Scaling 1,300+ Doors: The Hard Truth About Property Management

it is so easy to grow a property management company from 0 to 500 it's hard to grow a property management company from 1,000 to 2,000 you have to say no in real estate you have to focus on what you're really good at the reality is people will pay if they get better service if you're looking as real estate as a part of your portfolio to invest I think there's tons of good buys out there because time cures all even if you make a mistake time cures it all it does hold it just hold it welcome back to the roots podcast today we have on Jeremy tomman Jeremy is the founder and owner of tnh realy and Property Management which manages over, 1300 doors in Indianapolis Jeremy is also a very successful real estate investor he currently has a portfolio of around 50 doors in Indianapolis he has his own podcast which is very popular it's the Indie REI podcast Jeremy welcome to the show thank you appreciate guys having me yeah thanks for coming on um thanks for kicking things off Tyler those was much smoother than my radio voice is finally once we're on episode 100 it's going to be the Flow State um Jeremy take me back to the sheriff sale days I want to hear there's the way that you are able to purchase doors and acquire properties is so far different than how somebody can get started today but what I like is how it um the story that I want to hear is how you found the niche spot to go into and scaled from there so yeah share sale that's uh those were the fun days honestly in real estate for us I think Scott and I Scott would agree with that um he's my business partner and um we think we started Shar around 2002 so we bought our first like rental in 2000 and then we said we want to make a full-time deal of real estate like we can't be full-time single family landlords we didn't we just we did the math we thought we could do it and it quickly learned as we started acquiring rentals that we could not become full-time real estate people by owning just rentals so so just by being an investor just by being an investor right it's just the cash flow was not there it's it's a myth you know that you think you buy 10 houses that cash flow $400 a month and you have $4,000 a month in income you don't so I can't watch one Bigger Pockets episode and read two books and buy a property and qu my job yeah yeah it's tough so um we learned about share of sale it wasn't like a big mystery but it was intimidating because you had have cash and as 25 27 year old guys you know to come with to Sheriff sale with several hundred, is what you really need to be impactful down there it was hard so we found a local bank that took a gamble on us and we attended a sale and bought a house it was in South Broad rable and we quickly learned that we can do this and make good money doing it and we can quit our W2s was that flipping yeah that's flipping you know there's we had a term called wholesaling back then that's different than it is today to us wholesaling was basically we just bought it and immediately flipped it to another investor we never touched it that was our term of wholesaling it's not really wholesaling as as we know it today but no we did a lot of work as well so we would buy them fix them up developed a ton of contractor relationships um and I remember many many lunches working my W2 job going to job sites and checking status of properties and I'm sure Scott would say the same thing um but flipping at share of sale it you know as we were able to amass Capital um from a bank we had some private money but not anything crazy um we were able to buy several homes a month and and the idea was to to sell them and for for profits and we mostly did what was your or W2 uh the W2 I had before I left I called it tnh South was uh I was a financial analyst basically a controller which if people know me today that doesn't make a lot of sense uh probably shouldn't have been given that kind of authority uh at a company called Stoops freight liner which still exists um the guy Jeff Stoops sold it for um several years ago but the name still exists and so our our business back then was we sold big class eight trucks so the big semis you know that back then sold for six figures I'm sure they're a whole lot more than that today but I was a financial analyst and I worked five days a week and then I went four and then I went full-time and I think it was January 2004 is when we said this is humming so we were at that point I guess two years into flipping and we said we can do this I don't need a the the W2 job was actually holding me back and so I said we can make more money if I'm in the field more with Scott looking at homes and and getting things bought so what did a typical deal look like at a high level like purchase Renault air so I would say a typical deal back then was buy it for 50 25 sell it for a buck 25 or a buck 50 just real quick I mean they weren't they weren't we've made very high we paid as much as I think 850,000 at a house at Sheriff sale that was toward the end of our Sheriff sale run um but that wasn't normal or Norm we could we bought homes in the teens we bought home a lot of homes in the 20s 40s 50s um because if you buy if you could buy in the 40s and 50s and just do that model you could buy a few homes a month you know and make decent money so so at what point did the flipping Biz kind of did that train kind of pass and you're like oh we need to go into long-term rentals like walk me through that transition so we were we were still buying long-term rentals got it all right so um if I go back and look at the several hundred homes we did at Sheriff sale there were I could probably go and say yeah we should have kept that one we should have kept that one we should have kept that one um well you drive yourself mad if you went and looked at all properties right that's right but at the same time you know people say is flipping really investing and it's a good question because it was our it was basically replaced our W2 income like we had to have that income to live I had two small kids and like is being an agent really investing yeah right yeah running a service I think you're running a business versus investing in a lot of ways but you're also holding the deeds and owning it but you're running out a 60% AR like you're everybody goes for the 75% Rule now to be able to bur is where that's the perfect number running at 60% with those numbers at a buck 25 or 75 no they were they were great margins and then um but so yeah we still continue to buy rental properties um I think we got up you know around 50 I think we still own around 45 50 you know 45 doors or so um most of those were bought between 2000 2005 is there any leverage on those not much I think most of those are paid paying off this year and then soon so how much cash flow does the entire portfolio make let's say every month [Music] gosh um enough I don't know I think it's around 45,000 a month or so uh in Gross rents gross rents so you know we have a property management company so the management company manages them for us now we're still involved with day-to-day like but it's not like we're just informed of things for the most part new furnace new AC you know things like that um so we but we also have some contractors that we use that we pay through our company directly what I mean that is T properties owns those properties so we we we do pay so it's hard to get a good p&l from our property management company but we have a p&l through our you know Scott keeps our books through Quick Books how uh at what point did you realize that not only you should start a management company but that you needed one was it just out of necessity no we wanted a management company out of necessity for our own rentals okay now that was let's say 2004 when we were really doing a pretty decent volume of flips and we did interview several companies but there were only like three or four names back then there very few companies that managed homes and they were typically what we we' call like a back office real realtor that didn't want to do transactions they can just do Property Management because it's easy that was the that wasable income that was the generally how it worked well those people still exist and a lot of them don't even you know own a house themselves but they're managing others from distance which is wild to me right we were talking last week uh at our Master Class event which that will be dated because this will be posted in like March yeah um but you were telling me your average uh owner ratio property to owner yeah um being that I was dumbfounded it was under two or right around two right 1.89 1.89 yeah so our average client owns 1.89 properties and that number to me is just like a eye opening to where the need becomes that it's like uh let's do this internally where somebody is either at a place where like I'm full-time and real estate obviously as an agent uh running the team and all those things I don't see a need for a management company for myself because why wouldn't I just I have staff that can do it um which I think is very different from I forget the owner that it's like two properties is it that's that's the management either what do you see most of that being is that next up buyers that don't sell their house or it's just Logistics okay so 7 uh 4% of our clients don't live in Indiana mhm so it's a logistic problem for them solution yeah yeah they they can't be we're the boots on the ground literally so that's why they hire us now you know a lot of our clients too May own in multiple States and they just don't want to deal with with it as well State investing just from where it's I'm sure in the past few years it's it's up there's been an uptick for out of state investor uh a few is not accurate it's been a lot of years okay when did that started to change because I would assume been 2004 there was not many from California or New York when did that started to change so it changed and I don't know the date but there's a famous video out there of Warren Buffett when he said this is after the when right after the housing crisis so call it 2008 probably 2009 when he said hey you know if I it to me it could make a lot of sense to go out and buy a few hundred thousand single family homes and he was saying it because the money was cheap um you hedge inflation big time with that kind of interest rate but then the famous line is the problem is though the management right because it's not like Apartments where you've got 500 Apartments in one spot it's the management is hard well literally right after that is when things change um where we saw an influx of investors to Circle back we saw the change at Sheriff sale that's where it first started and I'll never forget when Scott called me and said we didn't buy anything today because I would he would go to the sale I would hang back and run numbers and send numbers down to Sheriff sale through text and that worked really well um and he called me said we didn't get anything I was like well it's not good and he's like but there's some company down here that bought like 30 houses and it was ah4r America's homes were inent so they came in and were buying dozens at Sheriff sale and on open market and then it all followed so you had this mad rush so institutions start and then your Joe and Jill investors come in after that so that's when we felt it let me get your take on this do you think that the out ofate capital is going to go down in the future or is it just going to keep going going up cuz right now is an interesting time in the market where the Market's relatively cold on the buy side right now but I think that's rate dependent I think it will get hot again do you think it will be out of state investors or back I think it'll be both I think I mean obviously funds have slowed yeah you know or quit can't make the numbers yeah they quit they quit buying I think I think they're going to get back in the game I don't think it's going to be a like it was in 2010 to 2015 and on on up I just don't think the there's so many homes they bought and you know I'll be honest when when they were buying there were a group of investors that I was a part of that we said those guys are going to get crushed like they can't buy single families and make them work what we had no idea of is the appreciation that our Market was about to go through so if you look at their and I don't I don't know their numbers but if you had someone that could come in and give you really insight into how their cash flow was I'm going to guess it wasn't great um we've had a lot of people that work for us that used to work for America's homes for Rand and they just said that they years two and three when they were here they started getting more stingy with turnovers they were having a hard time making cash flow work for them but the Saving Grace which is always the Saving Grace in real estate is their Equity position every Mentor I have when I ask them about their portfolio and where they're making money from every single one says the same thing I don't take the cash flow from my rentals and I refinance my portfolio and live the equity but then also here you can't buy groceries with Equity so like right you have to you know you have to buy smart to get into a position where it's going to gain and and that's like the when you're stuck at two or three properties and for me I mean I have over six figures and the real estate market no return like that's and and that's been over the past year right like it's it's a train that's just halted I can't even you know get cold to get the train to start going before we started recording you told me that you have roughly um I mean it was under six figures in the marketplace yeah we we um proudly can say that we've Scott and I've invested less than 100,000 in all of the properties that we own fig sadly yeah starting in 2021 it was a little different yeah I mean we we were doing kind of the Burr method before bur method was like a was coined that term by the time it was coined it was kind of gone like heading out the door M yeah yeah so we did a lot lot of that you know back when we were buying a lot of duplexes the rule of thumb was you used the cash flow from one side of the duplex to pay your mortgage that's that was the barometer that it's the 1% Rule now well the 1% rule would have been terrible like that to us have been like we would we would demand more than that right it was a 2% rule probably we didn't use like a metric that way we just what duplex is that is a metric we use so our mortgage payment is 750s can we get 750 aside yeah and most of the time we can get something around that I'm seeing you know we're on the tail end of 23 24 where we struggled so much with the tick and interest for the first time ever I'm I'm putting deal sheets together that are above the coined 1% Ru where that's actually possible like tomorrow I'm setting up duplexes that are at 2600 and we're going to list like one 85 and I think that just it comes in part of rent rates caught up to what has happened over the past two years but prior prices have cooled a little bit too they have cooled for sure but I I guarantee that duplex goes $25,000 over asking in December MH on a transactional down I mean we're down what like 30% in the past quarter if not more on on standard trans transactions I think across the United States there's been 14% less or this is like the lowest year in the past decade by 14% um it's insane recessionary levels of real estate transaction about transactions the same level as 2009 yeah yeah everyone's Frozen because it's hard I mean you think about the houses you all live in and you know the equity you have and maybe a house you want to buy it's like well I'm sitting at an interest rate that's so favorable and why would I want to buy a house and double my interest rate right and probably double your payment easily so it's it's just put a choke hold on the market it's just it's it's in it's pretty remarkable what interest rates have done to our Market it really is I watched new construction they've been able to um like what I buy I should be at an 8% interest rate but I'm at like a four and a quarter because what they did is just inflated the price yeah so I paid 440 but truthfully they bought the rate down with an astronomical amount of money and that's why you see a lot of people transacting in new construction but I'm so curious on that house what will happen in the next 5 years for it to catch up to the market well and on the I do about 50% of my real estate business is retail so owner occupants I would say 50% of those clients I have been able to negotiate in for them a rate buy down if I was allowed to do that for investors the game would be totally different totally different which I hate that it's not allowed for investment loans I mean my friends can't buy a house like even even with that rate buy down it is very challenging with a standard W2 in our Marketplace to buy your first home well it's cheaper to rent than buy for the first time in Indianapolis possibly ever yeah right now and that will change it's inter straight dependent you know could shift your son's in Tennessee and we were talking about that where it's like it it's a struggle he should be able to yeah and it's it's just hard now we used did a recent podcast to talking about housing affordability and and um I went back and looked it CU When I bought my first house this was in two 1997 this is my primary okay B before I was an investor um I made $965 an hour at my job okay yeah I listen to this on your podcast keep going so my wife made around this she made a salary but it was essentially probably less hourly than I made and the mindset back then was we can afford a house like that wasn't a problem we didn't buy a great house it's it's a nice house um it's worth many multiples now today but it was never a thought of I can't afford a house well my son makes even with inflation adjusted significantly more and he's struggling to get his mind around buying a house he lives in Knoxville which is essentially the same city as Indianapolis just smaller um but yeah where do you think considering all this asset price higher interest rate um where is the win right now look I think it depends on your frame of reference I think a win is buying a property I really do I think I've got plenty of examples of mistakes and I have air quotes going here that we've had in the last 20 years 24 years of buying real estate none of are mistakes today like none of them are I think if you have the ability again it depends on your goal if you're looking for Real Estate to replace your income like I was that's very hard today if you're looking at real estate as a part of your portfolio to invest I think there's tons of good buys out there because time cures all even if you make a mistake time cures it all it does just hold it just hold it yeah it will always be worth more in 10 years um I don't think I'll ever eat my words on that maybe will there be a time in our economy in the United States for Le 100 years and I don't think in Indianapolis for sure I just think we have inventory constraints that aren't going to be solved anytime soon right and that's what I wish I had megaphone to say is like month-to month real estate is going to look like an L but long run decades it's even bigger win because the appreciation game is like strengthened it's much stronger than it used to be in Indie so here's some interesting there's a study that went out and I am starting to read through it now and it's a property management study but one of the takeaways was the average investor single family investor their financial IQ is very low I would agree yep so my clients who are listening so um and it's not it's not like a it's not a dig it's there's nothing wrong with ignorance you don't know what you don't know yeah and as you know a property management company someone who owns a small brokerage with Buyer Agents the education can has to move away and the narrative needs to move away from cash flow Indianapolis is not really a cash flow Market anymore it has to move into what I consider to be the biggest benefits of real estate yeah and it is pay down and Equity gain you know the the net can I challenge something pay down I don't get cuz I looked at I have a mortgage and I have 127,000 on it it's a Christian Park home I looked at monthly what the pay down it was 100 $24 yeah I was like this is the hardest earn money ever waiting for this thing to pay down but but there's going to be a times let's say your mortgage payments $1,000 1224 you said is goes to principal there's going to be a time where that is your interest yeah so it but it but look if you're on a 30-year am that's a long 30 years is a long time 30 year yeah so we're paying I think 200 extra which does help because the principle yeah so but yeah I so I think that's the biggest benefit of real estate is is time it's not a getrich thing we've had big wins on The Flipping side you know we've had big paydays on The Flipping side but we never you know we mentioned we took we've add less than 100,000 into that business we've never taken money out of our rental business ever and it's because of what you said it's your interest it becomes your interest so in 30 years Tyler or if you're paying that off 200 extra bucks a month you're probably going to pay it off in like 21 years which at that point that 900 and some odd dollars becomes money in Tyler's pocket as where it was going to the institution your your Equity yeah I'll tell you what'll happen I'll just predict what will happen with Tyler well he'll sell the house next well he let's just say how keeps this very long term you're going to refinance into a shortterm shorter Term Loan you're probably going to go down to a 20 or a 10 year loan and I just I can because you're going to have the uh monthly cash flow through other businesses and things like that to support that you're going to get a more favorable interest rate um and you're just going to probably it's just going to make some someone's going to present you a product you're going to be like I want that one and you're going to refinance that down and put these instead of 30 years now you're all of a sudden you're on a 10 year TR and you're going to that pay down is going to happen at a much much more biggest mentors he owns the brokage where at at properties Rex Fisher yeah he's saying when I got in the industry this was 2021 now it's three years later he said if it's in the block buy it if it's in a good neighborhood that's going to develop in the black which means breaking even his whole thing was just the cash flows for making the wheels spend that's all the point was he was like you're betting on the neighborhood and you're betting on Indianapolis and what better time to bet on Indianapolis with the leap District in Lebanon 14 billion yeah like who is putting 14 billion in Lebanon I mean and then 9 billion coming to downtown that's actually under represented it's more like 14 coming to downtown so I mean you know all this I think it's the skyline is literally changing in Indianapolis like it coming to paint the skyline and Rex always says to us like people will react after they see the Skyland shift it's too late yeah you should be buying that 100 20K home in hille right now well I mean you guys have you guys driven through 16th in capital down to 10th or it's crazy that whole neighborhood hey that's my commute to Danville well yeah the IU Health it is real estate right there right now you notet it it is almost it's almost unbelievable until you see it yeah I mean when you see even when you see it it's like I just can't believe the development that's going on and the how much money yeah I told her friend of mine I was like I feel like every person in Indianapolis could go could have their could go to the doctor there and they would still absorb everybody it's there's so much footage being built it's it's incredible yeah a lot of people actually make fun of it for how just Fantastical that building is going to be well it's it's like the Taj Mahal tons of buildings and I can see it out my bedroom window I can see the cranes working in the Skylight will light up at night it's just it's just an unbelievable project what's your real quick what is your take on midterm rentals in the travel Norse game I honestly have not I'm not the person to ask I don't have a good feel for that market it's something that we've never explored um it could be an opportunity look there's plenty of opportunities in real estate that you kind of have to just you have to say no to occasionally and shortterm and Midterm syndrome is this something that we you know we said no to Fountain Square many years ago we were told go there well Rex Stone's half of it so he but yeah there was there was tons of houses rolling through Sheriff sale um you said no why because we just I didn't like it I didn't like the I didn't like the construction and I honestly it was very anecdotal I didn't spend much time down there the reality there wasn't a community down there yet right the reality you know I just saw a lot of weird triplexes and things like that and and sound the reality is we had plenty of inventory to pull from in South Broad that's where we did our bought at the exact right time in South Brader I mean it's hard to miss in the Midtown area it just has what it has the recreation the restaurants the bars ability um it's hard 46th in college was not a pleasant place to be when we were buying that's where I lived yeah yeah and now it's it's fun place yeah there's a lot of cool stuff right there right I I the saying is like every year the next parallel down is like the new it spot so it used to be like you know 49th was sketchy now 46 is sketchy right 42nd would be the next logical one and uh that gear seems to be shifting slower but it always feels so slow in the moment it feels slow in the moment it took it feels like it took forever for 46th in college to De to develop it did well the Everest is 38th when we can remove the needle on 3 there so much commercial zoning that when that flips all of Indianapolis will feel a lot 38 in my opinion no offense I have to watch my words here but it's kind of like dragging literally in the middle it's dragging the whole thing down I think yeah there's a lot of tough commercial apartment complexes are tough yeah and you own an Airbnb right there I do luckily it's by newfields and Butler so like we kind of get that you're on the other side we're further down we're close to Crown Hill but yeah we're right on the edge there yeah I had to buy I have to buy in class C+ areas to cash flow and I'm just hoping the lift that's makes it I mean look I think you would call you know 46 in Caroline I think you would call that a cclass area back in you know and maybe maybe call B minus today probably B to B minus today yeah um but as an example one bedroom aside duplexes which we own several right there we rented them back in when we bought them in 2002 most of them uh we rented them for 400 bucks aside now we're running for 900 bucks aside so you know it's so hard to get brought a multif family I'm looking every day myself for others it's they're very rarely and they're always higher than you could ever cash flow there was one opportunity when taxes were reassessed our city did a terrible job of property taxes for years and years and years and finally when the city got poor and still continue to be poor but um they just said we need to reassess property because we're woefully under assessed well duplexes got hammered and investors have got hit the hardest they were they got crushed especially cuz paying 2% so that's one time when I used to look I had a save search Washing Township duplexes and there was always 10 or 11 that's the number it hovered on Just for years and years and years when the taxes got reassessed and frankly a lot of went through foreclosure because they people couldn't afford the taxes anymore um then it popped into the maybe 30 you know and I don't know what it is today if you put in punched in 4903 which I think that's I think that's Washington Township on the BLC side and looked at multi out there be but there's not many it's just a hard place to buy yeah definitely is out of the rentals you have which are you the most happy you still [Music] own uh all of them I mean I honestly I mean we have I would say the probably the more the multif family when I say multif family I mean the the duplexes and we have a total of three quads that are awesome um you know there's a property that we own that we have never been huge fans of and I will say I don't know exactly the time but I'll say five to seven years ago we decided to sell it and we couldn't sell it and we got down into the 300,000 range as an eight door two two quads on the same parcel and we couldn't sell it sort like we'll just take it off the market and now that thing is worth three times that much so it's like I am so glad we kept that property like I always say the biggest regrets in real estate the stuff you sell or didn't buy I can't imagine compared to what I sold on East Washington this year that sounds like very very similar where is that one it's on Fall Creek there's a lot of them over there they're trading hands a lot right now about 700k at Pop yeah the four units I'm about to be listing one really yeah 45 Fall Creek if you want to buy it oh so you're ride off Meridian then there's been a lot of trading right around there I'm not sure exactly why but I've because investor we're working with but well there's just a block of them right there in the like exactly that they're they've had them listed for a long time um very favorable price essentially uh there there's a single owner that owns one quad and then there's an owner that owns everything around it and the single owner is willing to play ball so we'll see what happens I guess pay attention to that side um I want to shift gears and talk about tnh for a little bit a lot of our listeners will be thinking oh property manager that's one of the hardest things to get right you know they make want to pull your hair up they terrible communication what um one like how is tnh different and two what is the experience you hope investors have working with g& so you know going back to I guess my marketing hat differentiators I mean just came from a a company party and um you know we have most of our staff now I think is over 5 years with us um and we have 45 people um that's remarkable in Property Management yeah it's a big it's a big it's a lot of Staff now part of those are remote team members but there were probably 25 or 30 people there today um so I think our not only our size but our experience um is second to none I mean I don't think there's anybody that comes close to us I would say for maybe several States out even wow um I could be wrong about that I don't know every property management company but I know the big ones here comes the hate mail yeah exactly I for you but we have a a very large staff we have a very experienced staff and I think that's so fundamental in Property Management honestly there's you know I and sitting in my chair I see a lot of companies come into the into Property Management I've seen some be very successful and do a good job I've seen a lot of people fail it seems like to me if you can get past that five to seven year mark in Property Management where and and and have scaled along the way not just stayed at a 100 doors or 200 Doors or 300 doors or even 500 doors but if you can continue to scale and stay in it five to seven years I would say I feel comfortable referring business to you I don't refer business to people less than that because I just don't know that they're going to be able to make it because it's extremely hard um there's a lot of hard jobs out there and I'm not saying property manager is at the top at all but I'm just saying it is a job it's a it it can be a thankless job and that's okay it's not that's okay I don't need to be told thanks um but I don't think investors and and really understand the day-to-day that we go through um I think it's you guys collect rent that's basically it right and it's not I mean we're literally 247 business at least we make ourselves available certain part of our business 24/7 um maintenance being the the most of that 247 um so it's there's just a there's a ton of moving Parts um housing is a very emotional thing not only for investors because it certainly can be emotional um but it's also for the residents that live there it's a very emotional experience so you have to just walk a line that where you're making sure the resin is being taken care of from a moral standpoint but also from a statutory standpoint there are statutory requirements that we have to fulfill or we can get in big trouble like today if someone calls and doesn't have heat it's not a question of if we get the Heat going yeah right it's when and it's typically very fast so we can't just say well the owner needs a couple of months to save up money or talk to you know figure out if they want to replace the or not it's not if it's it's when it has to happen and so yeah it's a tough job it's something that you know is you have to have great processes for but you also have to have people not only they can operate the process but they can get when things get out of process know how to get it back in to me that's where breakages happen when things get out of process that's when residents get upset that's when owners get upset that's when things can go wrong so that's why you might have property managers we could be one of them that is less willing to do customizations to their processes because if they do they're probably going to fail well that's the mark of a really inexperienced property manager it's an making exceptions for you it's it's exceptions and it's taking on all business because we turn down a ton of business because our business development manager Jake who I think you guys know he knows exactly the type of property you want to manage and he will say no um because we can't like again you have to say no in real estate you have to focus on what you're really good at um which is why we've stayed away from midterm which is why we stayed away from shortterm we we know what we're good at and we have to stay I just want to underscore that you have to say no to excel in real estate that's the really good line third person I think that has said that on the show already really it's a through line we've noticed yeah yeah you have to you have to because look real estate is this massive Wonderland out there there's so many things you can do with it and so you have to like kind of get more focused on this is what we want to do and develop expertise in it then you can make good money if if you're good at it yeah walk through the high level um of kind of Ju Just I think I imagine there's a lot of people listening who are like I wonder what it's like to work with them like what is a high level of like um what are the marks of your business let's just say like in terms of like percentage fee structure like what types of units you're looking for just that footprint we're a generally a single family property manager we do take on small multi- family buildings uh we say no to on-site management that's one thing that we're not equipped to do and frankly don't want to spend a ton of banwi learning it's just hey we do single family we can do you know we manage our eight unit building we manage some quads we know that we can do that um but we say no to the big multif family buildings we've had opportunities to manage 100 Door we could be significantly bigger if we had just chosen to do things differently one taking on all prop you taking on more properties taking on bigger properties but we just have to say no a lot um so fee structure it's typically 8% of rents collected um our leasing team I think there's like gosh I don't know how many people are on leasing team anymore 8 to 10 people in our leasing team leasing's big leasing's important it's what uh our clients demand that we do a really good job of um and sets the tone for it sets the tone yes because it's not only getting it lease quickly which is important you have to play Someone really qualified yep and those yes you can't have both necessarily you can first person Applause usually is not the best C in my experience in some cases they are some cases they just it all depends but you have to you have to say no a lot there too and that has to be done through very specific regimented screening requirements that are published and enforced uniformly right you can't you can't have well I feel good about that person but I don't feel good about that having a system and and process to do so so we charge as much as one month rent to lease because we frankly have a ton of effort that goes intoing leasing but we have caps on that our leasing fee we don't if you have a $2,000 rent we're not going to charge you $2,000 to lease your property um and then we have like we have standard like renewal fees and yeah and things like that but you know we've never positioned ourselves as the cheapest that's something that we felt was a a way to lose quickly um we wanted to build a sustainable business our payroll is just it's unbelievable like how much we have to spend on labor that is by far in a way the number one expense a property manager goes through service based industry especially one that scales you know you can be an owner operator and you pay yourself one whatever you pay yourself and you can be pretty lean but as you build staff and really build expertise you have to pay for that yeah and wages have went up a whole lot you know so it's not only that we've hired more people it's just we're paying a lot more for people um so and honestly the reality is people will pay if they get better service I mean we take on one of our biggest lead sources is frustrated frustrated uh with PM well that was me I hired someone that had a business for two months and just didn't understand how to run a business right and closeup shop and I'm like I need someone who's been in the game for a while has experien and has uh scripted uh policies that they don't deviate from you got to that place after having pm12 got third or fourth and I didn't buy you guys we just evolved into we had an in-house employee that this was going to help pay for her frankly yeah was that 8% and I'd go back in a heartbeat because frankly I the expectations were very clear and they were followed through on That's So key yeah I think you have to under I think you have to become very clear on what the client is going to get for that 8 10% whatever it is is the communication Cadence yeah when we're going to notify you um you know there's this whole idea that real estate is passive and I've never agreed that real estate is a passive investment even if you have the best property manager in the world you're still going to be involved at a certain level absolutely right so we try to make it passive we try to take the small decisions out of the the equation that we don't need your permission for the we're not and we tell people we're not going to come to you for these things were going to come to you for these things so they know like I have as a as a client of tnh I have no say in who tnh places for my property zero that is for a fair housing right because I can't go to owners and say hey because we used to do this a long time ago called them application summaries what do you think of this person now it'd be numbers only but we let owners decide if they wanted an application or not that is dumb I mean for from our perspective we were opening ourselves up to all kinds of fair housing claims I'm not going to name any names but many property management companies still do that they still do it I was a little bit put off by that policy yeah I'm put off right now learning about it I actually was unaware like wa this is my investment they're deciding for me but now in hindsight I've had numerous tenant issues I've had tenants just pack up and leave the middle of the lease I've had everything you could possibly I've had a go to jail paying Le on credit cards it all credit cards and now I realize like oh this is why it's sometimes helpful to wait the extra 3 weeks to get the quality tenant and have these script like I plac someone whose credit score was in the 500s everything else was flawless I interviewed them I had this gut feeling I should place them and it worked out but not in the financial respect they paid late like every single month some months there behind 500 credit score yeah yeah they paid like a I and I paid for it now they have a cleaning business that I supported so you got to know why you're in real estate like if you're trying to be tenant first like Addison Newell who will be coming on this podcast you're going to uh you're going to have to deal with some different things payments different model right he's making a different impact if you want to be Financial first then you need to have policies yeah which is having that that rugged system I think I try to flirt with both right I'm like I want to be Financial first but I also want to have a heart I have a tenant right now that I mean you know I get the story the job messed up the pay and this and that yeah what I didn't expect as a property owner being uh that I'm self-managing is the phone calls of just like questions that I would personally never ask yeah as in my heat's not working and they send me a picture of the heat set at 91 and I had to call them and say you're not in your car yeah you the Heat Can't you'll blow the furnace up like I had to go put a lock on the thing that you would see at a restaurant because I don't trust now that she won't click it up to 91 cuz it wasn't getting hot enough it was that's so normal too I know and I spent $1,000 on a tech to go tell me they're paying their own utilities paying their own utilities now that's another thing I had to learn like I didn't get that on boarded so it's all those systems as a self-manager that I purposefully wanted to go through the pain before I even yeah you know implemented in another person because in some ways we do and this might come off weird but we have to protect our clients from themselves sometimes oh amen so like you know if we just literally just ran every application and said hey do you want it most are going be yeah when can they move in they we have to be like the professionals which we are why they pay us frankly to say look you know what our screening requirements are just like our perspective residents know what our screening requirements are it's all right on our website it's our third most visited page we have on our website it's our screening requirements so you know what we're going to require we're going to enforce this and I'll tell you guys in today's environment I would be scared to death I know you guys both do this to screen tenants and not get scammed there are so many rental scams out there that unless you know unless you have systems and then wherewithal and experience I believe that I've been scammed then you're going to get scammed I guess I'm unaware of so I mean I always like called the employer so many people that don't have a good credit score that people creative okay well it's not only that but it's it's you can jump on your phon or your computer now and Google how to make a fake pay stub you will have paid ads come up for that oh yeah so there are pay stubs that will are software out there that will replicate Lily um any employer that's around and you will not know the difference I wonder H yeah that's just interesting I I called all the employers like myself whenever I'm about to have them sign Le that's good as long as you get through probably hopefully a central system where it's like hi this is Eli Lily how can I help you right and I need this person they trans so yes that's a good way to do it that's one that's one hack it's a lot more time but you can do it that way right if you're if you're trying to screen a ton I always try to wait until I'm like yeah I I I know that I'm going to move forward with this one but for me what I've learned the hard way is I like an iPhone over 700 credit score and three times the rent and I don't deviate from that because when I have deviated from it I've paid the cost and what's the iPhone reason iPhone what is it you have a responsive it I I promise just try it every tenant that I've evicted has had an Android and it's a communication they can't send good pictures so I don't know what's going on so then I send the wrong people fix things I'm just if you're green I'm sorry well another thing that I've started to do which I'm curious if you do this Jeremy at all is I've started ask for a landlord reference and I started calling and gotten really good Intel from that really or you end up talking to their Uncle that's that's one thing you have to be very careful of is landlord references to me or because I'll be your landlord I'll say this most professional get duped yeah most professional companies now won't provide landlord references they don't want the exposure and potential so look we've talked to many landlords again I'm using my air quotes that were not landlords right I like oh yeah they were how much was the rent I can tell you right now I put my mom down my wife's parents and like my B we we did a podcast on rental fraud and had a buddy of mine from uh he owns a company and that we use and he's out in um uh San Francisco so he's very DED into Tech and uh he had some statistics that were just I don't remember what they were but when I heard them they were shocking about the number of billions of dollars fraud yeah costs the Housing Industry I'm I'm curious to know in the midwest I mean you guys have you're at 1,200 plus doors yeah between 1500 I'm shocked that in Indianapolis like that many tenants Go I mean yeah you want the house and you want to be able to get the place but we're pretty landlord friendly as far as like how we can remove tenants or move forward it's going to cost us money but in California I could see all day long because you're in the there's not much landlord yeah Indianapolis is Indianapolis is very landlord friendly and I don't think Indianapolis investors understand exactly how good they have it yeah because I go to national conferences and I sit beside property managers that live in Oregon you know Portland OR I live in Lo in California or Colorado Denver and the rental it's just it's very difficult you know and and honestly I think look will will it happen while I'm still doing this I doubt it but there will be a day when Indianapolis gets much less landlord friendly there's been pushes to already make that happen and give residents more protections which frankly I'm behind a lot of what they proposed but we are such a conservative um body in Indiana that it's going to be hard to get Statewide regulations actually like even if something gets passed then for it to go into we've seen very like what I would call it won't cost landlords anything it might be a little more work for landlords just very I think modest changes to landlord tenant law just get get knocked down um so Indiana investors and I'm sure investors that invest in other states know they have it good here yeah the questions that I get from out of state investors sometimes I'm like yeah we don't we don't deal with any of that um well before we wrap up we have a couple rapid fire questions that we ask all of our guests um you want to kick it off Tyler absolutely um I was gonna ask we ask for a restaurant and usually go brunch but I already know you're going to take Cafe P every time I see we go there I'm going to I'm gonna go I'm gonna go what's your favorite dinner spot in Indie favorite dinner spot you know I'll I'll be uh biased I love Tinker Street cuz I can walk right there it's a great little phenomenal yeah it's a great little restaurant it's tiny um make a your champagne when you sit down the Tinker toast for free yep so it's never been there it's a place that my wife and I you know actually it's the we we ate there we made the decision to move to Heron Morton because we were looking to move and we were looking at marinian Castor we were looking at Heron Morton kind of old Norah side and I said all things the same house is the same where do you want to live here or R castler she said I want to live here so that's when we kind of narrowed our Focus down and we were mostly looking for Old North side but we ended up just on the other side of 16th Street in I like that that comparison of Midian Kessler and her Mor yeah um hoping M Kessler would win there with you shared in a group that we're in that there's a metric that you have to hit and then you get to go have sushi right or was this is just a completely different person I thought I thought you had a like celebration metric where no be someone else we've talked to a lot of people these days yeah way too many dang I'm giving you credit to a sushi dinner and I'm giving it to the wrong guy um what's one habit that's changed your life you know habit um I would say I don't this is necessarily a habit I think it's developing a reflex and the ability to care right I think that's I think that's key um it's and so I'll use this in a couple different ways one care about your clients I think if you don't care about your clients and are only looking at your pnl every month then you're going to that pnl is going to shrink right especially the top side um and so I think in caring about your people and which means to invest in them um caring that you just do good work and that you're good stewards of the properties that we manage um also say like you know caring about yourself there were there have been times honestly that I wanted to be done with property management I mean just it was hard and I'm like we're going through growing pains and um you know I think I've shared this before but there's time where my business partner kind of pulled me out of that and just said we're going to be okay you know because I was like we were like at 300 doors and I said I just want to flip homes like we were still flipping back then I was like I just want to flip homes because it's so much easier I have to deal with anybody except for contractors yeah as managing a partner relationship with us what are kind of the things that help keep you um was it like hey go flip homes and I'll run the the 300 doors at that time well that was part of how we started um he was managing our flips every day and we started third party Property Management 2007 end of 200 mostly 2008 and I was kind of on like I start went out and started doing it and started building process and stuff and then he was always there and we met every we worked together and we ate lunch today we ate lunch together every day and very aware of the you know and provided a lot of you know value into building processes and stuff but yeah cuz that was essentially running two businesses and then flipping died and he got more immersed into the property management which allowed us to separate duties and and you know scale the business frankly um so yeah it's it's it's worked y last question for you what is it an area of your life you're currently focused on growing you know I would say just being more intentional with my time I think I show up the office 5 days a week week and I don't know if that's always going to be the case for me I think the office environment can get distracting frankly um because there's people there and there's they come and go and the phone may ring and your email problems calling out your name yeah there well you can hear problems going on you can you know whatever and um I have found myself needing time to kind of get quiet um we run EOS and there's a thing in there that you know business owners need uh at least monthly I try to do them weekly I don't I'm not good at I won't try to get really good at it in 25 and that is Clarity breaks to take an hour and literally no electronics and sit with a notepad and a pen yeah and start journaling and writing out like why am I doing this why am I here what what are my priorities um what what needs to get done like kind of really getting back to the vision of where our business needs to go because if all you're doing is responding to owner complaints or putting out fires you're never going to to be able to scale your business the right way and it could be finding Talent it could be um creating new markets we could go into whatever it is not creating but discovering new markets we could go into um well as a Founder you have to have some Detachment you have the day to day you have to yeah it's not an option it's not an option and so that's one thing with my time I think I just need to get more intentional of you know cuz I found myself the last couple weeks saying am I doing things that are really helping us and sometimes it's no it's like I don't so it's that whole delegate and Elevate thing like I don't have a job anymore guys I really don't like I don't have like oh Jeremy's responsible for these things like in terms of like day-to-day Property Management I have none of that I lead meetings so maybe you could say it's that but I don't have like you I used to do payroll I used to do all kinds of things used to do Bank Rex I used to do all all kinds of things but that's went away because I just had to make that space to be able to I think get us focused and and continue to grow because it's hard it is so easy to grow a property management company from Z to 500 it really is it's hard to grow a property management company from a th000 to 2,000 that's very hard because you're attrition naturally every month if you've got a th doors under management there's going to be a whole lot of them that want to sell and so you're going to lose 10% of your portfolio probably every year even if you're the best property manager in the country because it's just hey I want to sell I'm moving back in whatever I'm decided to self-manage because I move back in town I'm just going to self-manage it um there's so you have to be you know it's just it's yeah so that's what I've been working on a lot I just is just really trying to stay focused on my time uh to do high value things I love the the notepad pieace and and taking the time off I got to take a ton of time off luckily Tyler let me escape you know for the first couple weeks with my son yeah um when he was born and I came back and I'm like I want every October off because I just learned so much about our company and I feel like I probably came back and smothered a little bit cuz I'm like we're changing this we're changing this this and this and you know I've always for last sever years went to a National Property Management conference and I've always used that time as a time to really honestly not attend events at the at the conference like I don't need to know like best screening practices it's like a lot of that stuff is like call it call like 101 type stuff I find the most value in seeking out people that are bigger than us and learning from them like sitting hey let's have breakfast let's have a coffee let's have lunch together and really picking their brains and then it allows you to see your business at a different level CU you're hundreds of miles away away from it literally physically that has an effect on you a little bit I think um and I'm excited because Scott's going to join me this year um in Colorado Springs we're going to both go out uh to a conference and I think it's going to be a fun time for us to to both learn about how we can grow and and do better work yeah that's super cool um well before we let you out where can people find you or where do you want people to find you uh there just TN Ampersand H realy services and we'll be there um it's eest way to find us they can email me directly I love hearing from investors stories uh Jeremy atth reality inc.com it's not the reality Inc it's not th reality Inc it's thaly inc.com so and Jeremy has his own podcast the Indie podcast a lot of good discussions on there with other Indian apples folks so yeah yeah it's one of the fun things I do frankly is to to meet people get out of the office and uh I I've had a lot of fun doing it yeah and uh the most gratifying one of the things we just we signed up a fairly large not a huge but a decent Siz portfolio and it said how did you hear about tnh podcast that was a lot of gratification that says because I don't necessarily do it for lead gen I do it more for just meeting people and and telling great stories it builds trust too with clients I think yeah but it's it's great to see that we actually get business from it that's that's kind of fun that's that's awesome hopefully we'll start getting business from this well yeah that's been another uh Roots episode if you want to see Jeremy in person he's going to be at our next master class this episode will come out late February and that event will be March 6 so we uh around the corner can't wait to have you on our panel there where you know live audience can learn more so drop a like subscribe turn on the Bell do all those YouTube things and uh we'll see you next time peace [Music]