2079 FBF: 4 Options For Property Management, Client Case Study Muthiah Nachiappan

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Hey, it's my pleasure to welcome one of our clients back to the show. We actually recorded another show a while back. We didn't air it yet because we kind of thought we could do it better. And he's just such a great contributor. He's been to several of our events. He's got nine properties through our network. And that is Muthiah from, from Los Angeles. Muthaya, how are you?

I'm good, Jason, thank you. How are you?

Well, welcome, welcome. And thank you so much for the preparation you did for this podcast interview. I think the information that you're going to share here is going to be very valuable to all of our other clients. So I just want to first say how much we appreciate that. I'll say that on behalf of my company, but I want to say that on behalf of all of our clients because I just think what you did here is really, really valuable. I'm looking at the stuff you sent me in preparation for this interview. You, maybe more than any of our other clients, have really delved in to property management contracts. And what I believe is this outdated, outmoded, in many ways, dysfunctional model of property management. And as I say, you know, the two biggest challenges we have in our business is, well, right now and this will change, it always does. It's dynamic and ebb and flow, but lack of inventory of properties. So we really. Inventory is very scarce, very tight for the past few years. Seems to be getting worse frankly. And property Management, those are the two biggest challenges we have. So if we can, if we can solve those, everything will just be rosy and wonderful. But Muthaya, what kind of caused you to get so interested in the property management part of the business, being an investor with nine properties?

Well, the thing is, Jason, I have a habit of reading everything I find it's a good habit to my detriment. I did, I do read all these property management contracts that come, that I have to sign and you know, there are things in there that don't seem, don't seem like it. Look, anytime, you know, I've signed a lot of leases over my time and you know, a lot of the leases and agreements, they always favor the person who's drafting it. And all these agreements were drafted by attorneys on behalf of property management companies. As an investor, I'm always looking out for myself, obviously as an investor. And so there are things in there that I'm not really comfortable with. And half the time you go back and forth and the argument often from the property management company is, hey, look, this is what everybody signs and we can't change it just for you, that type of thing. And so I was, I was, I've been able to change a few things, you know, here and there that, that seemed important to me. But you know, certain things I don't really bother even, you know, negotiating because it's not worth it in the long run. The big, the big picture is, you know, the actual, well, you got to.

You got to, as the old saying goes, you got to pick your battles, right? So. Yeah, yeah, absolutely. But what I think ultimately needs to happen is I want to disrupt the property management industry. I want to see self management become more popular and certainly we have made a dent in that. It has become more popular as we've been teaching it for the last six or seven years now. And I also want to see a la carte property management services. Why is it that most property managers out there expect you to just sign up with them and they do the whole kit and caboodle? Why can't you just buy the service you need? Right? So those are two things that I want to see and then the third thing is what I propose maybe four years ago, God, I don't know, time goes so fast. Maybe it was five years ago now at our Meet the Masters event which was this flat fee property management and you did a beautiful spreadsheet on that that I am looking at now and we're going to talk about that where the manager just charges a flat Fee and I, I think this is the way to go. I really like this plan. So where would you like to start, Mathias? We dive into this.

Well, we can start with, you know, like in any business, right, There are good property management companies and bad property management companies. And as an investor, you know, going into this, you know, not everybody's, you know, an experienced investor. You know, most of us are just starting out. You know, I think that what do you look for in a property management company when you first get started? I think that would be a good place to start. And then maybe that, you know, from that it can evolve into other. There it is.

Absolutely. Okay, good talk about that. You know, in terms of what you look for, you've got the, what you call the property management company survey. And I just love this. You know, you've, you've, you've gone over, you know, several items like the lease up fee, the re renting fee or the renewal fee, other fees, if any, you know, monthly management fees, pet fee and deposit maintenance, advertising, late fees, rent due and credited and you know, statement of accounting of rents. Tell us about that.

Well, look, I broke these fees down based on the nine different agreements and I actually may have seen up to a dozen. You know, I looked at these and pulled out the different fees that these companies charge. And you know, and so I figured that, you know, it'd be good to see what, where the biggest chunk of your rent is going. You know, the biggest chunk of your rent is obviously going to the, to the managing company and the management fee, which is really, maybe not a whole lot, 8 to 10%. But then you start, you know, nickel and diming with these, you know, other fees and they don't want to share those fees.

I call, I call those garbage fees. There's a bunch of garbage fees in there. But listen, folks, as I, as I say that, don't think of it as too derogatory because everything has garbage fees. You know, hotels are now doing resort fees, this fee, that fee. You know, these are all garbage fees. You know, they're all over the world. So, you know, it's not just managers doing that. But, but yeah, you know, they're not the, they're not the apparent obvious fees, right? They're these extra things they, they kind of slip in there and a lot of people aren't really thinking about them. And Muthaya, before we dive into this, I'm actually sorry I didn't ask you about this before, but it's always nice to know where someone's coming from. You've got nine properties now. What do you do for a living? And you know, give us a little bit of your background first, just so we'll understand kind of how you, how you think maybe.

Right, sure. Well, look, you know, I mean, I'm actually a real estate broker. I've done some loans and things of that nature, but I, you know, I, it kind. I started as a broker. Really what the way it all got started was I became a broker and I went to get my fingerprints and I couldn't find a place in downtown LA to get my fingerprints. I had to drive 15 miles to get my fingerprints.

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And I thought, well, wait a minute, this looks like there's a market. This was around 2008, around that time where mortgage brokers are not doing that well. And so I said, wait a minute, it looks like this might be something that there might be a need, you know, and always when there's a need, you fill a need, you make some money. That's generally the business concept where people make money. So I slowly got into, you know, setting up this business where we got, got certified through the FBI, the Department of justice, bought the equipment, went through training and, and then, you know, it just started. And then the, the mortgage brokering business fell off and this picked up. So that's what happened. So I started doing, run background checks in all 50 states. We do Department of Justice, the FBI, criminal background checks for, you know, for immigrants, for professional occupants, professional licenses, lawyers, doctors, nurses, children. I mean, people who are coming, contact with children, elders, those types of things. So there's a, there's been a market for that. So I've been able, fortunate to make a living at that. And so I did that for a few years and then I just started, you know, slow. I mean, I listened to your podcast, you know, I mean, I looking at other things to do as well. And, and your podcast got me interested in investing and I started very slowly, you know, and in a matter of three months I bought three properties and then slowly started picking up and I've been doing properties. I basically refinanced my primary home, took the money out of that and bought some properties and then I used this conventional financing and bought other properties. So it was not an easy process because the Fannie Mae Freddie Mac guidelines are so strict and the requirements are so rigorous that it took me a while to close on the last four properties that I closed on, and I closed four before the end of last year. And so it became more and more difficult. But in any event, that's what I did and I intend to continue buying. But I'm looking at maybe doing something unconventional, maybe doing seller financing, some lease options, that type of thing, rather than just going just with a conventional way of buying properties.

Yeah. Okay, good. So what else happened? First of all, on your business? Did you open a fingerprinting business?

Oh, no, no. Right. No, no. What I was going to say was, look, the way it works is, you know, and I don't know all the. I don't know the specifics in terms of how they do the calculations, but when you. When you have a business and you have issue of profit and you know, I have an S corporation, so basically they take the profits added to your income and then just kind of, you know, escalate your income. But by the same token, if you have a loss, they basically offset the income against the loss. And so when you calculate your debt to income ratio, it really hurts you and you're very tight in terms of qualifying for a loan. So that's what happened for me in 2015. The business that I was running was. Had a little bit of a loss, you know, and so that affected my ability to borrow more money. And so that's why I kind of stopped at, I mean, starting bought four. And I'm looking at other ways of buying property right now. That's all.

Yeah. Okay. Okay, good. So on the property management agreement side, now that you. We got a little background, so that was great. Tell us, you know, what, what your thoughts are about this property manager survey, property management company survey. You're using this to really understand what you're getting into. Right. That's the key to it.

Right. And I think it's also important for property managers to look at this survey because I don't know if they've done an internal analysis on what their fee structure is because they, you know, they've been doing this for a number of years. I don't think they've sat down and broken it down and said, hey, this is what we're charging for this, that and the other. I think it allows them to look at all the fees they charge and make and make an informed decision on whether or not if it be worth their while to just charge a flat fee. And everything is transparent. There's no hidden fees. There are things like markup fees on maintenance, for example, a lot of it's become very common practice among many property management companies. If they call a maintenance person into your rental to fix something, then they would charge, you know, up to 30% on top of what they, what the maintenance guy charges you. You know, I don't know how you know why that's even necessary. Right.

I think the thing to do is to empower the tenant. You know, the property manager doesn't even know something is wrong until the tenant reports it. That's kind of the irony of this situation is that if you just work with your tenant. Now granted, you know, there are bad tenants out there, we all know that. But if you just kind of work with your tenant, a lot of times they can be your best ally. I mean, I get, you know, I try to get my tenants to, I was going to say I get, but I don't always get. I try to get my tenants to, to, you know, basically get into partnership with me here. And you know, you get some, There are some really great. Most tenants are wonderful people. They're just people. They want to have a nice place to live and they are our customers. You get some bad ones for sure now and then, but by and large they're great, you know, so, so, okay, go go through this survey a little bit more. You know, lease up, fee re rent fees.

Right. These are the fees that I have because, you know, I think people, you know, it's like, it's like mutual funds, right? But they have all these hidden fees. I'm going to sit down and break it down. You don't really know how. People just think they're just paying a flat fee. But there's all these. Tony Robbins had a book published a book not too long ago where he had like 16 or 17 different fees that mutual fund companies charge, all hidden, you know, unless you really know what you're looking at. They're all hidden and you just think that you're getting, this is your return, but within that return there's so many hidden fees. So I'm just saying that, look, as an investor, if you're looking for your return on investment, you want to look at all the fees that you're charging and see you're being charged and see if there's something you can negotiate before, ahead of time. And in addition to the fees. Right, Let me just go through the fees, lease up fees, the fees that they normally charge when they find a new tenant for the property. Now here's the thing, that can be as much as 100% of the first month's rent. So basically you get nothing. The first month's rent, you get nothing. The whole fee is gone when they find a tenant for you and the property is vacant. I like to buy a property with a tenant in it, but that's a lease of that. So you basically lost the whole first month's rent. The other thing, that reader entry, they find a new tenant for the property in the second year, then they charge you a fee again, that's another. It can go from 60 to, I've seen from 50 to 100%, which is a pretty big chunk of money. You lose a whole year's worth of rent.

And some. But sometimes, and here's the odd thing about it, sometimes there's no renewal fee or sometimes the renewal fee is $150 or $100. So it's all over the board. And, and here's the problem. This old fashioned philosophy of property management is out of alignment. Whenever you get into a deal, you want to have a strong alignment of interest. The owner's interest is to get as much income out of the property as possible. The property's manager's interest is to make as much money as possible. Why can't we put these two things together, you know, rather than having all these diverse motivations. So let me just tell you about that.

Also, besides the owner and the management company, the tenant, the tenant is the one that's paying us. So I think aligning the tenant's interest as well, you know, if you make it hard for the tenant to stay there, they aren't going to stay there very long.

They're not going to stay. Yeah, yep, exactly. So here's what I was going to say about that. Some clients will say the property manager is not aggressive enough on rent increases. They tell me to just not raise the rent or to raise it a very small amount when I know I can get more. And they'll say, well, the property manager's being too lazy on getting me a higher yield. But then others will say, well, they'll say that one of the reasons is they're lazy. They don't want to have to go replace the tenant if they decide to move when the renewal comes up. Right. But then on the other side of that spectrum, you'll get a different client that says, well, you know these property managers, they always tell you to really jack up the rent so that the client, so that the tenant is incentivized to move. Because if they move out, they can charge you another lease up fee. You can't win in this debate. Right. Nobody knows really what the real motivation is. Right. We totally see that. You see how it's the exact same set of circumstances and 2 completely different belief systems. Right. So here's what has to happen. We have to have a flat fee system where you as the investor pay a higher percentage. But it's simple, it's totally flat. Every dollar that comes in, the property manager gets a certain defined percentage of that dollar. And if the dollar doesn't come in, they don't get anything. And then I believe there is an alignment of interest. That's why I proposed this idea about four years ago at Meet the Masters. And you know, nobody really took me up on it. I didn't really push it too hard. I have mentioned it on the show over the years. But let's talk about this spreadsheet a little bit. Okay. So we see from just what you haven't even gone over all of these 18 items yet, we see that there's a misalignment of interest. Right. Let's see if we can get the interest aligned. Okay, tell us about your spreadsheet here.

Well, look, I took the, I took the three most common fees that are universal in all property management agreements. They were the management fee, the lease up fee and the property inspection fee. All the other fees exist to some extent or the other, but these three fees seem like they exist in all contracts. And, and I analyze them from 8%. Assuming the management fees are 8%, 9%.

10% on a $1,000 per month property.

Yes. Right. Just to make the numbers easy. So $1,000 a month. So having, if you do that, you know, basically the total fees on an 8% over one year, it's all annualized. So one year it's 1,710. For the 8%, it's a total of those three fees on 9% is 1,830 and 10% is 1,950. But the annual rent is 12,000 throughout because you're getting 12,000 bucks a month no matter which way you go. So as a percentage of the rent you're paying, anywhere between 14 and a quarter percent to 16 and a quarter percent. You know, that's what you're paying. You know, if you look at it, that's a sizable amount. Right. I mean, if you're paying whatever people.

I agree, I agree. And a lot of times this is, this is not, this doesn't happen on the first year because the property will be pre rented or they won't charge A lease up fee for the first tenant, but then after that you got to pay it.

Right, right, right.

And sometimes, and to be fair, sometimes the tenant will stay for two or three years or heck, maybe even longer. Okay. And that brings that number as a percentage down quite a bit.

No, it does bring it down by 5 percentage points. Brings it down. So that's what I'm saying. If they don't charge the lease up fee or you buy, you buy a property with a tenant in it, or if you already bought a property with a tenant in it, then there's no reason for a lease up fee because you're buying it as it is. And the second year, if the tenant continues to stay there, there's no lease up fee. You know, maybe the renewal fee of 150 bucks, which is negligible if you break it down over 12 months, is nothing. So if you can take the same management fee as a percentage of rent and you remove the lease up fee from this equation, you get anywhere between 9 to 11 or 12%. And that's why I think that maybe it would be better if these. That's one of the questions I have in my survey is, hey, you know, you know, would you consider switching to a single flat percent percentage monthly property management fee? Yes or no? If you answered yes, what is the percentage fee? Would be, what would be the percentage fee? And if you answer no, provide your reasons. See, if they look at this right, I mean they're basically making 9 and 10% anyway and they're getting all these bickering going back and forth between the investor and the rest of things. They know there's no trust, has got to trust a management company. I got to tell you something, Jason, there are a few companies in your network that I trust implicitly and I don't have to do any work at all. They do a lot of the stuff for me. They find the best insurance for me. I mean, they do everything. So on the other hand, there's some others that I have to go out and shop for this, that and the other, and I have to call them, you know, spends more, it takes more of my time. So the more value that a property management company can add to this relationship, it would be much better for all parties.

I couldn't agree more. And you know, this comes down to the old thing, is that, you know, it's the question of thinking long term in business or thinking for today. It's instant gratification versus long term thinking. And you know, just humans think different generally about that. So I say the solution to this is number one, you know, there are some options. Either self manage your properties and learn how to do that. It's really, a lot of times it's easier, frankly. If not self manage, you can propose an a la carte property management relationship. The, the blend that I like is having your property manager do the lease up and handle things between tenants. But the rest of the year just collect the rent directly. Just have them pay you and then you've got that manager there. If you need a local contact, if you need some help, you can just call them up or you know, email them and they can help you and they're going to be happy to do that because they want to earn your business, right? Versus if they have you under contract, it's more like they've got you and they become complacent. You know, it's, it's just human nature. That's just the way things are, okay? That's the way humans are. So when it's a transactional relationship rather than a contracted relationship, I say you get better service, which is odd because you pay less too. So.

One other thing I did want, I did want to mention before I forget is, you know, this thing I don't mean you can, you can enlighten me on this. You know the rent, rent is due on the 1st, becomes late on the 5th, right? Generally that's, that's the thing.

And, and then you don't get it till the 20th.

Well, yeah, no, but sometimes another benefit.

Of self management, you get your rent sooner.

You know, sometimes they don't, they don't credit your account until the following month. There's no reason for them. That's long.

That's, that's, that's ridiculous.

That's a big float. Imagine doing that over 100 properties. You know, you're collecting month people's rent and then holding it, you know, and the pretext of saying, hey, you know what, there might be expenses, so we want to wait. Expenses to be paid. Wait a minute. You already have $500 of minimum reserves that you're already holding in a market.

In a market. If there were actual interest rates paid on savings and you know, this wasn't a trust account, I would accuse them of making money on the float. I can't do that now because there's no money to be made. But yes, in a normal world where we had normal interest rates, not these exceptionally low interest rates, that would be absolutely true. I think right now it's just custom or laziness, but it's ridiculous. If you self manage, then you don't have that. You get the rent right away. My mom self manages all her properties all across the country. None of them are local to her. She doesn't own any properties anywhere near where she lives. Okay. You know, some of her properties are 2,000 miles away from her, okay? And she self manages everything now. I think she does too much. I think she could do a nice hybrid arrangement where she wouldn't go out and do lease ups. Frankly, she's retired. I think she just kind of wants something to do. Okay? And I've had her on the show talking about that. That's not very logical. Okay, so look at the third option. You know, remember I was telling you three options, you know, there's really four. You can go into your typical property management relationship and if you have a good property manager, it'll be great. Most of them are pretty good or mediocre. Ish or mediocre to good. You know, they're on like the, the 70%. They're like C and above, right? Most property managers. But some are like, you know, C and D and some are F's. They're terrible, okay? You know, they're all over the board. So you, if you get a good one, a traditional property manager arrangement is not going to be too bad, okay? It may be fine, okay. And I have some great ones and I have traditional deals with them and it's fine. Or the next step is you can have a hybrid arrangement, okay, where you pay a la carte for services, okay? The next one is you could completely self manage your property. And the one we didn't mention, which is really what your spreadsheet is about, is you could do a flat fee arrangement with your manager where you actually pay them a higher percentage. But there's no garbage, there's no. They don't get to keep the late fees, they don't get to charge you renewal fees, they don't get to do any other fees except you might pay them, say 14% instead of 8 or 9%. And you might be thinking, well, that's crazy. Not really. Okay? You know, that could be a better deal. And even if the deal isn't better, you can't hear the dogs that don't bark. And here's what you can't hear. You can't hear that that tenant becomes a happier tenant because they're not dealing with a property manager that's incentivized to be predatory and charge them late fees. Or, you know, you as the investor aren't dealing with a property, property manager who's predatory and wants to ding you for a bunch of little miscellaneous fees. Right? Everything is simple and aligned and it's just a clean deal. And this is where the industry needs to go if it wants to survive. You know, one of the old, look it, you're sort of into the technology world. I know, Mathias. You know, one of the things we've really all realized in business the last few years, that successful companies are willing to take the risk of cannibalizing their own business before a disruptor does it to them. And you know, look, for example, if the taxis would have done that, if the music industry would have done that, okay, they wouldn't have suffered so much in the transition. You know, the taxis got killed by Lyft and Uber. The music industry got killed by Kaza and what is it, Napster? Okay? You know, they wouldn't have had that if they just were willing to disrupt their own business preemptively. And this is what the property management business has got to do. They need to disrupt and cannibalize their own business and they will win. That's what I say. You agree?

They're in the comfort, they're sitting in the comfort zone. They don't want to get, get uncomfortable in doing something they're not used to doing. That's the problem. But, but honestly, if they, if, if they look seriously at a long term relationship that they have with, with the investor, I think it would be in their best interest to move away from the model that they have right now. Because it's not, it's not something that's, I don't think it's sustainable given, given all the new technology and how, you know, I mean, you've done podcasts on no Keys Please and other things where you don't really need these guys to do stuff for you. You know what I mean? You can, like you say, maybe do a hybrid, you know, maybe use somebody for just leasing it out and somebody for maintaining it, you know, and just the checks come to you and there's no waiting 45 days to get the check. It's just so many different things that people want to get smarter about how to manage these properties. You don't have to get rid of, they're not, they're not saying get rid of the property management companies, but I think using them in a more, in a more efficient manner. And I think once you do that, then the property managers become wise to the fact that maybe they should change their business model. That's my.

Yeah, absolutely, absolutely. This is the hint. And you know, look it, I want to say you mentioned mutual funds earlier, Matthia. And you know, look at, even though it sounds like we're griping and complaining about this stuff, which we are, okay. But you know, we, we want to cause some change, okay? We really want to cause some change and disrupt this industry and be the forward thinking people here. And I'm so glad that we have such intelligent, interesting clients that are so engaged. And Muthaya, thank you for coming on the show and talking about it. But at the end of the day, this is a zillion times better than any Wall street investment. Any, you know, fund of sorts or any pooled money investment, you know, invest in someone's private placement memorandum their llc, you know, they're always skimming the profits off the top there. At least here, if you read the contract, you know where the money's going, right? So it's not, you know, it is transparent in that sense. But, and you know, when you gave the mutual fund example, I was thinking, Mathia, you didn't even mention all the skimming that's going on at the level of the companies in which that mutual fund is invest. So the mutual fund has all these hidden fees, right? But then there's a whole nother layer to the onion and that's the graft and corruption of all the executives at the company in which they invest, right? They're, they're paying themselves the big fat bonuses. They've got expense accounts, they're going on first class trips. They're going and whining, dining and people, you know, spent. That's all your money, folks paying for.

All that all the while while your investment is just, is tanking every day, you're not earning anything. These guys are living high off the hog. You know what, look, the thing is, in order for them to have that kind of to charge those fees, I mean, the problem is nothing is transparent. Most people are not educated enough to drill, to look through their statements and see what the fees. Most of you don't even open the damn statements. That's the thing, you see. And you know, all you got is open your statement, you see all the, you know, you got to go through and read your stuff and then you'll find out all these fees is getting charged. And, and most people just leave it to someone else to handle it. And then they cry afterwards about, hey, you know, I'm losing money here.

Yeah, they do, they do. And, and so that's what I also want to Tell people this is not a new thing. You know, I've said this many times before, but is at the beginning of the relationship with your property manager. And if you've already had the same manager for years, then, you know, start today, okay? Really pay attention at the beginning and set the tone that you are an aware investor. Ask questions about this fee, about that fee, about that expense, what is that? You know, and get it all down so they know you are paying attention. They know you are an attentive investor who is aware and who is not going to be, you know, overfeed. Okay? So just set the tone. And if you haven't done that and you've had the same property manager for three years, then do it next month when you get your next statement, okay? And just set the tone for a while. You know, be courteous, don't be rude, you know, don't be difficult, but make sure they get the message you are paying attention, okay?

Right. Absolutely. No, and you know, you need to know if they're spending your money, you need to know where they're spending it. And I, there's certain things, I've tried to follow your philosophy, okay? $250 per month per property. You know, these, I mean, it's difficult. Enforce that. A lot of them want $500, just fine, you know, but don't, you know, I mean, you're going to spend, you know, spend the investors money, let them know where it's going, you know, I mean, that's all. I mean you can't argue with them for everything. Like you said, pick your battles, right. You know, but if they're going to charge you all kinds of fees and which you didn't even agree to, you know, I mean, look, there was, I got my bank, my account was credited, you know, for, with a 10% fee and I said, wait a second, I just signed an agreement with you guys for 8%. What are you doing? Oh, I'm sorry, it was a mistake. We'll credit you the other 2%. So those kinds of things, you got to catch them, right? Otherwise then you just, you just think that, oh, they're crediting you. Nobody's perfect. And it's all being done by human beings anyway. So you know, somebody might make a mathematical error or somebody might make an error. It's your money. If you're, you want to, you know, see, make sure it's, it's done well, you know, you either do it or hire a bookkeeper to do it. But you know, I mean, I don't Know, I mean, just paying attention to the details, I think is important.

Absolutely. Well, I think we covered it. And Mathias, thank you so much for preparing this information. Really good stuff. You know, on the positive side, what's next for you with your investments in your portfolio? Are you looking to buy in any more markets? Tell me.

Yes. No, I am, Jason. I am. You know, I, I, I like new construction, you know, only because they require less maintenance. You know, I've got one in Ohio that I'm buying one in Tennessee.

Yeah, you pay a premium for it, but it is more convenient, there's no question. Yeah. So you're buying in Ohio and Tennessee right now, Right?

Right. Ohio and Tennessee. They're both new construction. They're going to be done in March or April. And then I think there's something that Carrie sent me saying, something's coming up in Dallas. I'm going to look at that, but I don't want to go too far out. You know, I got four markets. I've got Tennessee, Ohio, Alabama, Mississippi. So that's where I'm at. And, you know, I like Tennessee myself.

Stop at five. Don't go, don't go more than five. Don't go more than five. Just, just double down in the same market now. Okay. You know, this is one of the mistakes I made. And don't make the mistake I made. That's why I, that's, that's why you're here listening to, you know, you, you can learn. I spend the money and I make the mistake, and you just get the lesson. Okay? So don't over diversify. Definitely do diversify. It's a, you know, it's a commandment. Thou shalt diversify. One of my ten commandments. But don't over diversify. So three to five markets are enough. That's enough diversification. Not more than five. Okay.

I mean, I'm still looking at, you know, every day and looking into different things that are coming up and looking at these deals and seeing what, what will work. And you know something? I know the inventory is limited, but there's still some that are good. You know, I mean, it's just a matter of looking and going through the stuff and hopefully making the right decisions. You know, it's not, it's not all paper and gold. I'm sure you make mistakes, and I'm trying to make them. I made mistakes and make them. But hopefully, at the end of the day, you know, these rental incomes will allow me to just retire. That's the whole, that's the objective of doing this so that we don't have to. We can do what you want when we want and drive a Tesla when we want.

Yeah, yeah.

Good stuff. Good stuff. Well, hey, Muthaya, thank you so much and happy investing to you and we really appreciate you contributing to the show and sharing with everybody. And folks, insist on some of this stuff we talked about with your property managers. And let's together, let's move the needle on this and let's get some new thinking into this industry. We have thousands of clients out there and way more listeners than that. We are a powerful group, folks. So let's move the needle. I have a dream. There you go. Not quite as inspiring as the original guy who said that, but, you know, there we go. All right, Mathias, thanks a lot. Happy investing.

Hey, thanks for having me on your show, Jason. Thank you.

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