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Yeah, no, I agree wholeheartedly, um, in profits. Awesome. You know, the other piece of it is you want to make sure you have the capital available to make the investments in the property to keep it going. What I’ve seen happen frequently is people try to operate in that affordable model or really low rents.
And then when the capital expense comes up, there’s not enough money to put it back into the property. And so the condition of the property continues to be great. And it’s just kind of a self fulfilling prophecy. Yeah, it just gets worse and worse and worse. And so then they’re forced to sell to people like us who want to come in and purchase a distressed asset and fuse the capital that needs to be infused in order to bring it up to, you know, be class S.
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This podcast is where we share the lessons we learned along the way. I can give you some context around the house. Timberline, put you further ahead on the garden quick yesterday. Marjorie, are you ready?
Welcome to REI spotlight with your host David Schwan and today’s guest is Jerome Meyers, the managing director at the myers development group. Welcome to the show. David. I’m so glad to be here. Thanks for having me, man. Thank you for being on Jerome. Give us a, give us a little bit of your background and, and kind of how, uh, you know, the, the, the 92nd, uh, look at how you’ve got into a multi family.
Man that’s going to be hard. I, I typically start with that warm Sunday afternoon or Saturday afternoon when I was born at Womack army hospital. And my dad named me before my mom woke up from the anesthesia from the C-section, but I guess I don’t have time to go through all that. I mean, I’m not saying that it’s not a very fascinating story.
Um, just, uh, w w w w we’ll go through that. We’ll do the 92nd version now. And then like, whilst people like. Thumbs up that they want, like the first 18 years in detail. And if we get enough people we’ll come back and we’ll do another episode on that. Okay. That’s fair enough, man. So I’m an engineer by training.
I went to North Carolina, agricultural and technical state university got a degree in civil engineering, uh, left there and started working for a power company. And I didn’t really know what I was getting myself into. Got on a leadership track, got an MBA along the way when it’s to consult. Um, and you know, did a couple of different firms ended up at a construction company and that’s when things kind of pedal hit the metal or rubber met the road.
However you want to look at it. We’ve built a $20 million business. I was employee number two, by in January in August. We had about 150 people on a team doing EPC work. You know, I was responsible for everything from getting permits and acquire a real estate. To doing engineering design and actually complete an, a construction.
And so that was like the closest thing that I could get to entrepreneurship without actually taking a pay cut. And I knew kind of early in my career that I wanted to be entrepreneur, but I kind of had those golden handcuffs. In November of that year, we had to lay off half the people that started working with us.
And I was like, this there’s something wrong about this. It doesn’t make sense. And I remember having a conversation and everything kind of came to a head on Christmas Eve and I was like, man, look, I think we need to figure out another way. We shouldn’t lay people off, et cetera, et cetera. And my boss was like Jerome, tired of arguing with you guys.
It’s five o’clock it’s Christmas Eve. I’m done. And he hangs up the phone. And he was like, just pick the people who are going to be fired and you know, we’ll move on. And so, you know, what do I do? He was the senior vice president. So we, we picked them and moved on and we did another 20 million the next year.
And you know what my reward was for all of that $30,000 bonus, he made $6 million in profit and I got a $30,000 bonus. And so I asked for a pay increase. So my guys said, oh, You overpaid already. I was like, okay, there’s enough of this. And so I started planning my exit and so I got real aggressive on the savings and saved about a year worth of expenses.
And I jumped out. I said, no more corporate America, no more layoffs. And oh, by the way, we did more layoffs at the end of the night. And I was just like, there is just no reason for us to be doing this. It’s it’s like, look, look, we need to, we, we need to manage this better so that we’re more consistent. And so that we don’t have these hits, you know, it’s like, look, um, you know, w w when people come to work for us, you know, they’re, they’re, they’re partying with their most sack.
You’re their most sacred item that they will ever. They are giving it to you for a return of you, you know, for a return of money. And it’s like, look, you know, I mean, somebody has donated that you, you owed them something, you know, it’s like, look, you they’re there. Like you said, there has to be a better way to do this.
And that is just so that’s so awesome. That it hit you like that? That is, that is awesome, dude. I don’t even celebrate the holidays anymore. Like it, it cut me open and put it all my insides out on the street. And I, I remember not eating for a few days because I mean, these people. Literally committed their lives.
What we were doing, we had wives of sailors who didn’t move on to the next duty station because they wanted to continue working on the project, you know, and we, we just, it was really a family kind of environment. And the best part for me was, you know, I got to set the culture. I didn’t have. Um, a boss that was in the state, you know, I had three different supervisors over the course of about 18 months and none of them lived in the state of Virginia.
And so I might talk to them every other week and see them once a quarter. And so that really gave me the confidence that I could go out and, and do it on my own. And, you know, I didn’t need to do $20 million in revenue. Um, but I could do something smaller than that and, you know, still be able to satisfy what I needed in order to live off of.
Yeah. Yeah. It’s, it’s like, look, well, you know, I got that $30,000 bonus and, you know, say, you know, it’s like, well, you know, I’ve made them 6 million. I, you know, if I make half of a million, you know, one 12th of what I’ve made them. I’m good. It’s like, I, yeah, it makes you go. Wow. I got that much. That shouldn’t be that hard for me to do.
I do it everyday now. So, you know, if I jumped back to college, I used to sit on the stoop and I don’t know where the majority of your listeners are, but in North Carolina, there’s just, stoop is some form of stairs near a doorway at the stoop. And, you know, we trade magazines and so on and so forth. And we were really interested in trying to find, you know, passive income or financial freedom.
And one day we were sitting there doing the math is back of the napkin. It’s like, all right, we pay $400 a month in rent. There’s 18 units in each building. There’s eight building links here. And those numbers probably aren’t. Right. But what we came up with was that the apartment complex was generating about $700,000 a year in income.
And you’re like, okay, so who owns that? And like, where does the money go? And we didn’t have any of those answers, but we knew that we wanted to own apartments. And so fast forward, 15 years. And here we are, we’ve done. It we’ve exceeded the potential for what we thought we would see back in. Uh, like I said, it was like 2001, 2002.
Um, it’s been a long journey, but we got back to the basics and, you know, the first deal, and I don’t think any deal actually ever goes the way you plan for it to go. But you know, you just learn so much so quick. Uh, you know, we we’ve come full circle and got back to the roots that we thought we were going to get into for a living.
Awesome. Awesome. That is that’s. That is that’s, that’s a, that’s a great way to lead into it, you know, it’s, it’s like, look, you, you, you know, you guys, uh, I it’s perhaps, because it’s not too many people I know, like just organically grew into apartments like that. I love that. I love that angle of how you got into it.
That is that’s. That’s awesome. You know, it’s like a lot of people it’s like, no, there wasn’t no guru. I just, I just went and. Realize that, Hey, I want to know this, and then I’m going to go find out what it is. And you went and found out what you needed to know. That’s a, I love that spirit. That is that’s.
That’s great spirit. That is awesome. Um, so now that, now that. Well, we’ll, uh, pivot to say, okay, now you’ve gone through all your due diligence. You’ve you’ve just closed. You know, you’ve done all your pre-work. You, you just walked in and it’s like, okay, I’ve kind of met these people before. I know you, you, you know, it’s like, it’s that exchange of, and it’s like, okay, here’s day one.
We woke up in the motel room. What how’s how’s how’s that, uh, how’s that process start to unfold, right? Like on day one. What what’s that like? Yeah. So if I can have the Liberty to back up a little bit, so we’ve got a four-step process, right? So we find them. We fund them, we fix them and then we flip them.
That’s our game. And so, you know, what you’re talking about is, you know, after closing day, which is our fix it process, the third step in the process, how do we get our fingers? Get dirt on our, figuring out housing and get to it. I laugh all the time. Cause you know, people. Spend a bunch of time pouring over the due diligence documents.
And, you know, they want to know, well, is this percentage point off going to make a big difference in the investment? And the reality of the situation is, and I went to engineering school. So I think I’m qualified to savings. Well, that stuff is just a fancy. Guess we call them with some options, but I mean it’s yes.
With the best knowledge that you have about the marketplace and the condition of the property, when you find out what you really have is after you close. Right? If the owner doesn’t want to be honest with you, they’re not going to be honest with you and I’ll give you a perfect example. We bought a 20 unit here in Greensboro and.
There was a bus that wall and one of the walls, there was a bus at pipe and one of the walls in the bathroom, going from the toilet to the shower now. There was a reason why the water was off in the unit was down. Do you think the property owner told me that? Oh no, no, not at all. And I wasn’t smart enough at that point to insist that all the utilities be on in every unit when we go in and do our due diligence inspection.
So surprise, surprise. When we turned the water on it and the unit and water started spraying all over the place. And I wrote on the side of the kitchen cabinets. Oh, we couldn’t get it. Didn’t have an in unit water, main shuttle. So you had to go all the way back to the street to turn the water off. So imagine, you know, two-story townhouse, you got the water in the upstairs bathroom flowing full force.
You don’t have a shut off in the unit. You got to run all the way back to the streets. Get that water turned off. It was just a nightmare. You know, I’m sure that, uh, he knew, but you know, until you get into it, it’s just kind of those surprises, unless, you know, you’re a whole lot smarter than me with the due diligence.
And of course I learned that lesson and I try to share it with everybody. I camp, as I was about Ray say that was, that was education. Um, it sucks, you know, it’s like, look, uh, you know, um, education education can be painful. It may be mentally painful if you’re reading somebody else’s experience and, you know, putting that knowledge in your head.
And then the most painful is when it just hits you. But it’s like, look, you know, it’s it’s okay. There’s my lesson. That was, uh, you know, that was whatever the expense was that it cost you. It’s like, okay, I learned a $30,000 or a $30,000 lesson right there. And, uh, you know, it’s called it’s, it’s called there with $30,000 into my education fund, you know, but I can guarantee you, I will never, never, never, never bought.
I will never do that again. Ever, you know, we got it. I got that last. And then it’s always interesting when I talk to folks now, um, you know, you can get coaching and there’s a lot of programs and it’s interesting, you mentioned the $30,000. I talked to one coach, $40,000, and I’ve seen other programs that go up into the fifties and sixties.
And I just don’t know how most people can afford that stuff outside of, you know, boosting a credit card, boosting a credit card, and then being in a bunch of debt. And you know, at the end of the day, everybody’s got to get there. I wouldn’t encourage anybody to go through the school of hard knocks. I think that was the wrong way to do it, but I debit, I still here and, you know, I don’t have one of those $30,000 boo-boos, but I do have enough of those smaller ones that, you know, maybe it’s a death by a thousand cuts.
Right. So, you know, you asked about the fix it phase. And so we’re getting ready to close on a 10 unit and I’m thinking about this, um, With, you know, what are we going to start doing week after next? And I think the first step for us, it’s really about, um, doing an assessment. The, I think probably the most challenging thing is knowing who’s going to pay, who’s going to stay and who’s going, gonna move out.
Um, if I go back to my experience with the 20 unit we had, we thought we had four vacancies out of 20. It turned out that three people moved out the day after closing. So we went from four vacancies to seven vacancies just like that. Right. And so now you’re down to almost 50% occupancy. If you weren’t conservative in your underwriting, you’re in trouble.
Fortunately, we were really conservative in our underwriting, so we were able to manage that. But the first thing you want to know is who’s going to stay, who’s going to actually pay and who’s going to. Um, and I, I lump it into those three buckets. The people who stay don’t necessarily go in our business, we’ve decided that physical occupancy doesn’t matter what matters is economic occupancy.
How many folks are actually paying rent and paying rent on time, right? Because every time that you got to file those legal expenses or those legal fees, Is one of the auto pocket. And depending on how much rent it is, it could be up to a quarter of what your rental income would be for the month. And so now you’ve got to try to figure out how to recoup those dollars.
And I mean, it just gets into a spiral because we focus on workforce housing and, you know, it was funny. I heard an interesting statistic that said that most people can’t afford an unexpected $400 expense. So, you know, when you have, when, when you’re charging them a late fee, plus another, in my state, it’s like 150 to $180 to start the eviction process have them served and all that.
You’re getting into that danger threshold and where people can’t get caught up. Yeah. Yeah. And yeah. And you have to be very cognizant of, you know, making sure that, you know, it’s like that you have tenants. You know, can, can handle it, but that you’re also, you know, that you, you know, you have to realize that like, look, if we go through this and I hit them with this 400, it’s like, look, this is probably just going to keep rolling there.
Probably isn’t going to be a whole lot of saving it. Yeah. There’s another eviction on the way. Right. So, and that for me is painful because it takes about 45 days for us to get a person out. So. You know, you’ve got the people who are going to pay. They’re great. Leave them over there. You’ve got the people who are staying, but they’re just squatting.
They’re not going to pay you. And so the longer it takes you to get them out the door, the more lost revenue you have, and I’ll say this, um, what we found. After, you know, digging into the details of our operations, the vacancy expenses is our biggest expense. We, in this more than property management has been more than, you know, any of these kind of, uh, ONM type expenses.
And mainly because we’ve been transitioning properties, are we experiencing that sustained vacancy issue, but it jumps up when you take over a property. And so you want to be careful with that. Yeah, yeah. Kinda, kinda, kinda makes sure that like try, try and figure out which, which bucket you have. So you know, which, where, you know, where you need to, to, to head on it.
So, um, once you, when not now, um, How do you, uh, you know, once you, once you’ve gotten them segmented into, you know, there, there are buckets of, you know, who’s going to stay, who’s going to go, um, you know, whether it’s willingly or, or, you know, in the next 45 days, uh, unwillingly, if not, but, you know, once you, after you kind of get that situated and you kind of have that feeling of what you’re going to do, where what’s your next step.
So we take the vacancies and we go in and make whatever improvements we think each unit needs. And we do more of a smart renovation than a whole cell everything’s everybody’s getting paid and everybody’s getting cabinets. Everybody’s getting countertops, everybody’s getting floors. We go in and do a condition assessment.
And if the stuff is server support, Um, the only thing that probably doesn’t get a pass is, um, toilets. We like new toilets just because the lower flow. And if there’s a property where we’re paying the water bill, we want to make sure that we’ve got either great new guts in the toilet or a new toilet so that, um, you’re not dealing with the running water.
Yeah. Yeah, uh, kind of hold, you know, keep that, um, and just, just be able to keep all that, be able to cut that, that consumption cost and do, you know, low flow faucets and all that stuff, just to kind of make sure that you’re saving what you need to, but you know, not, not necessarily rehabbing a whole complete unit, just for the sake of rehabbing, a whole complete unit.
You’re just, you know, you’re, you’re, you’re just rehabbing. You’re only doing what you need to do. Right. And so we’ll go in and we’ll, we’ll dive into those and get those turn as soon as we can so that we can get them on the market. Um, and we’re going to bring them on the market at, you know, whatever the pro forma says.
We thought we could do. We’re going to try to get market, run them. Immediately. Um, and we’ll do some testing. We may even go a little bit over what we expect it, market rent to be, just to see what the market will take. Um, we found it as long as you’re with and about $150 of whatever the other residents are.
You can kind of integrate different. Um, I guess. Socioeconomic classes, I guess that’s the best way to quantify or classify it. But once you start getting more than that, you start getting into trouble because they tend not to have similar. Yeah. Yeah. It’s, it’s, you know, it’s, you know, when you’re taking over a property and especially one that has some troubles, it’s like, well, you know, um, some of these troubles are, you know, the people who live here and, you know, it’s like, unfortunately if you’re taking over, you know, and especially, you know, if you’re in a, in workforce housing, you know, sometimes it’s like, look, these, these people just.
They mismanaged. It is what it is and they mismanaged it by letting the wrong people move into it. And, you know, that’s a, that’s a form of mismanagement, you know? And, and it’s like, well, you know, they either didn’t want to take the time or they were buddies with them or, you know, whatever the issue was, but it’s like, look, it’s time to, uh, Time for these people to move on and, and, you know, and it’s like, look, well, you know, it, it, it stinks, but you know, most of the time it’s like, look, these are, these are people who they’re not trying or not really wanting to do what they need to do.
So it’s like, look, uh, you know, I, I’m a charitable person. But let me choose who I’m charitable to. You’re not going to just demand my charity. Right, right. I mean, I call it the AF I mean, right or wrong, you know, you got to pay to stay. And I’ve David. I had a lady who had her water turned off because she didn’t pay the bill.
And so she went down to the city and filed a cold compliance complaint. Again. Because she didn’t have running water. And so they opened up the case and they told us until we evict her, the unit is condemned. And I was like, you’ve got to be kidding me. So now I’ve got to open code enforcement case for someone who doesn’t pay their water bill, who hasn’t paid us rent in a month or two, and just sitting on this wedding and for us to evict them, I mean, Have you guys ever tried to do like, you know, cash for keys with some of these more, uh, difficult people.
We have a pretty strong position on that one, David, we, we don’t want to set up the next landlord. So we want people to have the evictions on their records so that it’s difficult for them when they move on. Um, when, when you do the cash for keys, you get the unit quicker, which is great for you, but that next landlord doesn’t have the opportunity to.
Um, see that person a potential risk for them. And I don’t think people’s behaviors change all that much. And so we, we want it to be documented that you took advantage of us because that’s what we feel like that yeah. Awesome. Awesome. I, I agree with the point of view, I just, uh, I, I like, uh, like getting people’s point of view on that and I’d like, your, I like your, well, you know, it’s like, look, uh, now the next guy, if, if he’s going to accept them, he needs to know that like, look, this is a risky guy.
You’re, you know, no know what you’re dealing with. So yeah, I get that because you, you really don’t know. It’s that’s one of those kind of do on the others as you want to have done on the U is like that. It’s like, well, I don’t want, I don’t want somebody hiding somebody’s eviction just to get them out of there so that now I have to take this crappy tenant, you know, it’s like, you know, It’s just figure it out, but you know, it’s like, no, no, make sure, make sure they know the name.
Make sure the next guy knows what’s going on. Yeah. Yeah. I mean, it takes a little bit more time, but I feel like if all of us owners did the same thing. Then we could elevate the pool of folks that we’re dealing with and feel a little bit better about, you know, who we’re renting to, because I mean, I do think that’s a true indicator, whether or not somebody is actually going to pay well and, and, and, you know, really it’s, it’s a service that you owe the other tenants that live in your building in reality, because.
You have to have a certain amount of profit for it to be a business and to sustain it and to get gone, you know, just to stay, I mean, you know, face it, this is capitalism, it’s a busy, you know, owning apartments as a business. We in business, we are supposed to make a profit. That is what we’re supposed to do.
Um, and there’s a certain percentage of pot profit. Your, your mortgage payment is your mortgage payment. You know, it’s like, look, your expenses are your expenses. You’re going to pay them. You have to, you know, you have to get enough back in return. Well, you know, if you’re not getting paid on unit number 10, well, when you do the math next year, the people who are paying, you’re going to have to raise their rent even more than you normally would because you’ve allowed the.
These these bad tenants to stay in place. So you are actually, you know, it, you know, some people say, well, don’t you feel bad about? No, because these, these are people who are taking, like you said, theft, you know, these are people who are taking advantage of the situation and. Costing people who paid me the rent on time, they’re trying to cost them more money.
You know, it’s just like, look, um, no, I want all good tenants. So that way I can be fair. I don’t have to overcharge seven tenants to make sure I make the profit off with 10 tenants that I have, you know, it’s like, no, it’s, it’s like. Going to keep the seven good ones. And where you going to get people who are three more good ones in there.
So that way everybody pays the most affordable rent and we still make our path. I’m looking for properties when unable to find a good deal. Do you feel like lack of access to private capital is holding you back? Do you have the confidence in your skills to execute your business plan? The Meyer’s method.
We walk with you to help you step by step. Understand the actions needed to identify acquire, operate, and maintain multi-family properties guys. Great morning. Great morning. It’s Monday morning over here at towns. No, this isn’t towns. This is Mark’s point, man. Why it’s pointed at Greenbriar again, the grass.
Me and my property manager to talk about strategy on a couple of evictions and turnovers, we’re going to take care of this month. Coming up in June, really made a lot of progress on this property over the past year. Now it’s time to take it to the next level.
I agree wholeheartedly. And profits. Awesome. You know, the other piece of it is you wanna make sure, so you have the capital available to make the investments in the property to keep it going. What I’ve seen happen frequently is people try to operate in that affordable model or really low rents. And then when the capital expense comes up, there’s not enough money to put it back into the property.
And so the condition of the property continues to degrade and it’s just kind of a self fulfilling prophecy. Yeah, it just gets worse and worse and worse. And so then they’re forced to sell it to people like us who want to come in and purchase a distressed asset, infuse the capital that needs to be infused in order to bring it up to, you know, be class S.
Yeah. Being able to, you know, it’s like, look, um, you know, just, you know, if you’re, if you’re, if you’re going to hop in and play this game, you, you, you better know, you know, make sure your numbers are good people, you know, it’s like, look, it’s, uh, you know, Just acquisition isn’t enough, you know, it’s like, look, you know, and I guess this is kind of like a little bit of an under, you know, stepping back to the underwriting side, but it’s, you know, it’s kind of like, you know, from an educational standpoint, this is why, you know, when you’re looking at somebody who’s underwriting that they have budgeted for.
You know these vacancies and you should understand what the whole business plan is and what the business model that you’re trying to achieve on this project is so that you understand that like, look, yeah. Um, this is a C-Class neighborhood. Um, it’s been mismanaged just for us to have the opportunity to get it back to right management.
It’s like, yeah, we’re going to have to take it down to 50% because that’s all the good tenants that I happen to be there. You know, it’s like, look, we. Got to, you know, it’s going to be down there and then we’re going to do our thing and we’re going to move it back up. We’re going to get it back to the occupancy that it needs to be.
But when you’re looking at somebody who’s underwriting, you need to make sure that they factored in that, you know, if you know, it’s a distressed property, you know, that, you know, part of the business plan is, you know, re-tenanting, um, you know, part of the complex that, you know, you you’ve just looked at the rent rolls and know that like, look, there’s three people that they just need to go.
They’re they’re costing us money. Um, and you know, you realize that just from your due diligence, it’s like, okay, these, these guys, you know, they’re, they’re, they’re a burden on this business. They, they need to go it’s there, there a loss loss. So, you know, but you know, it’s like, look just because you, it, like you said, you know, if it takes you 45 days to, to kick them out, there’s two months, there’s two months of vacancy right there, you know?
It’s that’s what it is. So, you know, for a year, first, two months on European ALS there’s, there’s 30% vacancy that is going to be there, or you need to have planned for it to be there. You know? So if that isn’t in the underwriting, that’s when you start going, oh, wait a second. You guys aren’t. Uh, you know, you guys haven’t built in enough CapEx expense to get us through because it’s like, look, this is a rehab. Rehab means that you’re going to have to, you know, you got some work to do on the unit, so you have to allow time to actually do the physical work and then you have to allow time to get it, you know, get tenants back in there.
Um, you know, then it’s like, look that, you know, if you’re, if you’re in a great market and familiar timing, all lines up perfectly, that may be a very short timeframe, but, you know, Underwriting and, you know, not everything goes as we plan. So, you know, you have to give a little bit of leeway, you know, to be able to return it.
Um, you know, the, you know, to get them fixed, to return it in. So just to make sure that, you know, your that’s built into the underwriting and make sure that, especially on something that’s a heavy value add that that is. Certainly accounted for. Yeah. You want to have your interest reserves locked in and you want to have enough money in to do the rehabs.
And you know, it’s funny. I thought I was going to do four or five and my first value add in the first year. And we ended up doing 13. So imagine the shift on that with, you know, people moving out now, I would do wonders for my NLI at the end of the year, because we were able to block our income targets off the water, but, you know, just the additional capital expenses.
Um, but again, You had to have that capital expense money there. So you could go do the work, get these higher paying tenants in. And then once you got those higher paying tenants and it’s like, okay, well we, you know, this is going to increase our cashflow, but if you didn’t have the cap X money to. Make the unit, the way that it needed to be, to attract that tenant that was going to pay that higher rent, you know, because you know, it’s like, look, you, you had to go in and you had to do some work and there’s no way that you would have gotten that dollar amount.
I don’t have rent in the condition. It was before, you know, there’s thought you wouldn’t have gotten those same rents. It’s like, that’s why you go in and you do the work so you can maximize your rent. You know, but you have to have that building capital to be able to keep it. And you had enough where it’s like, okay, well instead of five word 13.
Awesome. Kill it. Hey, you know? Yeah. So, you know, if we circle back to, you know, what’s happening in the first 90 days, parallel with, you know, doing some of the interior stuff on the current vacant units, we’re going to start improving outside. You know, if we need to work on landscaping, we’ll take care of landscape.
And a lot of times they’re softened issues. So we go on and get that stuff corrected. If we need to do paint on shutters or whatever, deferred maintenance on the outside, we’re going to get that knocked out so that when the new residents come see our new shiny interior. They have some curb appeal to walk up to that, to continue to Greenfield you, you, you don’t want them to pull up.
It’s like, look, you can have the Taj Mahal on the inside, but if it looks like a dump on the outside, you know, it’s like grassing cut there’s litter everywhere, you know, uh, you know, stuff has peel and paint and doesn’t matter, you can have Taj Mahal on the inside and third, you, you know, they. Downgraded your value of the, of your building before they even seen what the unit looked like.
And it, you could have, you know, tile floor, you know, marble floors and, and, uh, granite countertops, but it’s still going to be worth less to the, to your renter because it’s like, well, yeah, but I had to walk through that to get back there. Okay. Right, right. And so, you know, when we do that, when we finish up the exterior.
Catching up of deferred maintenance or whatever improvements we’re gonna make. We’re gonna approach the residents that decided to stay. And we’re going to give them a buck. We’re going to give them a rent bump, and start getting that cashflow recoup that we put out into the property. Um, you know, first thing we want to do is deliver some value, make it nicer for them, but then the next thing is, okay, you know, we need to make an investment.
And typically what we try to do is find properties that have month to month leases primarily. And so some of those folks that decided to stay may decide to leave at this point, but we’re already in the rehabilitation mode, right? So we’re already getting into these units. And so if they decide to move, we can turn that, you know, Bring it to the new standard and put it on the market at the new rate.
And so, you know, we just continue this process and what we find is a lot of people have been. Hungry for the improvements. And they’re willing to pay a little bit more on rent because of it. So we continue that cycle and as people move out, we improve the units. If they don’t move out, we don’t make investments on the interior of the units, unless there’s something majorly wrong and they’re living in conditions.
Are not up to what we think people should be living in. Yeah. It’s, it’s like, look, if it’s a substandard apartment where we’re going to go fix substandard, we’re not going to make somebody live in substandard. It’s like, look, you know, there there’s a certain level that, yeah, you’re not moving out, but we still got to bring this, this, this apartment up a little bit because this, you know, the level it’s at just isn’t, it’s not right.
So we’re going to fix that. And, you know, a lot of the residents, I don’t know if I wanna call them notes. But they’re interested in finding out what’s going on in the new units, right? So they’ll come in, they’ll pick your head in and ask if they can walk around and so on and so forth. And we always ask them, Hey, do you want to move over into a new unit?
And you know, here’s the new rate for the new units, et cetera. And you know, if they want to make that transition from the unit, they ran it until the new one. It speeds up our term process. And you know, for us that makes us happy, but we also like saving the. Capital and investment in instances where people don’t want to move, but are willing to pay a little bump on their rent.
Yeah. Yeah. It’s it’s like, well, yeah. You know, either way, you know, it’s, it’s, uh, we’re, we’re accommodating either way. It’s like, look, if you want the newer shiny unit, we’ll, you know, we’ll, we’ll work on that. Or if you want to stay where you’re at, you know, that that’s fine too. Uh, you know, it’s kind of a, win-win either way with you.
It’s like, well, we either get the target or we get to, you know, make a little bit, you know, get a little rent bump anyway. And it’s like, okay, Either way, but we’re, we’re good. You know, it works, works in our favor either way. I love a win-win. Yeah. And for them too, cause I mean, they’ve got an actual place to live.
Right. And I mean, at the end of the day, that’s the goal and I mean, that’s what they’re paying for. They’re paying for more comfortable. Yeah, yeah, yeah. And you know, it’s like, look, you know, some people are like, Yeah. If you, you know, if I have this upgrade, I’m fine paying a little bit more for it because I’m more proud of it.
You know, people were proud of their homes, even if it’s a rented home, they’re still private in their own, you know, you’re always proud of where you, you know, you are, you want to be proud of where you live, you know? So it’s like, yeah, you know, it’s like, I like it. So, and, um, you know, and those are the tenants that you want to keep because if they have, you know, they have a little bit of pride in where they live, they treat things better and everything just goes better.
I agree. I agree wholeheartedly. And that pride of ownership is the difference maker. And even with the, well, I guess I can’t call it ownership, but you guys get the point, right? They live there. They’re proud of where they live. Um, but our goal is retention, right? Because once we turn them. If we’ve got to turn them again, it can eat all your profit for the year that you made on that unit.
So, you know, we want people to stay two and three years so that we can actually get the money out of the investments that we made in year one. It, yeah. Yeah. That’s that’s, you know, get that ROI that you were planning on. You know, without, without having to turn it. Yeah. So it’s, it’s definitely, no, we, I think we should all do, you know, whatever we can and to reasonably keep the tenants that we have and keep them for as long as we have.
But, you know, and, and that’s the whole thing is, like you said, retention, you know, it’s, um, you know, weed out the tenants that you don’t want, but the ones that you do want, you know, treat, you know, treat them right. And treat them fair and they’ll, you know, they’ll keep treating you right. And treat you fair.
I agree. I agree. Um, and you know, it’s funny cause it’s not just the residents that you want to treat you. Right? You got to treat the property, right. Your property will turn into it. Yeah. Alligator and all you do is feed it, but it doesn’t give you anything back. But if you love on that thing and treat it well, it will become that goose that keeps laying those eggs.
So you feed the goose that lays as you feed the goose, some more lay, some more eggs. You know, we try to think about our properties that. Awesome. Awesome. So would you say that would probably just about sum up that first 90 days, that’s about where you’re. Yeah. I mean, for me, that is the fix it process.
Right. We continue to do that. And then we iterate and we make small adjustments, but the goal is always to execute on the business plan, right? Whatever we lay out in our doc, um, based on the whatever assumptions we had, our goal is to go through that and see if we can execute it, see if we can prove our rent, um, premiums.
See if we can reduce those expenses that we targeted. So. And, you know, make those capital improvements in the property. And, you know, if we do that, well, we get rewarded. If we don’t, then you know, it could be bad news. And I’ve seen many people who’ve had to sell properties because they weren’t able to either execute on their business model or the business plan that they created.
It wasn’t one that was going to work for the property, that if they tried to apply it against yep. Awesome. Awesome. Well, thank you so much for, uh, for educating everybody on that. Um, that is very, very, it’s very interesting to dig into it and kind of get that feel of what exactly, you know, those, those, uh, 90 days on a, on a good value add is going to look like.
Um, now, um, how do you like to, I, I asked this of almost all guests is, um, how do you like to give back to your kids? Yeah, man. So the apartment community w is really just providing that extra co excellent customer service for the folks in the investing community. You know, we have a podcast, it’s probably the dreamcatchers podcast.
We put out an episode on Sunday evenings and then put out another one on Thursdays, the one on Thursdays, more coaching mindset. Real estate investing specific. The one on Sundays is tied to people who set out to accomplish something and actually achieved it and get them to recount the journey to accomplishment and try to pick up those keys to success.
Um, also we. A lot. And then every now and again, I’ll, I’ll do these, uh, promotions kind of on LinkedIn and Instagram, Facebook, where I’ll give people and I’ll give them a 15, well, actually it’s more like 30 minutes. I’ll give them a 30 minute breakthrough call. But the pro the, the challenge is you got to get up at five o’clock with me.
So while I’m on my morning, I’ll talk to you for 30 minutes to an hour, depending on how complicated the situation is. And you know, if you’re stuck and it’s all about helping people get unstuck and some of it’s just getting uncomfortable and being willing to do things you aren’t necessarily willing to do.
And so. We do those two and we’ve had a lot of success with them. I actually get really excited when I get to talk to somebody, especially I hit them with plenty of energy. Cause I’m already out walking and they’re like, hello, it’s rubbing your eyes. And maybe I woke them up cause they overslept a little bit.
But you know, at the end of the day, You know, our goal is to help people catch their dreams. That’s kind of my thesis on life. Your dreams should be well. And so whatever we can do to help people do that, we try to do that as much as possible. Jerome. That is, that is awesome. That is amazing. I love that spirit.
I love that challenge. That is that, that, that is absolutely amazing. Yeah, that I, uh, yeah, I, I absolutely loved that. Uh, you know, for y’all that aren’t, aren’t watching the video, like I’m smiling, like ear to ear because I just love what he just said. That is, that is amazing. That is great. I, I, I, I’m one of those ones that I will say.
From the community. I appreciate, uh, somebody that has a giving heart like that, that wants to make sure that, Hey, yeah, you’re going to sacrifice a little bit, you know, you, you know, you want to spend some time with me. You want to, you know, it’s like, look, um, yeah, I’m going to require you to sacrifice by being up at 5:00 AM, but that’s all I’m asking you to sacrifice is getting up and it’s like, look, if you’re serious, 5:00 AM is not going to be an issue for you.
If you’re serious about fixing what you want to do, it’s a little bit of an accountability. It’s like, look, uh, yeah, UK, I will spend my time and I will give you my knowledge and I will share, I don’t mind. One is, but I’m going to make sure that you’re real about this because I don’t like wasting my breath.
I like that. That’s uh, that’s ingenious. I love that. It’s like, yeah, I’ll give you advice all day long, as long as it’s 5am.
To make it convenient so that the folks who aren’t serious about it. Stay out of the way. I want those folks who are actually going to make a difference, because for me, it’s an investment, right. I got to our times our most precious resource. And so if I’m going to give you some of my most precious resource, I want to get a return on that investment.
And it’s not so much that, you know, there’s a transaction there. Me seeing you do well and actually accomplished what you set out to accomplish is just as good as me doing it. Like I genuinely get excited about people accomplishing it because then it makes it real for me. I know that dreams can be real because you did it right.
And it’s just that confirmation. Yeah. Yeah. Oh, well, it’s, it’s, it’s that like, look, I I’m jacked. I’m super excited to help people, you know, but it’s like, look, I don’t want to put, you know, it’s like, look, if I’m helping you, I’m truly helping you. I am walking side by side, I’m holding your hand. We’re pulling this along.
I’m helping you with whatever it is that you’re doing. It’s like, look, I’m here. I’m helping you. But if I’m putting my time and energy, I just want to make sure that you’re going to, that if I’m putting my time and energy in it, that you’re going to put your time and energy into it. And it’s like, look, as long as you’re putting your time and energy in it, I will help you and put as much as mine and I personally can.
So it’s like, but you know, it’s like, well, I’m not going to sit here and I’m not gonna pull you across, you know, I might help you across the finish line, but I sure as I can pull in you across the finish line, Yeah. I, I had a bad habit of wanting things for people more than they wanted them for themselves.
So I had to put in some of those, I guess they’re called toll gates or, uh, you know, some of those barriers so that I don’t get in a situation where I’m trying to, like you said, pull people across. Yeah. Yeah. It, yeah. It’s um, yeah, but that, that is amazing. I love how you’re giving back Jeremy, what is a good way, uh, for my listeners to get ahold of you, if they want to.
Um, I think the best ways to connect with me on LinkedIn. Um, I’m the only Jerome Meyers and it’s MYERS on in Greensboro, North Carolina. So you can find me there. Um, you know, if you want to hear some of our contact content on the podcast is to dreamcatchers podcast. It’s on all the major pack podcasts and platforms.
And we also just started a video. So we’ve probably got six or seven videos out. Yeah. On YouTube as well. And you can find that dream catchers. Um, and then, you know, if you want to get to, you know, my business website is developing, but the E’s are three. So the three V3 lop ing.com. And that’ll put you in the game with me and, you know, contact us form.
We can get some time scheduled and do what you need to do in order to foster a mutually beneficial and productive relation. Awesome. Awesome. Jerome. I appreciate you hopping on here so much and thank you for giving all the value, uh, that you have to, uh, to my listeners. And until we get a chance to talk again.
Thank you. Thanks, David. Good talking to you. Thanks for having me on again. I really appreciate.
But we want to learn more about dream catchers. We used the word fight. He drained. If you can think of someone who would benefit from this type of opportunity and are willing to share what we’re doing with him, we would greatly appreciate it.