In today’s The Same Day Podcast episode, Mat Zalk welcomes Danny Schwab, the Owner of Keyrenter Property Management South Florida, who shares his journey of building a property management business in South Florida’s lucrative market. Danny addresses the rise in eviction rates, strategies for supervising contractors, and the importance of building relationships with vendors.
How To Build Equity and Scale Your Business in a Fluctuating Real Estate Market
Danny Schwab is the Owner of Keyrenter Property Management South Florida, which provides property management solutions for homeowners and real estate investors. The company helps homeowners increase their properties’ value. With 30 years of property management experience, Danny has owned and managed hundreds of residential properties.
Here’s a glimpse of what you’ll learn:
- Danny Schwab shares how he became a property manager in Florida
- The value of building vendor relationships
- Danny’s most defining experiences as a real estate veteran
- How South Florida’s rental market has fluctuated
- Communicating with homeowners about real estate price increases
- The rise in eviction rates — and how to reduce them
- Strategies for scaling a property management business and supervising contractors
In this episode…
Real estate market prices have risen with inflation, and owners are raising rent to afford mortgage payments. Namely, rental prices in South Florida have increased from $800 to $1,900 for a one-bedroom apartment. With investors struggling to gain returns, how can you navigate this tumultuous market to maximize profitability?
Property owners who increase rent are more likely to lose tenants to competitors who price rentals according to the market. Danny Schwab, a seasoned property manager, urges investors to evaluate the market daily for similar properties to develop an ideal price. Tenants maintain consistent payments when homeowners communicate with them and perform routine inspections and maintenance to preserve the property’s condition. Rather than raising the rent to cover your mortgage, Danny recommends focusing on building equity on multiple upscale properties instead of relying solely on cash returns.
Resources mentioned in this episode:
- Mat Zalk on LinkedIn
- Keyrenter Property Management
- Keyrenter Property Management Tulsa
- Keyrenter Property Management Oklahoma City
- Keyrenter Property Management Arkansas
- Keyrenter Property Management email address: [email protected]
- Chris Lile State Farm
- Chris Lile’s phone number: 918-878-7771
- Danny Schwab on LinkedIn
- Keyrenter Property Management South Florida
- “Paving the Way for Affordable Housing in Urban Communities” with Devin Howland on The Same Day Podcast
- “Property Management FAQ: How Keyrenter Handless All Aspects of the Process” with Yoni Schmidt on The Same Day Podcast
- “HVAC Systems: Maintenance Considerations and Pricing” with Kevin Evans on The Same Day Podcast
Sponsor for this episode…
Chris Lile at State Farm Insurance:
This episode is brought to you by Chris Lile at State Farm Insurance.
Chris Lile at State Farm helps you protect your most precious assets and investments, including home and auto.
To learn more about how you can save double digits on all your insurance needs, visit dialliale.com or call Chris’ office at 918-878-7771.
Keyrenter Property Management:
This episode is also brought to you by Keyrenter Property Management.
Keyrenter Property Management is a full-service property management company that helps clients buy, renovate, and operate real estate assets.
The team helps clients build wealth while taking the headache out of property management.
That’s why, no matter what rental you have — single-family homes, condos, townhomes, or apartments — they can give you the management solutions you need.
To learn more about their services, go to https://keyrenterpmc.com/ or send them an email at [email protected].
Episode Transcript
Intro 0:05
Welcome to The Same Day Podcast where we discuss driving incremental business growth and other topics related to real estate, property management and entrepreneurship. Now to the show at hand.
Mat Zalk 0:20
Mat Zalk here on the host of The Same Day Podcast where I connect with top business experts and real estate leaders. past guests on our show include Devin Howland, talking about economic development in Fayetteville, Arkansas, Yonatan Schmidt, of the Keyrenter team talking about property owners frequently asked questions and Kevin Evans of Liberty Air Service is talking about H vac systems, how they work and why they are so darn complicated. Today’s episode’s brought to you by Chris Lile State Farm Chris Lile State Farm helps protect your most precious assets and investments. Doesn’t matter whether you’re at your home and auto investment rental properties or other valuables call Chris Lile State Farm for a quick and painless phone call that will potentially save you double digits on all of your insurance needs, visit diallile.com or call his office at 918-878-7771. Today’s episode is also brought to you by Keyrenter Property Management at Keyrenter Property Management. We are a full service property management company helping our clients buy renovate and operate real estate assets. We help our clients build wealth while taking the headache out of real estate ownership. Listen to any you know this better than anybody else. You’re in the business. It’s the middle of summer, electricity goes out into rental and shuts down the AC unit. There probably isn’t any worst situation or time for the maintenance issue to arrive. It’s important to have the relationships that allow you as the property manager or management company to get some person an electrician hopefully out there ASAP to solve the problem. It’s not easy, but it’s how we built our business and reputation through reliable and responsive and trustworthy vendors like Michael over lighted up electric that we love. But that is why it doesn’t matter what rental you have a single family home condo townhome apartment, we have the management solutions that you need to take that headache away from you. You can go to keyrenterpmc.com or email us at info at keyrenterpmc.com in order to get more information. Today’s guest Danny Schwab is the owner of Keyrenter Property Management in South Florida. Danny has extensive experience working in the property management business. He’s been doing it for 30 years, he has owned and managed residential investment properties for that long. So happy to have you, Danny Schwab. Welcome to the show. How are you doing?
Danny Schwab 2:25
I’m doing great. It’s it’s an honor to be here with you today, Mat.
Mat Zalk 2:32
I love it. It’s an honor. The honor is truly mine. It’s an honor to be with you, Danny. It’s clear from your light setup that you’ve done a lot of podcasts that you were part of the the wave of COVID at home podcasting, meeting people with your ring light. So it’s really if this is the first time you’ve been on video since 2020. That’s, you know, I feel I feel the honors mine. out I’ll go. I’ll go with that. It looks good. It looks good. Let’s talk Okay, first and foremost, where are you located? What have you What are you doing? How long have you been in business? Sure, sure.
Danny Schwab 3:12
So I am in residential property management down here in South Florida, which I consider to be Palm Beach County and Broward County. When we talk about Miami, that’s basically you’re living in another country. So I live in the areas that some people might recognize obviously Fort Lauderdale, some upscale areas as you go north into Palm Beach County, our Boca Raton, Delray Beach and then far north to Jupiter, and Palm Beach Gardens where you have the Michael Jordan’s and Tiger Woods of the world.
Mat Zalk 3:49
But that’s a pretty that’s a pretty, like, significant gap. Geographically.
Danny Schwab 3:56
Yeah, you know, what’s funny about that? Is that my first usually, yeah, it so it’s definitely runs east, east, north to south not really to ask, right so we’re pretty much predominantly on the water upscale areas of that. And you know, what’s funny is that my first property I got was in Vero Beach, which is about 60 miles north of my territory,
Mat Zalk 4:17
home of Piper aircraft. I love that.
Danny Schwab 4:21
There’s so I took it on was my first property knew what didn’t make sense, but I was excited. I just moved to Florida from California. And it was my first call. So I was excited. I landed in a 55 up community, two bedroom, one bath and not exciting property, but I was excited to be, you know, to start this version. So this was January of 2017. I just relocated from California. My second property was in basically Aventura in North Miami. They won’t be miles away from each other. So the only way I could ever get If there was I would go on Sundays I get up at 6am on a Sunday, I drive to Vero Beach and then come down go take the turnpike down to Miami. And then you know be home by noon and oh my god property set up showings and realize really quickly that wasn’t going to work.
Mat Zalk 5:17
But somehow you still have from Jupiter, What’s the furthest north that you go? I’m just looking at the map.
Danny Schwab 5:22
So right now I have property or beaches up there. Right. I have properties in Port St. Lucie are the home of the Mets. Okay, so spring training and that is about, I’d say 40 minutes north of where I currently live. Okay. And then Aventura, North Miami, I have a couple of condos they still manage but I would only take on you know nowadays, you know, I really predominantly and let’s say are from Oakland Park, Fort Lauderdale. You know, the loss or loss is an upscale, you know, trendy part of Fort Lauderdale, and then north as I said to Port St. Lucie, which is a really interesting area.
Mat Zalk 6:04
Okay, so just from from for those people that don’t know the east coast of the East Coast that will Aventura, north of Miami. It’s 102 miles up to Port St. Lucie by drive according to Google Maps, that’s 106 An hour and 44 minutes on the turnpike probably now a little bit longer than other times because it’s a Monday morning when we’re recording this. But ultimately, that’s 102 Miles even at the best time. That’s basically an hour and 20 minutes, an hour and a half. If you’re really if you’re really putting the pedal to the metal. Yeah, that’s a good spread. And just to cover goes Aventura Fort Lauderdale, Pompano Beach Boca Raton Boynton Beach, you might heard of Delray Beach that you might have in that not that order Lake Worth Beach, West Palm Beach, Palm Beach Gardens, Jupiter, up to Port St. Lucie. So that’s a lot of it’s a lot of territory that you’re covering. Yeah, how many? How many? How many properties you managing right now?
Danny Schwab 6:54
In this territory about 300.
Mat Zalk 6:57
Got it. So it’s pretty, it’s pretty significant.
Danny Schwab 7:00
Yeah. So the way I look at it is that Boca Raton is kind of like the what I like to refer to as the Beverly Hills of South Florida, you know, very upscale, some people refer to it as the fifth borough of New York. You know, lots of like, wealthy people live there. So that’s kind of in the dead center, from where I live is to the North Pole. crotons dead center. And then Fort Lauderdale is pretty close to Boca. So I have an office in Fort Lauderdale about 20 minutes 25 minutes south of Boca Raton, and I kind of hit that mid week and focus on that area. And then you know, you brought up COVID and lock downs and you know, a lot of us probably work from home. So it’s been it’s been pretty, it’s been pretty easy for me to organize it, you know, I have team members, property managers, right, you pay some higher people down south and you develop the vendor relationships, you know, one of the most positive things about it is that I network with other parties, right? Yeah. And I say hey, what what areas don’t you want to cover? What do you not interested? I’m happy to take on your overload and and you know, represent you in the best way possible. So I’ve made some good connections over the years with other property managers and other BDMS of other companies that refer me this.
Mat Zalk 8:18
The other thing that I thought you were gonna say but you didn’t is that you develop relationships with vendors in different areas, and that’s really helpful. So if somebody only does have inter Miami, and somebody else’s Port St. Lucie it’s you’ve got a pretty vast network. I would imagine a vendors and if you if it’s a Sunday and you need something done, you know, they’re anyway, somebody’s doing you a favor, but you give them so much business that they’re happy to do your favor once in a while. For them to go from Port St. Lucie to West Palm Beach is one thing from Port St. Lucie to Aventura, something else a little bit of a of a different have a different favor. But you’re you have five H back contractors or 10 h by contractors that you really trust that you give a lot of business to that that would do that favor that or that would potentially do that favor? And that’d be helpful, I would think.
Danny Schwab 8:57
Yeah, no, absolutely. And it’s funny you say that, right. The first was, was a Sunday. And I reached out for a couple of favors. I had no hot water on the move in on Sunday. And I had to reach out to a guy by end to drive 40 minutes from his house each direction. Yeah, he was happy to do it from the way he acted and responded. But yeah, the vendor relationships, I think are very undervalued. In our world. Some of the best referrals I’ve received in this industry come from, you know, vendors, they see everything, you know, and that’s why I’ve always tried to work with the independent contractor, the independent owner of his business that is actually working in the field, not the company. You know, I feel like you get great relationships and they’re also the eyes, your eyes and ears.
Mat Zalk 9:40
Totally, they go, Hey, there’s a blade missing on your fan, you should probably notate that and get somebody to fix it. Or the place looks like crap, you should fix it and whatever else. Absolutely. Tell me so what’s your history of property management? How long have you been doing? Yeah,
Danny Schwab 9:52
absolutely. So I bought my first investment property in 1994. And God How old are you? I will I was I turned 50 In about a month. So I’ve been doing this. You look good for Vivi, you
Mat Zalk 10:07
don’t even have any gray hairs. Most property managers have a lot of gray hairs.
Danny Schwab 10:11
I’m just, you know, you gotta you gotta you gotta live in South Florida like your genetics. Ashkenazi in me has done well. I love it. So yeah, I was I, you know, didn’t have the greatest collegiate career. And I was definitely always, you know, working, always grinding and different things. And, you know, I really, I just love that real estate bug, you know, I love the trenches, I love walking neighborhoods, you know, gentrifying neighborhoods, seeing things seeing, you know, the way buildings laid out on a block, you know, which were set back and had small, you know, you know, small square footages, and which ones, the brick, you know, grew up in Chicago, you know, we have a lot of brick buildings, right, the Great Chicago Fire, everything burned down, and everything was built in brick. So we have these buildings that are 100 120 550 years old. They were just amazing. So I just really got into that. And, and, you know, I’ve kind of built slowly buying investment properties, fixing them up. I mean, I’ve made every mistake you can make, you know, in my 20s thinking, Oh, I met this wonderful cocktail waitress, she’s very stable, I’m gonna rent her an apartment without doing a background screening or confirming anything about her. And, you know, go to collect rent, no one’s been there. And weeks, you could say the frigerator doors open, you know, been there done at all. But yeah, I developed about, you know, 1617 buildings and 60 units under management by, you know, the good times of the 2008 2009 recession. And, you know, I was a genius in a lot of ways to the end of 2000 to six, I said, at the height of the market, I decided I would be be a great time to get into real estate development, I took on some huge ons, took on some really, really big projects that kind of kind of died about six months to a year later. So
Mat Zalk 12:00
what do you what did you? What did you learn from that lesson?
Danny Schwab 12:04
One of the main things I learned from that lesson is that profits and assets are very different, you know, them worth, right. When you when you when you are heavily invested in a property and you put all this money in developing it, and you feel like you’ve made it right, you’ve got it’s rented out now. That’s paper assets, right? It can all disappear in a second. So really, it really showed me a lot about not not buying something, you know, having create an equity in the property. Learning that there is no, you know, just just getting the property and buying it, I was just trying to accumulate property, right, I didn’t really focus probably as much on the best areas or the best building is like, if I get an asset, and I get it for a, you know, no doc, no verification, no money down, I would do it. And I realized that I was just creating now is creating a house of cards. But what I really learned is that, you know, there are no shortcuts that, you know, taking a property, taking care of it, putting in really good tenants, paying attention to it, taking care of it, you can definitely build up a great, great, great wealth. And you can transfer great wealth through family through real estate. So I didn’t, you know, some of the lessons that I think I take on today are just really focusing on, you know, a lot of people look at assets in real estate investors, like I just want to buy something, right. So I’ll buy a c plus property in a C area, I can buy something for 50,000 80,000 These markets. And that’s a popular thing with a lot of people and I get it, I believe that I’d rather have one larger asset in a B neighborhood or in a neighborhood than having nine ads spread out. And I’ve really focused on that. And, you know, into my personal investment investments. Now, I tried to look at higher quality, more expensive assets in
Mat Zalk 14:02
neighborhoods, the implication is you’d rather have one $600,000 house than six $100,000 house,
Danny Schwab 14:10
because I personally would Yes, I feel that, you know, the, you know, looking at, especially here in Florida, where the smaller assets, condos, townhouses always come with HOAs which are very hard to navigate as an investment. I also feel that, you know, something that, you know, strategically over a long term will that asset will grow a higher rate of return, you know, more stable environments, right. Typically, single family homes, as we say, in property management are more stable investments than smaller two flats and, or, you know, the calm duplexes. Now, it’s an old Chicago term, right, the two flats.
Mat Zalk 14:50
Yeah, I mean, the only challenge with that is that the the amount of the amount of the number of tenants that you’re putting into six units is six, the number have tenants are putting into one unit is one. And so if that one stops paying rent, you’re paying for that out of pocket, if there’s a vacancy where if you have six, you stagger them at points and you can still cover your mortgage and other stuff.
Danny Schwab 15:12
Absolutely. I think that a lot of people, which I think are intelligent people, and I’m not saying it’s a wrong way to look at it, but you know, to me, the the equity that you grow in your buildings in upscale areas is far outweighs the cash on cash returns, that you hear these people pontificate all over the internet, right? Oh, I wouldn’t buy something if it didn’t get an temporary 10 cap, you know, you don’t get 10% return on your money or it’s not worth, you know, 1%, I feel that from my career, and what I bring to the table is the add value. You know, as long as I’m in the right area, with the right piece of property, I want something that I need to come in and create a huge add value to add the master like Currently, I’m working on a big project, where I’m adding about 800 square feet master suite, building an addition above the garage, a lot of people look at something like this and say, Oh, wow, you’re carrying costs, gonna take you a year to get this done with permits and dealing with Palm Beach County and the addition and architects and everything. But I know when I’m set, when this is all done, I’ve created in a one year span a huge amount of equity that would take me multiple years to get anywhere near that working on smaller investments.
Mat Zalk 16:27
What are the numbers? What are the numbers on that, for example, you’re building at $200 a square foot and it’s worth 400? When you’re done or something like that?
Danny Schwab 16:33
Yeah, I mean, some I mean, I can get into it, if you really want I’m, I’m an open book, if you want to hear all the numbers, I’m happy to go into that. But
Mat Zalk 16:40
let’s just, let’s just talk rough numbers,
Danny Schwab 16:42
I think that was said and done, you hit the nail on the head, it’s gonna be worth four to 425 square foot purchase debt at, you know, around 220 a square foot carrying costs, you know, a rough, you know, during this period, I mean,
Mat Zalk 16:59
what does it cost? What does it cost you to build the palm? Beach County?
Danny Schwab 17:02
I mean, in addition, you know, rough rough is about 125 Square $125 a square foot? Yeah, and then I mean, obviously, it can, depending on how nice you want to make, right? Depends on what your finishes are. Right? So I think I’m gonna get in for 260s, square foot 270 all in and make it upscale, really, that’s including
Mat Zalk 17:26
all your soft costs, all your permitting and architecture and everything else.
Danny Schwab 17:31
Maybe not, maybe not, maybe your carrying costs would add another, you know, $25 a foot into that. I mean, it really depends I don’t, I don’t look at it as a science, right, I’m not trying to spec it out on a sheet accom for all my costs, I’m looking at it on the big picture, right? I buy this in October of 2022, by December of 2023, which I hope to be done somewhere in that time, I feel like I’m gonna take a property that’s worth that I bought for 650, it’s gonna be worth, you know, put in 350,000 will be worth 1,000,005. So I hope to make $600,000 in equity in that on paper, cover all my costs and the refi. But then I’m renting it out at you know, with a 10 cap, right? In this area, I believe I’ll turn a four bedroom three and a half bath on a over, you know, third of an acre into a $7,500 month rent. Wow. You know, so with with Wholesale, you knock out equity left over to do it again. Right, to pull out, pull out buy another piece of land. Again, I don’t think I’m in traditional investor. I think that and I’m not saying that what other people doing are wrong, I just don’t have the appetite for it. You know,
Mat Zalk 18:39
I mean, you’ve touched on a couple, etc. And a couple of things I want to talk about. One is depreciation. So now you have an asset that you can depreciate much, it’s a higher value, higher book value asset that you can appreciate and take more off your tax liability. A lot of people don’t consider depreciation when they’re thinking about returns, they think about appreciation and think about cash on cash, but they’re not thinking about the actual benefit of saving 40% or 37%, whatever it is off their top line income number. So I think that’s super important. The second thing I want to touch on, which is far more important is can you actually get 7500 bucks come December, whatever. I want to talk about seasonality of rentals in the south Florida market. And I also want to talk about year on year changes. Where are you seeing in terms of let’s start
Danny Schwab 19:20
with the federal roller coaster? Right? I mean, you can you know, Florida is a big, you know, touch point in this whole world of, of Red State Blue State Tax tax havens, obviously here in Florida, we don’t have, you know, federal we don’t have state, you know, capital gains tax. So a lot of people have moved here. You know, this part of why I went into this particular area, because I would consider this area in a plus plus area. So Florida has always been the haves and the have nots right on one side of the highway. On one side of the road. You’ve got the mansions that have been there facing the water or the intercoastal. Across the street, you have the shacks, where the workers Isn’t the average man live in that neighborhood? So Florida’s very much like that. And we’ve seen, you know, from March of, you know, 22 to January of 22. Most rents went up by between 100 to 125%. Wow. Areas where you consider them a safe upscale or a safe neighborhood a good neighbor, right?
Mat Zalk 20:26
So Selena lender for $2,000 is now running for 4040 200%.
Danny Schwab 20:30
You look at like Boca Raton, Delray Beach, Jupiter, you know, we used to get 15 to 1800. For, you know, a two bedroom, one bath, we used to get, you know, 800 for a studio to a one bedroom. You know, I’m seeing $1,900, one bedrooms, they used to be 800. Right? Wow, I’m seeing single family homes in that 22 to 2400 Mark, now renting for 45 to 4800. Now, this isn’t you take that property, and you just double the rent, right? There have been improvements made, right? These are some properties, we had to rip off the carpet, put in the vinyl plank flooring, you had to up, you know, paint, update lighting, I’m not talking about structural improvements, you know, new roofs, new new impact glass, all these very expensive items, but cosmetic improvements to get. What we’ve seen also is that, you know, so many people have moved here. And these people that have that we’re living in, we’re living in these neighborhoods, paying these rents, obviously could no longer afford. So what that did is that move them out of those areas. And so that the competition in areas that things just didn’t rent it, you know, things that were just historically very slow, people didn’t really want to live there, further out, not good schools, by the communities. Those areas grew, too, because people had nowhere to go. The influx of people. I mean, we’ve all heard the stories I’ve heard anywhere from 1000 to 1500 people a day, we’re moving to Florida, I mean, the numbers in Palm Beach County in 22. I’ve heard somewhere that number 250 to 300,000 people moved into our county, which isn’t a big area, there aren’t a lot of major cities. So the rent market, you know, blew up housing sales were, you know, blew up rents to then, you know, then I’d say around that. So we when we talk about the season, right season is typically typically November through May, right? That’s a European
Mat Zalk 22:30
losing season is November to May.
Danny Schwab 22:34
I’d say our peak leasing, leasing season has as two markets, right? We have that that November, December market, we get so many people to come here. We have so many people are moving here and checking it out. And then we have a hot losing season at the end of the season as well. Because there’s all this turnover. Right school start also, what’s interesting about Florida is school starts August 1, in most areas, school starts September 1. So you have a little bit of a of a jump late summer, because there’s a lot of people that have been moving here. Everything’s up in the air since when the past, you know, Florida completely changed. I mean, I was living in a house that was valued, you know, rental property when I moved here, you know, or not, when I moved here in right before the pandemic, where I purchased my home, there was renting for 2400 a month now that house rents for 5000, you know, in a two year period, so different areas in these in these upscale areas just blew up. It’s been wild to see, you know, what about since
Mat Zalk 23:37
11 consecutive interest rate hikes I should consecutive maybe not because they didn’t raise in the last last meeting. But what has that done to your rents or rents actually coming down at all? Are they just flat?
Danny Schwab 23:48
Yeah, so So again, it was always a flight to quality, right? People were leaving upscale areas because they couldn’t afford to live there and people are moving into that, that really slow down. rent stabilized. Still not you know, nothing’s ever gonna go down in this near future in the past and these Boca Raton Delray and, you know, Palm Beach Gardens and Jupiter, these are like our cream of the crop. We have a lot of tax players and pro athletes live here, obviously, for tax reasons, and things like that. But other areas, rents have definitely stabilized in certain areas are going down. So as we look at, let’s say, renewals, you know, over this last six months, we are not raising rents, we’re asking people to renew at the same rate. And there’s been a few instances where we’ve we’ve caught rents by, you know, a small amount just to keep the tenant in a tough negotiation. You know, part of it obviously, for me my opinion, it has nothing to do with the market. It has to deal with inflation, and the cost, you know, of renewing a lease if you lose them the cost of rehabbing that unit painting, the lab, the fees that we pay, so I really tried to convince owners that hey, him might not be sexy to take a little pay cut, but it’s absolutely worth it to keep a good tenant in place. Right? Yeah. So let me ask you this straw.
Mat Zalk 25:08
How do you How are you having this conversation with owners owners that came on in 2020? saw massive jumps through 2021 and 2022 and renewables that are now having to plateau? Or come down a little bit? How does that impact the conversation, the nature of the relationship that you have with somebody that thought real estate is this amazing investment, I bought it in March, April, May of 2020, when price prices probably had dropped a little bit, because people were scared about what was what the future held for the pandemic, and then everything spiked, and all rents went up, and now you’re
Danny Schwab 25:40
having a different conversation. I think a good property manager and part of our, our process and what our value is, is educating people on the realities of the world, right? You know, it’s people are emotional with their real estate, they’re emotionally attached, I’m not emotionally attached to their real estate. So it’s really easy to break down, hey, listen, this kind of has been great pays on time, we do routine inspections, a place looks great, we call our vendor needs to get in, they let him in there, you know, when you can communicate and work with someone it makes lifeberries Yeah, I say to them, Listen, I’m gonna lose this kind of replace will be vacant, for a minimum of a month, maybe longer, I make a fee of one month’s rent, if I lose this tenant, you might be out 10 to $12,000, over the over over this year, or you’re gonna lose $600 in rent for the year before. It’s a simple thing, right? We also, obviously work with the tenants to try to at least maintain the rent, in these situations by sharing listings with them of other like properties, just show that they’re still getting a value working with them. And I also try to imply that if you’re happy with how we treat you, you’re happy with our maintenance repair services. We excel at a high level, not all property managers do what we do. So I really try to kind of manipulate both sides of the equation to have effect. But you know, there’s always that owner that says, hey, no, plays hardball, they lose the tenant. And then they’re very stressed out and very upset, and they learn a valuable lesson, you know?
Mat Zalk 27:18
Yeah. Do any of those people then come to you and say, Actually, I think what the what the truth is, is that we’ll have a month of vacancy, but we’ll be able to make up for that lost revenue that lost income in rents that are $1,000, higher, and you say, Look, I don’t think that’s the case. But I’m happy to try it.
Danny Schwab 27:37
Yeah, you know, it’s funny, there’s always it’s always it’s the couples, right? It’s the younger couples in their 30s that have gotten into real estate, and you know, where they’re emotionally attached to the real estate, they think it’s so great, are always like, well, not, we’re not that’s ridiculous, and they get upset. And you just really try to work with them where the market is, you know, and, and I show them listings, I show them days on market for similar like property. And it’s a battle he can’t, you know, I unfortunately ended a relationship with a owner of a condo building that just told me that he’s raising the rent 300 bucks, because he has a $40,000 special assessment. And he is not going to
Mat Zalk 28:19
what can you do about that? We have owners that tell us I’m on my I have to cover my mortgage payment, I say, look, I didn’t make the decision, the tenant didn’t make the decision that you put it on a 15 year amortization instead of a 30 year mortgage payments $300 higher per month and the neighbor next door, they’re leasing their property for 1500. You want 1800? What does a tenant? Do? They go to the $1,500 property? It’s a difficult discussion.
Danny Schwab 28:40
Very easy, right? It makes it very easy in these types of buildings where there’s 300 units, and you show them what the units are running. You know, it’s always funny, when, when, you know, like, I have a background in the financial futures and financial market, I traded commodities briefly at the Chicago Board of Trade, and you see the people that think they make the market, right, those are the people that always get smacked, you know, they do well for a while, and then they’re just smacked down the market is what the market is, what’s the place gonna rent, I can give you an estimate what the place is gonna run for a while. But I’d rather get it rented to a high quality person in 15 to 20 days, then a not maybe not a high quality person and a little bit higher rent over two to three months. The numbers just don’t make sense. And you sit down and you plot them up, obviously, you know that but, you know, people are emotional. It’s part of our job to to educate people on the realities of what are happening today. You know, but we’re heavily seasonal, right? There’s not a lot of action in Florida, June and July, you know, it gets it’s hot and quiet here and I will lower the price intentionally, sometimes going into a weekend. Right? We have properties listed on the MLS. We have property listed through, you know, 30 different rental networks. I like to lower the rent even artificially without fully die, you know, vetting out with the owners on a Thursday to a Monday just to see if I can get any extra showings any market, and then usually do and usually get an offer and you can go to the owner, hey, I got an offer a little under market, I really liked this person. And they take, you know, I’m not saying I go against the rules of of how it should be. But sometimes you have to help people from making the mistakes that you see are made over and over. Vacancy is the worst thing our best, right? Mold, you know, weeks. Squatters, we need people in the units, even if the rent isn’t as high as you had hoped. Right?
Mat Zalk 30:36
In your market? Do you have realtors that are showing? or leasing agents that are showing prospective tenants the units? And then they come to you represented? Or do they just submit an application.
Danny Schwab 30:48
And we have all kinds of things. You know, we have HOA communities and upscale areas where it’s very difficult to do with showing without a leasing agent, and realtors, we have hot, you know, we have older, wealthier people that would never go on to Zillow, and search out their own units where the only way to attract them is through the MLS. And then we have, you know, other properties that we do self access viewing, and we show it with with our, you know, our leasing team, you know, there’s, you know that we run the gamut, right, I manage multifamily properties, and I manage upscale single family homes in you know, gated community. So, obviously I prefer to rent it, you know, through us not just because we make more money, but when you’re represented by someone who’s a tenant or an applicant is represented by someone outside of your organization. They don’t get the information, right. Their realtor might be very uneducated, and how things works. Just the tenant, you know, poor information. I mean, I had a rough situation with a realtor recently, who didn’t explain to an wealthy 80 year old man that was relocated from the Bahamas, that just by signing the lease with us, they weren’t approved by the HOA. He didn’t understand is his router.
Mat Zalk 31:58
HOA has to approve an applicant.
Danny Schwab 32:01
In Florida, you have to do an application with an HOA they have up to 30 days. Wow, are they approved the tenant? So the whole process basically starts again, we background screen, the tenant, we get the information, we approve, and we sign a lease. We then turn that over the HOA nother set of applications. It’s wild, and things are notoriously slow and difficult. You know, they’re not always, you know, sometimes people working in the HOAs are volunteers. They don’t always manage professionally. It’s very difficult process. I mean, it’s wild. I would say that 60 to 70% of all new developments in Florida, at least in Palm Beach County, Broward County are all built with the plans and being HOA property.
Mat Zalk 32:45
Well, let me ask you this. Why do you end up managing HOA units? Why does an owner come to you with an HOA is are they accidental landlords or have they consciously made the decision that they want to invest in an HOA?
Danny Schwab 32:55
Great question. majority of them are people that are accidental landlords, they owned a townhouse. They owned a condo, they bought a single family home, they relocated to Dubai for business, and they decided, hey, I want to do this. You also have the the guy that owned the condo in his 20s liked the community and would just go around buying it. I have a client that lives in a community. He now owns, like 910 11 units in his community and other ones cuz he likes it feels comfortable. Yes, it’s a good investment. Yeah, you know, so we get all kinds of
Mat Zalk 33:28
let me ask you this with the shift in the economy, interest rates going up, people are unable to buy stuff inflation, making, making everything in life harder. It’s just harder to make ends meet in general, when when we’ve seen inflation and where we have over the last couple of years. Are you seeing eviction rates go up? Are you seeing people struggling to pay the rent that they could two years ago afford to pay, they’ve renewed they’ve renewed again, and they’re just now just something has happened? They’re struggling?
Danny Schwab 33:53
Yeah, I mean, I hear that more than I physically feel it. I think I’ve developed you know, systems in place to avoid that. I mean, I’m, I’m very choosy with with who we let in financially, you know, I’m not really renting to someone just based off their income. I’m basing it off that you can prove to me that you can afford to lose your job and still be able to pay your rent next month. Well, because I dealt with that a lot in the past, it just became a very difficult situation. But yes, there you know, what I’m seeing more are people that can’t afford their mortgage payments right now. People in different industries, you know, a lot of investors that come into real estate or real estate, you know, everyone’s a realtor in Florida, right? Most of them are not doing more than two transactions a year. So you know, a lot of realtors I can’t afford I gotta dump this I’m seeing a lot of contractors and different people that road that Hi, what properties and now they can’t afford it. So I’m seeing a lot more people like that. But you know, we have a really good relationship with our tenants. I get to know them, our people get to know them. I find it very easy to buy have the keys, as we say in the industry and have to go to eviction. But yes, I manage in the Jacksonville market for people that don’t know, that’s the northern part of the state, I see a lot more of that in Jacksonville happening right now, nationally, where I’m at, what’s the process of buying keys, like, the process of buying keys, it’s really so, you know, you went when the tenant does not pay the rent, they have a history, you see it coming, right, you’re chasing, chasing the rent at 1.3. day notice, you say, Hey, you turn off their ability to make a payment lessons in full, you say, I’m no longer gonna accept payments for me, you can’t piecemeal it anymore. This asked, then you’ve got till the end of the month, or 15 days to get out of the unit. I’ll help you find a studio, I’ll help you downsize to something else. I will meet you at the property. When you’re out, we’ll sign a release and mutual release. And I’ll give you some money on your security Plaza. Last month’s rent, I’ll obviously discuss that with the owner, try to come to them. I have tenant you know, their famous line is, I don’t have enough money to move out. I can’t rent a truck, no problem, go get a U haul. I worked with some some guys that own and do a lot of inexpensive Bruce roof repair work, they big guys have a truck, they love doing this stuff. You know, go to recycling center, get boxes we show up? You know, we move out, we give him some money. You know, so
Mat Zalk 36:19
how does it work? You give him a three day notice. And then you say after the three day notice the three day notices as a notice to pay or quit. First of all, let’s be clear, right? Okay. But how do you have the how do you have the precedent? How do you have the legal right to say I’m only going to collect rent in full, I’m not taking half that’s
Danny Schwab 36:38
after we after you give somebody a three day notice. Right? They have three business days or typically five days to make their payment in full. You don’t have to accept a partial payment. And only after that five days, you no longer have to accept payment. Got it, you turn it over, you go to the court, if the tenant wants to work something out, the tenant then has to respond to the court in 10 days. Yeah. And put in their money into the court registry. Got it. Most of the time that tests don’t have the money. So that court registry situation doesn’t happen, you get a judgment. So to avoid us paying our attorneys and doing that. This is all within a conversation that’s happening. I’m not talking about the illegal story. I’m saying this is the writing on the wall. I want to be your friend, I want to help you I like you, I moved you. Let me help you find a studio, let’s go live with family for a while, get your feet get back on your feet. And then I’ll be a resource to help you find some. These are not people that are bombs or drug addicts or people these are people that have fallen on hard times. Right that they lost. They lost their job. They you had a horrific car accident. They’re their wife is sick, and they’re just their incomes gone. Like don’t end up on the street is my is my call to action. Let me help you.
Mat Zalk 37:52
How much how much do you typically pay them to go you know,
Danny Schwab 37:57
it really a percentage if you’re holding a last month and a security which these people typically are more than willing to give them their entire last month’s rent, just delete will take well, then we’ll do the traditional security deposit disposition. You know, a lot of times if it’s if they’re like, okay with it, they’re allowing us to do active show. They’ll be in there assisting us in showing it because if we rent it to someone else, they get all their money back. Right? Yeah, always have the conversation or team as the conversation you move in. Don’t worry, you know, the old expression I like to say is if if you if you corner a cat, cat’s gonna come out, scratch it. We’re not here to corny. I’ll show up at seven o’clock at night, I’ll knock on the door, I’ll come by, you know, grab some Dunkin Donuts. It’s 7am Go buy their house if they’re not responding my call, you know, I just I owned all my own properties. Chicago, these are things I developed, you know, over the years. Let me help you. Let me be an asset
Mat Zalk 38:48
is an interesting that’s an interesting trick bringing over Dunkin Donuts, like I’m here. I’m here as a friend to help you. Here’s your landlord and put you in a corner
Danny Schwab 38:55
when you’re when you’re suffering in life. Everybody’s out to get you. Yeah, don’t have a job that bill collectors are common. Everybody. In our world. We write nasty emails we send nasty people have internet muscles. I’m like, I’m your friend, man. Right, let me help it.
Mat Zalk 39:11
Yeah, I love it. Tell me a little bit about the the the journey of scaling your business of growing your business of adding employees of adding w 210 99. Folks, what’s the hardest part about owning
Danny Schwab 39:26
a property management business? Well, I mean, it’s like I’ve said before, I don’t get emotional about things, but this is like, the hardest thing in the world, right? You hit these, you hit these plateaus, where you personally are maxed out with effort. You’re doing so much in all phases of your business. So you know that’s not scalable, right. So you have to bring the hardest part is I have like I was been saying right develop these relationships with people. I think that the only way our business works is human contact. I think sending someone an email explained Eating something, this is how we do it. They’re not focused on it, they’re not reading, they’re not understanding it, right? So you need that develop people that can reach out and touch somebody can talk to them, and say, Hey, does that make sense to you? So that’s the hardest part is training people to to deliver our message to our philosophy, to be able to, you know, still be profitable as a business, when you’re adding w two employees, you know, when I started doing that, I mean, my profitability went down by 50%. And I realized that my life got a lot better. You know, so I think, you know, hiring and training, I think, you know, that old expression, quick to hire, you know, slow to hire quick to fire is huge, you know, I’ve never had somebody as an employee that turned around, right? I mean, everything I mean,
Mat Zalk 40:52
if they’re, if they’re poorly performing, they don’t start measuring,
Danny Schwab 40:55
I mean, performing, they never do, you know, if someone, there’s a certain thing in life, you know, I know you have it, the first time I ever talked to you, there’s these people that are like, Get up and go, right, I’m gonna succeed, I’m gonna give a maximum effort. People, you, when you hire them in that interview, you feel that right, or otherwise you wouldn’t hire within the first three weeks, they’re already not performing, you know, you have to you, you also have to really demand a lot out of people, almost more than they can perform. You know, if you don’t demand a lot of people, if you don’t set up and say, hey, you know, it’s really hard to criticize someone to their face, right? It’s really hard to sit with someone and say, I’m reading through the emails you’re sending out to our owners or tenants, and they’re not at a high level, let’s sit down and work on right, let me help. That’s very hard for people, we get overwhelmed in our own world, and what we’re doing. And it’s really important, since the ultimate thing is training people, getting them to speak your message, and to check them, you know, regular, hey, this is not to the level that that that we need, we’re going to give you one more opportunity. I had this with a woman that worked for me. And I realized while I was looking at the calendar, and on our hire date, she’s been with me a year and a half. You know, we’ve gone through this a couple of times, I’ve asked her to step up, she steps up, and then she backs down. Yeah. And over the weekend, I decided, you know, I let her go today. It’s just, if you’re not trying to get better, right, there is no coasting in this world, in my opinion. Yeah, unless you’re taking on more responsibility to get better. And people reach a level where they don’t want to give any more effort. At that point, you got to cut them loose. So I think, you know, you as you know, using technology, using different platforms, is the only way to really scale. You know, we use it as you know, we use remote team members in other countries, so that our labor costs go down. We use different, you know, platforms for our CRMs and our marketing, to really try to connect,
Mat Zalk 42:54
I think the issue, the issue that we see is that the the, you can go too far with technology. And you hit the nail on the head, this is a People to People business, on the tenancy side, on the ownership side, you need to be able to reach out and touch somebody, you said it, pick up the phone and talk to somebody so that they can hear your voice, they can understand whether you’re being funny or gravely serious by and that doesn’t always come through in an email and the nuance of why you might want to keep rents flat, or even decreasing. $50 or $100, a month doesn’t come through in an email. So you can’t go too far with tech.
Danny Schwab 43:28
Yeah, and I’m not articulate enough in an email to get through to somebody, but in a person to person conversation. Yeah, or, you know, one of the best things, you know, we joke around about, you know, zooms and pandemic, one of the best things is that I can get somebody that doesn’t understand a lot of what I’m saying, reading an Owner Statement. And I say, let’s just jump into a zoom, I just You let me know, when you’re free. And I want to be in front of my computer, I want to go through this with you. If you go through that with an owner, you’re building that trust, you’re walking them through your processes, and you’re able to speak to them on hey, my best interest is your best interest, right? I’m a fiduciary, this is what I would do in my world. If this was my property. This is what I do. I’m 100% Confident in this plant. They’re gonna listen to you 98% of the times, and the ones that don’t, it doesn’t go well, they ship up or ship out. I mean, the greatest thing about our industry, at least for my business, is I don’t have one client that can affect my bottom line. There’s not one client that I can say, hey, you and I don’t see eye to eye, I really appreciate the business relationship we had. I think it’s time that we we you know that we’re not a good fit for each other anymore. The second you say to somebody, I don’t think I’m a good fit for you. Whoa, what do you mean? What do you mean you’re not a good fit, you know, they really want to understand it. We haven’t seen you got people the cycles that just get upset and you know, your guts are gone, but people really want to understand where you’re coming from. And if you can speak on your experience and you can speak on things that were I think you can really get people to follow your mouth. I mean, I mean, I hear you talk a lot on scaling, right? And you’ve scaled into me in an incredible way. And you just every wrong, right? We bump our heads and things, we got to figure it out. But it comes down to having quality people that speak our attitude, right? Speak our theory speak our voice. And I think that’s the hardest part is to train that and not get lackadaisical, right? We we accept mediocrity and a lot of ways in our in our lives, and our and things that we deal with. And when you’re trying to scale a business, everything has to be tight, everything has to be high level,
Mat Zalk 45:40
yeah, it’s so hard, I find it much easier to operate as a property manager, then hiring great people to do that for you to speak that message for you to get somebody to take your philosophy to take your words. And cascade that out to an owner is way more difficult than just doing it yourself. And that’s a big, but you cannot scale that way. So that’s a big, that’s a big problem. For a person that’s moved from direct operations into management, it’s a way it’s a different skill set, it’s a harder thing to do. And yet, it’s something that’s critical. And hiring is such an important thing in in scaling any business, you just cannot. Yeah, I don’t know how I have not cracked the the the, the puzzle, the mystery of how to hire the right people, every single time you switch your interview process, you try to make sure that you do a role playing, you try to make sure that you discuss how urgent things are that if you let a leak sit for a day, it’s going to turn into mold, whereas fixing it immediately is is is is you know the solution. And so if you’re if you’re slow to hire and quick to fire, which I think is the right way to be, you also turn over employees and then owners go Why am I why do I have a new property manager every six months. So that’s it’s there’s no easy solution. But Charlie Munger is fond of saying that we’re in the we’re in the business of business. And problems are just, that’s just what we do, we solve problems. So you see a problem, you solve a problem, you see another problem, you solve a problem, you’re never gonna get to a point in any business where your problems are done. So it’s just you understand that management? Yeah, you understand that in Manager? This is what you do you solve problems. And if you’re frustrated by solving problems, or you cannot solve problems, and it’s really hard to be in business.
Danny Schwab 47:24
Absolutely. You know, I know you have young children I do I have a young child, I have pets, you know, I have two dogs have cats we like I feel like people like say all we put out fires all day, I like to say I clean up shit all day, in my personal life, in my business life, it’s just you step in it, you got to clean it up. Right. And as long as you know, we are responsible for other people’s most valuable assets. So as long as we are giving it a max effort, and our team understands that, you know, I also think you have to find people that have high moral added, you know, ethics, right? I think when we talk about, you know, I’ve learned a lot from, you know, my business development manager, you know, you know, I’m Dusty, and he really, you know, every owner that we bring on everyone who we talked to, he shares with them, you know, our code, right, our Keyrenter mottos and stuff. And I think it’s, I think it’s really important to let people know that, that we’re going to take care of things to a high level, even at your expense, right? That the ultimate goal is that we have to take care of the property, we have to take care of the tenants inside the property to protect you from liability. And that’s not the cheapest way to go. So from the start, we really let people know that we’re not going to be your cheapest, what solution? Yeah, I’m confident I’m gonna be your best solution. Because I care. And everyone in my team really, really cares. But I’m not going to you know, so you really want to weed out in our world, the bad tenants and the bad owners, right? The idea of the transactional real estate, find a tenant, put them in your place, boom, you’re done. That’s why I stay away as much as I can from real interest, bringing the tenants, I want to meet them, I want to look in their car, I want my people to say, how was the relationship between the husband and the wife? Were they kind to each other? Were they were they excited to be in here? Right? There’s so many ways that you could step in, in property management. And those are the hard things right? I spent. I hired a young kid to work for me about two years ago. Because I was so sick and tired of people that we’re hiring that already are established, they did things their way, right. I’m gonna give up somebody who has a lot of knowledge and experience. I’m gonna take a raw person, and he’s gonna frustrate the hell out of me, but I’m gonna mold him into what I want as someone representing me in the field. And it’s we’ve had a lot of highs and lows. And I’m super proud of this kid. 22 years old. You know, he’s an American citizen, but he was raised in Mexico, Mexico. Been American, and got his GED is in college taking classes, he’s getting his real estate license, and he’s changed his life. You know, and I’m really proud of them. And, man, I’ve had some, you know, some, some tough moments, but I just feel better. Like, that’s one of the ways like, I think you’d have to really develop your own talent at times, right? People look all shiny with their real estate license. And I’ve worked for a major property management company, my portfolio included 150 units, but it’s like, you know, like, we’re saying, like, how many times you like, What’s your connection with the owner with it with a tenant? Like, how many some of us? I don’t know, I sent him an email. My favorite thing, when people tell me that I asked, Hey, what’s going on with this? One of the owners say, where are we at? Oh, I connect, I contacted the owner, what has contacted me. That’s why we say, take that word out of your vocabulary. I haven’t heard back. Right, I spoke to that person. And this is what happened, or I sent them a text, they sent me an email. Well, in my business, what I say for my business is that emails are the backup plan. write emails to cover your ass to get the information out. But don’t consider that contact. Contact is verbal speaking, or you’re texting back and forth. And we say things like, does that make sense to you? Do you understand? You know, because people hear what they want to hear in this world. Wow,
Mat Zalk 51:21
valuable stuff that I need to take back to my team make sure that we’re we’re having enough face to face enough zoom meetings and enough verbal conversation, because I think we relied too much on email, also, super important to make sure somebody understands something.
Danny Schwab 51:34
Because because we all use CRMs. And we have these auto documents through our systems that go out 90 days before the test, you know, the tenants lease expiration saying the process but come on, how many people are reading the emails digest and now we live in this world of reading two sentences. And, you know, moving out of that inbox, right, Claire, your inbox store the email server, I’ll get to it later, right? Especially if it’s on your property manager or an owner, right. But it’s also with acquiring new business, right? In our industry, we want to talk to that person and say, at least for me, I really want to know, why did you leave that other property manager? Why did you lose your tenant? Why do you have to evict your tenant? Like, what is this process? Right? Some of the worst decisions I’ve made in this business has taken on owners that don’t see eye to eye to me, with me, right, that have this idea of like, my, one of the funniest experiences I had was like, I’m with an owner at one of their properties. And they’re telling me, they won’t fix the roof. Because it’s not in their budget. I have a budget for how much I can spend in meat per month. It’s not in my budget. So I met them at the property. Four year old three, four year old kid pulling on my shirt, saying to me, Why is it raining in my bedroom? Can you stop it from raining? Go up there, there the ceilings like caving in? Right? And I got you still not gonna fix it? Like literally we’re at it doesn’t it’s not in my budget, I quit. I quit, you know, effective immediately. I’m gone. Wow. You know, you know what I mean? It’s like, and I put six months into this owner and all their properties and getting things straightened out. And it’s just like, it was just a valuable lesson, right? We can only work with people that CII so and a half my business model is to have a tough conversation at the jump with an owner or a tenant event. What would you do with this happens like what this is like, boom, boom, boom, right? I like to lay it out and just see what they say kind of like they should be doing to me, right? If I was, if I own real estate, and I was interviewing a property manager, I would run them through some scenarios, right? What do you do at 7am? On a Saturday morning, when you get a call from an eight that your AC is that? You know, are you troubleshooting it? Are you working with that tenant to turn on breakers to try to clear the drain line? Are you saying, Oh son, we’ll call the vendor on Monday and hopefully we will be out by Tuesday or Wednesday. Right? Yeah, yeah. Obviously, in certain parts of the world, like Florida doesn’t work. I’m sure it doesn’t work in Tulsa in January if someone doesn’t have heat, right. You have to solve these situations and if it costs a little bit extra money to your honor, that’s part of the game, you know. Yeah. valuable lessons. Danny
Mat Zalk 54:12
Schwab valuable lessons. I appreciate a lot.
Danny Schwab 54:15
What do you see, you know, the market because to me, you know, obviously no insult to Tulsa, Tulsa would be considered a small market, right? You’re, you’re a big fish, as they would say in a smaller pond. How do you see the market and where it’s been going, you know, from your from your bird’s eye view.
Mat Zalk 54:32
So we’ve definitely definitely saw huge rent increases through 2021 22. I would say our smallest increases came in the form of 678 percent jumps for renewing tenants and they had nowhere to go so they stayed. If we didn’t have a tenant that stayed and we put the market back, put the unit back to market openly. We were bumping rents you know 1015 20% Sometimes, and now we’re seeing that the appetite for those increases is not there. So we’re keeping rent stable, we’re on occasion lowering rent, but I don’t think we’re doing much of that at all. But we are certainly seeing that if we put a house if we go for a rent renewal that, you know, that was formerly 1400 bucks now 1500 bucks, and somebody says no, and we, and we actually have that tenant leave, our ability to get 1500 bucks is probably not there. So our best move is to keep rents flat, and explaining that to owners for us. And we’re a cash flow investor market. And so having that conversation is way more difficult. And people don’t always get that last month of rent at 1500 bucks is worth $100 times 15 months, right plus the Make ready costs plus our our fee for leasing the property. So it’s it is it’s a difficult time for us to be in the business, we also see people that are that are not accommodating or understanding of the price of of maintenance, which has gone through the roof. So it’s just in general, it’s
Danny Schwab 56:00
it’s difficult. Yeah, I would say to the average owner for townhouse two to three bedroom condo or single family home, the cost of turning your unit is $4,000. Yep, they lose their mind. Yeah, they lose their mind. And how is that it’s impossible. That’s what it costs to get anybody. You know, like, I like to say, in Florida, you have to have shoes, you have to have teeth, if you want to work for me, you know, if you want to, you got to be able to, you know, even get into an HOA community, you know, you have to have the right vehicle, you have to have a driver driver’s license like that, in the days, the days of the Home Depot, guys on the side of the road. Somebody you know, it doesn’t exist and not professional, professional. And I mean, the amount of like subcontractors and stuff that are, you know, just their prices quadruple during the pandemic, and people will pay. People in Florida love to overpay to get to the front line, you tell you tell Well, the person here that Yeah, well, we’ll take care of that in two weeks. Like, what do you mean, you know, what’s wrong tomorrow? Right? So you see people jumping the line all the time I’ve had, we’ve, you know, service workers repair work became very difficult, you know, verse, excuse me, service calls versus updating remodeling, turning became very difficult, you know, a lot of those service people didn’t want to do that anymore, because they were stuck, you know, in this whole phase of, of remodeling properties, updating properties. And it was, you know, a lot of general contractors went under, in Florida, because they didn’t have subcontractors anymore. So they could not perform because the subcontractors were taken on that work. So it’s a wild ride when you get into the updating, turning, you know, but it’s, it’s a big part of my desk, that always has been, you know, I really want to take on that, that add value property with that investor and say, Hey, man, you’ve been living in this cycle of vacancy and eviction, and code enforcement hell, why don’t you make it easier? I’ll get you great people I get I’ll guarantee the rent for a year, you know, just to get them to do it. You know, and to deal with it. That’s one time where I feel like proud of myself. But I can take someone who’s an investor, or owns real estate, and has just been stepping on their own, you know, what, their whole career and I’ve turned properties over to them. They’re like, wow, you changed over the wife came to me, like, you’ve changed our life. You know, I have a great video of a guy says, I before I met you, I hadn’t had a good sleep, a good night’s sleep and 20 years. Now I sleep well at night, you know, because I know you’re going to take care of you got me good tenants, you know, because that I can’t handle that whole investor mentality. You know, I respect it. Don’t get me wrong. It’s a valuable thing. I’m not putting anyone down. It’s just not for me in my business in any way.
Mat Zalk 58:56
Danny Schwab’s owner of Keyrenter, Property Management of South Florida, he’s owned and managed residential investment properties for 30 years because he’s an old man, even though it doesn’t look like it. He’s married. He’s got a five year old daughter. Looking forward to welcoming you out to Tulsa in a couple of weeks. My friend, thank you for being on the show. Thank
Danny Schwab 59:15
you so much. Take care. It’s truly a pleasure and honor to see you today.
Outro 59:24
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