What Actually Works to Lease your Rentals - Multifamily Strategy Live

Hello and welcome to Multifamily Strategy. I'm Christian Osgood, your channel host. Today we're going to be going over leasing. I'm also a little later tonight, if you're watching live today, gonna be hosting a little webinar on how we're buying all the real estate that we are, how we're doing this without creating a job, how we are doing this without, uh, honestly without using a lot of our own money, if any. Uh, additionally gonna show some Section 8 strategies that have made actual millions of dollars for a lot of people. I'll be adding a link to the description here as I speak. I just realized as I said that out loud, I don't know that I include that here, so I'll be adding that to YouTube as I talk. But super excited for today's episode. By the way, as always, you can ask questions here. I will post them, answer them. We will go through today's topic and we will dive into the live Q&A. So welcome to Multifamily Strategy Live. Adding this webinar code in here for you now. That should show up shortly. That is multifamily— multifamilystrategy.com workshop-live. I'll get that up for you here shortly. FamilyStrategy.com/workshop-live. Excellent. That should be updating here momentarily. That is in the video description and available now. So I'd love to see more people over there for the webinar afterwards. Uh, that starts in about an hour from now. Going into leasing strategy, this is a huge, huge piece of real estate. You make money in real estate based, uh, at least commercial real estate, 5 units and up, based on the operations of your building. Every additional dollar of revenue I make, that does not increase my expenses. If I do rent increases, expenses don't go up. I just increase my net operating income. And as net operating income goes up, the value of my building goes up. Quick math, and I wish I had my whiteboard easy to pull here. Visualize this super, super, super, super easy algebra. Most of the markets that I invest in right now are valued at a 6 cap, which means for every dollar invested, it would yield 6%. If you bought the deal in cash, it would cash flow 6% back to you. That is the average expected price. That's how things are valued. You take that cap rate, that is the, again, the return on investment an investor expects to make if they bought in cash. And you take your net operating income, all of your income streams minus your expenses, not inclusive of debt, that's not an operating expense. Income minus expenses, net operating income for the year, divide by 0.06. The math comes out to every time I raise rent $100, expenses don't go up, I increase my income by $1,200 per year, which increases my net worth by $20,000. Now if you You've noticed I have an over 300-unit portfolio. When we do rent increases of $100 across the portfolio, I make millions of dollars. In fact, I use Section 8 strategies to make my first $2 million. I bought 100 studios. Section 8 allowed us to increase rent by, well, it was $91, but basically $100 per unit that the government paid for. And voilà, $2 million new dollars were created. Those were not my only units at the time, but that is how the math behind this works. So. If you're trying to increase your revenue, you're trying to create your, increase your net operating income and maximize the value of your property in commercial real estate, your ability to be a great manager is your most valuable asset. You need to keep excellent people in your units because you want to provide great housing to great people. And you need to have the right strategy to get them filled, have all of the legal that you need in your leases, be protected as a landlord. I'm going to go over some of our best practices, what we put in our lease, and most importantly, how the heck we eliminate vacancy in our portfolio. Number 1, and most importantly, every market is going to be a little bit unique. I will share the best practices that work for me both in Washington and in Texas. There are some trends that I found, some websites that work the best. I'm going to share my operation playbook with you. Number 1, every market that I have tried thus far, the least expensive and most effective paid advertising has still been Zillow.com, which is crazy to me. I used to work at Apartments.com. I worked for the Coast Star Group for many years. You would think since they have so much surf— search traffic, they would be the number one. Here's what I found. They are number one if you have a 100+ unit apartment complex with a ton of amenities, with a pool, with common areas, with a coffee shop downstairs. If you have a fully decked out large commercial building, like you are a big time institutional size landlord, Apartments.com is a necessary part of your business and you will probably kill it. However, for the average landlord, a lot of your tenants and entry-level tenants are on Facebook and they are on Zillow. Zillow charges roughly a dollar per unit per month— a dollar per day per unit per month, so $30 per month to get a premium listing. We see more leads from that than any other lead source, and I have pushed out to over 100 different leasing sites every single time. No competition. Zillow's inexpensive premium listings outperform everything for lead quality, for lead volume, for placed tenants. Clear winner. I did not know this till a few years into investing in real estate. This has helped us be very effective in leasing up for our clients in Waco. It's really helped me with my leasing in Stephenville, Texas. It's helping me in Moses Lake, Washington, and Mason County, Washington. Across the board, that seems to be where the people are for entry-level housing. Number 2 is Facebook Marketplace, which is completely for free. But there's a trick to these. Facebook Marketplace people, you have more looky-loos, so it has the highest total traffic, but it has one of the lower conversion rates. If you want to increase that rate, you have to actively be on Facebook Marketplace when people reach out, get an application in their hands quickly. The problem with Facebook Marketplace comes down to the most scams are run through Facebook Marketplace. There are fake people copying other people's listings, trying to collect nominal deposit fees and, uh, background check fees. Occasionally they'll actually get full security deposits. It's less regulated. It's a bit of a mess. On Facebook Marketplace, there are still a ton of people. You have to be very, very responsive. You have to make them feel very comfortable. Your first thing on Facebook Marketplace when someone reaches out is to as quickly as possible get them to fill out an actual application and book a tour. If you can be the most responsive person, oftentimes what you get is you get people who will tour your space before they even look for other spaces. Then since they've already toured it, if it fits their needs, they will sign a lease. It is active, but Facebook Market is number 2 if you can put in the time. Number 1 is absolutely Zillow. Outside of that, I would not spend— personally, I wouldn't spend money on Apartments.com unless you had a, you know, again, big Class A or B+ Apartment complex, probably 100 units plus, definitely with pools and other amenities. If you have all those, awesome, go for it. Apartments.com all the way. For entry-level housing, for— we'll say Class C, Class B, up to B+, up to 100 units, Zillow and Facebook Marketplace is a vast majority of our lead sourcing. Uh, number 3, there's a third one that works very, very well, and this works in every market. The age-old bandit sign. If you have a sign in front of your property with a phone number saying, here is where you apply, there are always going to be people who drive past and go, oh my gosh, I would love to live here. And then they call in and you get organic leasing. You can do this if you're self-managing. Your manager needs to do this though. It is almost no cost. It is very, very, very, very, very cheap to put a sign in front of a property, put it out there, advertise your vacancy. Now you're hitting street traffic, you're hitting online traffic. The best two places, again, I've ever found have been inexpensive paid on Zillow and free on Facebook Marketplace. If you can hit that, you have the lead flow. Showing units— make sure that you have clean, presentable units. If you don't know how to take a picture of a unit, learn how to take a picture of a unit or hire a company to do it for you. It is amazing to me how many landlords take these crappy, like, angled pictures on their iPhone terrible lighting. Maybe you have like half of a stove in one of the pictures and like a corner of a wall, and you're like, what were they even trying to capture? That hurts your leaseability so much, and it's the easiest thing you can do. Uh, there are— I don't even know which one to link. There's so— go to Google and just type in how to take listing photos. There's gonna be so many different 5-step guides that say like, here are the angles you're looking for, zoom out so you capture as much space as possible, get good lighting, which costs basically nothing. Get great light, and then you can also edit in great lighting if you don't have great lighting. You can always run it through a basic filter. But to become a basic, like, level 1 photographer for real estate, that is all you have to learn to do. If you can execute a great picture that is zoomed out correctly, that captures the space, that makes it feel maybe even a little bit bigger than it is, not at a crazy angle, just get a nice level shot Post professional-looking photos. If you don't know how to do it, again, hop on Google University, hop on YouTube. This will take you 5 minutes to learn how to take better photos. Then go take those photos, get them posted. Listing descriptions— if you want to utilize my Section 8 strategy, you have to hit fair housing laws. You can't discriminate against them. You can't say, oh, I only accept Section 8. You have to allow housing for everyone. However, people will often look and search with filters for Section 8. So include multiple places in your description, Section 8 encouraged or Section 8 accepted. Um, of course, everywhere already has Section 8 accepted, but if you want to target that, or that is a demographic that you want to go after, match your pricing to at or slightly below fair market rent for your area. It's posted publicly online. Match that fair market rent and then move on to the next phase. That's— I mean, It seems really simple. Lots of people don't do this. This is why I lease up faster than most people in every market. I know where to advertise. I know how to take pictures. Our listing descriptions are simple. They're sexy. They get it done. They mention what it is we need to mention. We list the amenities. If you're slow to lease, offer a partial rent credit. You credit it on their second month, so they have to pay their full move-in fees. They pay a full month's rent, and then in the second month, the credit kicks in. They have a lower second month. That way, one, you establish, yes, I actually have a tenant who actually can pay full month's That's very important. But two, you can offer these incentives. What people tend to do, and this is the wrong thing to do, remember at the very beginning of this, or if you just hopped on, welcome, uh, real estate is valued, and the reason leasing is so important to get right is because the amount of money that you're bringing in directly determines the value of your property. What does this mean? We need to keep occupied. We need to stay near market rent. Don't skip any of these steps. Don't skimp on rent, and definitely don't reduce your rent to get a tenant. One of the most common things that people do incorrectly, they go, man, we're not getting— let's say market rents $1,000, you had it listed for $1,000. They go, hey, we're not getting anyone at $1,000. Maybe it's just too high. Maybe we need to lease at $900. Your property is now worth significantly less if you're leasing at 10% less. Your building's worth 10% less. You just have less income. Doesn't work exactly like that because it's a ratio between income and expenses, but you get the point. If you're making less money, your building is worth less money. However, you offer a rent credit, your scheduled rent, your actual lease value of the property is still full price. Maybe you paid a little bit, maybe you have a little larger loss to lease, but your valuation is based on the income that you have recurring. In addition, they don't have the same rental credit in subsequent years that they stay. So if you're an awesome landlord and you provide a great space, you have very few moveouts. This is Leasing 101. It's been amazing to me over the years how many people don't know how to play this game. For those who've just joined, I'm going to do a quick recap and we're going to dive into some of the questions. Number 1, where do you advertise? I have found apartments.com is not the best. We do a lot of Zillow. It's very inexpensive to do paid traffic. It's about a dollar per lead per day. And it works unbelievably well in every market I have ever tried it in. Number 2 is free. It's Facebook Marketplace, but you have to be active and communicative with everyone who applies. Uh, that is a first-come, first-served lead source. It's gonna take a little bit of work. It has the highest traffic but sometimes needs a little bit of extra help on leads as far as the, like, the lead quality. Sometimes leaves a little bit to be desired. Um, number 2 Rent readiness— make sure your pictures and your descriptions right on your listings. You can learn this in 5 to 15 minutes on YouTube University, or Google it. Learn how to take a good picture, get good pictures in there. Hire someone to do good pictures, I don't care how you do it. Get the good marketing photos in there. That is what attracts people. Have a good description that matches what people are looking for. Call it a day, move on. Do not skimp on those. Third, do not reduce your rent before you offer incentives to move in. If you have a move-in credit of $500 or you have a— I don't care if you have an $800 moving credit on a $1,000 rent. If you lower that rent, your building's worth more. Your building and your values are stabilized. When you maximize rent, remove the barrier to entry to people to get into your building, you will find more people. So if you are slow to lease and you're doing everything else right before you adjust that price, try adding leasing incentives. If you do that, you're going to maximize your building. You're going to outperform a lot of other people in your market, which is why while some of my neighbors make hundreds of thousands of dollars, I make millions of dollars. By being a better operator. It makes a difference, and in fact, it can make a huge multimillion-dollar difference. If it's $100 in rent over 100 units in a 6-cap market, that is $2 million of forced depreciation that you have created by being a better operator, being better at leasing. This is how you make the big bucks. And good news, it's probably the simplest thing that you'll ever do in real estate. Get past level 1 of marketing, be a level 2 out of 10 marketer, you're ahead of most of the market. You will lease your spaces just fine. All right, let's go dive into some questions here. And I am waiting for my contacts subscription to be refilled. My screen is actually farther away than you might think it is. So if I, if I squint a little bit, I apologize. I am temporarily slightly blind. All Nighter says, hey everyone. Hey, hey, All Nighter. I'm glad you're here. That means we can officially start. All Nighter has been probably, and by probably I mean is probably the most loyal attendee of our YouTube Lives. All Nighter, it's good to see you. Troy, who's also in the mentorship group, by the way, saying what up to Hyder. Love that there's community happening in here. Uh, speaking of common contributors, we got Oscar. Oscar, uh, how much do you typically pay a property manager? Also, at what point do you get a PM? Once you own 150 units or over? It's really up to you. I have found that it's very, very, very easy to manage up to 30 units by yourself. It is not a whole lot of work. Now, if it's way out of state, I would just go ahead and say get a property manager and get eyes on it more often than you. But if it's within driving distance, I was able to manage myself really comfortably. A little over 50, I think it was about 55 units before I got a property manager. When I bought a property management company to do that, but 55 units when I lived 3 hours away on the other side of the Cascade Mountains. So there's a few, you know, there's times where you can't make it over the mountains because of snowstorms. Um, I still had no problem running those. It wasn't that hard. It's really not that complicated. As you start to get more people, the amount of maintenance calls, the amount— like, it starts to become a job. In my opinion, over 50 units, it's, it's starting to feel like a job. Uh, that's where you add more people. I found the easiest way to do it for me was to start my own PM company, to hire great people, and to control my market. Uh, when I left Washington State, I sold that company, and so now it's in third party. And I love the company that manages my properties. Uh, they— I continue to use the company that I originally built, um, but they came in with a new group that had their own massive portfolio. They made a bigger company out of it, and I absolutely love it. Um, for charges in Texas, it really depends on the size of building. If it's a smaller building, I have to charge more because we just won't make any money. Uh, but most multifamily buildings, like you're saying, mid-sized multifamily, 50 units or less, we're usually looking at 6% fees. 6% usually does it just fine. Um, I do renewal or leases at $500 flat fee. And annual renewals, which includes all sorts of stuff— inspection, walkthrough, signing the new lease, all that. There's actually a lot of man-hours that goes into renewals, but $200 per lease renewal. So it all maps out at the end of the day closer to like 7% of the rents. Uh, but I don't make a lot of money in PM. I use it to subsidize the cost of managing my own portfolio by being an excellent manager of other people's portfolios as well. I chose to do my own portfolio and third party. Uh, you can build the business however you want. But having a good PM ties right back into being amazing at leasing. They got to be able to do this, and you need to understand the basics of what they're doing so you can instruct them to be better. If you know how to market your own units and you know what to look for, you will— just factually, if you're a better marketer, you'll make more money than other people in real estate. And this has been consistently true for me. You don't have to be that good to be better than most the other operators in your market. Dylan, speaking of, of people who attend the live— Dylan, I haven't seen you in a second. Dylan's also a member of the mentorship group, but I have not seen you on the live for a second, man. Good to see you. Oscar, how do we raise rents without losing current tenants? Uh, how have you done this so we can learn? So sometimes if the rent increases are dramatic enough, you will lose a bunch of tenants. We typically don't have that happen. Typically, I do a few things. If utilities are currently being billed to the owners, I move those to tenants first with no rent increases. So year 1, wherever their renewal is, they do not receive a rent increase. They do get utilities billed back, which is usually pretty substantial, but it feels better than raising their— like, just psychologically, raising their rent and billing back utilities, people are like, oh my gosh, this is horrible. Uh, you get away with the utilities, you have lower move-outs when you pass that bill through. So that's number 1. Um, other than that, I try to do rent bumps personally. I have enough in reserve to renovate units and get them online if we have partial move-outs when we raise rents. My preferred method is to say, hey, this is our target rent, we're going to raise target rent, and it is okay if we have people move out. We're going to fill it with new people and we'll go even higher on the rent. Um, and I've done that many times. The rule of the game, or the overall, like, there's one golden rule on this: don't rock the boat if you can't afford to get wet. If you can't afford to lose tenants, if your deal doesn't work or you didn't raise enough reserves, don't roll the dice. You're going to have to have a longer lease-up period. You're going to have to do smaller rent bumps. Best practice: have or raise enough capital to get through your rent bumps, to afford a few move-outs and a few renovations so that you can get through the project faster. This does two things for you. One, it makes you more money faster because again, valuation in real estate, you're increasing your income, and that's, that's generally speaking a good thing. You can be a better landlord because out of more money you can renovate the property faster. It's easier to run a great property and keep it full when you have some cash flow coming in. But in addition, when you finish the project quickly, like you get your renovations done, you get your rent bumps done, it takes a lot less bandwidth, which means you can focus on more real estate. I, I think the biggest thing that you lose by going slow or trying to do things just out of cash flow instead of raising enough on the front end is you lose time. It takes your attention from buying deals and stabilizing properties to trying to operate and try to penny pinch, which is usually actually the least effective way to multiply money. The reason I was able to go from 4 units to hundreds of units is because we got really efficient at how are we budgeting, how are we doing the project. I can turn a like midsize multifamily building in 60 days. Like I can get teams in there, we get the reno done, we get the rent bumps in place. The lease-up usually takes me 60 days. If I had to re-lease half a building, I can usually do that within 60 days. Um, but if you can't afford to do that, or your raise didn't work that way, or you had more move-outs than anticipated, don't get so aggressive with the, with bumps that you lose tenants when you can't afford to lose tenants. Keep that cash flow strong. Plan your deal based on the deal. It's a little deal dependent, but those are the general— those are the goalposts. Let's see here. You teach to acquire deals on interest-only notes and then do the debt hammer. How do you pay off equity partners if you're not doing cash-out refis? Uh, usually through a cash-out refi. There's nothing wrong with the cash-out refi. I'm just not re-leveraging the property again and again and again to pull out money. Um, that's the most typical way to do it, is cash-out refi. You can also do it out of saved cash flow. You can also do it out of other projects. You can also do it out of earned income. At the end of the day, you pay off partners with money, and that can come from a sale of a property, come from your job, it can come from the cash flow of the property, and come from additional debt. It can come from the refinance of a property. Uh, it doesn't matter where it comes from. You have to be able to hit your buyouts, and you pay your buyouts with money. But I do a lot of cash-out refis. Typically, you're going to build your plan based on the financing you have. So for example, I like seller financing debt that's 10 years plus. Sometimes sellers are only willing to carry 5 years, and sometimes that's fine. That would be when I do the buyout of the partner. So the debt expires in 5 years, so somewhere around year 4 and a half at the latest, I'm going to be doing a refinance. We'll pull the cash out, we'll buy out the partner. Now I have my long-term debt product in place. I'm not going to retap that property when it's time to refinance. I won't pull any new cash out once I'm the only owner on that deal. So it doesn't mean not refiing, it means don't do the refi till you die method. Uh, there is a— Grant Cardone is one of many people who've made this really popular. Kiyosaki did this before him. It's basically just keep everything levered all the time. Ben Maller has done a great job of running this where he's just ripped like $100 million out of his portfolio. You can do that, but all of them tend to burn the principal. I find if you're going to do a cash-out refi only do it to buy more real estate or to pay off other real estate. I, I don't get this whole like keep everything levered to the moon all the time. Once you get financial freedom, the last thing you want to do is gamble with your financial freedom. Take risk off the table once you hit your goals. That's my, that's my motto. And the nice thing is, so we hit financial freedom and you're paying off your debt, your income just keeps going up because your expenses are going down. So the market's depreciating, your costs are coming down, you just get richer and richer and richer. This is how the rich get ahead. If you lever to the— if you lever to the moon, there's always more risk. I like less risk. Nate, do you think it's worth starting with a sub-5-unit building? After speaking with some lenders, they would only lend to a first-time investor at 4 units. Uh, one, you need to find better lenders. I, I get that, and there's often an experience requirement. Um, so sure, if you have an opportunity— I'm not saying don't buy I bought— I have 11. Well, no, I sold one. I have 10 duplexes. Uh, I had 2 triplexes. I sold those, uh, to my buddy Cody. We actually traded some buildings. I got some larger ones, he got some smaller ones. When we put together this deal, or my first few deals, there's nothing wrong with buying small multifamily. It's not going to move you forward super fast, but experience is great. What you can do as a first-time investor though, I don't want people— and this was the biggest mistake I made— I only looked at duplexes through fourplexes because I thought that's all I could to do. That is not true. If you found, like, like my 38-unit building, or like my 25 or 26 or 44, or now the 76 that I'm under contract for— any of these deals that I found in Stephenville, Texas, or in Moses Lake, Washington— if I was only looking for 4-plexes and there were 38s and 25s that I could buy, I just needed a partner who had some experience, I would have knocked that out. If that's the only thing you're missing between you— like, I made $2 million. Well, My business partner at the time, Cody, and I made $2 million. So each of us made $1 million on that deal. We made $1 million each on that deal when we didn't have the experience, we couldn't afford to buy it, but we believed that we would make millions of dollars if we did. Everyone can raise money and everyone can find a partner with experience. If you're like, wait a second, for $300,000 you can make $2 million. Everyone listening to this You would find someone with $300,000 and you would pay them a lot of money if you can turn $300,000 into $2 million. If you know how to underwrite these, that's, that's how you play the game. So to answer your question succinctly, yes, I think it is worth buying smaller deals when you're new. Buy deals that move you forward, that moves you forward. I also want to say, don't only look at those deals. Look at all opportunities. The way you're taking it out could be completely different than your conventional lenders. And if it happens to be seller financed, bank's not even involved. Who cares what they think? Kashif, as a PM, what reports do you provide and frequency? Do you have weekly calls with owners? Oh, definitely not weekly calls with owners. Uh, not active projects or when we're bringing on, uh, properties, absolutely weekly calls. Um, I have some big projects where I'm on 3 times a week. I actually just drove down to Waco offer a 60-unit that we managed for my buddy Joe. Shameless plug, also from the mentorship program. Uh, and double shameless plug, uh, I offered on this deal and he beat me. When your own mentees know enough to beat you on a great deal, that's pretty cool. That is— never been so happy to not buy a property. Not because it wasn't awesome, it's a great deal. It's fun when you've taught someone well enough to annihilate you on an offer and they still absolutely knock it out of the park. A little, a little backstory on that, by the way. He bought the first building. I can't remember how many units are in each building, but it's, it's two transactions. They're side by side. Deal one, he put under contract at a higher price than I offered. Deal two, he went, hey, since I'm already buying this, he just lowballed the bejesus out of him on the other half of the deal. Super smart. He was the— he became the only logical buyer for it and then made the offer. I was trying to buy both at the same time. He had a better strategy. He came up with a better strategy than I on how he was going to pitch and sell and get his pricing. That being said, I will be— I've been down there in person 3 times. My team's been down there almost weekly. I'm probably on calls twice a week because it's a major lease-up project that's going really well. Once it's stabilized though, which I believe is probably your question, monthly or quarterly calls is just fine. Reporting that goes out is always monthly. And we're giving them a delinquency report, which is usually sent on the 10th. So, you know, we give people a test enough time to pay and communicate. I don't really care about delinquencies 5 days into the month because we don't know, we don't know yet. By the 10th, distributions go out for the first time. I do distributions on the 10th, and sometimes we collect a few extra checks, we do another distribution on the 25th. So 10th, 25th, we do our distributions and bill pays. Owner statements, rent roll, delinquency report. Those are the big three. Those all go out. Uh, we also send a quick email summary with updates on the property, so there'll be commentary. Owner statement has every credit and debit that happened that month, every expense, every— everything that passed through our books is on that statement. The rent roll, we always keep that updated so people know exactly what they're bringing in. And we always show them the delinquency report of your tenants who are behind, and it's completely annotated. So if someone's getting on a payment plan, they had something happen, we let them know what the communication has been thus far and how we're following up on that delinquency and what the plan is to get them current or start evictions or serve notice. And then any situation that arrives, arises, or any bill that comes up, for most of my people, it's over $2,000. A few of them, it's anything over $500. That also merits a call where we reach out and we ask them how they want to handle it. But that's how we handle reports, billings, and communication with our clients. Nate, when it comes to contacting owners, I've been having trouble getting their contact info. For example, they use an RA firm for the LLC that owns the property. Advice? Number one, if you Google that LLC and the city that it's in and the word phone number, you usually find some number associated outside of their law firm. Sometimes LLCs are buried so deep that you just can't find contact, and that's okay. I have a couple of LLCs that you would never get to the bottom of, and they're designed to be that way. It's an LLC filed by another LLC filed by another LLC, and every time you look at one of the LLCs, it just brings you around in the same triangle of LLCs. You're like, who the heck owns this? Who do I call? You're not supposed to know. That's how my holding company is designed. Uh, that being said, most people aren't that sophisticated. You can usually find it. There will be a few. Where they're just buried really deep, and that's okay, move on. I do want to say though, the ones that are harder to find are usually the best ones. When you have to do a little bit of digging, they're getting blown up by less people because their number's harder to find. When you reach out and you're like, hey, I want to talk to you about this deal, those are usually the really quality people. They're sophisticated, they're established, they haven't been beat up by everyone and their sister because you actually had to do a little bit of work to find their phone number. So I always find it encouraging when it's hard to find a phone number, but you should be able to do this. I'd say probably 9 out of 10 people, you can go through public records, find the owner, research the word phone number. If it's an LLC, plop into OpenCorporates. It's either going to be filed by the individual or a law firm, and just keep working down the Google search until you narrow in on a phone number. Call that number until you get the right person. If you get stuck on the law firm, by the way, I have called law firms and said, hey, I have a question for someone on property. It looks like you filed for them. I'm not getting any, like, in all of them. Can you guys pass an email to them? Uh, that works about, I would say, probably a fourth of the time. It's not a high success rate, um, but sometimes you actually can just get a hold of someone just based on, uh, just reaching out and asking. Kashif, I like Dion's binder strategy for rent raise. I do too, and I, uh, I've been resistant to that idea for a long time, uh, because I don't think it works on multi-hundred units. I just did a podcast with Dion. You can go to the Multifamily Strategy Podcast. It's called the Owner Meeting Podcast. Um, it's on the YouTube channel. It's also on Spotify, iTunes. It's everywhere. I interviewed Dion. I want to say that went live 1 or 2 weeks ago. I think it was last week's. Um, but Dion actually explains how you use the binder strategy for a multi-hundred-unit portfolio, and I thought it was genius. And I'm looking at how I roll this out into my existing company. So very interesting. You should check out that pod, um, if you haven't yet. That is highly recommended. But yes, Dion's Finder Strategy is awesome. Oh, also, uh, on my Instagram, there's a poll that BiggerPockets just put out on who should be the host for BPCon 2025 in Vegas. Dion is one of their four. Click that link and vote for Dion. I think he's, he's up astronomically, but He, of the 4 on there, Dion is by far, by far gonna be the best host. I want to see him, uh, I want to see him running the show there. So, uh, that's gonna be in October. I will see you guys at BPCon, by the way. I'll definitely be there. Uh, if not speaking, I'll be there to hang out and support Dion because you guys are going to go vote for him, and then he's going to, uh, he's going to be our keynote speaker. How should we pay the attorney from other people's money from capital raise? Do we pay the attorney after, um, or at closing. It depends on your attorney. I have attorneys who actually are paid as part of the closing costs. It's not uncommon. Oftentimes you need a retainer up front. Typically I pay that, but if it's part of servicing like the LLC docs, that would be reimbursed after close. That'd be— it's an LLC expense. But if it occurs before the LLC has been created, there's not really much you can do. You have to pay for it, but it's a bill back to the LLC. It's like, hey, these are the legal expenses that were incurred. So either way, it's it's done at or immediately after closing. Um, but depending on when money is due, it's due when it's due. And if you don't have an LLC to bill through, you have to write the check or find the money. Where are you running expenses on the 70-unit? If you're referring to the 76-unit that we are purchasing, um, the expenses— I loved this group that I'm buying from too. Uh, they are super organized. That is not usually the case when I'm buying deals. Um, the due diligence binder was just gorgeous. The walkthrough is so organized. They're like— they're very, very, very organized. Big company that I'm buying from. Um, so going to the expense, it was very easy to compare bank statements to just going down the whole line of like, hey, here's the bank statements, here's the, uh, here's the rent roll, here's the leases. Uh, inspection was really smooth. Uh, so expenses were pretty easy to, uh, pretty easy to run. Insurance quote came in at a little under 50% what I budgeted for, so that's great. Uh, we got our debt quote in at 5.94% with agency. So when I'm running all my expenses, I'm just using— I'm using their actuals, combining how I'm going to operate, which is our biggest savings on this deal. On that 76-unit deal, we are saving so much money by managing it with our existing PM company. I own 95 units around this building. It's my core market of Stephenville. So when we buy this deal, this is one that's like our day one numbers are going to look a lot better than what I underwrote because I wrote their actuals. The way that we are going to run this, I'm spending so much less on manpower because I can play, uh, essentially I can play zone instead of man-to-man. I don't need the same on-site because I'm overstaffed in all the buildings right around it. Super helpful. By the way, that one is, uh, we're structuring that as a, uh, that one's open to the public. Uh, we're going to be opening next week officially, officially be open for our capital raise there. But we have of the $2,052,000 we need to close. We have already raised a little over half a million of that, uh, with it sounds like commitments for the first million. So, uh, we have the back half of the funding of that is available. Um, I'll be hosting a few meetings. If you guys have not yet, uh, find Multifamily Strategy on Skool. I'm hosting the community, like the public community is on Skool, uh, that is free. It has our free online calculator that you guys can use to calculate your incomes and expenses. I've been decking that thing out. Head over there. I'll also be posting every time we host an event for that. So you guys are looking to get into deals, that will be a— I present everything that we are working on. Everything that is ever open to the public is always shared on that channel. We did one presentation last week. We'll do another one probably this weekend. JP, good to see you. From Troy, out of curiosity, do you recommend a moving credit for, uh, 2 and 3 bedroom apartments? One, uh, or what would I recommend? Um, I usually, if rent's $1,000 or $1,500, I'd usually start with like a $500 rental credit if it's not moving without it. If it's like, if it's not taken off, $500 rent credit. Is a huge reduction in the actual cost to move in. I would go up to 50% of the rent as a move-in credit. Uh, never do all of the rent. They shouldn't have a free month. That, in my opinion, that's teeing you up for someone who's going to end up being a non-pay or who's going to be bad with their money. I just, I've seen it happen too many times. But up to 50% of the rent I think is a good, a good rule of thumb. First try, you know, sometimes even just $100 or $250 off rent for one month, uh, is enough to— or off like a move-in credit. People are like, oh, okay, this is now better, let's go. Oscar, oh, this is exciting. Just went under contract, got interest-only 7 years, uh, now getting multiple deals. Seriously help me. Well, Oscar, that is why we run this YouTube Live. This is— don't quote me on this, I think it's year 4. I think this is year 4 of running lives. I used to run all the time with Cody. Um, 3 or 4 years we've been doing these lives every Wednesday at around the same time. I finally got it consistent again. Uh, but this is why we do it, dude. I'm super happy that this was, uh, this was helpful for you. I'm very excited that you went into under contract for a deal. Congratulations. Uh, keep us posted. I want to see, uh, I want to see what happens all the way through the close of this, but that's a big deal. Oh, 76-unit. What's the price per door? It is a $6 million purchase, and they are 3 and 4 bedroom, 2-story, 2-car townhome-style units, has a pool, has a clubhouse, has an on-site gym. I mean, this thing has all of the amenities, but we're coming under, like, significantly under $100,000 a door for very nice property. Insurance quoted the rebuild price. So when we got the, uh, like, hey, what does it actually cost to rebuild an identical building, it came in at $22.5 million to build the same building today, built in 2003. $3,000, uh, price per door is stupid. Uh, we're— Fannie Freddie does not typically like to give 80% loan to value. We got multiple Fannie Freddie quotes for 80% loan to value at 5.94%, uh, with a year or two of interest only. It is such— it could be the best deal I've ever done. Definitely the nicest building I've ever done. How do you know the new insurance bill will be, um, and are there companies that give you quotes? Yes, you can reach out to pretty much any insurance agent. I reached out to 3, got quotes back. So I always know the insurance bill based on the quotes. It's unique for every building. So that's the one— it's the only thing that I can't train you on what it's going to be, because every market, every city, even different areas of different counties have different insurance rates. Depends on if you're in a hurricane zone, a tornado zone, and heavy rain zone, a floodplain, uh, in California, they're just gonna assume that your building's gonna burn down at some point. Uh, it really depends. So insurance is the only thing that I can't tell you exactly what it's gonna be. Uh, that one is always a phone call to an insurance agent. Uh, sometimes they take a lot to run the quotes too. You can always ask them for a soft quote. Just go, okay, ballpark, here's your built, here's how many roofs we have, here's how many units we have. What do you anticipate we're gonna be falling in? And then estimate the high side. I estimated $100,000 a year for insurance and it looks like the first quote came in at like $47,000. So I was way off, which feels great. Where do you think payroll and management, uh, comes in on actuals? Uh, would you ever look at a deal with expenses based on actuals instead of market? Yeah, you always look at the actuals first. That's the main thing. I'm like, what is it costing them to run it? And then what is my plan to run it? So on this deal, we have a, we have 2 people working in the leasing office. We have a general property manager and we have 2 maintenance people. So there's 5, 5 on-site employees on this deal right now. I have a PM office right down the street. So I don't actually need really any of the leasing stuff. It will be nice to have someone who is part-time on-site, which I have already budgeted for and is in the budget. So we'll have on-site, we'll have an office open. Maintenance, I am overstaffed by a lot. For my maintenance corps in Moses Lake, or not Moses Lake, sorry, uh, Stephenville, Texas. And so for me, I actually, like, I have guys who need work who are waiting on work. I don't need on-site management. I have people who can actually field the maintenance calls, who can do the basic inspection, schedule the work, and then I have people who are ready to do the work. So I, I'm able to take 5 full-time employees and turn it into half of 1 on-site employee and a PM fee of, uh, we're charging 6%. That is, uh, unbelievably lower payroll cost, uh, but it will absolutely work because I already run 95 units on the same model. Running another 76, it— I'm less than doubling my portfolio here, and I have the bandwidth. How do you access new taxes after acquisition? And your numbers have been running, uh, numbers 2% purchase price, but been told that's a little bit too conservative. Um, oh, I can't think of anywhere where taxes are gonna be more than 2%. Um, Texas is one of the highest in the country, and we're averaging 1.81% of the purchase price. Uh, 2% is going to be plenty conservative. I completely disagree with whoever told you that, Dylan. For taxes reassessing, uh, the new taxes on acquisition, 2% in Washington State, you're gonna be very close to 1%. So it depends on where you're investing, but I'm not aware of any markets that are above 2. JP doesn't like concessions. Oh, I love— I'm always open to be disagreed with. We offer upgrades with their leasing instead of moving concessions. I like better renewal retention rates. That actually works really well. So my argument is not just give concessions. It's do concessions over rent drops where you devalue. One, you're devaluing your product by saying it's worth less, but two, you're decreasing your value. You're absolutely right. If there is an upgrade you could do to get them moved in, that is better than a concession. The less you give or the less you sacrifice and the more you actually provide, the better your retention rates are, the better the renewal rate is. The best answer, which I— so I actually do agree with you on this. The best answer is, what is your competition doing? You don't want to blow them out of the water because then it gets more expensive to lease the unit because you spent too much on it. You, you can't just lose money as a landlord. So what is in budget to make the property nicer than its competitors? Is it, hey, new floors? Or does every other property look exactly like yours and they're all super nice but they all have old windows? Awesome. Mine's going to be the one that just has the brand new— like, I just put in the brand new windows. It's identical to every other property, but it's a little bit nicer. If you can improve the building, so provide more value, that is always the number one way to lease up. If you are getting stuck on lease up, my argument is before you give up on the price, offer a concession. If there's nothing else to upgrade You're maxed on what you can upgrade. You've tailored the marketing. Before you go down in rent, first offer concession. If that's not working, do a little downgrade in rent. But you— that, that is my argument. JP, I, I do generally agree with you. Um, if you can do it by being a better operator, operator, or offering more in the lease, that is the best answer. Yeah, if you're looking at a 46 and 37 unit, um, it's going to highly, highly, highly depend on your market. I can't believe I recommend this, but it is— it's a great, great calculator. If you go into the financing calculator section of Zillow for houses around those buildings, uh, property residential and commercial multifamily are usually valued on the same multiple. There will be a multiplier that they actually list the multiplier in Zillow. I don't like a lot of Zillow's data. It is wildly accurate. Uh, so if I'm looking at all the houses around this one, Zillow pegs them all at a 1.81. Turns out the multifamily has about the same 1.81 tax rate. It's a really easy way to see how properties are actually being taxed and assessed after close in your market. It is a great metric. I'm glad Zillow has it for free. If you just go into the, the actual like calculation section, there's a little dropdown box when they break out your monthly payments. There's a dropdown box and it will actually show you the multiple it is using to calculate the anticipated taxes. Awesome. And it's free. How do you feel about acquisitions, buying someone's LLC to buy the property? I typically don't want any of the drama with their old LLC. I bought lots of companies, so I've done mergers and acquisitions. When it comes to real estate, I would rather just clear out the company. Now, people buy in and out for equities, but 100% takeover of an LLC, it's usually— and by usually I mean almost in every case— it is cleaner to go ahead and purchase in a brand new entity. Um, I— very, very, very common, we'll have people, you know, say I have a partnership with 3 people, one person has something happen in their other business. I've had this happen a couple weeks ago Someone has a medical business that's going through some struggles. They're like, I need more liquidity right now. Is anyone willing to buy out my share? And someone else bought in. That's a common thing with acquisitions. That's how I'd use LLCs. If it's 100% restructure, new OA, new entity, start fresh. That's— there's exceptions to that, but 99% of the time I believe that is true. All right. Speeding through the last couple questions and then we have to get ready for a webinar. So I'll see you guys shortly. Uh, link should should be in the description. I added it after I went live, so I don't know what that does necessarily. Uh, but the link if you guys want to join the upcoming, uh, webinar is, uh, which is immediately after this at, uh, 6 Central, is multifamilystrategy.com/workshop-live. And it is actually— media is live, that's why I have to go, uh, shortly. Typically staffing is approximately 1 person in each department, uh, per 100 units or so. I come from managing over a 500-unit Communities. Yeah, that seems to be average. I have actually bought a lot of deals where there is just a lot of fat. And oftentimes, and by fat, I mean there's too many expenses and they're running it more often than not. This company is, in my experience, it's been companies out of California where they're running this property as passively as humanly possible. And they do so by taking a lot of their profitability and overstaffing and making it so hands-off that it just runs itself. While it makes for a nice property, when I walk to this property— and I mean no offense because their staff, what I like, actually I really like a lot of the staff they have there— but both times I've been on site, when I was driving through while under contract, there are people sitting around not doing anything. And I honestly don't think it's because they're lazy. I think it's because there's not anything for them to be doing. They're overstaffed. I like that, you know, one person If you're running on-site, typically you're gonna be 75 units and up. Other than that, you can run decentralized. I'm running decentralized, so maintenance is zoned. So I service a huge area and a lot of units with a massive team. Uh, that same team has cleaners, so maintenance and cleaners are all roaming, but they can still come in same day. Office, if you have a big office, you do need someone manning the station. It really helps with leasing. And yes, as you get bigger, bigger buildings, your staff and overhead looks a little different and gets higher. Mr. Dylan, I've seen bigger guys underwrite deals based on market expenses, not current expenses, since they don't know how the current property is being ran. I always run both. I run my game plan. The nice thing is in Stephenville, Texas, I understand what market operations take because I own more units than what I'm buying. It's not even doubling of the portfolio. 76 is a significant expansion. So I'll run market. I'll also run actuals. I'll also run how I'm actually going to run it. So I have their actuals. I have my anticipates, which my pro formas are ludicrously conservative. And then I have, hey, just operating at market. I also write my exit numbers. Like if this one I'm going to do the refinance is designed for 5 years in. On this particular deal, year 5, we're going to refinance. I wrote it so that there's no market appreciation there. We're not pushing rents above market today. There's like cap rates don't compress, interest rates don't go down. I wrote it very, very, very conservatively. This works. This strategy works if you have a very large property where you have large, uh, or at least established enough onsite maintenance teams that can do a whole bunch of extra stuff. Um, for me, since I'd like to do entry-level closet or entry— I was reading California closet. Let's do entry-level housing. I don't want them dictating what everything looks like. I want everything to be fairly uniform so that I know, hey, when we have nice shower heads and when they break, I have I have spares, and the closets look like the closets, and the flooring looks like the close— the flooring. All the walls are always freshly painted every single time we have a move out. Every unit has a garbage disposal. But I love uniformity for scale. It makes it so much easier, and the cost savings I can pass directly to my tenants. If I have a backstock of everything I need and everything is replaceable parts, I have nice units. And because I'm running them more efficiently, I can charge less rent and still have more profit than someone This one is one of those things about midsize multifamily versus large multifamily where I'm able to have efficiencies. Again, it's a different model. It doesn't mean one's right or wrong. This is not how I run my business. It doesn't mean that someone else can't run it that way, uh, very effectively. And that is how larger buildings are typically run. Yes, the Zillow tax hack is, uh, very accurate. Very, very accurate. Some of their other estimates are horrible. Their tax estimates are phenomenal. Whoever wrote that algorithm knocked it way out of the park. Can you recommend something for starting out calling multifamily? What secondary market and price points do you like? Here's what I like in any market. If you're calling a new market, population's going up, you have some competitive advantage there. If you're a contractor, it's like awesome. You should probably invest in your backyard because your skills are directly related to your income. Uh, if you are from a certain town, you know it like the back of your hand, even if it's out of market, it's like, oh, that might be somewhere where you are a better investor than other people. If it happens to be near you, proximity advantage. Uh, but find somewhere you have an advantage and population's going up. It's a supply and demand game, especially with tariffs and all the other stuff that's coming in right now. Uh, new build is going to be expensive temporarily. This means supply is going to stagnate for a little while. Demand is still going up if people are moving in. So go for increasing demand, uh, especially in today's market. You're going to get an outsized return for that. And final question here, I'll actually use the product, they, uh, pick which upgrade they want. If you're going to do that, yeah, again, on bigger buildings, replaceable parts, you can have a team that goes, okay, we have 5 different layouts and we have little things that you can do. For me, on like a 25-unit building or even a 76-unit building, I don't want to get too too custom. But it's a valid strategy. I'm not knocking the strategy, I'm just being transparent. I don't, I don't do it that way. I like everything to be very, very uniform. My buildings look like my buildings, my units look like my units. If you don't want to rent that unit, good news is I have 5 other complexes in the same town, and each of them is unique in its own way. And so if you don't like that unit, I probably have another unit for you. But again, great model. Do like this a lot. Would make money. This is a better leasing strategy than going down in rent or offering concessions. So I, I do, at a base level, I do really like this. This is smart. All right, I gotta go prep for the webinar. I will talk to you guys on the next episode. Thank you guys for participating. This has been our leasing episode of Multifamily Strategy Live. Webinar link, I believe, is in the description here, but it is multifamilystrategy.com/workshop-live. Hopefully see a few of you there.