Latest / The Academy Presents podcast / Asset Management part 3: the Real Work Behind the Wealth

Transcript

Asset Management part 3: the Real Work Behind the Wealth · The Academy Presents podcast

0:01
Did you know that 90 % of the world's millionaires
0:05
invest in real estate? Well, I'm Angel with the
0:09
Academy Presents Real Estate Investing Rocks,
0:11
and I'm here to help you if you want to go for
0:15
your piece of that pie. Are you new? Are you
0:19
new to this and you just don't know where to
0:20
start? It's okay. Are you someone that has invested
0:25
but you feel stuck, you feel like you've lost
0:27
momentum, you don't know where to really head
0:30
from here? Are you a seasoned real estate investor
0:33
who is doing great, but maybe you just want to
0:35
hone a few skills here and there? This is the
0:38
place for you. The Academy Presents Real Estate
0:41
Investing Rocks podcast will connect you with
0:44
industry experts so that you can save time, avoid
0:48
costly mistakes, and begin living the life you've
0:52
dreamed of all through real estate investing.
0:56
You're already taking the first step. just by
1:00
joining us here today. Hey guys thank you so
1:04
much for joining us again and I am super excited
1:07
because we are going to talk about asset management
1:10
and asset management and management companies
1:13
and all of that stuff which if you have not had
1:17
the joy of doing those things get ready. Today
1:24
we have Greg Scully and he is going to share
1:26
with us some of what his experiences have been.
1:29
So Greg, I'm going to let you kind of intro yourself
1:31
and tell us a little bit about your background.
1:34
Thanks, Agile. Yes, Greg Scully, operating out
1:37
of Middle and Eastern Tennessee, almost exclusively.
1:42
We're apartment and RV park syndicators and joint
1:46
venturers, occasional house slippers and property
1:50
managers. So cut our teeth in the apartment space.
1:56
still have a bunch of that stuff. I don't know
1:59
how many units we have. We're managing 65 of
2:02
them ourselves now for the past year or so. And
2:06
more recently got into the RV space, evolved
2:10
in a few parks there and are currently on point
2:15
operating a 50 pad park out of town in Tennessee.
2:21
So I guess that's part of our property management
2:24
as well but not necessarily under the umbrella
2:28
of our company. So one of one of my other not
2:31
issues but one of my other questions was like
2:33
I understand why they use accrual to like account
2:39
for things but like when you're looking at the
2:43
P &L that's like that's cash basis. And so I
2:47
have a hard time mentally flipping over between,
2:49
oh, yeah, this is all accrual. Oh, but here's
2:51
the P &L. I'm like, what? Yeah. I mean, like
2:59
in the RV space, accrual becomes much more common
3:02
because you have all this deferred revenue because
3:05
you're taking money for reservations and the
3:08
person is not staying for six or eight months.
3:11
So we look at accrual in the RV space a lot more
3:14
than we did. uh the apartment space a lot of
3:17
that parole stuff has to do with debt and uh
3:23
i mean i get it when it comes to like you know
3:27
specific bills that happen monthly like in my
3:29
mind i'm like okay so fixed costs we know those
3:32
are always going to happen we can just um like
3:35
basically like budget them out or even them up
3:37
and put them out over the whole year Yeah, right
3:39
insurance is a typical one, you know, you pay
3:42
it in full once you really kind of want to look
3:44
at that on a monthly basis We end up looking
3:48
at you have to look at both Well, yeah, because
3:53
you have to look at it like especially what the
3:55
insurance like what you're saying You want to
3:56
look at the bottom line, but you can't say oh
4:00
yeah in december we we ran like um a negative
4:03
hundred thousand dollar no i so i mean i understand
4:07
why it is that way but like i at the base level
4:12
i get it but when i'm looking at the reports
4:13
i'm just like wait a second what are we in now
4:17
okay because it's tough for me to switch back
4:20
and forth so that's where i think that if at
4:25
any point we ever had a property management company
4:26
i feel like i would have to go back and learn
4:29
some accounting stuff because I just I mean I
4:32
haven't done that I haven't been in an accounting
4:34
class in 20 years heck 25 years how old am I
4:39
and so I've had to go like pull a lot of memory
4:44
on what stuff oh yeah no we've done a lot of
4:47
self -education on that stuff yeah it's um not
4:52
fun well and we use I mean yeah We use CPAs and
5:00
bookkeepers too. So, I mean, we're doing 85 %
5:03
of it and then the rest of it is getting taken
5:07
care of by a professional. So you like basically
5:12
are outsourcing your back office? For final stuff,
5:19
yes. Day to day. I do a lot of bookkeeping. So,
5:26
I mean, we do have, there's three of us, we're
5:29
real wealth solutions. That's where we buy most
5:31
of our stuff under, myself, my wife and Darren
5:34
Light. So I tend to be more of the asset manager
5:38
analysis guy. Kim is the tenant facing side of
5:42
the property management company, basically handles
5:45
98 % of the tenant interaction. And Darren is
5:51
largely, big part of our capital raising when
5:55
it comes to acquisitions, but then there's largely
5:58
the project management side. So on -property
6:01
for, you know, these two properties are significant
6:05
rehab projects. So he's handling more of the
6:08
on -property project management side. And there's
6:11
overlap in everything. Yeah. To some extent,
6:15
but that's basically how we bucket it out. That's
6:19
cool though. Yeah, the asset management stuff
6:21
can be taken on so many different ways. I don't
6:30
realize how many different parts there are to
6:34
the property management and asset management
6:35
pieces. I know when I'm unhappy and I think,
6:40
well, this is a simple fix. And then the more
6:43
I dig into it and the more I talk to people,
6:45
the more I understand that, well, it's a simple
6:47
fix. If I don't think about any of the details.
6:52
Yeah. Yeah. And I think there was just getting
6:59
started. I thought of numbers much more specifically.
7:06
when it came to like, oh, rents are going to
7:08
be 777 on average or something like that. And
7:11
now I realized that, you know, this is so dynamic
7:15
and so forward, you have to kind of think in
7:17
a range. And it's just like targeting in a rifle
7:20
or something. You just want to hit paper. You
7:23
know, the first thing you're trying to do is
7:25
just like, just get it on the paper. Okay, now,
7:29
you know, now we can start to fine tune it. I
7:32
think sometimes the opposite happens. Like people
7:35
are trying, they're thinking very specific, which
7:40
is the downfall of the spreadsheet. It'll, you
7:45
know, yeah, my P &L can go out to $197. Well,
7:51
why isn't it $196? or $198 is because I put in
7:56
a specific formula and it's empirical and it's
7:59
going to spit out a specific answer. But it doesn't
8:03
account for somebody just moving out in the middle
8:05
of the night or your contractor getting COVID
8:09
or people just ghosting you, which just happens
8:12
all the time. So we think a lot more in workable
8:18
ranges. And then you're just constantly adjusting.
8:29
And that's the big thing. It's just very consistent
8:31
where you're looking at your reports, your activity,
8:35
and being willing to make adjustments as you
8:38
go. And I think this is the reason why Jason
8:42
and I have been talking about what would it be
8:45
like to have your own property management company?
8:47
Because on the residential side, it makes zero
8:49
sense. We would never, we own six single family
8:53
homes. It would never make sense for us to take
8:58
those on because they're in three different towns
9:01
and we don't have the list of people to call
9:05
like, okay, this plumber can't do it here in
9:07
Lubbock. Well, who's another plumber we know
9:09
in Lubbock that we can call? Well, we don't have
9:11
any plumbers in Lubbock because we're not in
9:12
Lubbock anymore. And like even here where we
9:15
are in Wichita Falls, like I know a few plumbers.
9:20
But I don't want to spend all my time to fix
9:22
one house And so it makes sense for me as to
9:30
use a party major company on the residential
9:32
side because they have You know a hundred or
9:35
a hundred and fifty houses that they're managing,
9:38
right? Exactly. And so they have that you know,
9:40
they have that scale and they have that volume
9:42
so they're able to do More and be more efficient
9:45
at it. Whereas at the apartments, I mean Now
9:49
it is a big enough scale that we could have those
9:52
lists and do those things, but we just don't
9:56
even, I see the big picture, but like you're
9:59
sitting there talking about all these details
10:01
and I'm like, oh, I hadn't thought of that. I
10:03
hadn't thought of that. Oh yeah. I mean, hire,
10:04
I mean, we had hired managers at the RV park.
10:07
We lived there for seven weeks in a 300 square
10:09
foot cabin during the transition process. I mean,
10:13
somebody is out there doing that kind of work.
10:16
So, you know. If I was a capital raiser, maybe
10:21
I would have more respect for capital raisers.
10:23
But as an asset manager, property manager, I'm
10:26
like, hey, you know, it's a lot going on behind
10:30
the scenes that gets distilled down and communicated
10:36
on a weekly or bi -weekly call and hopefully
10:40
succinct little half hour, 45 minute package.
10:45
I had this conversation with Parker yesterday.
10:48
um like everybody's heart is different but I
10:52
would venture to say the way they feel that difficulty
10:55
is the same so like he may look he may look at
11:00
me and see what we do with our special needs
11:02
son to be like man that's hard well that's what
11:05
what we feel with that level of heart is no different
11:08
than the level of heart you feel and say your
11:12
wife being pregnant like because he's pregnant
11:15
right now and I'm like You know, there's difficulties
11:17
with that too. And the way that hard feels is
11:21
no different than the hard, the way we feel when
11:24
things get tough with Anson. So everybody feels
11:28
that difficulty in that hard, just that hard
11:31
moment with the same level of intensity. I really
11:35
believe that. Back home, we're from Alaska. There's
11:40
a race called the Mount Marathon, which is basically
11:42
a 5k up a mountain and back. uh and the elite
11:47
athletes do it in like something under an hour
11:50
and everybody else does it in a much longer time
11:54
frame and one of the elite women's runners had
11:57
a similar comment to that she's like she's like
12:00
i'm out there working as hard as i can pushing
12:02
myself for you know 52 minutes and then i'm done
12:07
i have so much respect for these people out there
12:11
that are doing it and it takes them two hours
12:15
of the same kind of internal fortitude and push
12:19
to the level that they're at. And I thought that
12:22
was very interesting insight that she didn't
12:26
think her effort was any better, I guess, for
12:34
lack of a better word, although she was competing
12:37
at an elite level. she thought everybody's effort
12:41
was based kind of on the same level. Yeah, I
12:46
had a friend tell me one time, because he was
12:48
saying, man, it must be tough. I have a lot of
12:49
respect for you. I'm like, everybody plays the
12:51
hand of Delta, but the best they can. And after
12:54
Russ said that, he was like, well, I guess it's
12:55
just as hard being me as it is being you. And
12:59
I'll never forget that. And I was like, yeah,
13:03
because we all, I mean, everything is hard. Like
13:05
I, we've raised capital. It's hard. It's a pain
13:09
in the ass. It's hard. Yeah. And after being
13:13
on site for those, you know, two weeks and dealing
13:15
with everything outside of the apartments, that's
13:18
hard. Is the hard different? I don't know. It
13:21
is different, but it's hard. And then creating
13:27
the banking house and then doing like some of
13:28
the property management stuff, that's hard too.
13:31
And it's like different kinds of hard, but it's
13:35
all very difficult. And it can be really stressful.
13:40
And I just have a lot of respect for everybody
13:42
in this space doing their thing, because I don't
13:45
think any of it's easy. No, I don't think it's
13:50
necessarily easy. It can be done. I think social
14:01
media makes it seem very easy. Being a passive
14:06
investor is very easy. I've been an LP. I think
14:10
that's great. Long term, I want to revert back
14:13
to that. We thought we were passive in the residential
14:16
space with property managers, and then we became
14:19
LPs in a multifamily investment. And it was like,
14:25
there's no phone calls. Yeah, I think I'll go
14:29
for a walk. Open Z County's like, hey, we got
14:33
a distribution. It's like literal mailbox money.
14:39
Yeah. Yeah, that part, that's nice. I want to
14:43
get back there. But I mean, we enjoy it. I'm
14:51
sitting at my kitchen table, Kim's upstairs in
14:53
our office. That looks a lot like the second
14:55
bedroom. And yeah, we've been doing this full
14:59
time for a few years now and everybody's fed.
15:03
We're debt free now. Yeah, we're doing fine.
15:08
Yeah, no, and it's, but it's a lot of work. It's,
15:11
it's, it's a lot of work. Yeah. Well, like Jason
15:13
and I had a meeting last night at eight 30. Um,
15:16
it's not, if you want the security of working,
15:20
you know, eight to five or nine to five or whatever
15:21
you want to call it, then this is not for you.
15:24
Um, and like when I, when I think of like, when
15:27
I said like, have respect for everyone in the
15:28
space, everything is hard. I look at what I do
15:31
and I'm like, what I do is easy, but in other
15:34
people's eyes, it's not. But like, I love talking
15:38
to people and going to events and seeing how
15:40
much I can remember. What do I remember about
15:42
this person? Those are, that's fun to me. And
15:46
to other people that are like, oh, I mean, it's
15:48
like me with spreadsheets. Those make me nauseous.
15:51
Well, for some people, the thought of going to
15:52
an event. and meeting hundreds of people makes
15:55
them nauseous. And so you really, you have to
15:59
find your spot, you have to find your niche and
16:01
buckle into it. Yeah, and that's where partnerships
16:06
can help. I'm very lucky Darren is much more
16:09
of a very personable guy. He knows everybody
16:17
in Tennessee, I swear to God. We would be in
16:20
the middle of nowhere. Hey, Darren! Now his wonderful
16:25
partner, Penny, is the same way. The two of them
16:28
together, you can't go anywhere without them
16:31
knowing somebody. But yeah, I'm happy to be behind
16:35
a laptop and hammering away at spreadsheets.
16:38
I don't mind being on property. I don't mind
16:40
talking to people, but I have no interest in...
16:46
answering the property management phone on a
16:49
regular basis and I'm very thankful Kim's is
16:53
doing it and is extremely good at it. Yeah when
16:56
you said she was taking it I was just like I
16:57
like this cringe inside me I was like oh no.
17:01
I think you know and I think she enjoys it there
17:04
are difficult days there are difficult conversations
17:07
that have to be had. What is it the Pareto principle
17:11
80 -20 rule type thing? You know, absolutely
17:14
most of our tenants are absolutely lovely and
17:19
wonderful to work with. And some of them aren't.
17:24
And that will always be the case. And, you know,
17:28
we will always have an emergency call on a Sunday
17:32
afternoon every now and then. It's just the way
17:36
it is. So, you know, once you're comfortable
17:38
with all of those things, but Hey, you know on
17:42
Thursday, I'm going to Washington for a family
17:45
wedding. With Ken, Dan is going to run the show
17:50
while we're gone. We'll still be working virtually
17:52
and we didn't have to ask anybody, so I like
17:56
that. No, and that that's how I felt yesterday.
17:58
It was the girls first day school. They go to
18:00
a different school than my son and. Jason got
18:03
to go and he didn't have to run off to WT and
18:06
it was it was nice. Yeah, in terms of the clock,
18:10
you know, I work, I work more now than I ever
18:14
did. Absolutely. No question. But yeah, I did
18:18
20 years W2 and probably the last seven years
18:22
of it, I mean, I was just struggling to, to find
18:25
a way out. You know, the last three or four years,
18:30
we did transition, but very personally unhappy
18:38
a lot of the time while I was doing that, which
18:42
affects all kinds of things, unfortunately, your
18:44
health, your relationships. So you're not happy
18:47
trying to figure out what makes you happy and
18:49
pursue it. I wasn't particularly happy yesterday
18:53
having to go up and find a plumber to show up
18:58
and deal with some issues, but it had to be done.
19:03
And you're working towards your dreams, not somebody
19:06
else's. Yeah, exactly. Yeah, that can help too.
19:11
Greg, I just want to say thank you for being
19:12
here with us today. Oh, you're welcome. We're
19:15
kind of all over the place talking about lots
19:16
of different asset management, company management
19:17
stuff. But I think that that kind of just goes
19:20
with it because it's all over the place. I think
19:24
about like the time I'm on site. people, I think
19:27
some people have figured out, some people haven't,
19:30
but I'm just like, oh yeah, we can get that information
19:32
to the owners. But like you said, I mean, I've
19:35
had, I've heard gut -wrenching stories. And some
19:39
that are just, they're not, that's just, hey,
19:41
yeah, my kid's here. They're just every day running
19:44
the mill conversations. And so it's just, it
19:48
takes a certain person of strength with a certain
19:51
lane to do the asset management piece. Yeah,
19:56
just, you know, thank you for being here and
19:57
sharing the information about your lane because
19:59
it's certainly yours. Oh, you're welcome. And
20:02
thank you. You do a lot for the community. You
20:04
bring a lot of people together with your meetups
20:06
and stuff. I attend when I can when I'm not,
20:09
you know, having to go put out a fire somewhere.
20:11
So those are the fun things. Those are the things
20:14
I think. No, no, we've had some we had some fun
20:17
conversations around around your meetup. So I
20:20
appreciate it. Awesome. Well for those of you
20:23
out there stick around there is more to come
20:24
or come join us on the live side because we would
20:27
love to have you and There's a lot of great stuff
20:29
going on over there. So until we see you again