EP. 53: Scaling Your Portfolio: From Property Management to Passive Income

When does managing your own properties stop making sense? According to Dave Pinson, it's not about how many doors you own - it's about your quality of life. "Are you missing your kid's softball game because someone's toilet overflowed?" This straightforward wisdom comes from a man who scaled Trinity Multifamily from 2,500 units to over 24,000 across 20+ states before selling the company.

Dave's 25-year journey through real estate offers a masterclass in relationship-based property management. Starting in student housing and eventually becoming CEO of a major management company, his perspective spans markets from Fort Smith to Northwest Arkansas and beyond. What's particularly fascinating is how Trinity grew not through aggressive marketing but through word-of-mouth and a philosophy of "managing properties like we owned them."

The conversation delivers practical insights on market comparisons, with Dave noting Northwest Arkansas' continued strength against national trends and Fort Smith's renaissance ("I've seen as much growth there in the past three years as what there's probably been in the last 30 years"). For investors looking beyond these markets, he highlights Tulsa and Atlanta suburbs as areas with significant untapped potential.

Perhaps most valuable are Dave's warnings about the three critical mistakes investors make: unrealistic exit cap rate projections, choosing the wrong property management partners, and undercapitalizing from the start. These pitfalls can derail even the most promising real estate ventures.

The episode concludes with a candid reflection on the personal costs of success - the family time and relationships sometimes sacrificed during career-building years. As Dave notes, priorities shift with age: "It's become more about time than money." For anyone building a real estate portfolio, this conversation offers both tactical wisdom and thoughtful perspective on balancing ambition with what truly matters.

Ready to scale your portfolio? Make sure your "tool chest has the appropriate tools" - the right relationships with attorneys, property managers, and brokers who can help you seize opportunities when they appear.

Episode Transcript

Speaker 1 (00:07):
Welcome to Northwest Arkansas Investing Podcast, your
go-to source for real estateinvesting in Northwest Arkansas.

Speaker 2 (00:13):
With your seasoned investor just starting out.
We bring you expert insights,market trends and practical
strategies to help you buildwealth through real estate.

Speaker 3 (00:20):
From buying and selling to property management
and long-term investmentplanning.
We cover it all so you can makesmart, informed decisions in
this fast-growing market.
Let's dive in.

Speaker 1 (00:30):
Welcome to Northwest Stock and Soul Investing Podcast
.
Today we have Dave Pinson on tothe podcast.
Dave, thank you for your timecoming on.
We really appreciate you.
Are you based out of Fort Smithor are you living out of here
north of Arkansas?
I'm out of Fort Smith Okay, outof Fort Smith.
Or are you living out of herenorth of Arkansas, out of Fort
Smith?
Okay, out of Fort Smith.
So we appreciate you driving upAbsolutely.
Really.
Do appreciate that, my pleasure.
What we like to do is just kindof do a quick 30,000 foot

(00:53):
perspective of like what you do,how you got into what you're
doing.
You know a little bit aboutyour background and then we'll
facilitate from there.

Speaker 4 (01:01):
Yeah, absolutely.
Well, I've been involved inreal estate property management
facility management for aboutthe past 25 years.
That actually started instudent housing.
Even back when I was anundergrad I was a desk attendant
and a leasing agent andprivatized student housing and
stayed in the student housinghigher ed field for almost 10

(01:21):
years.
That part of my career ended,uh, I was the chief housing
officer at the university ofarkansas for smith.
Uh, kind of helped them withtheir conversion from a two-year
school to a four-year schooland getting their residence hall
program set up.
And, yeah, at that time I wentinto the uh to the, to the pure
property management side ofbusiness, and that was at
trinity multifamily.
Yeah, started there as aregional director.

(01:43):
Uh, I guess that was back in2011.

Speaker 1 (01:45):
Okay, Okay, what?
I guess and we like tofacilitate this too what about?
Real estate caught yourattention.
What about?
How did that even become?
Like?
Were your parents in realestate, was it?
You'd watch a podcast, listento a podcast, and you're like,
oh, I want to be in propertymanagement.
Well, how did that look?

Speaker 4 (02:02):
Yeah well, believe it or not, back as an undergrad I
was going into law.
I was a pre-law major and whatI wanted to do in law was real
estate law.
It had always intrigued me.
I had known several realtorsgrowing up, even in South
Arkansas.
It looked like they had a lotof fun with what they did.
So I was going the law side ofit I was.

(02:23):
I was really uh bent on wantingto be an attorney and ended up
getting that attendant kind ofleasing agent job there as an
undergraduate on a on a federalwork study program.
That really opened my eyes toto kind of that side of the
world.
And uh, I ended up beingoffered a graduate assistantship
at uh, at the at Maumau MaterTech, and it was a pretty
customizable degree.

(02:45):
It was a, it was a master'sdegree but I did mine with a.
It was it was an administrationbut I got an emphasis with
student housing kind of facilitymanagement side of the business
and I was hooked then and themore I progressed kind of on
that side of the business youknow there's a lot of red tape
right and I had the opportunityto join really a young company
in Trinity Multifamily that hada little bit more leeway and you

(03:07):
know I can kind of express myabilities a little bit more on
that side of the table, but Ilove student housing.

Speaker 1 (03:14):
So with Trinity Multifamily, explain, you're
with them right now, correct?

Speaker 4 (03:20):
Actually, I sold that company a few years ago.
Okay, yep.

Speaker 1 (03:23):
Congrats.
Yeah Well, thank you, thank you.
That's amazing.
So how long of a period wereyou doing the Trinity?
Approximately 10 years, 10years, 10 years.
Sold that, and then what doestoday look like for you?

Speaker 4 (03:38):
Well, I get to do a lot of different stuff, get to
have a lot of fun.
It's all real estate centered.
That's what I do either.
On the acquisition side, I dosome business with a firm out of
Los Angeles called MotionCapital, okay, and that firm
specializes really in secondary,tertiary markets, small capital

(03:58):
cities, growing submarkets,re-gentrifying submarkets in the
sub-5 million space, primarilyapartments, okay, duplexes, some
SFRs, but it's primarily allapartments.
Wow, I help them with theirasset management and
acquisitions.
But really my day-to-day rightnow, guys, focuses around being
an investment sales advisor, asenior advisor with SB&O
Corralty at Laulsa and we reallywe sell apartment deals all

(04:20):
over the country.
Wow, as far as the specialtygoes, um, you know it, it would
be apartments.
But we do some commercial, some, some retail, uh, everything
from trailer parks to RV parks,all that sort of stuff, wow, Wow
.

Speaker 1 (04:34):
So you, you started in um, uh, as a undergrad
started and then went to Trinity, um, would you say that all of
this background you have such aunique perspective from like
seeing the property managementside of the thing you get to see
, I would say like probably someof the like the craziest

(04:56):
stories, some of the managingall this stuff, like would you
say, that gave you a really goodbase for like being where you
are today.
You're able to do some reallycreative things.
Would you agree with that?

Speaker 4 (05:06):
Yes, absolutely, and that's one of the neatest things
about property management.
I mean, it's an integral partof the business.
You know, I always tried totell people that we manage stuff
like we owned it, because noone really manages a property as
good as what or not.
That hands-on approach.
The problem with that, thoughif we go out and buy a deal and
we try to manage it ourself, itreally slows down how fast we

(05:28):
can scale.
We're doing work orders, we'repaying units, and we should be
out looking for the next deal.
You have to find that trustedthird-party property manager
that's willing to manage withyou, to grow with you and really
to form a partnership.

Speaker 2 (05:43):
To me, that's what property management really boils
down to right is thecollaboration between the, the
owner and the manager so such akey with multifamily and
commercial the team like we justtalked to tj about having a
good cpa, having a good attorney, having a good broker is worth
their weight and you knowattorneys always it's starting
around, they're worth theirweight in gold.

(06:04):
You know same no-transcript andI think with a good commercial
broker but also a propertymanager, you know it's built in
that team and I feel like fromwhat you're saying, there too,
the property management side ofthe business, I'm sure you have
a lot more respect for the duediligence on a property, like
what you see, probably fromowners maybe who didn't do
proper due diligence, or even Iknow we were involved on a

(06:28):
couple of deals early and youguys got as a property manager,
you got involved on the duediligence.
So I think you have a respectfor the unforeseen things that
can happen.
You know there's some things inreal estate that are out of
your control and may beunforeseen.
You know there's some things inreal estate out of your control
and may be unforeseen, buthaving that property management

(06:48):
background I think hasdefinitely probably been key.

Speaker 4 (06:51):
It absolutely has been, because you know, when
you're helping someone likeyourself, brian, with an
acquisition, you're going in andyou're familiarizing yourself
not only with the property butwith the sub-market and the
market that the property's in.
So I mean it's education, it'sreal estate 101, how you
approach every one of thesedeals, because they're all
different.
Each one is unique in their ownright and may be in the same

(07:13):
city and it may operate totallydifferent between north and
south side of town or east andwest side of town.
So being a property manager,you really get to study that
stuff on the front end,especially when you're included
in it.
So the acquisitions from aproperty management standpoint
are probably the easiest type ofdeal to take over.
But then on the flip side ofthat, you get a deal that maybe
someone hadn't ran correctlyanother management company owner

(07:36):
and you know you walk intosomething that's 50% occupied
and you're expected to makegreat strides in a very short
amount of time.
You know, because the thing'shemorrhaging right.
So you have to learn on the flyin those types of situations
For our listeners.

Speaker 1 (07:51):
explain how y'all met in the relationship there.

Speaker 2 (07:56):
Yeah, I mean I could start that I was buying
multifamily, originally inSpringdale.
It was my first venture, youknow, seven and a half years ago
.
Originally in Springdale was myfirst venture, you know, seven
and a half years ago before.
And then I kind of started torun out of doors in Northwest
Arkansas and started to look atFort Smith.
You know Fort Smith got on myradar somehow.
Uh, you know, and when I wasbuying in Springdale people were
like are you buying inSpringdale?
And then when I started lookingat Fort Smith they're like, oh,

(08:18):
you're, you're buying, and whatare you doing in Fort Smith or
doing in Fort Smith, why wouldyou even look there?
And you know, but some of thebasis there was just a crazy
different basis between FortSmith and NWA.
But we met.
Trinity was recommended to me tobe a good property manager in
Fort Smith.
I wanted someone local to themarket.
Trinity was headquartered inFort Smith.

(08:38):
You guys had experience inC-class properties, which is
also important to me, makingsure you had experience not just
in multifamily but the sametype of asset class and in the
market.
And uh met.
We met uh in person on a duediligence tour on a 59 unit that
I did a joint venture with myfather-in-law actually, so he

(09:01):
was out there and it was.
It was really good, like here,that was uh, six years.
I mean.
I felt like I mean five yearsago, maybe six years, I don't
know, I lose track of time.

Speaker 4 (09:12):
I would say at least, at least five or six, yeah,
five or six, yeah, 2019 maybe orsomething like that.

Speaker 2 (09:17):
And uh, and I was really impressed one he had the
ceo title at the time.
We're very close to I think youwere a ceo, uh, president, or
very close to that.
And just the market knowledgewas super key to me because I
never bought anything inportsmouth.
I I knew the market, noteverything on paper, but I
didn't know what windsor streetwould be, the difference between

(09:39):
sunset street or what kincaidavenue looks like or what like
that changes a and we'll talkabout that too.
I'd like to get into NWA versusFort Smith, for sure, but that
was when we first met and I wasreally impressed, like with your
knowledge, you know, and someof those you kind of knew.
You said everything, everyproject and every property is

(10:00):
different, but you have an ideaof okay, the roofs are the big
expenses here.
The you know, plumbing is, is a.
Is it more of an issue in FortSmith than it is here, something
that you'll probably want totake a look at closer, just okay
, I know you had $20,000 quoteon probably a property over here
.
It may not, maybe it's 10,000here or 30,000 there, so but you

(10:22):
have an idea of, like ballparknumbers and and the idea of the
rents.
You know, yeah, I think maybethey were around 400.
I think that property they were, I think they started, I think
a couple of started with three,375 and 400.
So, uh, you can imagine some ofthe units and they.
I saw worse properties thanthat too.

(10:43):
Oh yeah, rents, and I thinkthat was almost operational
improvement too.
So, uh, that's how we met andlike I was really impressed with
, like, the market knowledge atthe time and the process and, uh
, knowing every aspect of it.

Speaker 1 (10:58):
So, yeah, that was uh that was our first meeting,
dave would, would you say, atTrinity were y'all specialized
in bigger things.
Were you taking over someone'sfive-unit family?
Did you guys do anythingmanagement-wise?

Speaker 4 (11:14):
Yeah, we kind of had it the way I set it up.
It was compartmentalized.
So, for example, we had aresidential division that
managed single-family homes,complexes, four-plexes, you know
, for the guy that may own sixor eight units, type deal.
So we had a division set upspecifically for that staff
specifically, you set that upwhen you came on with Trinity.
I did yes, it primarily focusedin markets where we had larger

(11:37):
multifamily businesses andprobably our biggest holding was
Fort Smith and the River Valley, even up here in northwest
Arkansas, Wow.
And then we had our multifamilyside of the business, which was
the big one, right, yes, and wehad the thousands and thousands
of units and really typicallythe break over between the two
divisions, 30 units.
But it depended on the market,on kind of which one it fit into

(11:58):
Right.

Speaker 1 (11:59):
I would say and Brandon correct me if I'm wrong
too like a lot of our listenersare probably like in the.
You know we got commercial guyslistening, of course, but
they're probably like eitherlooking at their first deal,
looking to do deal four, five,six, up to ten.
What's your opinion on propertymanagement?
Because I have, I have 10 andI'm doing it myself right now

(12:23):
and I have a lot of clients thatlisten to this podcast and
they're like from two to 10,somewhere in that range.
What's your opinion on likewhen's that threshold for?
Like?
Hey, property is time, it'stime.
Is it?
Is it personal or is it one?

Speaker 2 (12:38):
One.

Speaker 4 (12:41):
You know I'm asked that question.
I bet you're asking a lot nokidding.
You know I'm asked thatquestion I bet you're asking a
lot no kidding Maybe half adozen times a year, and it's
obviously going to be differentfor everyone.
Yeah, some people are much morehands-on, some people enjoy it,
some people have a W-2 that'smore flexible, you know.
So there's a lot of things thatgo into it.
My immediate answer, though, ishow's your quality of life?

(13:02):
Is it impacting your quality oflife?
Is it impacting your quality oflife?
Are you missing a kid'ssoftball game because someone's
toilet overflowed?
So that's kind of the breakeven for me.
Now I will tell you, as peoplescale up and grow, there's sweet
spots that you'll hit.
Now it's going to be different.
For market it's going to bedifferent, you know, based on
what your rent rates are, whatvintage of stuff that you buy,

(13:23):
and once, once you hit one ofthose.
That's a good time to kind ofreflect and look.
For me, personally, I still ownthe first house, the first rent
house I ever bought.
That's amazing.
I still own it.
So I've almost paid off andit's almost like part of my
family now.

Speaker 3 (13:36):
Yeah, I can't agree with that.

Speaker 4 (13:37):
I probably hit like six or seven, and that's coming
from an old property manager.
Yeah, property manager, yeah,you know, I hit six or seven of
them when I started kind of tonotice the burn a little bit.
You know, I just I don't likethis 11 o'clock call.

Speaker 1 (13:48):
Yeah, I started noticing at around five, six,
seven that like leasing cyclesgot really sporadic throughout
the year and I was like I can'ttime all these out because I I
would say you would say too liketiming up.
Leasing cycles are huge andlike I had just had, like
randomly, three come up and I'mlike I hate my life rate.

Speaker 4 (14:07):
And it was only three .
No, I know, and you know,vacancy loss.
That's the number one killer inthe business right there and
you know you have to look at it.
Does this company that I'mlooking at, do they have avenues
to get this thing rented, youknow, 30 or 45 days quicker and
it saved me 1500 or two grand.
Well, if the answer to that'syes, then you just paid.

Speaker 3 (14:26):
Wow, I feel like most of us don't get into real
estate to to pick up anotherfull-time job either, and uh and
so for even even like Briansaid, I'm I'm kind of on that
boat too.
It's just harder to makesometimes, it's harder to make
those numbers work until you getto a scale and so, uh, you know
, but if you've got a W-2 job ora job that is the bread and

(14:47):
butter of helping you continueto buy more units and maybe
property management puts you inthe you know, in a break even, I
would almost say it could beworth it for you to be able to
spend that time going to pick upmore units and look for the
next deals and get to a scalewhere it makes a lot more sense.

Speaker 4 (15:04):
Yeah, and there's the 80% capacity rule too.
Once you kind of hit that,whether it's you, whether it's
an employee, whether it's aproperty manager, whatever the
case is, how much more do youhave to give beyond that and
keep doing all the other stuffyou're doing, including?

Speaker 1 (15:17):
your family.
I really like your answer onquality of life.
My wife and I have a lot ofconversations about that right
now.
I I'm kind of my wife and Ihave a lot of conversations
about that right now.
I'm like what does paying anextra thousand bucks a month do
for us?
And it's like it gets rid ofthe annoyance and like, yeah,
the, the call from the tenant,that isn't hard.
The filling one thing isn'thard, but it's how many two
pound weights can you put onyour back?

(15:37):
Sure, or, along with all theclients that we have to talk to,
and I, you know I'm buildingstuff and it's like none of
those things in themselves arethat hard, but you stack
everything up and like it getsreally hard.
I love your quality.

Speaker 4 (15:52):
And that statement comes from me, as a parent and
having, you know, teetered onboth sides of that over the over
the course of, you know, myproperty management career.

Speaker 2 (16:00):
Yeah, yeah, the quality of life was a buzzer
answer right there.
And yeah, the quality of lifewas a buzzer answer right there.
And that stems also to like ifyou're doing a full time, if you
have a W-2, if you have abusiness, you go.
And for me I think if you're,it's right along the accredited
investor line.
If you're making $200,000 ormore, you should not be chasing
down one lease or two leases.
That your dollar per hour isnot.
Your quality of life is notworth it.

(16:25):
So I almost at that, is it?
What's your current income?
Yeah, I would almost look at it, not even a door count.
But is that tied to your doorcount or is it tied to other
factors?

Speaker 1 (16:31):
outside your.
You can be super analyticalabout it too and, like my wife
and I, at the end of the year welike to go, all right, what do
we make?
How can we break this down perhour?
How much do we think we work?
And then like, all right, thisyear, you know, we made a little
more, so this and this gets putoff.
And so, listener, listening,like that is one way to go about
it.
Um, I think, even just takinglike, how does this make me feel

(16:53):
?
Like, does it cause stress andanxiety?
Some people are gifted, likeyou're probably you.
You are probably a lot moregifted for doing those tasks
than like maybe a me or somebodyelse.
So it, I think, boils down tosome of that.
I agree, yeah, I agree.
Let's dive into a little bit ofnwa versus for smith.
I have I've lived here my wholelife.

(17:13):
I have very little knowledge ofsmith, like I've stayed in this
area.
Tell us just like an overviewI'm sure you've been asked this
a lot.
You know, because you've dealtin both markets, what are some
key differences, but in like themanagement real estate world
from the two spots okay, I'llstart on that by saying let's
you know I'm gonna do a wholepodcast yeah we could, we really

(17:35):
could, but not necessarily froma versus standpoint.

Speaker 4 (17:38):
And you know we've all heard the saying rising ties
lift all ships, yes, right.
Well, northwest arkansas is therising tide and you can see
that, you know, from solemnspruce to joplin, missouri and
ford smith being on the southernend of that.
So ford smith is is on the riseright now, and part of that is
because of northwest arkansas.
Some of the otherdistinguishable factors, though,

(18:00):
about the market is the uh, the188th fighter wing and the
training program that they haveset up with germany and
singapore there wow, that'screated a significant amount of
buzz in the market, and also themedical school and the
expansion of that super nicearea.
What they've done at chaffeecrossing I mean you could pick
that up and put that innorthwest arkansas or a lot of

(18:21):
different markets.
And, yeah, it's really unique,really distinguishable to fort
smith.
You, fort Smith's an old townand up until just a few years
ago it was the second largestcity in Arkansas behind Little
Rock, and Fayetteville has sinceclipped that, yeah, barely, and
I think it will continue to doso.
But, right, fort Smith is kindof rounding the corner now to
back to becoming more of adestination type market, just

(18:43):
with all the stuff that's going.
Yeah, I think I think I madethe comment earlier.
You know I've seen as muchgrowth there in the past three
years as what there's probablybeen in the last 30 years.
Wow.
As far as rent growth, I'vebeen hosting out-of-state buyers
in the market.
You know that's not somethingthat's happened in a long time,
unless it's a brand new A-classdeal.
So, there's some neat stuffhappening there.
So there's some neat stuffhappening there.

(19:03):
Housing shortage there somewhattoo, not to the level of up
here.
I mean the markets they're anhour apart but really they're
still night and day different.
Fort Smith is moreworkforce-oriented Factories
Mars, petco, rheem, all of thatsort of stuff.
So we're very good employmentbase.

(19:27):
I won't say it's aninflation-proof market, because
no market is, but typicallyunemployment runs pretty low in
Fort Smith.
I call it a dirty hands town.
That's nothing derogatory.
There's a lot of factories anda lot of employment base of that
nature and historically it'sbeen a renter by choice market
or, excuse me, renter by demand,whereas Northwest Arkansas in
some cases has a renter bychoice market or, excuse me,

(19:47):
renter by demand, whereasNorthwest Arkansas in some cases
has been renter by choice.
That's another distinguishabledifference.
But also they haven't builtnear the product in Fort Smith
that they have in NorthwestArkansas.
So I see a lot of that 90s to2005 construction stuff really
pulling some nice rep ratesright now, even with light
upgrades, because there's not aplethora of the new stuff and

(20:11):
the variety of the new stuffthat you have up here Now
Northwest Arkansas is hard tocompare to almost anywhere else
that's coming from someone whoused to do business in 22 states
while during my Trinity timestimes with you know 20 plus
thousand units, and even fromthe brokerage side.
Now we're seeing a lot of thethe bigger major metro markets

(20:31):
the phoenixes, the dallas's,austin's, another one where you
know cap rates are ticking up,you know, uh, vacancy rates
ticking up, you know rent ratestaking down, that sort of thing,
and that's something that Ihaven't noticed here in
Northwest Arkansas.
Yeah, there's just a handful ofmarkets that's really
maintained its integrity throughkind of this rough four or

(20:52):
five-year patch that we've beenin.
Yeah, so that's been neat tosee up here.

Speaker 1 (20:57):
That's a great point that we just did the Skyline
Report.
We had an episode on SkylineReport and we were like going
over every like.
We had an episode on scoutingreport and we were like going
over every like line item and itwas just what you described.
It was like hey, vacancy likewent down, like and in a lot of
different places and like oncommercial and residential and
multifamily like everything'slike in.
Well, how many units were builtin Fayetteville?

Speaker 3 (21:18):
and like it still went down like yeah it's also
cool just to see vacancy ratesover a long period of time here
are pretty relatively low.
How does that look?
Stack up to Fort Smith Ourvacancy you mentioned?
There's still kind of a housingcrisis there and stuff like
that in a way.
Yes, Our vacancy rates prettyhistorically low in Fort Smith

(21:40):
Three to five percent.

Speaker 4 (21:41):
Yeah, true, and they fluctuate from that.
Now, once again, rates are muchlower.
But, as Brian pointed outearlier, you can get a much
better basis plate than you canhere.
So there's give and takes onthat sort of stuff.
Now, as far as NorthwestArkansas goes, I know several
developers up here just haven'tbeen in this market for a long
time that have built multipledeals over the past five-year

(22:02):
window, and five years ago youcan lease up a 150-unit deal.
I mean, it was a record pace.
You know you tell people aboutit, they wouldn't believe it.
I quit.
You could have leased up.
Now some of the saturation rateshave slowed down up here.
They've become more like othermarkets and they call me hey,
what's going on?
What's up?
What can we do?
I said this is just normal.
Now I said it's crazy Three orfour or five years ago.

(22:24):
You're still getting 10 to 15leases a month on $1,600 average
rents, and that's much betterthan any other market that
you're going to go find it'sslowed down, but the end result
hasn't changed any Low vacancyrates.
Rent rates have maintainedintegrity.
So it's still a great market.

Speaker 2 (22:40):
Yeah, people are freaking out about the vacancy
increase.
Like it's funny because theskyline report q1 2025.
It's like everything isdecreasing, the commercial, you
know, decreasing to 5.8, but uh,last the half, before last, so
I guess a year ago vacancyincreased from two percent to

(23:01):
like three and a half%.
Like starting to like break downScott's falling Scott's falling
and then just here another halflater here it's coming back
down and it definitely for me.
For Fort Smith, I try tounderwrite 5% vacancy and I try
to get my economic vacancy to10%.
The deal needs to still makesense there because I think

(23:22):
there's a little bit more baddebt.
You know, to your earlier pointabout, you know we have a 376
unit, a class and center, 10 0,376 renters don't all pay on
time, you know, and that'sincredible.
In fort smith, you better forme, I'm underwriting for a
little bit more concessions, alittle bit more, uh, more

(23:43):
vacancy.
And then also, uh, fort smith,they pay for what the owner?
It's more typical for the ownerto pay water.
About water and utilities.
That's something to be up onthe right electric, so it's an
increasing cost, yeah yeah.
So as long as you're in, as longas you know that going like you
just have to underwrite itdifferently, you know, so you're
, you're probably paying less.
Your price per door door isless.

(24:03):
Other factors are less so forthat.
But that's starting to comeback too.
Actually, I know that there'sbeen more utility billbacks.
I guess rubs, that's correct.
Rubs is starting to be moreprevalent in Fort Smith than
when I was buying.
What does rubs mean.
Rental utility billbacks, sowe'll charge a $25 water fee.

(24:24):
You're charging a $25 water fee.
You're charging a $25 water fee.
If it's individually metered.
You could do it direct, but alot of them aren't, so you're
just charging a flat fee forwater, flat fee for electric,
some of the utilities.

Speaker 1 (24:36):
Right, Dave.
Do you see in the coming years,or even right now or in the
past, like people living in FortSmith driving to North of
Sargent's off a walk because oflike, is that a trend you, you
have seen in the past and evennow?

Speaker 4 (24:53):
it is and even still see some of it.
Now.
You know a lot of a lot of the.
You know they're from FortSmith, their kids are in school
at Fort Smith and at the end ofthe day it's it's a little
cheaper to live in for smith,yeah, and yeah, you know, if you
live in van buren, alma or, andon the east side of fort smith,
I mean fayetteville's, 45, 50minutes away, it's not bad, it's
.
It's a real easy trip to me.

(25:13):
Yeah, uh, so I do see a lot ofpeople that that still do that.
Yeah, more professional typejobs.
But then again, I also knowsome people in fayetteville
drive down to to our bestenforcement, to one.

Speaker 1 (25:24):
So, yeah, these and I love everyone's opinion on this
the gap between Fort Smith andFayetteville, south Fayetteville
, okay, 40, 45 minute drive,yeah, the terrain in between
that makes it hard to develop.
Do you?
Do we ever see that likestarting to get filled in Cause,
like I hope not.

Speaker 2 (25:44):
It's a.
It's a nice drive.
I love the drive.
It's a straight shot like youcan go.

Speaker 4 (25:48):
You can rip it down there and, yeah, maybe a
bookie's in there somewhere, solike at least in case you saw.
Yeah, exactly something?

Speaker 2 (25:57):
yeah, I think there's .
For me, personally, I thinkthere's too much of fort smith
to expand, too much of northwestarkansas to expand, like some
of these Northwest Arkansas toexpand, to start looking To even
need to go there.
Yeah, maybe it does.
You know what's the one southGreenland, greenland, you know
their multi-vacancy rate is likezero because they can't build
anything.
So maybe Greenland inches out alittle bit, maybe Alma Van

(26:21):
Buren inches out, but there willbe some point where it's
undeveloped and I don't know ifany of it's protected or
anything like that between thereI do agree.

Speaker 4 (26:29):
I can see greenland to fayetteville filling in
pretty nicely here over the nextdecade, two or three, and I
could see kind of that alma vanburen up to rudy, you know, for
the new loves gas station is and, uh, the hilltop travel plaza
or whatever it is.
I can see that developing yeah,but I think you'll still have a
pretty good stretch gap I do.

Speaker 1 (26:48):
Yeah, my wife was asking that.
She's like why?
How is that?
We, my wife and I, we talkedthis all night.
She's like this is beautiful.
It is beautiful like becauseshe's from tulsa and it's like
not beautiful, right like, likeI, I, we go over to tulsa all
the time and we even thoughtabout living there at some point
.
There's great things abouttulsa.
Tulsa is a great place.
It's pretty flat.
It's a great place.
It's not nearly as beautiful asthat.

(27:09):
She's like this is insane.
I'm like, well, have you beento colorado?
But yeah, I, I.
She's like is that area evergonna get?

Speaker 2 (27:16):
and I was like probably not coming back from
fort smith, like through fayette, that, like coming over the
hill, and you can kind of see,see, you know and everything
it's.
It's a great, it's prolific.

Speaker 1 (27:24):
Yeah, it's prolific.
It's amazing so I have one herethat when you join Trinity
multifamily I don't know howaccurate this is you went from
managing 2,500 units to over24,000.
Is that correct?

Speaker 4 (27:37):
Ish that is correct Throughout my tenure there.
How the hell did you?

Speaker 3 (27:42):
get about a 10X.

Speaker 4 (27:47):
Well, you know we kind of discussed this a little
bit.
You know property management isso relationship-based Real
estate in general and there's alot of professions that are but
you know, even more so in realestate, property management is
so relationship-based.
Yeah.
And you know, I went throughprobably seven of my a little
over ten years there and youknow we didn't really do any

(28:08):
marketing.
I didn't even have a directorof marketing, I was just a staff
until that point, I think aboutthe time I became the CEO.
You know I ended up hiring one,but you know so much of it is
word of mouth and we really gotour start in this market up here
on the third-party managementside.
Wow, and Trinity, when Istarted there, two gentlemen
owned it from the Fort Smitharea and a lot of the stuff that

(28:30):
we managed they owned.
So we always took the model ofrunning stuff like we owned it.
So we kind of all came up in asystem where we were asset
managers, we were propertymanagers.
Know, we were used to the fullservice that Brian commented on
when I came out and did the DDwith him and Walt as the CEO of

(28:50):
the company.
Yeah, so that's kind of theapproach that we had from day
one all the way through.
And I want to say when I started, there were about 35 employees
and I started out in Oklahoma.
We had deals in Tulsa andOklahoma City and then I
eventually, just a short timeafter that, took over the
northwest portfolio that we hadand about that time, the
foreclosures from the crash 2008, 9, 10, and at that time,

(29:15):
northwest Arkansas had beenoverdeveloped, yeah, so there
were a lot of half-finishedapartment complexes, a lot of
foreclosures, and I had aconnection at US Bank that gave
us a deal in Center to Narcosome.
Yeah, it was one of our firsttrue third-party managing for
other accounts.
And from that point on, I meanit was steady growth of, you

(29:36):
know, 1,000 to 3,000 units overthe next few years.
And then I want to say it wasabout 2015 or 2016 is when we
broke the 10,000-unit mark.
Wow, and that was a sweet spotfor us, yeah, you know.
And then we got up to 13 or 14,and I looked at it and couldn't
figure out why we weren'tmaking as much money because we
had more units, yeah, but 10,000units was a sweet spot, right.
Our next sweet spot was between18,000 and 19,000 units, and

(29:58):
when I sold the business.
At one point we had 24,000units.
Yes, I sold the business.
We were over 20,000 units.

Speaker 1 (30:12):
And I think it was 500 or 600 employees is kind of.
When we finished up and thatwas across a 20, 20 plus state
system.
Well, bring us through thesweet spot at 10 to the 19 and
and and why was 10?
And how?
What do you have to do to toget that 19?

Speaker 4 (30:22):
well, to get to that 10 was relatively easy.
That was my ultimate, forevergoal was to to run a management
company that had 10 000000 unitsin it.
Yeah, and we had a history of,you know, training people up,
starting as leasing agents.
I mean one of my partnersactually started with the
company prior to me starting andhe started in the maintenance

(30:42):
division, yeah, and ended upbeing our principal broker and
kind of my write-in man, yeah,you know.
So we grew through promotionand training people that had
been there the longest.
I mean I had vice presidentsthat I'd hired as community
managers, as property managers,you know, five, six years before
that and you get to a pointwhere you kind of run out of
those people.

(31:03):
So you have to start hiringpeople from the outside.
And we had such a hands-onapproach, such a personal
approach to the management thatyou know that process from an
interview standpoint reallyslows down too, because you've
got to bring people in that arelike-minded and have, you know,
same leadership qualities, samemanagement philosophies and all
of that.
So we get there.

(31:23):
You've got to get to know them,trust them, you know all that
sort of stuff.
So you know, through that$10,000 was pretty easy, it was
profitable.
You know all of that.
And then we started hiring fromthe outside and you know, some
of them were good, some of themweren't.

Speaker 1 (31:36):
Yeah.
So we'll just say the growthfrom 10 to 19 was a little
tougher than maybe 2,500 to 10.

Speaker 4 (31:45):
It was for more of an administrative standpoint,
because you know if you offergood, honest management services
, you're going to get thebusiness right.
Because there's just there'snot a ton of property management
companies out there, especiallyones that handle larger.
You know, workforce b and cclass deals.
Now we manage the whole gamutof stuff right.

(32:07):
Like you know, every propertymanagement company is going to
have a specialty that they're intheir bedroom, whether it's a
class B, class, c class, yeah,low income housing, tax credit,
hud housing or whatever the caseis.
So there's a lot of nicheswithin the business, yeah, so
you know, I think you know froma word of mouth, from a, you
know, phone ringing.
From an opportunity standpoint,you know, from 10 to 19 was no

(32:28):
different from, you know, 2500to 10.
From 10 to 19 was no differentfrom 2,500 to 10.
But from the inner, workingbehind the scenes, having people
in the right seat of the bus,having the right people in place
, standpoint, that's where itgot significantly more difficult
.

Speaker 1 (32:41):
I love the constant foundation to the Trinity model
that you have is like word ofmouth, personable we showed up
and so it's like you guysliterally went from 10 to 20 up
to 24,000 units by a foundationof like we're just good people
and we we do the right thing andcharacter is high and when you

(33:02):
say that's accurate, like a lotof that foundation and grace was
from just create systems andprocesses and doing things
correctly it was.

Speaker 4 (33:11):
it was by was by family and partnerships with
folks like Brian and theseproperty owners.
That's really what it is at theend of the day
Relationship-based.
It may not be a contract likewe all think of as real estate
guys here, but an understandingthat this is a partnership and
setting those clear-cutexpectations.
On the front end, we did a lotof kickoff calls.

Speaker 2 (33:31):
The scope of work.
Dave would send me a scope ofwork.
I probably filled out six orseven of those scope of works.
He would send it to me everytime, like are we escrowing for
insurance?
Are we escrowing for taxes?
Who's a point of contact forinsurance?
Who's a point of contact forlender?
You know this whole scope andthe word of mouth was for me.
I told the story about youmeeting me on site.

(33:52):
I had a joke.
I never saw him on a duediligence tour since then.
He was in Aaron.
Aaron was great too, aaron wasjust as good.
But him showing up, yeah,showing up was big and that's
all you need in the first intro.
But from there on I knew, likeyou know, hey, this leasing
agent has a response.
I don't know if it's a leasingor my point cut person hasn't.

(34:16):
You know they've been a littleslow to respond past couple
months.
What do you think?
You know he takes that call andtakes action.
Okay, maybe we need a pivot orsomething.
Okay, won't happen again.
So I knew from there I couldjust just call him or shoot him
an email like look, but you hadthe right people in place where
I didn't need to do that veryoften.
You know, I was just talking tothose, the people that you had
put in there, the errands, theleasing.

(34:36):
You know I wasn't even talkingto leasing, but you know,
whoever is, about leasing theregional director.

Speaker 4 (34:41):
Regional director yeah, it's rare you'll ever see
a great property manager withouthaving a great owner.
Yeah, because it is a two-waystreet.
Oftentimes I see propertymanagement.
They're handicapped to a level.
Maybe earlier in the talk hereI talked about taking over a
deal that's 50% occupied.
It's not cash flowing, there'sno money to do anything.
You can't make ready units.

(35:03):
Ownership has an expectation on10 leases a month.
Well, there's enough money toturn two units a month.
It's just there's a disconnect,so it's a give and take type
deal.

Speaker 3 (35:13):
Yeah, yeah.
What do you think, I think,just piggybacking off that, what
do you think for you, you know,as an investor if you know we
have a lot of first-timeinvestors or early investors
that listen to this what aresome big things that we talked
about?
A lot of that integrity pieceand relationship building and
stuff like that knowing themarket, knowing the processes,

(35:33):
but are there any key thingsthat you would look for just as
an investor looking at, maybeyou're interviewing a couple
property managers for yourproperty what are some things
there.

Speaker 4 (35:42):
Great question.
Well, you know, if I'm firsttime or if I'm entering a new
market, my recommendation wouldbe to, you know, obviously, ask
around, ask the broker involvedwith the deal would be to, you
know, obviously, ask around, askthe broker involved with the
deal, ask your attorney, askyour insurance person whoever
may be involved that has alittle bit more knowledge than
you in the market to get acouple of recommendations.
And you know, I recommendinterviewing two or three of
them absolutely.

(36:02):
And you know you've got to findsomeone that obviously you want
to do business with, that youlike, but also someone that can
be, you know, kind of proficientenough to get the job done,
whatever your business model is.
And you know a question that Ialways ask when I'm looking at
stuff on the most side and we'regoing to a new market and I'm
interviewing property managers.
Obviously that's my background,so I know the questions to ask,

(36:25):
but I always ask them.
You know it's easy to talk aboutwhat to do when the market's
going good and the property'sdoing good, when it's in high
demand and all that.
But the question I want to knowis what do you do when it's not
going well?
Because we're dealing withpeople's homes, we're dealing
with people's money.
I mean there's other choicesyes, it's emotional.
There's other choices in themarketplace, there's all other

(36:48):
sorts of stuff at play.
So what do you do when thingsstart going bad?
There's eight vacants, eightrenewals coming up.
Four of them already saidthey're moving out.
We've never had four vacantsbefore.
How are you going to fill those?
So I want to know how youhandle stuff when it's going bad
, because I mean, inherently, itdoes happen sometimes.

Speaker 2 (37:09):
I'd love to be sitting on one of those calls
just a property manager, justsure he's got the job, and then
Dave in the background Not inDave's background of property
management, with the questionscoming on.

Speaker 4 (37:19):
I usually don't lead with that background.
I'm just saying he's just anormal guy.

Speaker 1 (37:25):
Just a guy who buys real estate.
That's crazy.
So for a property managementcompany, let's say listening or
someone who's thinking they wantto get into the property
management um, a key factor isthe relationship base.
Yeah, very, very, very, verybig.
Um, what would you say are somesome of the common struggles
you faced with um on the owner,between the the owner and

(37:49):
yourself?
Um, and maybe hiccups orroadblocks that, like, maybe an
owner did, that's like makes itmakes your job harder.

Speaker 4 (37:57):
Yeah, and I'll kind of talk about that from both
sides.
You know, property managementis a labor intensive business.
At any given time on any givenapartment complex, you've got
the field staff, the leasingagent, the manager, the
maintenance guys.
You've got a regional director,you've got a vice president.
Then you've got the field staff, the leasing agent, the manager
, the maintenance guys, You'vegot a regional director, You've
got a vice president.
Then you've got the financialarm of the company that's
putting together report packets.

(38:19):
Maybe the constructiondivision's involved with an
insurance claim or a make-readyor you know, property rehab, any
of that sort of stuff Can't AIthat there can be so much lost
in translation and really youhave one hiccup in that kind of
that chain of command that Imentioned to you.
The owner may end updissatisfied.

(38:39):
Maybe it's the leasing agentthat was too slow to respond to
a lead.
That led to losing the lead,and then the regional director
didn't find out about it in timeand then she couldn't report.
He or she couldn't report tothe ownership.
So communication is key ineverything that we do in life,
but even more so on the side ofthe business because so many
different people are involved.

(38:59):
Yeah, and I see a lot ofmanagement companies that become
siloed in that reporting andit's so difficult to effectively
get out the correct message toanyone involved.
And how did y'all speak of?

Speaker 1 (39:11):
an experience, you know, yeah, how did?

Speaker 4 (39:13):
how did y'all effectively get that message as
quickly as possible to teachperson my goal as a property
manager for all the ownershipgroups I don't care if they own
one house or 550 unit apartmentcomplex that we manage was to
answer as many questions aspossible before they were asked.
Okay, and we did that throughreporting.

(39:34):
Okay, and with technology beingwhat it is now and being able
to link up with all the variouswell, most of the various
property management softwares, atechnology person with some
talent can write scripts, canput together a program that can
send out a very concise weeklyand monthly owner statement.
So if I could, you know I gotto the point where I thought if

(39:56):
I could answer three out ofevery five questions before they
were asked, you know that's 60%more capacity that my team has,
because you know when somethingstarts going bad.
Everyone wants to know what'sgoing on and everyone spends
time answering those questionsrightfully so.
But then that takes away from,you know, greeting the tenant
that comes in the door with awork order problem or answering

(40:18):
the lead in a timely manner.
Yeah, on actually gettingsomeone in to pay money to lease
the place.

Speaker 1 (40:23):
I joked earlier about it being so.
It's such a labor intensivebusiness and I was like, oh, you
can't AI that, but do you seeAI having a place in, like
getting messages back and forthin response?
Do you see a spot for that?

Speaker 4 (40:36):
You know I'm pretty old school in all that.
But I will tell you, you know,since I started doing the
brokerage side of the businessmore so than really what I've
ever done before it's what I donow.
There are certain components ofthe business where you know
Chad's EBT, ai all that sort ofstuff certainly plays a very
pivotal role in it and a lot ofthat can be round one of leads,

(40:59):
responding to online leads yeah,huge there the development of
advertising brochures, you knowthat sort of stuff.
But there's a big component ofthis business that's still very
people-centric.
You know you want to know whoyour manager is.
You still remember how theleasing agent addressed you when
you walked in the door, how itmade you feel, how it made you
feel what the atmosphere waslike and what the environment.

(41:21):
I think it does have a place,but you know to what level.
I think that you know we'llhave to figure that out here in
the coming years.

Speaker 1 (41:27):
You've had a lot of experience in this across the
nation in different markets andI'd like to ask for our
listeners and even myself whereyou see some of the most
opportunity right now.
I mean, you really do have sucha great perspective from your
background to what you're doingnow to advising.
You're advising people in thereal estate field.

(41:49):
Where do you see a lot ofopportunity?

Speaker 2 (41:51):
That was going to be.
My question too was like beside, okay, uh one, what's your
favorite market outside of FortSmith and and Northwest Arkansas
?
Also, if you could do it, thesame type of deal, would you do
it in Fort Smith?
Or if you got the same return,both are going to spit off the
same return profile.
Would you rather do a deal andyou're in Fort Smith?
Would you rather do a deal inFort Smith or Northwest Arkansas

(42:11):
?
And then a follow-up questionafter that is what market do you
see most opportunity outside ofFort Smith or Northwest
Arkansas?

Speaker 4 (42:19):
Okay, you know I'm Fort Smith proud.
Love Northwest Arkansas.
I'm a proud Arkansan in general.
Yeah, We'll pick you know.
It's a sense of pride for me totell where.

Speaker 2 (42:31):
I'm from.

Speaker 4 (42:33):
And you know, seeing the market progress, I've been,
you know, traveling up here andworking up here for, you know,
15 years now.
It's been so cool to see allthe new buildings go up.
Yeah, you know all that stuff.
If I'm with your scenario, ifI'm given the opportunity side
by side, same deal I pickNorthwest Arkansas and I pick it
because of the potential upperend, the sales value and exit of

(42:55):
the property.
Yeah, it's something you can'tput on paper.
It's something you can't put onpaper.
You know you've got reportscoming out top three places in
the country to live cool museums, great concerts, hustle and
bustle Tyson.

Speaker 2 (43:07):
Walmart.
Huh, Still can't.
Still not home to Dave Pinson,though that's right.

Speaker 4 (43:12):
It's not, maybe someday Too much land down there
in Fort Smith.

Speaker 2 (43:16):
I do, I do enjoy where I live.

Speaker 4 (43:18):
Yeah, it's nice, a little slower paced, yeah, a
little slower paced Not as cool,but slower paced now.
So I would pick probablyNorthwest Arkansas in that, just
for the potential, because youknow a lot of people, you know,
looking at it throughrose-colored glasses.
Hey, I'm going to make $300 amonth in cash flow.
I'm going to make $2,000 amonth in cash flow.
I'm going to make 12% of mymoney or whatever.
But few people think about theend game and where you really

(43:42):
make your money at in thisbusiness is either through the
refinance or the sale of theproperty.
You're going to keep that inmind as you're looking at the
end game and that's why I wouldpick northwest arkansas.
And if I'm going outside of, uh, really, western arkansas here,
we'll call it um, I like tulsaright now, yeah, but yeah,

(44:02):
that's interesting, I do reallylike tulsa.
I haven't haven't noticed thecap rate rise there, like other
markets.
Um, I you know vacancy ratesare still relatively low,
depending on the sub market, andrents are still going up there.
Yeah, and you know, I'm overthere once a month looking at
something we sell a lot of stuffin in tulsa.
That's where my home office isat with sbn and rents are still
going up there.
But uh, I'm gonna put this oneahead of it anything that's kind

(44:25):
of in that 30 to 50 minuteouter band fitland and that
encompasses a lot of, a lot ofdifferent cities Carrollton,
cedartown, cartersville,marietta, alpharetta, dallas,
georgia, not Texas.
There's a lot of those types ofmarkets right now and as kind
of Atlanta has continued tosprawl a little bit and

(44:50):
Atlanta's not overlylandlord-friendly landlord
friendly either.
Okay, not comparativelyspeaking to other similar type
cities in the south.
People have decided to move outof there to that kind of that.
That.
What used to be way out thereit's not so much anymore, but
rents are really going up thereand a lot of these markets
haven't had any new developmentsentiment in 10 or 15 years,

(45:12):
with ceilings pretty high rightnow.
More of a fish in a barrel typescenario where you know rats
are rising very rapidly.

Speaker 2 (45:18):
I like Tulsa for that reason too, because it's still
landlord friendly, like Oklahoma, is very landlord, and we had a
20 unit in Tulsa that it wasTrinity.
It was right when Trinity wassold to Asset Living and so you
guys, trinity managed it.
Then asset living did great.
I don't know anymore but uh, itwas a great look.
It was out by the tulsa airport.
Kind of looked like, uh,schitt's creek hotel uh one of

(45:42):
my investors who didn't do thedeal but should have, uh, said
about it and I like to talk.
You talked about almost likemoving there with your wife and
it's a cool, cool little market.
You know, you got the uptownTulsa and then you got downtown
Boxer, sound and stuff.

Speaker 1 (45:59):
Yeah, there's some really neat areas.
What are some of the anchorsfor that market?
I honestly don't know.

Speaker 4 (46:05):
Well, you know, from an Oklahoma standpoint, that's
really their only truemillennial destination.
Yeah, you know it's a moreeclectic market.
You know, I'll compare oklahomacity, which is a very good
market, it's on right.
Yeah, more to like a four smithversus northwest arkansas, okay
, okay, yeah, what's yourworkforce?
You know it's a bigger city andbut it's it's more workforce,

(46:26):
it's maybe it's a little lesssophisticated, maybe, you know
rest maybe a little bit lower.
Yeah, that sort of thing.
Older areas of town.
Tulsa's really done a great jobbetween jinx awaso, broken
arrow.
Yeah, I mean, there's a bigspeed yeah, big speed did.

Speaker 2 (46:41):
Our vest is by the bach building or our vest just
made a big move in uh in tulsa,I don't know what it was.

Speaker 4 (46:47):
It was one of the downtown centers and there's
more professional opportunitiesin tulsa than other comparable
markets around and I thinkthat's a big draw, the young
professional crowd there.
I don't want to compare it toBentonville, but maybe Canada.

Speaker 1 (47:02):
Yeah, yeah, I can see that for sure.

Speaker 3 (47:04):
I think there's maybe a medical school there, with
Oklahoma State in Tulsa, if I'mnot mistaken, or something like
that, our youth gathering placeTulsa if I'm not mistaken, or
something like that.

Speaker 1 (47:12):
I would use gathering places Tulsa's great, st
Francis Hospital's great.
They have a lot of really goodthings.
I think I heard something toothat like Tulsa's an interesting
market as far as the foodsphere goes.
Oh yeah, because a lot of Imight be butchering this, but,
like a lot of companies, beforethey explore other markets, use
Tulsa as kind of like a testermarket.

Speaker 4 (47:31):
They do.
It's Tulsa and Wichita, Kansas.
Really, You'll see a lot ofrestaurants number ones in both
of those markets.

Speaker 1 (47:37):
Really.

Speaker 2 (47:37):
That's why we love coming over there, because,
food's great Food's great LongWolf is this kind of
Chipotle-styled kimchi place.

Speaker 1 (47:46):
Yes, it's right by the box we just had there last
week.
They just had their last week.

Speaker 4 (47:50):
Yeah, it was so good and it was maybe 30 years ago.
If that Tulsa was known as theold capital of the world, yes,
you would see license plates,billboards, bumper stickers, all
of that.
And it's hard for me to sithere right now and tell you any
one major company there, becausethey have done such a good job
of diversifying, kind ofshedding that old capital deal.
Now Oklahoma City's done welltoo, but it's hard to get away

(48:13):
from there.
So I give Tulsa the slight edgein that.

Speaker 1 (48:16):
Yeah, tulsa's great.
We almost moved back.
My wife's dad passed away thispast year and we were thinking
about moving back and I waslooking at moving to Bixby and
we found a house there and I waswas like this house is like
700k and it would be 1.5 innorthwest arkansas.
Like it is.

(48:37):
It is crazy.
Like the you can get a reallygood value for your home over
and especially just on theresidential side.
For sure, like your money goesa lot further, at least on the
residential side.
Would you see on the commercialside?
Like your money goes further,maybe further over there?
Or you, the residential side,would you see on the commercial
side, like your money goesfurther, maybe further?

Speaker 4 (48:53):
over there or you know.
I haven't noticed a cap ratecompression.
You know so much.
But yes, I think there's stillsome good basis play in Tulsa.
It's a big enough market.
There's enough professionalmanagement companies to have to
have a choice if you do golooking in that market.
But it's still big enough thatthere's a lot of small
management companies andmom-and-pop operators still

(49:14):
going there, which in theorymeans there's a lot of meat left
on the bottom for someone elseto come in with a different set
of eyes or different managementapproach to go in and take it.

Speaker 2 (49:23):
Yeah, because SVN traded something and I thought I
saw something in OKC.
I don't know when the lastTulsa deal was.
I know SVN's pretty, I meanOklahoma's the backyard.

Speaker 4 (49:34):
We almost laid the market at any given time in
Tulsa transactions Wow.

Speaker 2 (49:40):
It seems like there's a lot of units there, but it's
hard to compare to NorthwestArkansas or Fort Smith, almost a
combination of the two.
It's almost like if you tookNorthwest Arkansas and Fort
Smith, that's Tulsa Well, thequadrants are so different of
the two.

Speaker 4 (49:53):
You know, it's almost like if you took northwest
arkansas and port smith and likethat's tulsa.
Yeah, like well, the quadrantsare so different of the city
from south to north, to east towest.
I mean, it's just it's verydifferent.

Speaker 2 (50:01):
You come up through, like coming from northwest
arkansas, past hard rock cafe,that, right through there, and
then you know that you kind ofsee some more older apartments,
industrial, industrial.
Then you get to the uptownTulsa and you just kind of over
by like Trader Joe's and there'ssome really nice, like modern
homes, probably multi-milliondollar.
Yeah, Multi you know, kind ofreminds like a Bentonville.

Speaker 1 (50:23):
I drive through there and it reminds me some of the
housing, reminds me of like aKansas City, like the overland
park kind of Like somePhiladelphia-style Kansas City.
I love Kansas City as well.

Speaker 4 (50:34):
It's just such a hard market for a first-timer or
even someone that doesn'tcurrently own something.
It's just a hard market to getinto.

Speaker 1 (50:42):
You've had the opportunity to talk with a ton
of investors over your career.
You've seen wins, you've seenlosses.
You've seen people at themountaintop and in the valley in
their portfolio.
Let's start off.
I want to talk about the wins.
But where do you see investorsmaking mistakes?
It's a very broad question, soyou can take it wherever you

(51:05):
want it, but I think you providea very unique perspective in
that you've been on, of course,the opposite side, like hey,
we're managing your stuff foryou, you know they made a
mistake, kind of thing.
Like where do you see themmaking mistakes as a whole?

Speaker 4 (51:19):
Probably some of the most common mistakes I've seen.
You know, every investor, everyinvestor group, has their
underwriting sheet.
Yeah, we've all seen them.
There's a million differentones of them.
They're all the same butthey're kind of slightly
different.
Yeah, there's one field in mostof these investor sheets that I
see that have a huge totalimpact on the deal and that's

(51:40):
the exit cap rate.
So I enter a market, I buy thisdeal, let's say, at a seven cap,
yeah, but in five years, on myunderwriting, I'm going to sell
it for a five cap.
What would lead me to believethat there's going to be that
sort of cap rate compression inthat market at any given time?
And if there's going to be, whyam I getting such a good deal?
Yeah, why am I the only one?

(52:01):
That's a red flag for me.
So I encourage people, as aconservative approach, to
typically mirror those two Okay,yeah, and if it's lower,
fantastic.
But there's, there's a reasonwhy you're buying it at a seven
cap.
That's the market orsomething's wrong with it, okay.
Second, most common uh,starting on these larger deals

(52:21):
with the wrong property manager.
Okay, because you know, allmanagement contracts for the
most part have 30 day outs.
You know I don't like you, youdon't like me.
30 days, yeah, business anymore.
But even having the wrongcompany out there for three to
six months sets the propertyback for a year plus.
Yeah, in my experience, becauseit's it's volatile switching

(52:45):
management, I mean it is it'stypically different, different
people on site, they, the newpeople have to get their arms
around it and the propertysuffers during that time almost
always.
So there's cases where itdoesn't.
So we've got perceived cap ratecompression management.
And number three would be uttercapitalization from Jump Street.
When you buy the deal, it needs$400,000 worth of work, for

(53:09):
whatever reason.
I didn't see it, you didn't seeit, or we just didn't see it.
You didn't see it or we justdidn't know.
We didn't.
We didn't have someone thatknew the market on the front end
.
You know that roof's going tocost 180 000, not 90 000.
Not doing your homework on thefront end and under capitalizing
yeah, that really handicaps one.
So if I had to pick threereasons, that would be down, wow
there's a yeah, perfect, Iwould say yeah, say yeah.

Speaker 2 (53:31):
I mean cap rate.
You know exit, cap rateassumption, choosing the right
team, property management andmaking sure you're not
undercapitalized for thoseunforeseens.
But to your point, like gettingthose numbers up front is
important, not just having, youknow, calling the roofer and
having that in hand talking tothe vet and having that in hand

(53:54):
talking to the vetting, theproperty managers it's a lot of
work on the front end.
It's true with investment.
You know the investment side ofit.
You know you're on thebrokerage side, which is super
transactional.
You know property managementwas pretty transactional too, so
you were already kind oftrained up to be that way.
But on the investment side, youknow we were just talking to TJ
before but it's less you, I Igot into investment just because
it is less.

(54:14):
You know I never wanted to be abroker because of the
transactional side of it.
I wanted the mailbox money tosay, but a lot that you get to
that point by putting the workin.
That's right up front.
And then the board that'sexactly right.

Speaker 1 (54:28):
Like that kind of leads us into the next part,
which is, um, the best piece ofpiece of advice you have for
someone looking to scale theirrental portfolio.
And you know you said some ofthe bad stuff which you could
just reverse, engineer that andjust like don't do that, but
what would you say?
Some good advice would be forsomeone that's five units, 15
units, 20 plus, looking to scaletheir portfolio.

Speaker 4 (54:52):
Well, the neat thing about it if you've done it once,
even on a single-family rentalproperty, a duplex or whatever,
the process doesn't change awhole lot.
Yeah, you know, from buying a20-unit to a 100-unit apartment
complex, you've still got anattorney involved, you're still
doing due diligence, you'rereviewing bank statements,
you're looking at all the units,all the stuff really.

(55:12):
Same title company, you're thesame insurance guy, a lot of
that.
So my advice to them would bemake sure your tool chest has
the appropriate tools in it, andby that I mean the correct
people Insurance, attorney,title company, all that sort of
stuff.
Also, make sure you're on anybrokerage mailing list that you

(55:34):
can.
You know any commercial brokersin the area.
Yeah, you know, introduceyourself to them, because
there's so much similarity inbeing able to make that next
jump.
A lot of people that I see don'tdo it.
It's a mindset issue andoftentimes it's because they
have not found the rightproperty manager to help them
with that transition, becausethey look at it as more work and

(55:55):
you know where it should bemore opportunity.
Yeah, because once you startcompiling units in a confined
location, the economies of scalego up considerably from a
purchase power standpoint, froma rentability standpoint, from a
marketability standpoint.
Yeah, all of that Financing,financing and financing.
And you know, you've got maybea unique team that just services

(56:18):
your properties.
Yeah, you're paying payrolldollars versus contract calling
contractors out dollars.
I mean there's a lot of good,you know, economies of scales,
benefits of growing that if youcan do it the right way and have
the right people on your team.

Speaker 2 (56:32):
Yeah, I love that.
That could be the theme of thispodcast having the people in
the right seats.
Yeah, that's right, the rightpeople.

Speaker 1 (56:40):
Yeah, that's really good.
Do you guys have anything else?
Because I have a question Iwant to ask.

Speaker 2 (56:44):
Dave.

Speaker 1 (56:48):
So we asked this to TJ.
I'm starting to ask this tosome of these high capacity
people that we have on here thatyou know.
Hats off to you.
You've had a great career sofar.
You've done some awesome stuff,very high capacity.
My wife and I were walkingactually this morning at Lake
Fayetteville and she was likeshe's a therapist and we're
always have these deepconversations and she's like you

(57:09):
should ask these guys, and somy question to you is what did
you have to sacrifice to get towhere you are today?

Speaker 4 (57:14):
so it's a really good question.
Yeah, because as I've gottenolder, I've I've, too have
become more philosophical andthought about that.
You know, more in touch withtheir feelings.
Yes, more in touch with myfailures.
But we'll put it that way, andsometimes, when you're in the
heat of the moment, in the heatof battle, I mean you're doing
what you think you have to doand, in a lot of cases, what you
really have to do, right, youknow, but then you have time to

(57:35):
sit back and reflect on it.
I'm very thankful for all thepeople I've met, all the
opportunities I've gotten, veryblessed to be where I am now and
having went through all of thatand, you know, made it out on
the other side, you know, stillstanding out, but you know
that's something that that Italked to even my kids about.
You know that's something thatI talk to even my kids about.
You know I've got 22 and19-year-old sons.
That you know sometimes inevery generation says you know,

(57:56):
but we point at the other ones.
Right, you know we walk toschool every day and uphill both
ways, in the snow andeverything else, but you know
it's more than that, that youknow, if you make sacrifices
today you do what you have to dotoday.
It allows you the opportunityto do what you want to at
another point in your life,whether that's financially,
whether you're time and as I'vegotten older, it's become more

(58:18):
about time than money and otherthings in life.
How much time can I devote tothis?
What am I passionate about?
But some of the sacrifices.
I mean, there was points in mycareer where I wasn't at home
enough.
Yeah, you know, and some of myfriends were taking all these
cool vacations, you know, twoweeks, and all that at a time

(58:41):
and you know I couldn't do that.
Right, you know, and my wifewas, you know.
Hey, I'll be going here.
Why aren't we doing this sortof stuff?
You know my kids saying thatsort of stuff.
Now, looking back on it, we'reall at a point where we
understand why, but there'scertainly sacrifices along the
way, and most of it's in regardsof time with people that you
care about.
Yeah, for me it was.

Speaker 1 (59:01):
Yeah, I love that.
I think that rings true andeven in my young career I'll
just speak for me, not for theseguys, but even in my own career
I can see how that it is andcan be a real issue in trying to
balance running through thebrick wall and spending time
with life.
It's a really tough thing to do.

Speaker 4 (59:25):
It's a delicate balance.
And then the things we have todo every day at work investing,
trying to sell a deal, trying toclose a deal, and there's also
a certain component of it whenyou do get to go home turning,
turning that off, yeah, you know, and becoming dad or, or spouse
, or yeah, whatever the case maybe.
So that was that one wasn't ashard for me, but the spending

(59:45):
time with people yeah, was youknow?

Speaker 1 (59:48):
I think I'm I'm coming to a realization that I
only have 100 every day.
Yep, and I was given realestate 100 every single day and
tory, well, my wife was gettingleft with 0.05 percent out of
all the businesses.

Speaker 4 (01:00:01):
Uh, you know, I'm obviously most familiar with
this one.
You know the law of the lid.
We've all heard of the law ofthe lid and you can reach it
pretty quick in this business.
Yeah, it'll let you know realquick when you've hit that lead.
And we all have one, alldifferent, but we all have one.

Speaker 1 (01:00:15):
Yeah, for sure Love that answer.
Thank you so much, dave.
Thank you for being on thepodcast.
We appreciate your time.
I mean, obviously, just awealth of knowledge.
We'll get this out there and Iknow it'll bring a lot of value
to our people Glad to do it.
Thanks so much.
Thank you, appreciate you.
See you guys next time.
See ya.
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Speaker 2 (01:00:36):
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Speaker 3 (01:00:42):
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