:53
  you
• 19:53
  and
• 19:53
  your
• 19:54
  pro
• 19:54
  forma
• 19:54
  for
• 19:54
  your
• 19:55
  capex
• 19:55
  and
• 19:55
  determining,
• 19:56
  you
• 19:56
  know,
• 19:57
  what
• 19:57
  are
• 19:57
  you
• 19:57
  taking
• 19:57
  on
• 19:57
  truly
• 19:58
  with
• 19:58
  this
• 19:58
  property
• 19:59
  and
• 19:59
  what
• 19:59
  to
• 19:59
  expect
• 20:00
  in
• 20:00
  the
• 20:00
  future.
• 20:01
  What
• 20:01
  do
• 20:01
  you
• 20:01
  find
• 20:01
  typically
• 20:02
  when
• 20:02
  it's
• 20:02
  the
• 20:03
  line
• 20:03
  item
• 20:03
  expenses
• 20:04
  for
• 20:04
  operational
• 20:05
  value
• 20:05
  add
• 20:05
  in
• 20:05
  particular?
• 20:06
  Well,
• 20:07
  let
• 20:07
  me
• 20:07
  stress
• 20:07
  one
• 20:08
  thing
• 20:08
  right
• 20:08
  now.
• 20:08
  So
• 20:09
  as
• 20:09
  we
• 20:09
  record
• 20:09
  this,
• 20:10
  It's
• 20:10
  November
• 20:10
  of
• 20:10
  2024,
• 20:11
  and
• 20:12
  in
• 20:12
  many
• 20:12
  markets,
• 20:13
  especially
• 20:13
  across
• 20:14
  the
• 20:14
  Sunbelt
• 20:14
  region,
• 20:15
  it's
• 20:15
  gotten
• 20:15
  a
• 20:15
  lot
• 20:15
  tougher
• 20:16
  to
• 20:16
  push
• 20:16
  rents.
• 20:16
  Regardless
• 20:17
  of
• 20:17
  all
• 20:17
  the
• 20:17
  hoopla
• 20:17
  you
• 20:18
  see
• 20:18
  on
• 20:18
  social
• 20:18
  media,
• 20:19
  it's
• 20:19
  not
• 20:19
  as
• 20:19
  easy
• 20:19
  as
• 20:20
  it
• 20:20
  was
• 20:20
  two
• 20:20
  or
• 20:20
  three
• 20:20
  years
• 20:20
  ago
• 20:21
  when
• 20:21
  all
• 20:21
  you
• 20:21
  had
• 20:21
  to
• 20:22
  do
• 20:22
  was
• 20:22
  advertise
• 20:22
  it
• 20:22
  and
• 20:23
  people
• 20:23
  would
• 20:23
  have
• 20:23
  come
• 20:23
  in.
• 20:23
  Market
• 20:24
  conditions
• 20:24
  have
• 20:24
  changed,
• 20:25
  the
• 20:25
  overall
• 20:25
  economy
• 20:25
  softened,
• 20:26
  and
• 20:27
  people
• 20:27
  are
• 20:27
  watching
• 20:28
  their
• 20:28
  purse
• 20:29
  strings
• 20:29
  a
• 20:29
  little
• 20:29
  bit
• 20:29
  tighter
• 20:29
  because
• 20:30
  they
• 20:30
  have
• 20:30
  to.
• 20:31
  So
• 20:31
  that
• 20:31
  being
• 20:31
  said,
• 20:32
  the
• 20:32
  expense
• 20:33
  reduction,
• 20:34
  or
• 20:34
  at
• 20:34
  least
• 20:35
  not
• 20:35
  growing,
• 20:36
  is
• 20:36
  going
• 20:36
  to
• 20:36
  be
• 20:36
  very
• 20:37
  key
• 20:37
  to
• 20:37
  value
• 20:38
  add
• 20:38
  right
• 20:38
  now
• 20:38
  and
• 20:39
  that'll
• 20:39
  probably
• 20:39
  stay
• 20:39
  that
• 20:40
  way
• 20:40
  for
• 20:40
  the
• 20:40
  next
• 20:40
  year
• 20:40
  because
• 20:41
  many
• 20:41
  markets
• 20:42
  even
• 20:42
  outside
• 20:42
  the
• 20:42
  Sunbelt
• 20:43
  region
• 20:43
  do
• 20:43
  have
• 20:43
  a
• 20:43
  good
• 20:43
  amount
• 20:44
  of
• 20:44
  supply.
• 20:44
  That's
• 20:44
  the
• 20:44
  last
• 20:45
  of
• 20:45
  the
• 20:45
  absorbed.
• 20:45
  So
• 20:45
  keeping
• 20:46
  the
• 20:46
  expenses
• 20:46
  and
• 20:46
  the
• 20:46
  control
• 20:47
  is
• 20:47
  important.
• 20:47
  Now,
• 20:47
  there's
• 20:48
  certain
• 20:48
  things
• 20:48
  that
• 20:48
  you're
• 20:48
  not
• 20:49
  going
• 20:49
  to
• 20:49
  have
• 20:49
  a
• 20:49
  lot
• 20:49
  of
• 20:49
  control
• 20:49
  over
• 20:50
  and
• 20:50
  those
• 20:50
  are
• 20:50
  namely
• 20:50
  taxes
• 20:51
  and
• 20:51
  insurance.
• 20:52
  You
• 20:52
  still
• 20:52
  want
• 20:52
  to
• 20:52
  be
• 20:52
  aware
• 20:53
  of
• 20:53
  them
• 20:53
  because
• 20:54
  that's
• 20:54
  going
• 20:54
  to
• 20:54
  be
• 20:54
  a
• 20:54
  very
• 20:54
  important
• 20:55
  part
• 20:55
  of
• 20:55
  your
• 20:55
  decision.
• 20:56
  I
• 20:56
  don't
• 20:56
  think
• 20:56
  I've
• 20:56
  ever
• 20:56
  seen
• 20:57
  insurance
• 20:58
  influence
• 20:58
  deals
• 20:59
  like
• 20:59
  they
• 20:59
  have
• 20:59
  in
• 20:59
  the
• 20:59
  last
• 20:59
  two
• 20:59
  years,
• 21:00
  but
• 21:00
  many
• 21:00
  deals
• 21:01
  literally
• 21:01
  live
• 21:01
  and
• 21:02
  die
• 21:02
  on
• 21:02
  the
• 21:02
  insurance
• 21:02
  premiums.
• 21:03
  Yeah.
• 21:04
  And
• 21:04
  especially
• 21:04
  if
• 21:04
  you're
• 21:05
  in
• 21:05
  Florida,
• 21:05
  you
• 21:05
  know
• 21:05
  that
• 21:06
  then
• 21:06
  it
• 21:06
  can
• 21:06
  be
• 21:06
  insane.
• 21:07
  But
• 21:07
  it's
• 21:08
  become
• 21:08
  very
• 21:08
  challenging.
• 21:09
  So
• 21:09
  something
• 21:09
  you
• 21:09
  want
• 21:09
  to
• 21:09
  still
• 21:10
  be
• 21:10
  aware
• 21:10
  of.
• 21:10
  But
• 21:11
  the
• 21:11
  things
• 21:11
  that
• 21:11
  you
• 21:11
  can
• 21:12
  control,
• 21:12
  so
• 21:13
  your
• 21:13
  payroll,
• 21:13
  your
• 21:14
  repairs
• 21:14
  and
• 21:14
  maintenance,
• 21:15
  management,
• 21:15
  like
• 21:15
  Eric
• 21:16
  is
• 21:16
  saying,
• 21:16
  advertising
• 21:17
  on
• 21:17
  a
• 21:17
  lot
• 21:17
  of
• 21:18
  our
• 21:18
  properties,
• 21:19
  One
• 21:19
  thing
• 21:19
  we've
• 21:19
  done,
• 21:19
  and
• 21:20
  hopefully,
• 21:20
  hopefully
• 21:20
  the
• 21:21
  good
• 21:21
  people
• 21:21
  at
• 21:21
  Coastal
• 21:21
  aren't
• 21:22
  listening
• 21:22
  as
• 21:22
  I
• 21:22
  say
• 21:22
  this,
• 21:22
  but
• 21:22
  we've
• 21:23
  cut
• 21:23
  Apartments.com,
• 21:24
  out
• 21:24
  because
• 21:24
  we
• 21:24
  haven't
• 21:25
  found
• 21:25
  it
• 21:26
  to
• 21:26
  be
• 21:26
  a
• 21:26
  good
• 21:27
  value.
• 21:27
  We
• 21:27
  found
• 21:27
  we
• 21:28
  were
• 21:28
  spending
• 21:28
  a
• 21:28
  lot
• 21:28
  of
• 21:28
  money,
• 21:29
  we
• 21:29
  weren't
• 21:29
  getting
• 21:29
  a
• 21:29
  lot
• 21:29
  of
• 21:30
  leads
• 21:30
  that
• 21:30
  were
• 21:30
  actually
• 21:30
  converting
• 21:31
  and
• 21:32
  it
• 21:32
  didn't
• 21:32
  make
• 21:32
  sense.
• 21:33
  So
• 21:33
  it's
• 21:33
  like,
• 21:33
  okay,
• 21:33
  well
• 21:34
  you
• 21:34
  know,
• 21:34
  if
• 21:34
  we
• 21:34
  can't
• 21:35
  justify
• 21:35
  that
• 21:35
  8,
• 21:36
  $900
• 21:37
  expense,
• 21:37
  $1,000
• 21:38
  expense
• 21:38
  a
• 21:38
  month,
• 21:39
  it's
• 21:39
  time
• 21:39
  to
• 21:39
  get
• 21:39
  rid
• 21:39
  of
• 21:40
  it.
• 21:40
  One
• 21:40
  of
• 21:40
  the
• 21:40
  reasons
• 21:40
  that
• 21:41
  48
• 21:41
  year
• 21:41
  property
• 21:42
  works
• 21:42
  so
• 21:42
  well
• 21:42
  that
• 21:42
  I
• 21:43
  just
• 21:43
  talked
• 21:43
  about
• 21:43
  is
• 21:44
  because
• 21:44
  aside
• 21:44
  from
• 21:44
  increasing
• 21:45
  the
• 21:45
  income,
• 21:45
  we
• 21:46
  found
• 21:46
  the
• 21:46
  management
• 21:47
  company
• 21:47
  that
• 21:48
  already
• 21:48
  had
• 21:48
  some
• 21:48
  other
• 21:49
  properties
• 21:49
  they
• 21:49
  were
• 21:49
  managing
• 21:49
  in
• 21:50
  the
• 21:50
  area
• 21:50
  because
• 21:50
  at
• 21:50
  48
• 21:51
  units,
• 21:51
  that
• 21:51
  property
• 21:52
  is
• 21:52
  not
• 21:52
  big
• 21:52
  enough
• 21:52
  to
• 21:52
  support
• 21:53
  staff,
• 21:54
  full
• 21:54
  time
• 21:54
  staff
• 21:54
  anyway.
• 21:55
  But
• 21:55
  because
• 21:56
  they
• 21:56
  had
• 21:56
  other
• 21:56
  properties,
• 21:57
  we
• 21:57
  were
• 21:57
  able
• 21:57
  to
• 21:58
  get
• 21:58
  the
• 21:58
  benefit
• 21:58
  of
• 21:58
  a
• 21:58
  full
• 21:59
  time
• 21:59
  manager
• 22:00
  without
• 22:00
  the
• 22:00
  cost
• 22:00
  because
• 22:01
  that
• 22:01
  course
• 22:01
  was
• 22:01
  split
• 22:02
  amongst
• 22:02
  the
• 22:02
  different
• 22:02
  properties
• 22:03
  and
• 22:03
  we
• 22:03
  only
• 22:03
  had
• 22:03
  to
• 22:03
  pay
• 22:03
  a
• 22:04
  small
• 22:04
  piece
• 22:04
  of
• 22:04
  it.
• 22:05
  So
• 22:05
  that
• 22:05
  gave
• 22:05
  us,
• 22:06
  you
• 22:06
  know,
• 22:06
  a
• 22:06
  higher
• 22:07
  quality
• 22:07
  person
• 22:07
  because
• 22:07
  when
• 22:08
  you
• 22:08
  get
• 22:08
  a
• 22:08
  full
• 22:08
  time
• 22:08
  person,
• 22:08
  it's
• 22:09
  always
• 22:09
  going
• 22:09
  to
• 22:09
  be
• 22:09
  higher
• 22:09
  quality
• 22:10
  than
• 22:10
  part
• 22:10
  time.
• 22:11
  And
• 22:11
  it
• 22:11
  gave
• 22:11
  us
• 22:11
  the
• 22:12
  benefit
• 22:12
  of
• 22:12
  not
• 22:13
  having
• 22:13
  to
• 22:13
  pay
• 22:13
  for
• 22:13
  that.
• 22:14
  That
• 22:14
  person,
• 22:14
  the
• 22:14
  property
• 22:15
  wouldn't
• 22:15
  have
• 22:15
  supported
• 22:16
  it.
• 22:16
  So
• 22:17
  things
• 22:17
  like
• 22:17
  that
• 22:17
  help
• 22:18
  you
• 22:18
  run
• 22:18
  your
• 22:18
  properties
• 22:19
  more
• 22:19
  effectively
• 22:19
  and
• 22:20
  the
• 22:20
  things
• 22:20
  that
• 22:20
  you
• 22:20
  want
• 22:20
  to
• 22:21
  keep
• 22:21
  in
• 22:21
  mind
• 22:21
  when
• 22:21
  you're
• 22:21
  evaluating
• 22:22
  deals
• 22:22
  and
• 22:23
  it
• 22:23
  sounds.
• 22:23
  Like
• 22:23
  that's,
• 22:23
  that
• 22:24
  was
• 22:24
  a
• 22:24
  really
• 22:24
  good
• 22:24
  relationship.
• 22:25
  You
• 22:25
  and
• 22:26
  I
• 22:26
  find
• 22:26
  that
• 22:26
  relationships,
• 22:27
  especially
• 22:27
  with
• 22:27
  property
• 22:28
  managers,
• 22:28
  are
• 22:29
  very
• 22:29
  key
• 22:30
  in
• 22:30
  reducing
• 22:30
  your
• 22:30
  operating
• 22:31
  expenses.
• 22:32
  For
• 22:32
  instance,
• 22:33
  somebody
• 22:33
  I
• 22:33
  know
• 22:33
  in
• 22:34
  Florida
• 22:34
  on
• 22:34
  that
• 22:35
  same,
• 22:35
  actually
• 22:35
  120
• 22:36
  unit
• 22:36
  in
• 22:36
  Destin,
• 22:37
  because
• 22:37
  of
• 22:37
  the
• 22:38
  property
• 22:38
  manager
• 22:38
  relationship
• 22:39
  they
• 22:39
  had,
• 22:39
  they
• 22:39
  were
• 22:39
  able
• 22:40
  to
• 22:40
  get
• 22:41
  basically
• 22:41
  their
• 22:42
  property
• 22:42
  insurance
• 22:43
  under
• 22:43
  the
• 22:43
  property
• 22:44
  manager's
• 22:44
  master
• 22:45
  policy.
• 22:45
  What
• 22:46
  ended
• 22:46
  up
• 22:46
  happening
• 22:46
  is
• 22:47
  not
• 22:47
  only
• 22:48
  did
• 22:48
  that
• 22:48
  policy
• 22:49
  cover
• 22:49
  the
• 22:49
  building
• 22:50
  better
• 22:50
  than
• 22:50
  the
• 22:50
  previous
• 22:51
  policy
• 22:51
  with
• 22:51
  the
• 22:51
  previous
• 22:52
  owner,
• 22:53
  however,
• 22:53
  it
• 22:53
  also
• 22:53
  reduced
• 22:54
  their
• 22:55
  annual
• 22:55
  expense
• 22:56
  on
• 22:56
  insurance
• 22:56
  by
• 22:57
  almost
• 22:57
  30%.
• 22:58
  And
• 22:58
  that
• 22:58
  was
• 22:59
  just.
• 22:59
  And
• 22:59
  so
• 22:59
  that
• 23:00
  again
• 23:00
  is,
• 23:00
  you
• 23:01
  know,
• 23:01
  can
• 23:01
  make
• 23:01
  or
• 23:01
  break
• 23:01
  a
• 23:02
  deal,
• 23:02
  that
• 23:02
  type
• 23:03
  of
• 23:03
  reduction
• 23:03
  in
• 23:04
  something
• 23:04
  like
• 23:04
  property
• 23:05
  insurance
• 23:05
  in
• 23:05
  Florida.
• 23:06
  So
• 23:06
  that
• 23:07
  relationship
• 23:07
  with
• 23:08
  the
• 23:08
  manager
• 23:08
  is
• 23:08
  why
• 23:09
  that
• 23:09
  was
• 23:09
  able
• 23:09
  to
• 23:09
  be
• 23:09
  accomplished,
• 23:10
  kind
• 23:10
  of
• 23:10
  like
• 23:10
  with
• 23:10
  you.
• 23:11
  So
• 23:11
  your
• 23:11
  relationships
• 23:12
  matter
• 23:12
  a
• 23:12
  lot,
• 23:12
  that's
• 23:13
  for
• 23:13
  sure.
• 23:13
  Right?
• 23:14
  Totally
• 23:14
  does.
• 23:15
  So
• 23:15
  what
• 23:15
  else
• 23:15
  do
• 23:15
  you
• 23:15
  need
• 23:16
  to
• 23:16
  be
• 23:16
  looking
• 23:16
  at
• 23:16
  when
• 23:16
  you're
• 23:17
  evaluating
• 23:17
  multifamily
• 23:18
  property?
• 23:18
  Well,
• 23:19
  how
• 23:19
  about
• 23:19
  local
• 23:19
  regulations
• 23:20
  and
• 23:20
  zoning
• 23:20
  considerations?
• 23:21
  So,
• 23:22
  you
• 23:22
  know,
• 23:22
  sometimes
• 23:23
  depending
• 23:23
  on,
• 23:24
  on
• 23:24
  the
• 23:24
  property,
• 23:24
  like
• 23:24
  Erica
• 23:25
  mentioned,
• 23:25
  you
• 23:25
  might
• 23:26
  be
• 23:26
  able
• 23:26
  to
• 23:26
  have
• 23:27
  certain
• 23:27
  arrangements
• 23:27
  where
• 23:27
  you
• 23:28
  have
• 23:28
  affordability.
• 23:29
  That
• 23:29
  means
• 23:29
  you
• 23:29
  have
• 23:29
  to
• 23:29
  rent
• 23:30
  many
• 23:30
  times
• 23:30
  to
• 23:31
  certain
• 23:31
  demographics.
• 23:32
  So
• 23:32
  you
• 23:32
  need
• 23:32
  to
• 23:32
  be
• 23:32
  aware
• 23:32
  of
• 23:33
  that.
• 23:33
  Because
• 23:33
  if
• 23:33
  you're
• 23:34
  planning
• 23:34
  to
• 23:34
  go
• 23:34
  in
• 23:34
  there
• 23:34
  and
• 23:34
  operate
• 23:35
  the
• 23:35
  property
• 23:35
  differently,
• 23:36
  but
• 23:36
  you're
• 23:36
  not
• 23:36
  allowed
• 23:37
  to
• 23:37
  do
• 23:37
  that.
• 23:37
  It's
• 23:37
  something
• 23:38
  you
• 23:38
  have
• 23:38
  to
• 23:38
  consider.
• 23:39
  You
• 23:39
  don't
• 23:39
  want
• 23:39
  to
• 23:39
  be
• 23:39
  doing
• 23:40
  something
• 23:40
  that's
• 23:40
  going
• 23:40
  to
• 23:40
  land
• 23:40
  you
• 23:41
  in
• 23:41
  hot
• 23:41
  water
• 23:41
  and
• 23:41
  that's
• 23:41
  going
• 23:41
  to
• 23:42
  get
• 23:42
  you
• 23:42
  penalties
• 23:42
  or
• 23:43
  violations
• 23:43
  or
• 23:43
  worse
• 23:44
  yet,
• 23:44
  jail
• 23:44
  time.
• 23:45
  Make
• 23:45
  sure
• 23:45
  that
• 23:45
  you're
• 23:45
  understanding
• 23:46
  any,
• 23:47
  any
• 23:47
  restrictions
• 23:47
  that
• 23:48
  are
• 23:48
  on
• 23:48
  the
• 23:48
  property.
• 23:49
  Some
• 23:49
  properties
• 23:49
  have
• 23:49
  what
• 23:50
  they
• 23:50
  call
• 23:50
  a
• 23:50
  Laura
• 23:51
  Land
• 23:51
  use
• 23:51
  restriction
• 23:52
  agreement.
• 23:53
  And
• 23:54
  what
• 23:54
  that
• 23:54
  does
• 23:54
  is
• 23:54
  it,
• 23:55
  it
• 23:55
  tells
• 23:55
  you,
• 23:55
  okay,
• 23:56
  you
• 23:56
  can
• 23:56
  rent
• 23:56
  so
• 23:57
  many
• 23:57
  units
• 23:57
  to
• 23:57
  people
• 23:58
  that
• 23:58
  make
• 23:58
  this
• 23:58
  type
• 23:58
  of
• 23:58
  income,
• 23:59
  or
• 23:59
  maybe
• 24:00
  it's
• 24:00
  a
• 24:00
  senior
• 24:01
  community
• 24:01
  where
• 24:01
  it's,
• 24:02
  you
• 24:02
  have
• 24:02
  to
• 24:02
  rent
• 24:02
  the
• 24:03
  people
• 24:03
  who
• 24:03
  are
• 24:03
  55
• 24:03
  and
• 24:04
  above.
• 24:04
  So
• 24:04
  you
• 24:05
  have
• 24:05
  to
• 24:05
  understand
• 24:05
  these
• 24:05
  things
• 24:06
  because
• 24:06
  they're
• 24:06
  going
• 24:07
  to
• 24:07
  dictate
• 24:07
  what
• 24:07
  you
• 24:08
  can
• 24:08
  and
• 24:08
  can't
• 24:08
  do
• 24:09
  with
• 24:09
  these
• 24:09
  different
• 24:09
  properties.
• 24:10
  Yeah,
• 24:10
  I
• 24:10
  think
• 24:11
  for
• 24:11
  instance,
• 24:11
  with
• 24:12
  like
• 24:12
  the
• 24:12
  lihtc,
• 24:12
  the
• 24:13
  low
• 24:13
  income
• 24:13
  housing
• 24:13
  Tax
• 24:14
  credit.
• 24:14
  I
• 24:14
  think
• 24:14
  a
• 24:14
  lot
• 24:14
  of
• 24:14
  investors
• 24:15
  were
• 24:16
  excited
• 24:16
  at
• 24:17
  first
• 24:17
  and
• 24:17
  so
• 24:18
  a
• 24:18
  lot
• 24:18
  of
• 24:18
  my
• 24:18
  investors
• 24:19
  were,
• 24:19
  you
• 24:19
  know,
• 24:19
  bringing
• 24:19
  it
• 24:20
  up
• 24:20
  and
• 24:20
  they
• 24:20
  wanted
• 24:20
  to
• 24:20
  target
• 24:21
  properties
• 24:21
  with
• 24:21
  that.
• 24:22
  I
• 24:22
  think
• 24:22
  after
• 24:22
  realizing
• 24:23
  that
• 24:23
  on
• 24:23
  a
• 24:23
  lot
• 24:23
  of
• 24:24
  properties
• 24:24
  that
• 24:24
  it's
• 24:24
  on
• 24:25
  here
• 24:25
  in
• 24:25
  my
• 24:25
  area
• 24:25
  at
• 24:25
  least
• 24:26
  it
• 24:26
  doesn't
• 24:26
  lift
• 24:26
  until
• 24:27
  2029.
• 24:28
  And
• 24:28
  these
• 24:28
  are
• 24:29
  syndicators
• 24:29
  that
• 24:30
  are
• 24:30
  looking
• 24:30
  to
• 24:30
  do,
• 24:30
  you
• 24:31
  know,
• 24:31
  that
• 24:31
  that
• 24:31
  value
• 24:32
  add
• 24:32
  to
• 24:32
  the
• 24:32
  property
• 24:33
  and
• 24:33
  typically
• 24:34
  have
• 24:34
  like
• 24:34
  a
• 24:34
  5
• 24:34
  year
• 24:35
  exit
• 24:35
  strategy.
• 24:36
  The
• 24:36
  credit
• 24:36
  not
• 24:36
  being
• 24:37
  lifted
• 24:37
  until
• 24:37
  2029
• 24:38
  didn't
• 24:38
  make
• 24:38
  them
• 24:38
  as
• 24:39
  excited
• 24:39
  to
• 24:39
  move
• 24:39
  forward
• 24:39
  on
• 24:40
  those
• 24:40
  properties
• 24:40
  just
• 24:40
  yet.
• 24:41
  And
• 24:41
  so,
• 24:42
  and
• 24:42
  also
• 24:42
  there's
• 24:43
  no
• 24:43
  guarantee
• 24:44
  necessarily
• 24:45
  that
• 24:45
  it
• 24:45
  will
• 24:45
  lift
• 24:46
  at
• 24:46
  that
• 24:46
  time,
• 24:46
  you
• 24:46
  know,
• 24:47
  because
• 24:47
  it
• 24:47
  is,
• 24:47
  it
• 24:47
  is
• 24:48
  government.
• 24:48
  So
• 24:48
  you're,
• 24:49
  you're
• 24:49
  also,
• 24:49
  you
• 24:49
  know,
• 24:50
  basing
• 24:50
  it
• 24:50
  off
• 24:50
  of
• 24:50
  something
• 24:50
  that
• 24:51
  you
• 24:51
  can't
• 24:51
  necessarily
• 24:51
  guarantee
• 24:52
  will
• 24:52
  happen.
• 24:53
  So
• 24:53
  I
• 24:54
  think
• 24:54
  that
• 24:54
  those
• 24:54
  will
• 24:54
  become
• 24:55
  opportunities
• 24:55
  that
• 24:56
  people
• 24:56
  will
• 24:56
  start
• 24:56
  taking
• 24:57
  advantage
• 24:57
  of,
• 24:57
  you
• 24:58
  know,
• 24:58
  probably
• 24:58
  within
• 24:59
  two
• 24:59
  to
• 24:59
  three
• 24:59
  years.
• 24:59
  But
• 25:00
  for
• 25:00
  right
• 25:00
  now,
• 25:00
  understanding
• 25:01
  how
• 25:01
  it
• 25:01
  truly
• 25:02
  kind
• 25:02
  of
• 25:02
  factors
• 25:03
  into
• 25:03
  your
• 25:03
  underwriting,
• 25:04
  a
• 25:04
  lot
• 25:04
  of
• 25:04
  my
• 25:04
  investors
• 25:05
  are
• 25:05
  holding
• 25:05
  off
• 25:05
  on
• 25:06
  those
• 25:06
  types
• 25:06
  of
• 25:06
  things
• 25:06
  right
• 25:07
  now,
• 25:07
  like
• 25:07
  the
• 25:07
  LI
• 25:07
  Tech
• 25:08
  in
• 25:08
  particular.
• 25:08
  So
• 25:09
  definitely
• 25:09
  things
• 25:09
  to
• 25:10
  consider
• 25:10
  when
• 25:10
  you're
• 25:11
  looking
• 25:11
  at
• 25:11
  a
• 25:11
  property.
• 25:11
  How
• 25:11
  does
• 25:12
  it
• 25:12
  impact
• 25:12
  your
• 25:12
  underwriting
• 25:13
  and
• 25:13
  your
• 25:13
  cash
• 25:13
  flow
• 25:14
  and
• 25:14
  is
• 25:14
  it
• 25:14
  something
• 25:14
  that
• 25:15
  is
• 25:15
  beneficial
• 25:16
  to
• 25:16
  your
• 25:16
  exit
• 25:17
  strategy
• 25:17
  or
• 25:17
  is
• 25:17
  it
• 25:18
  something
• 25:18
  that
• 25:18
  could
• 25:18
  hinder
• 25:18
  you?
• 25:19
  Right,
• 25:19
  so
• 25:20
  then
• 25:20
  another
• 25:20
  thing
• 25:20
  we
• 25:20
  touched
• 25:21
  on
• 25:21
  this
• 25:21
  already,
• 25:21
  but
• 25:22
  we'll
• 25:22
  go
• 25:22
  in
• 25:22
  a
• 25:22
  little
• 25:22
  bit
• 25:23
  further,
• 25:23
  is
• 25:23
  assessing
• 25:24
  your
• 25:24
  property
• 25:24
  management
• 25:25
  options.
• 25:26
  So,
• 25:26
  you
• 25:26
  know,
• 25:26
  a
• 25:27
  lot
• 25:27
  of
• 25:27
  people
• 25:28
  say
• 25:28
  that
• 25:28
  you
• 25:28
  want
• 25:28
  to
• 25:28
  use
• 25:29
  third
• 25:29
  party
• 25:29
  management
• 25:30
  and
• 25:30
  I'm
• 25:31
  not
• 25:31
  going
• 25:31
  to
• 25:32
  say
• 25:32
  that's,
• 25:33
  that's
• 25:33
  wrong,
• 25:33
  but
• 25:34
  I
• 25:34
  will
• 25:34
  say
• 25:34
  it's
• 25:35
  not
• 25:35
  right
• 25:35
  either.
• 25:35
  It
• 25:35
  depends
• 25:36
  on
• 25:36
  your
• 25:36
  situation
• 25:37
  and
• 25:37
  that's
• 25:37
  going
• 25:37
  to
• 25:37
  be
• 25:38
  a
• 25:38
  little
• 25:38
  bit
• 25:38
  different
• 25:38
  for
• 25:38
  everybody
• 25:39
  and
• 25:39
  what
• 25:39
  they
• 25:39
  want
• 25:39
  out
• 25:39
  of
• 25:39
  the
• 25:40
  property.
• 25:40
  If
• 25:40
  you
• 25:40
  want
• 25:40
  to
• 25:40
  maximize
• 25:41
  revenue,
• 25:42
  sometimes
• 25:42
  you
• 25:42
  could
• 25:43
  actually
• 25:43
  do
• 25:43
  that
• 25:43
  better
• 25:44
  managing
• 25:44
  yourself
• 25:45
  than
• 25:45
  you
• 25:45
  could
• 25:45
  with
• 25:45
  third
• 25:45
  party
• 25:46
  management.
• 25:46
  Not
• 25:47
  always.
• 25:47
  If
• 25:47
  your
• 25:47
  goal
• 25:47
  is
• 25:48
  to
• 25:48
  be
• 25:48
  more
• 25:48
  passive
• 25:48
  and
• 25:49
  to
• 25:49
  have
• 25:49
  time,
• 25:50
  then
• 25:50
  you
• 25:50
  probably
• 25:50
  don't
• 25:50
  want
• 25:51
  to
• 25:51
  be
• 25:51
  self
• 25:51
  managing
• 25:51
  because
• 25:52
  you're
• 25:52
  going
• 25:52
  to
• 25:52
  be
• 25:52
  spending
• 25:52
  a
• 25:52
  lot
• 25:53
  of
• 25:53
  time
• 25:53
  managing
• 25:54
  property.
• 25:55
  It's
• 25:56
  not
• 25:56
  a
• 25:56
  job
• 25:56
  for
• 25:56
  the
• 25:56
  week.
• 25:57
  So
• 25:57
  you
• 25:57
  got
• 25:57
  to
• 25:57
  be
• 25:57
  prepared
• 25:58
  for
• 25:58
  that
• 25:58
  and
• 25:58
  realize
• 25:58
  that
• 25:59
  it's
• 25:59
  sometimes
• 25:59
  a
• 26:00
  thankless
• 26:00
  job.
• 26:00
  So
• 26:00
  you
• 26:01
  need
• 26:01
  to
• 26:01
  understand
• 26:02
  what
• 26:02
  you
• 26:02
  want
• 26:02
  out
• 26:02
  of
• 26:03
  the
• 26:03
  investment.
• 26:03
  Do
• 26:03
  you
• 26:03
  want
• 26:03
  time,
• 26:04
  do
• 26:04
  you
• 26:04
  want
• 26:04
  money,
• 26:04
  do
• 26:05
  you
• 26:05
  want
• 26:05
  kind
• 26:05
  of
• 26:05
  a
• 26:05
  balance
• 26:06
  and
• 26:07
  are
• 26:07
  there
• 26:07
  good
• 26:07
  management
• 26:08
  options
• 26:09
  for
• 26:09
  this
• 26:09
  property
• 26:09
  in
• 26:10
  this
• 26:10
  area?
• 26:10
  So
• 26:11
  in
• 26:11
  my
• 26:11
  experience,
• 26:11
  what
• 26:12
  I
• 26:12
  find
• 26:12
  is
• 26:12
  that
• 26:12
  it's
• 26:13
  a
• 26:13
  lot
• 26:13
  easier
• 26:13
  to
• 26:14
  find
• 26:14
  property
• 26:15
  management
• 26:15
  companies
• 26:15
  who
• 26:15
  want
• 26:15
  to
• 26:16
  manage
• 26:16
  larger
• 26:16
  properties
• 26:17
  with
• 26:17
  staff,
• 26:18
  let's
• 26:18
  say
• 26:18
  100
• 26:18
  units
• 26:19
  or
• 26:19
  above,
• 26:19
  and
• 26:19
  also
• 26:20
  even
• 26:20
  smaller
• 26:21
  properties,
• 26:21
  maybe
• 26:22
  a
• 26:22
  duplex
• 26:22
  or
• 26:22
  triplex
• 26:23
  or
• 26:23
  fourplex.
• 26:23
  Because
• 26:24
  a
• 26:24
  lot
• 26:24
  of
• 26:24
  the
• 26:24
  management
• 26:24
  companies
• 26:25
  who
• 26:25
  do
• 26:25
  single
• 26:26
  family
• 26:26
  would
• 26:26
  also
• 26:26
  do
• 26:27
  those
• 26:27
  types
• 26:27
  of
• 26:27
  properties
• 26:28
  and
• 26:28
  they
• 26:28
  might
• 26:28
  be
• 26:28
  a
• 26:29
  good
• 26:29
  fit
• 26:29
  for
• 26:29
  them.
• 26:29
  But
• 26:29
  it's
• 26:30
  very
• 26:30
  tough
• 26:30
  to
• 26:30
  find
• 26:30
  good
• 26:31
  management
• 26:31
  options
• 26:31
  in
• 26:32
  like
• 26:32
  that
• 26:32
  medium
• 26:32
  sized
• 26:32
  space,
• 26:33
  like
• 26:33
  20
• 26:33
  to
• 26:33
  80
• 26:34
  units,
• 26:34
  because
• 26:34
  it
• 26:35
  kind
• 26:35
  of
• 26:35
  falls
• 26:35
  into
• 26:35
  a
• 26:35
  gray
• 26:36
  area.
• 26:36
  And
• 26:37
  like
• 26:37
  in
• 26:37
  our
• 26:37
  case
• 26:37
  with
• 26:37
  that
• 26:38
  48
• 26:38
  unit
• 26:38
  deal
• 26:38
  worked
• 26:39
  because
• 26:39
  we
• 26:39
  happened
• 26:40
  to
• 26:40
  find
• 26:40
  the
• 26:40
  company
• 26:41
  that
• 26:41
  was
• 26:41
  already
• 26:41
  in
• 26:41
  the
• 26:41
  area,
• 26:41
  they
• 26:42
  had
• 26:42
  other
• 26:42
  properties
• 26:43
  and
• 26:43
  there
• 26:43
  were
• 26:43
  benefits
• 26:44
  we
• 26:44
  could
• 26:44
  get.
• 26:44
  But
• 26:45
  you
• 26:45
  don't
• 26:45
  always
• 26:45
  get
• 26:45
  that
• 26:45
  lucky.
• 26:46
  Like
• 26:46
  if
• 26:46
  we
• 26:46
  didn't
• 26:46
  find
• 26:47
  that
• 26:47
  that
• 26:47
  option,
• 26:48
  there
• 26:48
  may
• 26:48
  not
• 26:48
  really
• 26:48
  have
• 26:48
  been
• 26:49
  another
• 26:49
  good
• 26:49
  fit,
• 26:50
  which
• 26:50
  means
• 26:50
  that
• 26:51
  you're
• 26:51
  hiring
• 26:51
  somebody
• 26:51
  who's
• 26:52
  not
• 26:52
  really
• 26:52
  equipped
• 26:52
  to
• 26:52
  do
• 26:53
  the
• 26:53
  job.
• 26:53
  And
• 26:53
  while
• 26:54
  it's
• 26:54
  good
• 26:54
  to
• 26:54
  have
• 26:54
  third
• 26:55
  party
• 26:55
  management,
• 26:55
  sometimes,
• 26:56
  sometimes
• 26:56
  it
• 26:56
  can
• 26:57
  actually
• 26:57
  shoot
• 26:57
  you
• 26:57
  in
• 26:57
  the
• 26:57
  foot.
• 26:57
  So
• 26:58
  you
• 26:58
  need
• 26:58
  to
• 26:58
  assess
• 26:59
  what
• 26:59
  options
• 26:59
  you
• 26:59
  have
• 27:00
  and
• 27:00
  how
• 27:01
  easy
• 27:01
  or
• 27:02
  difficult
• 27:02
  it's
• 27:03
  going
• 27:03
  to
• 27:03
  be
• 27:03
  for
• 27:03
  you
• 27:03
  to
• 27:03
  actually
• 27:04
  manage
• 27:04
  that
• 27:04
  property
• 27:04
  once
• 27:05
  you
• 27:05
  buy
• 27:05
  it.
• 27:05
  Absolutely.
• 27:06
  And
• 27:06
  I
• 27:07
  think
• 27:07
  that
• 27:07
  even,
• 27:07
  you
• 27:08
  know,
• 27:08
  being
• 27:08
  diligent
• 27:08
  on
• 27:09
  the
• 27:09
  front
• 27:09
  end
• 27:09
  to
• 27:09
  ensure
• 27:10
  that
• 27:10
  you
• 27:10
  have
• 27:10
  the
• 27:10
  right
• 27:10
  property
• 27:11
  manager
• 27:11
  and
• 27:12
  also,
• 27:12
  you
• 27:12
  know,
• 27:13
  making
• 27:13
  sure
• 27:13
  that
• 27:14
  you're
• 27:14
  holding
• 27:14
  them
• 27:14
  accountable
• 27:15
  and
• 27:15
  that
• 27:15
  you
• 27:16
  have
• 27:16
  KPIs
• 27:17
  that
• 27:17
  are
• 27:17
  measured
• 27:18
  and
• 27:18
  that
• 27:18
  that
• 27:18
  property
• 27:19
  manager
• 27:19
  is
• 27:19
  held
• 27:19
  accountable
• 27:20
  to
• 27:20
  KPIs,
• 27:21
  I
• 27:21
  think
• 27:21
  that
• 27:22
  there's
• 27:22
  so
• 27:22
  many
• 27:22
  times
• 27:22
  that
• 27:23
  people
• 27:23
  will
• 27:23
  hire
• 27:23
  a
• 27:23
  property
• 27:24
  manager
• 27:24
  and
• 27:24
  just
• 27:24
  think,
• 27:24
  okay,
• 27:25
  we're
• 27:25
  good
• 27:25
  to
• 27:25
  go
• 27:25
  and
• 27:26
  don't
• 27:26
  realize
• 27:26
  that
• 27:27
  maybe
• 27:27
  something's
• 27:27
  going
• 27:28
  wrong
• 27:28
  until
• 27:28
  for
• 27:28
  instance
• 27:29
  the,
• 27:29
  you
• 27:29
  know,
• 27:30
  there's
• 27:30
  now
• 27:30
  higher
• 27:31
  vacancy
• 27:31
  rates
• 27:32
  and
• 27:32
  potentially
• 27:33
  now
• 27:33
  you
• 27:33
  have
• 27:34
  delinquencies
• 27:34
  on,
• 27:35
  rent
• 27:35
  are
• 27:35
  going
• 27:36
  up
• 27:36
  and
• 27:36
  you're
• 27:36
  like
• 27:37
  wait
• 27:37
  a
• 27:37
  min.
• 27:37
  What's
• 27:37
  happening?
• 27:38
  When
• 27:38
  you
• 27:38
  see
• 27:38
  it
• 27:38
  in
• 27:39
  your
• 27:39
  reporting,
• 27:40
  you
• 27:40
  know,
• 27:40
  on
• 27:40
  a
• 27:40
  monthly
• 27:41
  basis
• 27:41
  or
• 27:42
  an
• 27:42
  annual
• 27:42
  basis.
• 27:42
  So
• 27:42
  it's
• 27:43
  like
• 27:43
  by
• 27:43
  that
• 27:43
  time
• 27:44
  you,
• 27:44
  it's
• 27:45
  already,
• 27:45
  you
• 27:46
  know,
• 27:46
  you
• 27:46
  should
• 27:46
  have
• 27:46
  already
• 27:46
  intervened.
• 27:47
  And
• 27:48
  so
• 27:48
  making
• 27:48
  sure
• 27:48
  to
• 27:48
  hire
• 27:48
  the
• 27:49
  right
• 27:49
  person,
• 27:49
  be
• 27:50
  proactive
• 27:50
  in
• 27:50
  that
• 27:50
  relationship
• 27:51
  and
• 27:51
  also
• 27:51
  making
• 27:52
  sure
• 27:52
  to
• 27:52
  hold
• 27:52
  it
• 27:53
  accountable,
• 27:53
  you
• 27:54
  know,
• 27:54
  to
• 27:54
  make
• 27:54
  sure
• 27:54
  it
• 27:54
  can
• 27:54
  be
• 27:54
  a
• 27:55
  long
• 27:55
  term
• 27:55
  relationship
• 27:56
  as
• 27:56
  you're
• 27:56
  scaling
• 27:57
  into
• 27:57
  other
• 27:57
  properties
• 27:57
  even
• 27:58
  I
• 27:58
  think
• 27:58
  is
• 27:58
  also
• 27:59
  really,
• 27:59
  really
• 27:59
  important
• 28:00
  for
• 28:00
  property
• 28:00
  managers.
• 28:01
  Right.
• 28:01
  And
• 28:02
  something
• 28:02
  else.
• 28:03
  You
• 28:03
  ideally
• 28:04
  you
• 28:04
  want
• 28:04
  to
• 28:04
  be
• 28:04
  buying
• 28:05
  properties
• 28:05
  in
• 28:06
  an
• 28:06
  area
• 28:06
  where
• 28:06
  you
• 28:06
  have
• 28:07
  multiple
• 28:07
  property
• 28:07
  management
• 28:08
  options.
• 28:09
  So
• 28:09
  if
• 28:09
  you're
• 28:09
  reliant
• 28:10
  on
• 28:10
  one
• 28:10
  management
• 28:11
  company
• 28:11
  and
• 28:11
  you
• 28:11
  find
• 28:12
  them
• 28:12
  and
• 28:12
  you
• 28:12
  can't
• 28:12
  find
• 28:12
  somebody
• 28:13
  else
• 28:13
  to
• 28:13
  manage
• 28:13
  that
• 28:13
  property,
• 28:14
  whether
• 28:14
  you
• 28:14
  want
• 28:15
  to
• 28:15
  or
• 28:15
  not,
• 28:15
  you're
• 28:15
  going
• 28:16
  to
• 28:16
  be
• 28:16
  managing
• 28:16
  yourself,
• 28:17
  so
• 28:17
  you
• 28:17
  got
• 28:17
  to
• 28:17
  keep
• 28:17
  that
• 28:17
  in
• 28:17
  mind.
• 28:18
  So
• 28:18
  make
• 28:19
  sure
• 28:19
  it's
• 28:19
  an
• 28:19
  area
• 28:20
  that
• 28:20
  has
• 28:20
  different
• 28:20
  options.
• 28:21
  You
• 28:21
  never
• 28:21
  want
• 28:21
  to
• 28:21
  be
• 28:22
  beholden
• 28:22
  to
• 28:22
  any
• 28:22
  one
• 28:22
  person
• 28:23
  or
• 28:23
  company.
• 28:24
  And
• 28:24
  also
• 28:24
  make
• 28:25
  sure
• 28:25
  when
• 28:25
  you're
• 28:25
  interviewing
• 28:25
  management
• 28:26
  companies,
• 28:26
  one
• 28:26
  of
• 28:26
  the
• 28:26
  things
• 28:27
  you
• 28:27
  want
• 28:27
  to
• 28:27
  ask
• 28:27
  is
• 28:28
  have
• 28:28
  they
• 28:28
  managed
• 28:28
  properties
• 28:29
  similar
• 28:29
  to
• 28:29
  yours?
• 28:30
  So
• 28:30
  if
• 28:30
  you're
• 28:30
  buying
• 28:31
  a
• 28:31
  15
• 28:31
  unit
• 28:32
  property
• 28:32
  in
• 28:32
  a
• 28:32
  tertiary
• 28:33
  market,
• 28:33
  you
• 28:34
  don't
• 28:34
  want
• 28:34
  a
• 28:34
  management
• 28:34
  company
• 28:34
  that
• 28:35
  manages
• 28:35
  a
• 28:35
  class
• 28:35
  properties
• 28:36
  in
• 28:36
  the
• 28:36
  best
• 28:36
  area
• 28:36
  of
• 28:36
  the
• 28:37
  city
• 28:37
  that's
• 28:37
  not
• 28:37
  the
• 28:37
  right
• 28:38
  fit
• 28:38
  for
• 28:38
  you
• 28:38
  because
• 28:39
  they're
• 28:39
  not
• 28:39
  going
• 28:39
  to
• 28:40
  most
• 28:40
  times
• 28:40
  they're
• 28:40
  not
• 28:40
  going
• 28:41
  to
• 28:41
  do
• 28:41
  the
• 28:41
  same
• 28:41
  job
• 28:42
  at
• 28:42
  that
• 28:42
  type
• 28:42
  of
• 28:42
  property.
• 28:43
  Now
• 28:43
  there
• 28:43
  are
• 28:44
  some
• 28:44
  companies
• 28:44
  that
• 28:44
  manage
• 28:45
  different
• 28:45
  asset
• 28:45
  classes
• 28:46
  and
• 28:46
  different
• 28:46
  sizes,
• 28:47
  but
• 28:47
  what
• 28:48
  you'll
• 28:48
  find
• 28:48
  is
• 28:48
  most
• 28:48
  companies
• 28:49
  generally,
• 28:50
  if
• 28:50
  they're
• 28:50
  smart,
• 28:50
  they
• 28:50
  know
• 28:51
  their
• 28:51
  niche
• 28:51
  and
• 28:52
  they
• 28:52
  know
• 28:52
  what
• 28:52
  they
• 28:52
  do
• 28:52
  very
• 28:53
  well.
• 28:53
  So
• 28:54
  you
• 28:54
  want
• 28:54
  to
• 28:54
  find
• 28:54
  the
• 28:55
  right
• 28:55
  company
• 28:55
  that's
• 28:55
  going
• 28:55
  to
• 28:56
  fit.
• 28:56
  What
• 28:56
  do
• 28:56
  you
• 28:56
  need?
• 28:57
  I
• 28:57
  think
• 28:57
  if
• 28:57
  you're
• 28:57
  going
• 28:57
  to
• 28:58
  buy
• 28:58
  100
• 28:58
  unit
• 28:59
  property
• 28:59
  in
• 28:59
  the
• 28:59
  best
• 28:59
  part
• 29:00
  of
• 29:00
  the
• 29:00
  city,
• 29:00
  you
• 29:01
  don't
• 29:01
  want
• 29:01
  the
• 29:01
  company
• 29:02
  that's
• 29:02
  used
• 29:02
  to
• 29:02
  managing
• 29:02
  property
• 29:03
  with
• 29:03
  no
• 29:03
  staff,
• 29:03
  because
• 29:04
  that's
• 29:04
  not
• 29:04
  the
• 29:04
  right
• 29:05
  fit
• 29:05
  there.
• 29:06
  So
• 29:06
  make
• 29:06
  sure
• 29:06
  you
• 29:06
  know
• 29:07
  who
• 29:07
  your
• 29:07
  options
• 29:07
  are
• 29:08
  as
• 29:08
  you're
• 29:08
  looking
• 29:08
  at
• 29:08
  properties
• 29:09
  and
• 29:09
  make
• 29:09
  sure
• 29:09
  that
• 29:09
  you
• 29:09
  have
• 29:10
  some
• 29:10
  viable
• 29:10
  candidates
• 29:11
  lined
• 29:11
  up
• 29:12
  that
• 29:12
  you
• 29:12
  can
• 29:12
  go
• 29:12
  to
• 29:12
  in
• 29:13
  case
• 29:13
  you
• 29:13
  ever
• 29:13
  need
• 29:14
  to
• 29:14
  make
• 29:14
  a
• 29:14
  switch.
• 29:14
  Very
• 29:15
  important.
• 29:15
  For
• 29:16
  sure.
• 29:16
  So
• 29:16
  I'll
• 29:17
  let
• 29:17
  Erica
• 29:17
  talk
• 29:17
  about
• 29:17
  kind
• 29:18
  of
• 29:18
  our
• 29:18
  next
• 29:18
  one
• 29:18
  here
• 29:19
  because
• 29:19
  I
• 29:19
  know
• 29:19
  she
• 29:19
  enjoys
• 29:20
  this
• 29:20
  side,
• 29:20
  the
• 29:20
  exit
• 29:21
  strategy.
• 29:21
  So
• 29:22
  how
• 29:22
  does
• 29:23
  that
• 29:23
  play
• 29:23
  into
• 29:23
  somebody's
• 29:24
  evaluation
• 29:24
  of
• 29:25
  a
• 29:25
  multifamily
• 29:25
  property?
• 29:26
  Yeah,
• 29:26
  so
• 29:27
  this,
• 29:27
  this
• 29:28
  one
• 29:28
  really
• 29:28
  is
• 29:29
  dependent
• 29:29
  upon
• 29:30
  what
• 29:30
  are
• 29:30
  the
• 29:30
  returns
• 29:31
  that
• 29:31
  you're
• 29:31
  looking
• 29:31
  to
• 29:31
  solve
• 29:32
  for.
• 29:32
  Right.
• 29:32
  And
• 29:33
  so
• 29:33
  you're
• 29:33
  analyzing
• 29:34
  a
• 29:34
  property
• 29:34
  and
• 29:34
  does
• 29:35
  it
• 29:35
  meet
• 29:35
  the
• 29:35
  requirements
• 29:36
  of
• 29:36
  the
• 29:36
  returns
• 29:36
  you're
• 29:36
  looking
• 29:37
  to
• 29:37
  solve
• 29:37
  for,
• 29:38
  whether
• 29:38
  it
• 29:38
  be
• 29:38
  for
• 29:38
  you
• 29:38
  or
• 29:38
  for
• 29:38
  your
• 29:39
  investors.
• 29:39
  One
• 29:40
  of
• 29:40
  the
• 29:40
  other
• 29:40
  things
• 29:40
  that
• 29:40
  you're
• 29:41
  looking
• 29:41
  at
• 29:41
  for
• 29:41
  your
• 29:42
  exit
• 29:42
  planning,
• 29:42
  and
• 29:42
  I'm
• 29:43
  a
• 29:43
  big
• 29:43
  advocate
• 29:44
  of
• 29:44
  exit
• 29:44
  strategy
• 29:45
  A,
• 29:45
  B
• 29:45
  and
• 29:45
  C,
• 29:46
  you
• 29:46
  have
• 29:46
  a
• 29:46
  backup
• 29:47
  exit
• 29:47
  strategy
• 29:48
  because
• 29:48
  unfortunately
• 29:49
  our
• 29:49
  crystal
• 29:49
  balls
• 29:50
  do
• 29:50
  not
• 29:50
  work.
• 29:51
  And
• 29:51
  so
• 29:51
  we
• 29:51
  don't
• 29:51
  know
• 29:51
  what
• 29:52
  the
• 29:52
  market
• 29:52
  will
• 29:52
  do
• 29:52
  two,
• 29:53
  three,
• 29:53
  four,
• 29:53
  five
• 29:54
  years
• 29:54
  from
• 29:54
  now.
• 29:55
  So
• 29:55
  it's
• 29:55
  important
• 29:56
  that
• 29:56
  you
• 29:56
  are
• 29:56
  mitigating
• 29:57
  risk
• 29:57
  in
• 29:57
  your
• 29:58
  portfolio
• 29:59
  by
• 29:59
  ensuring
• 29:59
  that
• 29:59
  you
• 30:00
  have
• 30:00
  multiple
• 30:01
  exit
• 30:01
  strategies
• 30:01
  that
• 30:02
  could
• 30:02
  work
• 30:02
  for
• 30:02
  any
• 30:02
  particular
• 30:03
  property.
• 30:04
  I
• 30:04
  think
• 30:04
  that's
• 30:04
  so
• 30:04
  important.
• 30:05
  Some
• 30:05
  of
• 30:05
  the
• 30:05
  exit
• 30:06
  strategies
• 30:06
  that
• 30:07
  I
• 30:07
  see,
• 30:07
  obviously
• 30:08
  you
• 30:08
  have
• 30:08
  the
• 30:08
  option
• 30:08
  to
• 30:09
  do
• 30:09
  your
• 30:09
  value
• 30:10
  add,
• 30:10
  cash
• 30:11
  out,
• 30:11
  refinance
• 30:12
  and
• 30:12
  move
• 30:12
  on
• 30:13
  to
• 30:13
  the
• 30:13
  next
• 30:13
  property
• 30:14
  that's
• 30:14
  that
• 30:14
  can
• 30:14
  be
• 30:14
  a
• 30:15
  really
• 30:15
  great
• 30:15
  one.
• 30:15
  You
• 30:16
  have
• 30:16
  your
• 30:17
  purchasing
• 30:17
  for
• 30:18
  basically
• 30:18
  for
• 30:19
  tax
• 30:19
  purposes.
• 30:20
  So
• 30:20
  you're
• 30:20
  purchasing,
• 30:20
  you're
• 30:21
  doing
• 30:21
  a
• 30:21
  cost
• 30:21
  segregation
• 30:22
  on
• 30:22
  the
• 30:22
  front
• 30:22
  end,
• 30:22
  you're
• 30:23
  depreciating
• 30:23
  taxes,
• 30:24
  you're
• 30:24
  making
• 30:24
  sure
• 30:25
  to
• 30:25
  have
• 30:25
  a
• 30:25
  really
• 30:25
  good
• 30:25
  attorney
• 30:26
  and
• 30:26
  CPA
• 30:27
  in
• 30:27
  place
• 30:27
  that
• 30:28
  can
• 30:28
  advise
• 30:28
  you
• 30:28
  on
• 30:28
  tax
• 30:29
  implications
• 30:29
  that
• 30:30
  can
• 30:30
  help
• 30:30
  you
• 30:30
  mitigate
• 30:30
  your
• 30:30
  recapture
• 30:31
  tax.
• 30:31
  And
• 30:32
  then
• 30:32
  you
• 30:32
  sell
• 30:32
  the
• 30:32
  property,
• 30:33
  whether
• 30:33
  that
• 30:33
  be
• 30:33
  on
• 30:33
  a
• 30:34
  5
• 30:34
  to
• 30:34
  10
• 30:34
  year
• 30:34
  hold.
• 30:35
  And
• 30:35
  then
• 30:35
  I
• 30:35
  see
• 30:36
  what's.
• 30:36
  Some
• 30:36
  of
• 30:36
  the
• 30:37
  unique
• 30:37
  ones
• 30:37
  I've
• 30:37
  seen
• 30:38
  are
• 30:38
  like
• 30:38
  people
• 30:39
  that
• 30:39
  are
• 30:40
  going
• 30:40
  to
• 30:40
  hold
• 30:41
  the
• 30:41
  property
• 30:41
  for
• 30:41
  say
• 30:42
  five
• 30:42
  years
• 30:42
  and
• 30:43
  at
• 30:43
  the
• 30:43
  end
• 30:43
  of
• 30:43
  the
• 30:43
  five
• 30:44
  years
• 30:44
  they're
• 30:44
  actually
• 30:44
  going
• 30:45
  to
• 30:45
  of
• 30:45
  course
• 30:46
  with
• 30:46
  permission
• 30:46
  from
• 30:46
  the
• 30:46
  lender,
• 30:47
  sell
• 30:47
  the
• 30:47
  unit's
• 30:48
  office
• 30:48
  condos.
• 30:49
  So
• 30:49
  I
• 30:49
  see
• 30:49
  that
• 30:49
  done
• 30:50
  in
• 30:50
  Florida
• 30:50
  sometimes
• 30:51
  where
• 30:51
  they'll
• 30:51
  convert
• 30:51
  the
• 30:52
  building
• 30:52
  into
• 30:52
  condos,
• 30:53
  sell
• 30:53
  it
• 30:53
  off
• 30:53
  as
• 30:53
  condos.
• 30:54
  And
• 30:54
  that's
• 30:54
  the
• 30:54
  exit
• 30:55
  strategy.
• 30:55
  That
• 30:56
  one
• 30:56
  can
• 30:56
  be
• 30:56
  really
• 30:56
  profitable
• 30:57
  if
• 30:57
  it
• 30:57
  can
• 30:57
  be
• 30:57
  accomplished.
• 30:58
  So
• 30:59
  different
• 30:59
  ones
• 30:59
  I've
• 30:59
  seen.
• 30:59
  What
• 31:00
  about
• 31:00
  you,
• 31:00
  Charles?
• 31:00
  What
• 31:01
  have
• 31:01
  you
• 31:01
  seen?
• 31:01
  Well,
• 31:01
  I
• 31:01
  think
• 31:02
  those
• 31:02
  are
• 31:02
  really
• 31:02
  the
• 31:02
  basic
• 31:03
  ones.
• 31:03
  It's
• 31:03
  sell,
• 31:04
  it's
• 31:04
  refinance,
• 31:05
  it's
• 31:05
  maybe
• 31:05
  a
• 31:05
  condo
• 31:06
  conversion
• 31:06
  or
• 31:07
  it's
• 31:07
  buy
• 31:07
  and
• 31:08
  hold.
• 31:08
  Can't
• 31:08
  go
• 31:08
  wrong
• 31:08
  with
• 31:09
  buy
• 31:09
  and
• 31:09
  hold
• 31:09
  if
• 31:09
  you're
• 31:09
  buying
• 31:10
  for
• 31:10
  cash
• 31:10
  flow
• 31:10
  and
• 31:10
  you're
• 31:10
  going
• 31:10
  to
• 31:10
  keep
• 31:11
  holding
• 31:11
  the
• 31:11
  property.
• 31:11
  Not
• 31:12
  never
• 31:12
  a
• 31:12
  bad
• 31:12
  thing.
• 31:13
  But
• 31:13
  just
• 31:13
  be
• 31:14
  clear
• 31:14
  on
• 31:14
  what
• 31:14
  your
• 31:14
  strategy
• 31:15
  is
• 31:15
  and
• 31:15
  make
• 31:15
  sure
• 31:15
  that
• 31:15
  you
• 31:16
  have
• 31:16
  options.
• 31:16
  You
• 31:17
  want
• 31:17
  to
• 31:17
  make
• 31:17
  sure
• 31:17
  that
• 31:18
  ideally
• 31:18
  you
• 31:18
  have
• 31:19
  more
• 31:19
  than
• 31:19
  one
• 31:19
  exit
• 31:19
  strategy
• 31:20
  as
• 31:20
  a
• 31:20
  viable
• 31:20
  option
• 31:21
  just
• 31:21
  in
• 31:21
  case.
• 31:21
  Sometimes
• 31:22
  things
• 31:22
  don't
• 31:22
  always
• 31:22
  go
• 31:23
  according
• 31:23
  to
• 31:23
  plan
• 31:24
  and
• 31:24
  it's
• 31:24
  good
• 31:24
  to
• 31:24
  have
• 31:25
  a
• 31:25
  backup
• 31:25
  plan
• 31:25
  just
• 31:25
  in
• 31:25
  case.
• 31:26
  Yep.
• 31:26
  And
• 31:26
  I
• 31:27
  sometimes
• 31:27
  in
• 31:27
  that
• 31:27
  exit
• 31:28
  strategy
• 31:28
  you
• 31:28
  can
• 31:29
  calculate
• 31:29
  things
• 31:30
  in
• 31:30
  like
• 31:30
  for
• 31:30
  instance,
• 31:31
  opportunity
• 31:32
  zones.
• 31:32
  Right.
• 31:32
  And
• 31:33
  from
• 31:33
  last
• 31:33
  time
• 31:33
  I
• 31:33
  checked,
• 31:34
  it's
• 31:34
  like
• 31:34
  a
• 31:34
  10
• 31:34
  year
• 31:35
  hold.
• 31:35
  In
• 31:35
  an
• 31:35
  opportunity
• 31:36
  zone,
• 31:36
  when
• 31:36
  you
• 31:36
  go
• 31:36
  to
• 31:37
  sell
• 31:37
  the
• 31:37
  property,
• 31:37
  you
• 31:37
  could
• 31:37
  just
• 31:38
  sell
• 31:38
  it,
• 31:38
  you
• 31:38
  know,
• 31:38
  free
• 31:39
  of
• 31:39
  capital
• 31:39
  gain
• 31:39
  tax.
• 31:40
  And
• 31:40
  so
• 31:41
  calculating
• 31:41
  that
• 31:42
  into
• 31:42
  your
• 31:42
  business
• 31:42
  plan
• 31:43
  and
• 31:43
  into
• 31:43
  your
• 31:43
  exit
• 31:43
  strategy,
• 31:44
  but
• 31:44
  also
• 31:44
  being
• 31:44
  cognizant,
• 31:45
  like
• 31:45
  I
• 31:46
  had
• 31:46
  mentioned
• 31:46
  earlier,
• 31:47
  that
• 31:47
  when
• 31:47
  you're,
• 31:48
  you
• 31:48
  know,
• 31:48
  dealing
• 31:48
  with
• 31:48
  government
• 31:49
  regulation,
• 31:50
  you
• 31:50
  just,
• 31:50
  you
• 31:50
  never
• 31:50
  want
• 31:51
  anything
• 31:51
  to
• 31:51
  be
• 31:51
  too
• 31:51
  contingent
• 31:52
  upon
• 31:52
  that
• 31:52
  because
• 31:53
  you
• 31:53
  have
• 31:53
  no
• 31:53
  control
• 31:53
  over
• 31:54
  what
• 31:54
  the
• 31:55
  government
• 31:55
  does
• 31:56
  as
• 31:56
  far
• 31:56
  as
• 31:56
  their
• 31:57
  regulation.
• 31:57
  So
• 31:58
  absolutely
• 31:58
  it
• 31:58
  can
• 31:59
  impact
• 31:59
  your
• 31:59
  exit
• 31:59
  strategy,
• 32:00
  it
• 32:00
  can
• 32:00
  make
• 32:00
  it
• 32:00
  a
• 32:00
  much
• 32:00
  more
• 32:01
  profitable
• 32:01
  exit
• 32:02
  strategy.
• 32:02
  But
• 32:02
  also
• 32:03
  just
• 32:03
  being
• 32:03
  careful.
• 32:04
  That's
• 32:04
  why
• 32:04
  you'd
• 32:04
  have
• 32:04
  to
• 32:05
  have
• 32:05
  exit
• 32:05
  strategy
• 32:06
  A,
• 32:06
  B
• 32:06
  and
• 32:06
  C
• 32:06
  lined
• 32:07
  up
• 32:07
  ready
• 32:07
  to
• 32:07
  go
• 32:08
  just
• 32:08
  in
• 32:08
  case.
• 32:08
  Right.
• 32:09
  So
• 32:09
  another
• 32:10
  important
• 32:10
  component
• 32:11
  is
• 32:11
  looking
• 32:11
  at
• 32:11
  sales
• 32:12
  comps
• 32:13
  and
• 32:13
  you
• 32:13
  know,
• 32:14
  for
• 32:14
  multifamily
• 32:14
  properties
• 32:15
  larger
• 32:15
  than
• 32:15
  five
• 32:16
  units,
• 32:16
  they
• 32:16
  are
• 32:17
  primarily
• 32:17
  valued
• 32:17
  on
• 32:18
  income.
• 32:18
  There's
• 32:18
  truth
• 32:18
  to
• 32:19
  that.
• 32:19
  If
• 32:19
  you're
• 32:19
  looking
• 32:19
  at
• 32:19
  smaller
• 32:20
  multifamily
• 32:20
  like
• 32:21
  duplexes,
• 32:21
  triplex
• 32:21
  plexus,
• 32:22
  four
• 32:22
  plexus,
• 32:22
  they
• 32:22
  actually,
• 32:23
  they're
• 32:23
  valued
• 32:23
  exclusively
• 32:24
  on
• 32:24
  sales
• 32:24
  comps,
• 32:25
  so
• 32:25
  you
• 32:25
  want
• 32:25
  to
• 32:25
  keep
• 32:25
  that
• 32:25
  in
• 32:25
  mind.
• 32:26
  But
• 32:26
  larger
• 32:27
  than
• 32:27
  five,
• 32:27
  five
• 32:27
  games
• 32:28
  for
• 32:28
  larger,
• 32:28
  they're
• 32:29
  not
• 32:29
  necessarily
• 32:30
  valued
• 32:30
  on
• 32:30
  sales
• 32:30
  comps,
• 32:31
  but
• 32:31
  if
• 32:31
  you
• 32:32
  tell
• 32:32
  me
• 32:32
  you
• 32:32
  found
• 32:32
  an
• 32:32
  investor
• 32:33
  who's
• 32:33
  not
• 32:33
  looking
• 32:33
  at
• 32:33
  sales
• 32:34
  comps,
• 32:34
  I
• 32:34
  would
• 32:34
  tell
• 32:34
  you
• 32:34
  they're
• 32:34
  a
• 32:35
  fool.
• 32:35
  And
• 32:35
  the
• 32:36
  reason
• 32:36
  for
• 32:36
  that
• 32:37
  is
• 32:37
  most
• 32:38
  buyers
• 32:39
  within
• 32:39
  a
• 32:39
  certain
• 32:39
  market
• 32:40
  usually
• 32:41
  have
• 32:41
  kind
• 32:42
  of
• 32:42
  a
• 32:42
  ceiling
• 32:43
  in
• 32:43
  mind
• 32:43
  for
• 32:43
  what
• 32:43
  they're
• 32:43
  willing
• 32:44
  to
• 32:44
  pay
• 32:44
  for
• 32:44
  a
• 32:44
  certain
• 32:45
  property.
• 32:45
  And
• 32:45
  it's
• 32:45
  important
• 32:46
  to
• 32:46
  be
• 32:46
  aware
• 32:46
  of
• 32:46
  that.
• 32:47
  So
• 32:47
  I'll
• 32:47
  give
• 32:47
  an
• 32:47
  example.
• 32:48
  I
• 32:48
  was
• 32:48
  helping
• 32:48
  a
• 32:48
  friend
• 32:48
  look
• 32:49
  at
• 32:49
  a
• 32:49
  deal
• 32:49
  last
• 32:50
  night
• 32:50
  and
• 32:51
  with
• 32:51
  this
• 32:51
  deal
• 32:52
  it's
• 32:52
  a,
• 32:52
  it's
• 32:52
  an
• 32:53
  A
• 32:53
  class
• 32:53
  property,
• 32:54
  a
• 32:54
  2021
• 32:54
  building
• 32:55
  in
• 32:55
  a
• 32:55
  great
• 32:55
  market,
• 32:56
  Columbus,
• 32:56
  Ohio
• 32:57
  in
• 32:57
  the
• 32:57
  downtown
• 32:58
  area.
• 32:58
  One
• 32:58
  of
• 32:59
  the
• 32:59
  things
• 32:59
  I
• 32:59
  really
• 32:59
  like
• 32:59
  about
• 33:00
  this
• 33:00
  deal
• 33:00
  is
• 33:01
  he's
• 33:01
  got
• 33:01
  the
• 33:02
  chance
• 33:02
  to
• 33:02
  buy
• 33:02
  it
• 33:02
  for,
• 33:03
  give
• 33:03
  or
• 33:03
  take,
• 33:03
  150
• 33:04
  a
• 33:04
  door.
• 33:05
  When
• 33:05
  most
• 33:06
  of
• 33:06
  the
• 33:06
  sales
• 33:06
  comps
• 33:07
  over
• 33:07
  the
• 33:07
  last
• 33:07
  three
• 33:07
  years
• 33:08
  in
• 33:08
  this
• 33:08
  same
• 33:09
  submarket
• 33:09
  for
• 33:10
  similar
• 33:10
  sized
• 33:10
  properties
• 33:11
  range
• 33:11
  from
• 33:11
  200
• 33:12
  to
• 33:12
  270
• 33:12
  door.
• 33:13
  Now,
• 33:13
  now
• 33:13
  granted,
• 33:14
  let's
• 33:14
  give
• 33:14
  a
• 33:15
  little
• 33:15
  context.
• 33:16
  Market
• 33:16
  conditions
• 33:17
  have
• 33:17
  changed
• 33:17
  a
• 33:18
  lot
• 33:18
  in
• 33:18
  the
• 33:18
  last
• 33:19
  two
• 33:19
  to
• 33:19
  three
• 33:19
  years.
• 33:20
  So
• 33:20
  you
• 33:21
  know,
• 33:21
  you
• 33:21
  may
• 33:21
  not
• 33:22
  necessarily
• 33:22
  see
• 33:22
  property
• 33:23
  selling
• 33:23
  for
• 33:23
  270
• 33:24
  do
• 33:24
  right
• 33:24
  now
• 33:24
  in
• 33:25
  that
• 33:25
  area,
• 33:25
  but
• 33:26
  there
• 33:26
  were
• 33:26
  two
• 33:26
  sales
• 33:27
  earlier
• 33:27
  this
• 33:27
  year
• 33:28
  in
• 33:28
  2024
• 33:28
  for
• 33:29
  similar
• 33:29
  sized
• 33:29
  properties
• 33:30
  that
• 33:30
  sold
• 33:31
  for
• 33:31
  224
• 33:31
  and
• 33:32
  233
• 33:32
  a
• 33:32
  door.
• 33:33
  So
• 33:33
  buying
• 33:33
  a
• 33:33
  property
• 33:34
  at
• 33:34
  150
• 33:35
  a
• 33:35
  door
• 33:35
  when
• 33:36
  similar
• 33:36
  properties
• 33:36
  are
• 33:37
  selling
• 33:37
  at
• 33:37
  224
• 33:38
  and
• 33:38
  233
• 33:38
  a
• 33:39
  door,
• 33:39
  that's
• 33:39
  a
• 33:39
  pretty
• 33:39
  darn
• 33:40
  good
• 33:40
  bargain.
• 33:40
  Very
• 33:41
  neat.
• 33:41
  Yeah,
• 33:41
  I'd
• 33:42
  say
• 33:42
  so.
• 33:42
  Yeah.
• 33:43
  So
• 33:43
  something
• 33:43
  to
• 33:44
  be
• 33:44
  aware
• 33:44
  of.
• 33:44
  You
• 33:44
  want
• 33:44
  to
• 33:44
  understand
• 33:45
  what
• 33:45
  things
• 33:45
  are
• 33:45
  selling
• 33:46
  for,
• 33:46
  what
• 33:46
  people
• 33:46
  are
• 33:46
  paying
• 33:47
  for
• 33:47
  in
• 33:47
  the
• 33:47
  market.
• 33:48
  Make
• 33:48
  sure
• 33:48
  you're
• 33:48
  not
• 33:48
  overpaying
• 33:49
  unless
• 33:49
  there's
• 33:49
  a
• 33:50
  darned
• 33:50
  reason.
• 33:51
  In
• 33:51
  most
• 33:51
  cases
• 33:51
  there's
• 33:51
  not
• 33:52
  a
• 33:52
  darned
• 33:52
  reason
• 33:52
  usually
• 33:53
  so,
• 33:53
  so,
• 33:54
  but
• 33:54
  you
• 33:54
  know,
• 33:55
  be
• 33:55
  aware
• 33:55
  of
• 33:55
  that.
• 33:55
  So
• 33:56
  you
• 33:56
  can
• 33:56
  factor
• 33:56
  that
• 33:56
  into
• 33:57
  your,
• 33:57
  your
• 33:57
  investment
• 33:58
  risk
• 33:58
  and
• 33:58
  your
• 33:59
  decision
• 33:59
  making
• 33:59
  process.
• 34:00
  Absolutely.
• 34:01
  And
• 34:01
  yeah,
• 34:02
  I
• 34:02
  agree
• 34:02
  the
• 34:02
  comparable
• 34:03
  sales
• 34:03
  approach,
• 34:04
  the
• 34:04
  income
• 34:04
  approach
• 34:05
  and
• 34:05
  very,
• 34:06
  very
• 34:06
  adamant
• 34:07
  with
• 34:07
  my
• 34:07
  investors
• 34:08
  that
• 34:08
  like
• 34:08
  I'll
• 34:08
  provide
• 34:09
  you
• 34:09
  an
• 34:09
  offering
• 34:09
  memorandum
• 34:10
  from,
• 34:11
  you
• 34:11
  know,
• 34:11
  like
• 34:11
  the
• 34:11
  seller,
• 34:12
  the
• 34:12
  list
• 34:12
  agent
• 34:13
  and
• 34:13
  scrap
• 34:14
  all
• 34:14
  of
• 34:14
  it.
• 34:14
  Start
• 34:15
  from
• 34:15
  the
• 34:15
  ground
• 34:15
  up
• 34:16
  and
• 34:16
  do
• 34:16
  your
• 34:16
  own
• 34:16
  underwriting.
• 34:17
  Because
• 34:18
  Many
• 34:18
  times,
• 34:19
  like
• 34:19
  the
• 34:19
  seller
• 34:19
  will
• 34:19
  include
• 34:20
  pro
• 34:20
  forma
• 34:21
  numbers
• 34:21
  within
• 34:22
  the
• 34:22
  underwriting
• 34:22
  on
• 34:22
  the
• 34:22
  om.
• 34:23
  And
• 34:24
  until
• 34:24
  you
• 34:24
  go
• 34:25
  through
• 34:25
  and
• 34:25
  really
• 34:25
  analyze
• 34:26
  everything,
• 34:27
  it's
• 34:27
  easy
• 34:27
  to
• 34:27
  look
• 34:27
  at
• 34:28
  something
• 34:28
  and
• 34:28
  go,
• 34:28
  oh,
• 34:29
  it's
• 34:29
  selling
• 34:29
  at
• 34:29
  this
• 34:29
  cap
• 34:30
  rate.
• 34:30
  This
• 34:30
  is
• 34:30
  a
• 34:30
  great
• 34:31
  deal.
• 34:31
  You
• 34:31
  know,
• 34:32
  except
• 34:32
  for
• 34:33
  the
• 34:33
  seller
• 34:33
  is
• 34:34
  trying
• 34:34
  to
• 34:34
  get
• 34:34
  that
• 34:34
  price
• 34:34
  based
• 34:35
  off
• 34:35
  of
• 34:35
  pro
• 34:35
  forma
• 34:35
  numbers.
• 34:36
  And
• 34:36
  those
• 34:37
  are,
• 34:37
  that's
• 34:37
  your
• 34:38
  value
• 34:38
  add
• 34:38
  opportunity.
• 34:39
  That
• 34:39
  should
• 34:40
  be
• 34:40
  the
• 34:40
  amount
• 34:40
  that
• 34:40
  you're
• 34:41
  gaining
• 34:41
  off
• 34:41
  of
• 34:41
  the
• 34:41
  sale.
• 34:42
  So
• 34:42
  being
• 34:42
  very
• 34:43
  careful
• 34:43
  to
• 34:43
  do
• 34:43
  your
• 34:43
  own
• 34:44
  underwriting
• 34:44
  when
• 34:45
  you're
• 34:45
  analyzing,
• 34:45
  you
• 34:46
  know,
• 34:46
  your
• 34:46
  comparable
• 34:47
  sales
• 34:47
  and
• 34:48
  when
• 34:48
  you're
• 34:48
  analyzing
• 34:48
  what
• 34:49
  you
• 34:49
  think
• 34:49
  the
• 34:49
  price
• 34:49
  should
• 34:49
  be,
• 34:50
  it's
• 34:50
  so
• 34:50
  important,
• 34:51
  right?
• 34:51
  And
• 34:52
  the
• 34:52
  last
• 34:52
  thing
• 34:52
  to
• 34:52
  consider
• 34:52
  with
• 34:53
  any,
• 34:53
  with
• 34:53
  any
• 34:54
  multifamily
• 34:55
  property
• 34:55
  and
• 34:55
  really
• 34:55
  with
• 34:56
  any
• 34:56
  investment
• 34:56
  is
• 34:57
  risk.
• 34:57
  Every
• 34:58
  investment
• 34:58
  has
• 34:58
  risk.
• 34:59
  If
• 34:59
  anybody
• 34:59
  tells
• 34:59
  you
• 35:00
  they
• 35:00
  don't
• 35:00
  have
• 35:00
  risk,
• 35:00
  they're
• 35:01
  lying
• 35:01
  and
• 35:01
  you
• 35:01
  should
• 35:01
  probably
• 35:02
  run
• 35:02
  the
• 35:02
  other
• 35:02
  way.
• 35:02
  That
• 35:03
  being
• 35:03
  said,
• 35:03
  you
• 35:04
  can
• 35:04
  mitigate
• 35:04
  the
• 35:04
  risk,
• 35:05
  but
• 35:05
  to
• 35:05
  mitigate
• 35:06
  it,
• 35:06
  you
• 35:06
  have
• 35:06
  to
• 35:06
  be
• 35:06
  aware
• 35:06
  of
• 35:07
  it.
• 35:07
  So
• 35:08
  you
• 35:08
  need
• 35:08
  to
• 35:08
  look
• 35:08
  at
• 35:09
  what
• 35:09
  you're
• 35:09
  buying.
• 35:10
  Again,
• 35:10
  just
• 35:10
  understand
• 35:10
  the
• 35:11
  area,
• 35:11
  understand
• 35:11
  the
• 35:11
  tenant
• 35:12
  demographic,
• 35:13
  understand
• 35:13
  how
• 35:13
  old
• 35:14
  the
• 35:14
  property
• 35:14
  is.
• 35:14
  One
• 35:15
  thing
• 35:15
  I
• 35:15
  always
• 35:15
  say
• 35:16
  is,
• 35:16
  you
• 35:17
  know,
• 35:17
  look,
• 35:17
  at
• 35:17
  the
• 35:17
  end
• 35:17
  of
• 35:17
  the
• 35:17
  day,
• 35:18
  it's
• 35:18
  a.
• 35:18
  If
• 35:18
  you're
• 35:18
  buying
• 35:19
  a
• 35:19
  1960s
• 35:19
  or
• 35:19
  1970s
• 35:20
  property,
• 35:21
  nothing
• 35:21
  wrong
• 35:21
  with
• 35:21
  that.
• 35:22
  I've
• 35:22
  done
• 35:22
  that.
• 35:23
  But
• 35:23
  you
• 35:23
  need
• 35:23
  to
• 35:23
  be
• 35:23
  aware
• 35:24
  that
• 35:25
  it's
• 35:25
  going
• 35:25
  to
• 35:25
  have
• 35:26
  some
• 35:26
  deferred
• 35:26
  maintenance
• 35:27
  and
• 35:27
  there's
• 35:27
  probably
• 35:28
  going
• 35:28
  to
• 35:28
  be
• 35:28
  some
• 35:28
  things
• 35:28
  that
• 35:28
  you
• 35:28
  don't
• 35:29
  truly
• 35:29
  uncover
• 35:29
  until
• 35:29
  you
• 35:29
  get
• 35:30
  in
• 35:30
  there
• 35:30
  and
• 35:30
  own
• 35:30
  the
• 35:30
  property.
• 35:31
  Think
• 35:31
  of
• 35:31
  it
• 35:31
  this
• 35:31
  way,
• 35:32
  you
• 35:32
  know,
• 35:32
  it's
• 35:32
  just
• 35:32
  properties
• 35:33
  are
• 35:33
  like
• 35:33
  people.
• 35:34
  The
• 35:34
  older
• 35:34
  we
• 35:34
  get,
• 35:35
  the
• 35:35
  more
• 35:35
  deferred
• 35:35
  maintenance
• 35:35
  we
• 35:36
  have.
• 35:36
  Right?
• 35:36
  No
• 35:36
  different
• 35:37
  with
• 35:37
  the
• 35:37
  property.
• 35:38
  You
• 35:38
  could
• 35:38
  go
• 35:38
  out
• 35:38
  there
• 35:38
  and
• 35:39
  you
• 35:39
  could
• 35:39
  put,
• 35:39
  you
• 35:40
  know,
• 35:40
  lipstick
• 35:41
  on
• 35:41
  the
• 35:41
  pig,
• 35:41
  but
• 35:42
  it's
• 35:42
  still
• 35:42
  going
• 35:42
  to
• 35:42
  have
• 35:42
  the
• 35:42
  same
• 35:43
  bones.
• 35:43
  And
• 35:44
  at
• 35:44
  the
• 35:44
  end
• 35:44
  of
• 35:44
  the
• 35:45
  day,
• 35:45
  it
• 35:45
  means
• 35:45
  you're
• 35:45
  going
• 35:45
  to
• 35:45
  be
• 35:45
  spending
• 35:46
  more
• 35:46
  money
• 35:46
  on
• 35:46
  the
• 35:46
  plumbing,
• 35:47
  you're
• 35:47
  going
• 35:47
  to
• 35:47
  be
• 35:47
  spending
• 35:47
  more
• 35:48
  money
• 35:48
  on
• 35:48
  things
• 35:48
  that
• 35:48
  go
• 35:48
  wrong.
• 35:49
  So
• 35:49
  just
• 35:50
  things
• 35:50
  that
• 35:50
  you
• 35:50
  have
• 35:50
  to
• 35:50
  factor
• 35:51
  in
• 35:51
  so
• 35:52
  you
• 35:52
  can
• 35:52
  make
• 35:52
  a
• 35:52
  good
• 35:53
  investment
• 35:53
  decision
• 35:53
  and
• 35:54
  pay
• 35:54
  the
• 35:54
  right
• 35:54
  price
• 35:54
  for
• 35:55
  that
• 35:55
  property.
• 35:55
  Absolutely.
• 35:56
  And
• 35:57
  just
• 35:57
  again,
• 35:58
  this
• 35:58
  is
• 35:58
  where,
• 35:59
  when
• 35:59
  you're
• 35:59
  looking
• 36:00
  at
• 36:00
  the
• 36:00
  OM
• 36:01
  or
• 36:01
  the
• 36:01
  underwriting
• 36:01
  that
• 36:02
  the
• 36:02
  seller
• 36:02
  has
• 36:02
  provided,
• 36:03
  you're
• 36:03
  making
• 36:04
  sure
• 36:04
  that,
• 36:04
  you
• 36:04
  know,
• 36:05
  you're
• 36:05
  filling
• 36:05
  in
• 36:05
  the
• 36:05
  blanks.
• 36:06
  I
• 36:06
  just
• 36:06
  looked
• 36:07
  at
• 36:07
  one
• 36:07
  yesterday
• 36:08
  actually,
• 36:08
  where
• 36:09
  their
• 36:09
  pro
• 36:10
  forma
• 36:10
  on
• 36:10
  what
• 36:11
  the
• 36:11
  lease
• 36:12
  rate
• 36:12
  would
• 36:12
  be
• 36:12
  for
• 36:12
  the
• 36:13
  portion
• 36:13
  that
• 36:13
  was
• 36:13
  available,
• 36:14
  which
• 36:14
  is
• 36:14
  basically
• 36:14
  the
• 36:15
  value
• 36:15
  add
• 36:15
  opportunity.
• 36:16
  It
• 36:16
  was
• 36:16
  double
• 36:16
  what
• 36:17
  everything
• 36:17
  else
• 36:17
  was
• 36:18
  And
• 36:18
  I
• 36:18
  was
• 36:18
  like,
• 36:19
  well,
• 36:19
  what,
• 36:19
  what
• 36:20
  exactly,
• 36:20
  you
• 36:21
  know,
• 36:21
  how
• 36:21
  exactly
• 36:21
  are
• 36:22
  you
• 36:22
  calculating
• 36:22
  you're
• 36:22
  going
• 36:22
  to
• 36:23
  get
• 36:23
  double
• 36:23
  the
• 36:23
  lease
• 36:23
  rate
• 36:24
  for
• 36:24
  this
• 36:24
  one
• 36:25
  somehow?
• 36:25
  So
• 36:26
  it's
• 36:26
  like
• 36:26
  that's
• 36:26
  obviously
• 36:27
  something
• 36:28
  that
• 36:28
  plays
• 36:28
  in
• 36:28
  then
• 36:29
  to,
• 36:29
  you
• 36:29
  know,
• 36:29
  what
• 36:30
  my
• 36:30
  investor
• 36:30
  has
• 36:30
  to
• 36:31
  underwrite
• 36:31
  and
• 36:31
  make
• 36:31
  sure
• 36:32
  to
• 36:32
  be
• 36:32
  careful
• 36:32
  of.
• 36:32
  So
• 36:33
  like
• 36:33
  lack
• 36:33
  of
• 36:34
  financial
• 36:34
  records,
• 36:35
  financial
• 36:36
  records
• 36:36
  being
• 36:36
  incomplete
• 36:37
  or
• 36:38
  off,
• 36:38
  it's
• 36:38
  really
• 36:39
  important
• 36:39
  to
• 36:39
  make
• 36:39
  sure
• 36:39
  you're
• 36:40
  running
• 36:40
  your
• 36:40
  own
• 36:40
  numbers
• 36:41
  on
• 36:41
  things.
• 36:41
  And
• 36:42
  that
• 36:42
  capex
• 36:42
  like
• 36:42
  you
• 36:43
  had
• 36:43
  mentioned,
• 36:43
  Charles,
• 36:43
  that's
• 36:44
  another
• 36:44
  big
• 36:44
  one.
• 36:44
  Being
• 36:45
  sure
• 36:45
  to
• 36:45
  not
• 36:45
  get
• 36:46
  caught
• 36:46
  up
• 36:46
  with
• 36:47
  unexpected
• 36:47
  capex
• 36:48
  and
• 36:48
  that
• 36:48
  all
• 36:48
  of
• 36:49
  that
• 36:49
  is
• 36:49
  calculated
• 36:49
  in
• 36:50
  proactive
• 36:50
  is
• 36:50
  important,
• 36:51
  right?
• 36:52
  What
• 36:52
  I
• 36:52
  would
• 36:52
  also
• 36:53
  say
• 36:53
  is
• 36:53
  any
• 36:54
  property
• 36:54
  you
• 36:54
  want
• 36:54
  to
• 36:55
  be
• 36:55
  doing
• 36:55
  a
• 36:55
  thorough
• 36:55
  due
• 36:56
  diligence.
• 36:56
  So
• 36:57
  never
• 36:57
  be
• 36:58
  afraid
• 36:58
  to
• 36:58
  walk
• 36:59
  away
• 36:59
  from
• 36:59
  a
• 36:59
  deal
• 37:00
  if
• 37:00
  the
• 37:00
  due
• 37:00
  diligence
• 37:01
  doesn't
• 37:01
  go
• 37:01
  as
• 37:01
  expected.
• 37:02
  Now,
• 37:02
  I'm
• 37:02
  not
• 37:02
  saying
• 37:02
  that's
• 37:03
  anybody's
• 37:03
  first
• 37:03
  choice
• 37:04
  because
• 37:04
  listen,
• 37:04
  by
• 37:04
  the
• 37:05
  point
• 37:05
  they
• 37:05
  get
• 37:05
  to
• 37:05
  that,
• 37:05
  there's
• 37:06
  already
• 37:06
  money
• 37:06
  involved.
• 37:07
  But
• 37:07
  sometimes
• 37:08
  the
• 37:08
  amount
• 37:08
  of
• 37:08
  money
• 37:09
  you
• 37:09
  can
• 37:09
  lose
• 37:09
  from
• 37:09
  walking
• 37:09
  away
• 37:10
  during
• 37:10
  due
• 37:10
  diligence
• 37:10
  is
• 37:11
  less
• 37:11
  than
• 37:11
  getting
• 37:11
  into
• 37:11
  a
• 37:12
  bad
• 37:12
  investment.
• 37:12
  So
• 37:12
  you
• 37:12
  do
• 37:13
  have
• 37:13
  to
• 37:13
  understand
• 37:13
  that
• 37:13
  one
• 37:14
  of
• 37:14
  my
• 37:14
  friends,
• 37:14
  you
• 37:15
  know,
• 37:15
  he
• 37:15
  bought
• 37:15
  a
• 37:15
  37
• 37:16
  unit
• 37:16
  property
• 37:17
  in
• 37:17
  2018
• 37:18
  or
• 37:18
  2019.
• 37:19
  And
• 37:20
  he
• 37:20
  always
• 37:20
  tells
• 37:21
  this
• 37:21
  story
• 37:21
  because
• 37:21
  it
• 37:22
  taught
• 37:22
  him
• 37:22
  a
• 37:22
  lot.
• 37:23
  He
• 37:23
  made
• 37:23
  the
• 37:23
  mistake
• 37:23
  of
• 37:24
  not
• 37:24
  inspecting
• 37:24
  all
• 37:25
  the
• 37:25
  units.
• 37:25
  He
• 37:25
  only
• 37:25
  inspected
• 37:26
  five
• 37:26
  of
• 37:26
  them.
• 37:26
  So
• 37:27
  here's
• 37:27
  the
• 37:27
  problem.
• 37:27
  When
• 37:28
  you
• 37:28
  buy
• 37:28
  a
• 37:28
  property
• 37:28
  and
• 37:28
  you
• 37:29
  only
• 37:29
  inspect
• 37:29
  a
• 37:30
  couple
• 37:30
  of
• 37:30
  units,
• 37:30
  which
• 37:31
  units
• 37:31
  do
• 37:31
  you
• 37:31
  think
• 37:31
  the
• 37:31
  seller
• 37:32
  is
• 37:32
  going
• 37:32
  to
• 37:32
  show
• 37:32
  you?
• 37:32
  Because
• 37:32
  I
• 37:32
  know
• 37:33
  which
• 37:33
  ones
• 37:33
  I
• 37:33
  would
• 37:33
  show
• 37:33
  you
• 37:34
  and
• 37:34
  they
• 37:34
  ain't
• 37:34
  going
• 37:34
  to
• 37:34
  be
• 37:34
  the
• 37:34
  ugly
• 37:35
  ones.
• 37:35
  So,
• 37:36
  so
• 37:36
  he
• 37:36
  went
• 37:37
  in
• 37:37
  and
• 37:38
  he,
• 37:38
  you
• 37:38
  know,
• 37:39
  overall
• 37:39
  what
• 37:39
  he
• 37:39
  saw
• 37:39
  was
• 37:40
  in
• 37:40
  pretty
• 37:40
  good
• 37:40
  condition.
• 37:41
  But
• 37:41
  what
• 37:41
  he
• 37:41
  found
• 37:41
  is
• 37:41
  that
• 37:42
  he
• 37:42
  had
• 37:42
  to
• 37:42
  replace
• 37:42
  almost
• 37:43
  all
• 37:43
  the
• 37:43
  H
• 37:43
  Vac
• 37:44
  into
• 37:44
  the
• 37:44
  property.
• 37:45
  He
• 37:45
  wasn't
• 37:45
  planning
• 37:45
  for
• 37:46
  that.
• 37:46
  The
• 37:46
  good
• 37:46
  news
• 37:47
  is,
• 37:47
  you
• 37:47
  know,
• 37:47
  he
• 37:47
  wound
• 37:48
  up
• 37:48
  selling
• 37:48
  this
• 37:48
  property
• 37:49
  for
• 37:49
  a
• 37:49
  crazy
• 37:50
  amount
• 37:50
  in
• 37:50
  2021
• 37:51
  because
• 37:51
  of
• 37:51
  market
• 37:52
  conditions.
• 37:52
  But
• 37:52
  you
• 37:52
  can't
• 37:53
  count
• 37:53
  on
• 37:53
  that.
• 37:53
  He
• 37:54
  happened,
• 37:54
  it
• 37:54
  happened
• 37:54
  to
• 37:55
  become
• 37:55
  a
• 37:55
  good
• 37:55
  investment.
• 37:56
  But
• 37:56
  there
• 37:56
  were
• 37:56
  things
• 37:57
  that
• 37:57
  could
• 37:57
  have
• 37:57
  been
• 37:57
  done
• 37:57
  on
• 37:58
  the
• 37:58
  front
• 37:58
  end
• 37:58
  to
• 37:59
  mitigate
• 37:59
  that
• 37:59
  risk.
• 38:00
  So
• 38:00
  keep
• 38:00
  that
• 38:00
  in
• 38:00
  mind.
• 38:01
  And
• 38:01
  that's
• 38:01
  something
• 38:02
  that's
• 38:02
  important.
• 38:03
  You
• 38:03
  know,
• 38:03
  investing
• 38:04
  is
• 38:04
  all
• 38:04
  about
• 38:04
  mitigating
• 38:05
  risk.
• 38:05
  So
• 38:05
  you
• 38:05
  got
• 38:06
  to
• 38:06
  do
• 38:06
  your
• 38:06
  homework
• 38:06
  on
• 38:06
  the
• 38:07
  front
• 38:07
  end
• 38:07
  and
• 38:07
  make
• 38:07
  sure
• 38:07
  that
• 38:08
  you're,
• 38:08
  you
• 38:08
  are
• 38:09
  doing
• 38:09
  your
• 38:09
  part
• 38:10
  to,
• 38:10
  to
• 38:10
  handle
• 38:10
  that.
• 38:11
  Yep.
• 38:11
  Caveat
• 38:12
  empore.
• 38:12
  Buyer
• 38:13
  beware.
• 38:13
  Do
• 38:13
  your
• 38:13
  due
• 38:14
  diligence.
• 38:14
  Inspect
• 38:15
  every
• 38:15
  unit,
• 38:16
  don't
• 38:16
  deep.
• 38:17
  So
• 38:17
  very
• 38:17
  good
• 38:18
  advice,
• 38:18
  Charles.
• 38:19
  Absolutely.
• 38:19
  Well,
• 38:19
  guys.
• 38:20
  We,
• 38:20
  we
• 38:20
  hope,
• 38:20
  we
• 38:20
  hope
• 38:21
  you
• 38:21
  found
• 38:21
  this
• 38:21
  valuable.
• 38:22
  And
• 38:22
  thank
• 38:22
  you
• 38:22
  for
• 38:22
  joining
• 38:22
  us
• 38:23
  for
• 38:23
  another
• 38:23
  episode
• 38:24
  of
• 38:24
  the
• 38:24
  Master
• 38:24
  Passive
• 38:25
  Income
• 38:25
  Multif
• 38:25
  family
• 38:26
  podcast.
• 38:26
  Thanks,
• 38:27
  guys.