In this episode of The Same Day Podcast, Yonatan Schmidt, the Regional Vice President of Sales and Marketing at Keyrenter Property Management, is interviewed by Chad Franzen of Rise25 about determining the profitability of rental properties. Yonatan describes Keyrenter’s process for purchasing rental properties in Oklahoma, how the company advises investors on purchasing properties, and the value of an investor dashboard.
How To Leverage Investor Dashboards To Analyze Rental Profitability
Yonatan (Yoni) Schmidt is the Regional Vice President of Sales and Marketing at Keyrenter Property Management, which has offices in Tulsa, Oklahoma City, Wichita, and Arkansas. After working as a financial analyst at a private equity firm, he founded Tulsa Property Lad to offer clients a better way to buy, sell, manage, and invest in real estate. Yoni provides comprehensive Oklahoma real estate services and listings, supported by first-class customer service.
Here’s a glimpse of what you’ll learn:
- The process for purchasing rental properties in Tulsa
- What is a cash-on-cash return?
- Yonatan (Yoni) Schmidt explains Keyrenter Property Management’s investor dashboard
- How Keyrenter advises investors on purchasing properties
- Strategies for evaluating ideal rental properties
In this episode…
Real estate prices and interest rates fluctuate, and with so many factors involved in profitability, it’s often difficult for investors to forecast returns. When purchasing an investment property, how can you make informed decisions?
With comprehensive experience forecasting the Tulsa, Oklahoma, rental market, Yoni Schmidt begins analyzing prospective investment properties by evaluating their income potential. This involves comparing rent prices with similar properties on the market to gauge the rental’s long-term income potential. You should also calculate your projected monthly rental income compared to your total investment to evaluate your cash-on-cash return. Companies like Keyrenter Property Management allow investors to identify market opportunities and view a sweeping analysis of their investments. These dashboards provide investors with the ability to keep track of their portfolios, equity, returns, and costs, giving them an overall view of their acquisitions.
Resources mentioned in this episode:
- Mat Zalk on LinkedIn
- Keyrenter Property Management
- Keyrenter Property Management in Tulsa | Oklahoma City | Arkansas
- Keyrenter Property Management email address: [email protected]
- Yonatan (Yoni) Schmidt on LinkedIn
- Chad Franzen on LinkedIn
- Rise25
Sponsor for this episode…
Keyrenter Property Management:
This episode is 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.
Yoni Schmidt 0:20
Hi there, Yoni Schmidt here, hosting today’s episode of The Same Day Podcast where I connect with top business and real estate leaders. Today’s episode is brought to you by Keyrenter Property Management, 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 property management. That’s why no matter what rental you have single family homes, condos, townhouses, apartments, we have management solutions for you go to keyrenterpmc.com or email us at [email protected]. I have Chad Franzen here of Rise25, who has done 1000s of interviews with successful entrepreneurs, investors NCOs. And we have flipped the script and he will be interviewing me. Chad, welcome to the show. Hey,
Chad Franzen 1:08
thanks so much, Yoni, great to be here. I am really looking forward to talking with you today. You’re sharing your screen right now. And we’re going to find out basically, what life is like for an investor who is looking to buy property in one of your markets. I think it’ll be very valuable for you know, potential investor in one of your markets, or just anybody really who’s interested in going getting an investment property. So you’re already sharing their screen. Why don’t you take us through that process? What is the process for an investor who is looking to buy property in one of your market?
Yoni Schmidt 1:41
Yeah, thanks so much, Chad. I’m excited to be here and show you guys this process. As you can see, we are standing outside of 149 Northwest legal Avenue A property in Tulsa, Oklahoma, which was purchased by an investor in roughly 2020. Potentially 2019. So, you know, we’re talking about a time where interest rates were quite lower than, you know, the December of 2023. And this investment, I just want to preface the fact that this investment, you know, may look really juicy in today’s world. But, you know, we have to understand that real estate also tends to be forgiving in the long term. And I generally think that as an investor, there is no better time, you know, to jump into a market than yesterday, because Wiseman once told me that everything looks cheap in the rearview mirror. So you know, 149 North Oswego Ave in Tulsa, Oklahoma, was it’s a duplex. And the process itself starts with us analyzing the income potential from that property. Since we we were managing the property at the time that the investor purchased it, and knew how much rent we had been we had been collecting and what the potential for the rent was, it seemed at the time, like a good investment. In today’s standards, this investment is currently bringing in 1490, we can see that here on the income statement that I have pulled up for the property. And when we’re analyzing the rent itself, you can see that a you know, there’s maybe a little bit more room to go up a little bit. There are some comps here that indicate you know, 1600 1495 it’s an it’s an interesting opportunity, I would say and it wasn’t interesting opportunity at the time. So rent
Chad Franzen 3:34
right now for that unit is 1490 a month. Yeah,
Yoni Schmidt 3:38
right. Right now is 14 on your month. It is a duplex although you know it’s showing it up here duplex triplex. But it looks like it’s a three, two. And the truth is yes, it is. Because it’s a two, one on one side and a one one on the other. It has two kitchens. And, you know, two tenants that have been living there for quite some time now. Great tenants. And, you know, when we come across an opportunity like this, we’re analyzing the rent, and we understand that, you know, the purchase price is favorable for an investor, then, you know, we can basically pull the trigger and submit our contract.
Chad Franzen 4:16
So what we said was that rent price, I’m sorry to interrupt you, is that rent price, the total between the two tenants or on it for each one? The
Yoni Schmidt 4:24
total between the two tanks. Okay, yeah. So thanks for clarifying that. But before we would submit any contract or you know, pursue an opportunity, we want to analyze you know, what we project the investment to to prove how we project the investment to perform over a longer period of time. As you can see, I put in some of the information that we we know is a fact and this property, although it was purchased on a package so when you go to the Tulsa County Assessor website, it looks like it was purchased at the price of $112,000, when in fact, it was also purchased with another property 1319 North Allegheny. So both of those were on one contract that was $112,000. And the allocation was that this property was worth $72,000. At that time 1319 North Allegheny is a completely different investment. And you know, it also kind of performs at a level that is similar to this one, because of the forced depreciation and the value that that we had to put into it. And, you know, the fact that our crews on the ground were able to do such a good job. So we know that back to 1.9. With us way go, the rent is 1490 a month, we should assume about 20 to 50, for the title charges, assuming a 25% down payment, at that time, a four and a half percent interest rate on a 20 year note, right with 1% in loan fees, with 7% maintenance expense 5%, capital expenditures 1100. For property taxes, 800 property insurance, you can see the parameters that I put in here $4,200 for utility expenses, because the owner is responsible for the utilities at this property, water and electrical and gas, average length of stay is two years with about 30 days between each tenant and a lease commission of $695. So I put, you know, 100% here, and then 495. Four, so I put about 50%. And then we’re assuming annual rental rate increases of 3%, expensive inflation of 3% and property appreciation of 3%. And as you can see, it brings us to a 12.9 Almost 13% cash on cash return.
Chad Franzen 6:51
Can you explain what that means? Yeah, so
Yoni Schmidt 6:55
the cash on cash return is basically, you know, how much money am I getting today in cash, given the amount, given the total investment that I have made, which out of 20 25% of 72,000. With all these other charges, you’re looking at a roughly $21,000. So how much cash is coming in compared to the capital outlay that I have made. And when we’re looking at the financial indicators, indicators, we want to understand a few things, we want to understand that the debt coverage ratio right here that is shown at 1.87 will be 1.1 or 1.2. or higher, of course, because that’s where a lender would feel comfortable lending on an investment property. We can also look at, you know, our projected returns and just like projected cash flow, which helps us understand, you know, a lot of other things here. And you know, overall what the cumulative like cash flow over a period of three of three years, and your cumulative wealth built, right. So from here, basically, if you were to make this investment and bring it on with us, at Keyrenter, would, we would basically create this property in our system. And from there, we would feed it into an investor dashboard that allows you to not only gain a higher level of transparency, but also a deeper level of understanding. Because not only do we bring transactions into this platform daily, so you can see your income and expenses. as the month goes by, with income, of course, being heavier on the front end of the month, and expenses happening throughout the month, you can also see what your true performance looks like. Which is difficult to do if you’re not living in an Excel spreadsheet, as a real estate investor.
Chad Franzen 8:54
Wow, that’s great. So take us through this.
Yoni Schmidt 8:57
So yeah, these are investor dashboards that are exclusively offered to Keyrenter clients. It comes with a marketplace where you can buy and sell properties and access to our closed marketplace off market opportunities that investors can find. And it essentially provides you with, you know, a full summary, it’s broken down by property, but then you also have a dashboard that shows you your entire portfolio, what your net worth is in real estate, what your total equity is in real estate. You know, your appreciation, it tracks your principal pay down shows you your true cash on cash returns based on the income that feeds in daily from our platform, your cap rate and it breaks down your monthly expenses. As you can see here, you know very nicely from here, you know, you can just gain a better understanding as to you know, is this worthwhile, should I continue holding on to this? Does it make sense? Should I pull out equity should I redeploy capital into something else, what am I waiting for interest rates to come back down. And that’s the time that I’m gonna make that move. But if you’re not living in an Excel spreadsheet, it’s hard to see this.
Chad Franzen 10:11
So just Keyrenter provide clients insight into this data, you know, like, let’s say, I’m kind of ignorant, but I see all the numbers there, and I come to a conclusion like this isn’t worth it would Keyrenter maybe redirect me if I was wrong? Or do you?
Yoni Schmidt 10:29
Yeah, that’s a great question. And I think that generally, yes, we would, and we tell our clients, you know, we tell our clients as it is, and if it’s not something that’s worthwhile, then why continue to hold on to it, if you’re not going to be happy at the end of the day, I think it’s better for you to give it up and, you know, try with something else. So if whether you’re doing a temporary one exchange and going into a different property, or, you know, you’re selling it starting over, taking that capital and that equity into, you know, some sort of different investment vehicle. In the future, this platform right here, is powered by blankethomes.com, which is an Israeli software company out of Tel Aviv, that, you know, offers this to landlords and real estate investors, through their property management companies. You know, they do plan on also using a I believe, and don’t quote me on this, but Lior Abramovich and wonderful CTO, Segi, Medina, you know, they’re, they’re looking into solutions where they can leverage artificial intelligence and machine learning to help landlords make better decisions overall.
Chad Franzen 11:48
So I know this is not this is not necessarily representative of every single property that people people invest in with you guys. But based on this data, you know, 16, almost 17,000 A year and passive income, the property value has more than doubled in the for three to four years since it was purchased. I’m guessing you would recommend that this person, whoever it is,
Yoni Schmidt 12:12
stick with it? I would stick with it. Yeah, that’s generally my philosophy, you know, in life is if I, if I was able to purchase this property, I’ll probably just stick with it. Okay. Let my heirs deal with it. Sure, sure.
Chad Franzen 12:28
Okay, what else? Do we need to know that anything?
Yoni Schmidt 12:34
Um, I really think we covered a lot here. I don’t know if you had any other questions or, you know, anything that you would add to this?
Chad Franzen 12:42
So why is why would you say this is particularly valuable, especially if, let’s say there’s competition in terms of property managers that didn’t offer this kind of service.
Yoni Schmidt 12:56
I think this is really valuable just because of the heightened level of transparency, really, because when you are an owner that, hi, as a property manager, you typically have to wait until the end of the month, when you receive your Owner Statement, to see what’s going on with your property. You know, some property management companies pay middle. So you see what happened in the last 30 days, right. But usually, you’re you’re always reactive to issues that are coming up. Here, when you log into this, it offers you a checking account like experience, and you can see things daily, and you can understand what’s going on with your property, you can have a little bit more control over your investments, and right try to perform them at a higher level. And with better with overall better performance. So
Chad Franzen 13:49
I say this has a net operating income of nearly 8000. Is there. What would you say? I know, I know, you’re just going you’re taking us through the process. But what would you say is kind of the like, okay, maybe we need to reconsider this. If it’s a negative operating income, or if you’re just breaking even. I mean, I would think that that’s that operating income is pretty good. Is there a low one where you’re thinking like, Okay,
Yoni Schmidt 14:16
I need to make a decision here. Yeah, I think it really depends on the investor’s personal situation. So if you’re a high earner on a W two, and you make a lot of money, and you can carry these losses from a, from a tax perspective, this may be beneficial to you because at some point, you will turn the corner that comes down to asking the question of Is this the right property? Is it long term is a good property? How much deferred maintenance does it have? Is this something that you know, will appreciate over time, maybe a little at a better rate than, you know what you’re anticipating? And, you know, it just depends it really comes down to the personal investor. And what they’re able to do, right, some investors operate some real estate for a loss for a couple years, and then they turn that corner. But, you know, they’re typically those typically tend to be doctors and lawyers and, you know, high earners and entrepreneurs and business owners who have the ability to do that.
Chad Franzen 15:20
Is there any way these things can be projected? You know, like, when you purchased this in 2020, could you have plugged something in there? And, and thought, Okay, this is what it’ll look like, in four years? Or, you know, you’re just at the mercy of the market?
Yoni Schmidt 15:34
You know, I think it’s, it’s interesting. That’s an interesting question, right? Because in 2021, with this was purchased at a four and a half percent interest rate, right, there was maybe a thought that interest rates would go up. But, you know, it wasn’t something that you were focused on at the time, because you, you think about, you know, well, I’ll kick that can down the road, you know, the time that I need to this loan, if it was purchased in 2020 2019, I believe, it could have been at the end of 2018. You know, will soon also recast, and you know, the investor will have to refinance. So this net operating income may even go down a little if you’re if you’re now having to pay at a higher interest rate. Right. So that’s one thing that you could have said, well, you know, we have to think about those interest rates and how they’re going to change over time. But in the grand scheme of things, when you’re when you’re buying stuff, you should look at how sensitive it is to market conditions. Right, and conduct some sort of sensitivity analysis to understand well graded operates at 4%. But will it operate at night? And will I still be positive if that’s what I need it to be? Sure, sure. Well, this
Chad Franzen 17:00
is very interesting, very informative, and I can tell it’s very valuable to property investors who work with Keyrenter. Thanks so much for taking us through it Yannick. Yeah,
Yoni Schmidt 17:12
absolutely. My pleasure. Thanks for having me, Chad, or thanks for joining. Yeah,
Chad Franzen 17:17
absolutely. My pleasure. Thanks, Yoni, and we’ll catch everybody next time. So long, everybody.
Outro 17:26
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