When You Should Visit Property Assets You Manage

A big part of running your own business is being hands-on. You may think that you don't have time to visit all the properties in your portfolio, but there are a lot of benefits to doing. In this episode, learn how to find the right property manager, identify red flags and avoid scams, improve communication with your property managers, and when you should visit properties you manage.

Barge Properties, a Temple-based company, personifies the genuine ideal of a management company with great capabilities and experience. Their vast knowledge of the Texas real estate market, especially Multifamily, allows them the unique ability to navigate any management issues with ease. Their goal is not to operate your apartment community but instead, team up with you to streamline operations and maximize property value and profitability.

Know more

https://www.bargeproperties.com/

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When You Should Visit Property Assets You Manage | Tyler Bradford & Zain Jaffer

What are your expectations for a regional to visit at all levels? The on-site team works on-site and sometimes lives on site. They will even have their own unit that is allocated for them if there is an intense period. We have that arrangement with you guys for some of our properties, but how often should the HQ level or regional level visit assets?

If it is a stabilized asset, you are not doing a big rehab or a lot of construction. Once a month for 2 to 3 days is adequate to go through a checklist, check on all the items, walk the property, and walk any vacant units. You get a feel by being there for a few days and having a different set of eyes on the property. You are able to find things that are going on that you may not see from afar by looking through your property management software. If it is a property that is going through a lot of renovations or needs repositioning, you are going to be there 2 to 3 times a month for a regional level.

There is an expectation, especially as property management firms mature and they partner with institutional-level investors, that the property manager will walk in hand-in-hand with them and evaluate the asset. You are involved in the due diligence level and construction budgets. Walk us through that process.

That process entails first contact with an investor. At that level, you hear about a piece of real estate that the investors want to buy. At that point, you are trying to learn as much as possible about that property, not just so for takeover, but in our case, we like to help the owner determine, “Is this a smart move? Is this a property that you should purchase? Where do we see it going?” A lot of that front end is getting that property information, looking at the current numbers, and trying to budget and proforma what we anticipate the property could do if it were purchased by this new investor. That is a big piece, looking at the actual property itself. Next is the due diligence phase.

You need to work with the investor, find their goals and work towards them together. It’s very much an active relationship and process.

That is when it is very important to look at everything physical on the property and see, “Are these plumbing systems in good shape? These HVAC systems. What type of wiring is on the property?” You go through a very comprehensive checklist, and then it helps you budget out as well of like, “We are going to have to change some of these major systems. It is going to cost X amount of money.” All of these things in the due diligence period, whether it is the financial aspect or looking at the physical aspect, help the potential owner or investor understand, “If I purchase this property, here is what it is going to take to get the return that I require on the capital invested. Here is how long we anticipate it will take to get that return.”

It is a relationship of the investor coming to the property management company and getting their expertise. You work together hand-in-hand towards that common goal, whether it is, “I want to hold this for two years and flip it. I want to own this for a long time.” You work with the investor to find their goals and work towards them together. It is not like, “Go do this,” and then you never talk to them again. It is very much an active relationship and process.

I am guessing the expectation is you have got to fly on a whim, you have got to travel, and you have got to build that flexibility into your schedule. Is that what separates ownership and leadership in the firms from the regionals and low-level staff, or do you get on-site staff involved at the due diligence stage also?

Unless you have someone who is taking a property over or you are looking to buy it in the due diligence phase, the current owner might already have staff there. You are typically going to take them on if you choose to at closing of the property. During the due diligence phase, it is usually something where higher-level personnel will go and walk the property.

PTVC 165 | Visit Property Assets

You are also taking who would be the supervisor for that region so they can get comfortable with the property, see the nuts and bolts of walking all the units, and looking at some of these systems, because then they know, “One closing day when we get those keys, I am going to have to hit the ground running. Here is what I have seen. The issues are here. Things we need to improve.” They already have a very solid knowledge of, “Here is what I am going to go tell the on-site maintenance and the on-site management,” and be ready to put the business and management plan in motion.

It is a delicate process when an owner wants to sell an asset because you do not want to spook out the on-site staff. The on-site staff is going to worry that, “We may lose our jobs because the owner is going to sell the property,” even when you are coming in and you are doing due diligence. I use the word “mystery shopping” in a way where you are coming in. You do not necessarily come in and say, “I am in your property management firm. We are exploring whether we should keep you or not.” This is for the on-site staff. Walk us through that dance because it is a very delicate one. It is one that you have got to approach carefully.

It is a delicate situation, and you have different owners you are dealing with too. Some owners will say, “I have Sally or Joe here for twenty years. They have been great employees. Please, do not say why you are here.” You have to go undercover a little bit. You have got to be sly and act like you are there for an appraisal or you are with the mortgage company. From the owner’s perspective, they are thinking, “If this person does not buy the property from me and they spook off my good employees, I am left sitting here with my property still and I have lost a twenty-year employee.” They are in a bad spot.

Some people want to be very secretive with it until they know that the property is going to change hands. Other times, you will go in and employees already know what is going on. They know the properties for sale. They are comfortable with it, but in either case, there is some bit of uncertainty. If they know that there is a very large property management company and they can get transferred somewhere else or to another property, they feel a little bit better. More often than not, if you do not keep the on-site staff, they do not have anywhere else to go within their current management company. There is a bit of anxiety there for on-site staff anytime a property changes ownership.

Seventy-five or 80% of the time, if you go into a property that is not working or is not running efficiently, you typically need to make a change to the personnel.

The parallel here in the tech industry is when you are an external CEO coming in, or you are a board member making a change. A new CEO comes in or not even new CEO. It could be at a VP level or a precedent level in the company. They are coming in and inheriting a team. That is an awkward time because, on the one hand, if you put yourself in the perspective of the new leader coming in, you need transparency.

You need to know what is going on. You do not want the dog and pony show where everything is rosy and people are selling their best version of themselves. You want to get straight to the point, but you also appreciate that sometimes, companies are in need of a tenor because they are not being managed well.

Nowhere is this more common than in real estate. One reason real estate is for sale is that management is competent and has not done a good job. It could be on the leasing side, the maintenance side, or any side. That is a vulnerable position to be in when you are a frontline employee.

What we see most of the time is you go into these properties. Either the management or the on-site staff has not been educated very well or the leadership that they have been given is not great. A big thing is their character and their attitude. If the employee is willing to learn a new way or take a new direction, that is great.

For instance, I will go in and be patient, teaching these processes that we have tested and know work. A lot of times, people get very stuck in their ways. They are resistant to change. We found, unfortunately, that 75% or 80% of the time, if you go into a property that is not working or not running efficiently, you typically need to make a change to the personnel.

That can make the largest difference by making those changes. You start to see everything else fall in line. That is why I think with real estate, there is location. You want to be in a good location and have a well-built building, but if you do not have the right people with the right character, skillset, or desire to want to make the property better and make it run in a success, then you are going to spin your wheels.

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About Zain Jaffer:

Zain Jaffer is an accomplished executive, investor, and entrepreneur. He started his first company at the age of 14 and later moved to the US as an immigrant to found Vungle, after securing $25M from tech giants including Google & AOL in 2011. Vungle recently sold for $780m.

His achievements have garnered international recognition and acclaim; he is the recipient of prestigious awards such as “Forbes 30 Under 30”, “Inc. Magazine’s 35 Under 35,” and the “SF Business Times Tech & Innovation Award.” He is regularly featured in major business & tech publications such as The Wall Street Journal, VentureBeat, and TechCrunch.