Christian Explains Property Management: Bonus Episode of the Live Sessions

All right, everyone. While half of us are still off at Mexican restaurant for lunch, I'm going to adjust our schedule a little bit. We're probably going to go a little bit after 5. The pizzas are going to get delivered to the pub for the VIP people at 5, but we're going to, we're going to figure out the schedule as we go. Uh, not on our scheduled thing, but I got so many questions just a second ago. I'm actually really excited to deliver this. So I'm just going to, we're just going to roll. We're, we're in, we're in learning time. I'm just going to make this a thing. And also wherever Dylan's at, he's speaking next. I don't even see him. So he— I couldn't start the normal schedule if I wanted to. There's no one here and the speaker is in their cabin. So management structures, bonus content. This is one of the things I actually think we do best and talk least about because it turns out when I host an event for how to manage your property, no one shows up. You call it creative finance and magically all these people are here. That's great. Uh, so management— when you buy a property— sorry, Chris literally said don't move this. He taped it for me. Wonderful. All right, management structures. When you buy properties, you need to buy right. Most of this event has been about buying right, structuring your debt, structuring your equity. Super stupidly important. You still don't make any money whatsoever, like none, if you do not know how to manage the property. Most of the deals that I am buying, I am buying from large groups that did their math just fine and failed to operate the property. It's the beauty of being able to operate in secondary and tertiary markets universally across the United States. Your property managers in these areas mostly suck. There's a few good ones. If you get them, put them on your team. You have 3 management models. By the way, I'm completely winging this speech. I think this is probably gonna be our best one. I'm so passionate about this. Oh wait, there's 3 management models. Option A, you self-manage. You can really do this effectively, maybe up to 50 units. I think the jumping off points, usually you start considering around 25, 30 units what you want to do with your time. So we have Sam and Kyle, you guys are at 40 units. That is like the peak. Yep. You're at the point where you're going to shift your model. It is right now. Self-manage. I'm actually a huge fan of when you're starting, even though it's hard and even though it's a time suck, the return on time is awful. However, you become such a better manager of the people that you work with on any model you do if you actually know how to do the steps of it. My boss at CoStar, John Hickman, I learned a ton from him. He could not sell the CoStar product if his life depended on it because he did not know how to do my job. At all. Very frustrating as an employee working for someone who literally doesn't know how to do what you do. He was actually a really good boss and a really good sales guy. He just did not, he didn't know the product. If you were in a pitch, someone asked a question, he literally didn't know the product. I think there's a huge advantage of knowing your product. I know what, how long things can, should take. I just, I talk about getting electrocuted on site, doing your own work all the time. We just went over to the farmer's market over near Hoodsport, and I just got electrocuted on their fridge. I put my hand between 2 of their fridges and I electrocuted myself. I was like, I know what that feels like because I've done this project. I can fix your problem. I didn't bring it up because I didn't want to explain to them how to fix it. It's fun getting your hands on the properties. I can replace a toilet. I've done many. I can do flooring. There's nothing that you can do physically to a building within reason that I haven't done. In the Robin Hood, I've done plumbing, I've done, I've done roofing, done siding. I've electrocuted myself in at least 4 of these cabins. I'm really bad with electric. I shouldn't touch it, but I know how to do these things. When we get into the books, I understand how AppFolio works. I understand our software. So when there's a problem or if a key person leaves, I can at least do it at a B level. You don't need to be an A+ property manager. I really, really advise if you're in a position to do so. Self-manage at some point for some project. That's option A. Problem is not scalable. You will not forever be your own property manager. It doesn't work. You're going to buy a few apartments. It's too big. You need more people. Yep. Option B, Matt Hawkins is a mentor to me. He lives in New Hampshire. I spent a week at his house recently just to learn from Matt. His model is what we call the hybrid model. I've done this model in multiple markets. I've done this actually really successfully in Moses Lake. You put together your own team of people who you just kind of quarterback. So he does showings, and I did this in Stephenville. This is how we opened Stephenville, Texas. College students and real estate agents in the area. I get a list of them to do the basic— basically, it's like your own internal TaskRabbit. I have a list of preferred people who would love to get paid a little bit of money to show my apartment. So I don't have to do showings now because they come out, I text the group. I stole this from Matt, so I just want to like, Matt Hawkins, if you see this video, I'm not like everyone else who just steals your stuff and brands it. This is Matt's strategy. It's just great strategy. So you're going to put together your list of people, usually 3 or 4 deep, and you have a showing, you just text to that group chat. Hey, got this going. Uh, do $20 a showing or whatever is reasonable for your market. You come out, pay per thing, and there's an additional pay if they actually sign the lease. So no matter what, you go out, you're paid for your time. If you have a successful outcome, you get paid more for your time. Super inexpensive. $10.99. It's not an employee, it's just a person. They do the same thing for contractors. 3 deep general contractors. I need something. Hit it to the list. First one to raise their hand gets the thing, gets out, gets the job done. Matt owns 134. Am I thinking about more? I think he has about 160 units. About 160 units. He has no partners whatsoever. He's just done this over the 20 years, built up his portfolio, mostly fourplexes. He has some bigger projects. He just converted a prison into a multifamily property. That's really cool. Did a YouTube video walking through it. Cool project. Doing those type of things, Matt and his wife are able to run their entire portfolio as them, just the two of them doing the hybrid thing. Things that take time where we need to go out to the property, we have people that we can send. Leases, everything's paid online. They have software, they manage their software, they do their own bookkeeping. Hybrid is really, really effective if you are doing One, maybe 2 areas. So if you are regional or local, again, Sam, I'm just kind of picking on you. This is good. It's a pretty good model for you guys. That is a viable model where you're like, hey, we can be involved, but we don't really need the expense of full-time people if you don't want to. The other option, which is, I would say, usually not the goer, but it's what I do, is full— I start a property management company. I hire full-time staff. I have an org chart. I have people on a, you know, oh, there's almost no 1099 people. They're all W-2 employees. That's really the difference between the 2 models. By the way, Dylan, I'm just adjusting the schedule. I'll have you hop up when everyone gets back. Of course. So just chill. We're doing a bonus thing, property management. So when you're structuring your company, I do it in layers. My org chart looks mostly like this. I want to be large enough as an investor To have an office, like a building in our market that has an office, so I can at least plant a human in a building I own without renting space. That is a really, really helpful thing. If you don't have that, you can use third-party management and find a client who has an office. And your pitch to them is, if I use your office, you just have more free resources because my humans are going to be at your property more than anywhere else. It's a great, great deal for you. You just get extra attention because we're parked. At your building. It's great. So I've negotiated free office space everywhere I've ever been. I've never paid office lease for PM. The people that you put in per 150 units, up 150 to 200, one PM on site, they can literally run everything for like, I submit work orders. They don't do the work orders. They submit the work orders. They make sure that the delinquency report is managed. They schedule showings. They get leases signed, they do the showings. Totally works in a regional model if it's a bunch of small properties up to 150 units. If it's 1 or 2 properties side by side, you can do a little over 200 units with like 1 person can hold that zone down, provided that it's not a heavy reno project. That is a plant the person there. So for us, Abilene's a perfect example. I have 2 buildings. There's an 80-unit. There's 144 units. Both have really big offices. We have an employee at each, and then we're picking up another deal. That one will have an employee as well. We'll be a little bit overstaffed, but every single building is set up perfectly to have an onsite. Once we are over 300 units, I add a maintenance lead who takes maintenance coordination off all of those people. The most important lesson from this though isn't like, hey, you need to— I need to write down and copy Christian's org chart. If you want me to send it to you, I'll just send you an org chart. I'd spent a ton of time trying it. It's actually like, I think it's one of the most valuable things I have. We have a really cool org chart, but the model is you need to understand if you're doing your own company, if I want to be an A-level property management company, we need to be unbelievably good at getting A players on the bus. I want to get all the right people on my bus, even if I got them in the wrong seat initially. I see someone with a ton of talent and I'm like, just, I need to get you in the org. There's been a few people I'm like, I can't even afford you right now, but if I don't pick you up, you're gonna work for someone else. And so I've figured out how to integrate some people. Caleb Hallman's a perfect example. Took me like 3 years to find the right seat for him. But I was like, you, someone else will scoop you up and I won't get a chance to work with you again. I need to get the right people on the bus in the org, and then you need to get the right people in the right seats. Important things in business. First of all, the people on your bus, Need to be going to the same destination. You can have excellent A players who are phenomenal people and really valuable, who are not getting off at the stop that you were trying to get off on. You just need to get them off your bus and onto the right bus. There's some awesome people who should be awesome for some other company, and it's the best thing for them and the best thing for you. Sometimes you actually find the person who is just a great fit for your company, and then you get them in the right seat. And everything works perfectly. The org chart game is essentially you write out every role that you need to delegate. So if I was going from self-management or hybrid management into, I'm building my PM org and I'm taking full control of the management of my properties, the first thing I would do is I would document, and it's super arduous, but it's only arduous once. I'm going to document everything that goes into the role. Every person writes down everything that they do in a day. I'm gonna highlight in green. These things make us money right now. I have learned in business that it's a lot easier when you make money. Do those things first. Profit needs to drive your business. I promise you will not regret that. The next thing you do is things in yellow. These are critical tasks. They may not make us money right now, but these are like critical for us to continue to operate and make money. We're gonna make sure that those are slotted next. And then red tasks are, I'm doing these right now. They definitely need to be delegated. We are going to make sure it ends up on our chart, but we're, we're gonna focus on the things that keep us growing and alive first. Then you're just going to put little boxes on the org chart and you're gonna go, how would I assign these roles so that there's someone in each of these seats so that nothing is missed? Then your job is to assign people to those seats. The rule of the game, one person can wear multiple hats. So when you start your company, you're gonna have a few people who have too many hats. You're gonna have like Corey in our company. when we started it, had like 12 roles and Christian had like 12 roles and Caleb had 2 and could focus on one. And that was our, that was our organization. But as you build out, you get one name per responsibility and you can move people into those seats. You just can't have 2 people responsible for the same thing. What is clear in my company and the reason that we kick butt at PM is I know who reports to who and I know who needs to do what, and I can always check who is supposed to be doing what. So I build my bus And I lay out my seats and I know what players are in what spot. And if there's a problem, I can go to that part of the org chart and I'm like, what is not working here? Is the wrong person communicating with the wrong person? Is this person assigning work to this person? Why is this person not reporting to the correct person? Is it a top-down problem or a bottom-up problem? If you get really good at this, it becomes— and this is the one thing I think I'm really efficient at. When I, when you guys hear me always saying, Hey, I just fired someone. I do a lot of bringing on people and I do a lot of shifting around this thing. We keep a team of people who are on mission, all headed the same way. I know who's reporting to whom. When there is a problem, we identify it ludicrously fast in that company, which is why we're able to do deals like we're doing in Abilene and Longview. I can open a market like this because I have the model and I know who I need in the seats for the project. And then when the project starts going, Things always go wrong and I can go back to my org chart and go, this is what we need to assign. We get it assigned and now it's, we, we build that net. It's one of the most valuable things that I learned. Last thing I'll share, and now everyone's back, so we'll, we'll get back on schedule. But the last thing I'm gonna share on, if you decide to do any company that supports your business, don't do all of them. You can start a landscaping company if you're like, hey, this sounds like a fun project and I have a whole bunch of lawns and I have clients who have lawns. Sure. Businesses are cool. They print more money. It's a great way to make more money. The people who— I've never seen anyone do this successfully on an individual investor level. Maybe on like a big corporation you can do this, but like as an investor, we do the landscaping and we're awesome at the landscaping and we do the general contracting. We do this for our clients and the people around us and we're really good at being a general contractor. And we're a property management company. We're really good at placing tenants and we're really good at accounting and we're really good at balancing our owners and our clients. We're also really good at— I've never seen anyone build that business. You cannot focus on every single aspect of your business and be epic at it. My company, we do awesome maintenance coordination. We do not do the maintenance in-house. Could we do it? Yes. Can I make money doing it? Absolutely. Will that make us a little bit less excellent at managing the asset? Definitely yes. My lanes for maximum capacity for Christian Osgood, I can currently CEO Multifamily Strategy as one of the main employees. I would argue I'm probably the main employee. I think that's fair. My eyebrows are the logo. The, the PM company, I can CEO it, but I have to limit the amount of direct reports I get. So I have to have a really strong leadership branch underneath me. Which with Caleb and Danny and Corey, we built a really good branch. So the reports that I need end up on my desk and I can help, I can drive the bus, but I can drive the bus part-time, which is fantastic. When it comes to the acquisition company, we built it the exact same way. Caleb and I were able to do this for our first 500 units. I have a few more people who I'm bringing on for operations because I can't do the things that I do. In every single market all the time without taking away from one of the other things. But that's all you're trying to do is just engineer what do I want to excel at? If it is property management, you can build a company. And it's really fun to do companies. I buy a bunch of PM companies. I love seller financing PM businesses. We gobble them up, roll it into our org, love doing it. You can play that game. You can build that company. I've met a whole bunch of people who got to 80,000 doors. There's a lady in Dallas who taught us a lot of the PM stuff that we're doing there. She's like, yeah, I did this for 12 years. I sold the business for like way less than she should have, but she still sold it for like $35 million. She's like, yeah. She's like, I got a pretty sweet house in Puerto Vallarta now. And she has a huge ranch out in Abilene. She just scaled her business over 20 years. She just did PM. I was like, did you invest anything in the property? She's like, oh yeah. She's like, along the way I picked up like 1,000 doors. Became an absolute titan passively. She just was building her business and sometimes clients would sell a building and she's like, ah, my son kind of likes this buying thing. So like occasionally we'll buy one of our clients' buildings and we just ended up with a boatload of money. You know what you're specialized at. Management has, you have those 3 main categories of you can self-manage, you can hybrid manage, You can go full company, but if that's what you do, don't do everything else. Be, this is what we specialize in. The deals that we're doing right now, especially the 200-unit in Longview, we are able to name our interest rate, our down payment, all of the terms, the balloon, because we specialized in management. And I can go to the bank and say, you have a unique problem that is all management. This is all we do. I'm not distracted. We We are focused. Here is my org chart. Here's my business plan. I know how to do this. It's a powerful tool. I get a lot of questions around PM. I figured since we were waiting for everyone to arrive, bonus session, bonus session delivered. Now we're back on schedule. Thank you. If you guys have questions for that, save it for the Q&A, which I will absolutely do. I'm gonna try to get us back on schedule, but Q&A will be after Dylan goes and then after Phil goes and then Q&A. Any other questions, I will answer them. And of course we're hanging out afterwards, so ask me anytime.