Vallejo presents serious opportunities for real estate ors. Even so, with such a unique market, ing in Vallejo can present its own particular set of challenges. Today we will be speaking with Doug Brien. Doug is the CEO of Mynd Property Management, and he is here to give us his top three reasons for failure in the Vallejo real estate market.Alex Osenenko: Boys and Girls, Alex here with Mynd Property Management, where we are talking about Vallejo real estate ing: how to do it, how not lose your butt. I have a guest today to help me unpack this large, vast and important topic. My guest today is Doug Brien. Doug, how are you?Doug Brien: I'm doing great.Alex Osenenko: Great, great. Doug and I are doing a whole series on Vallejo real estate ing, and the reason why he's such a qualified guest for this particular subject is that, back in the day, he was a founder and CEO of a company called Waypoint. These guys have purchased over 750 homes in the Vallejo area. So he's got a little bit of a background in the market. Doug is now the CEO of Mynd. And the topic today is going to be the three reasons why people will fail ing in Vallejo. Let's unpack those, Doug.Doug Brien: Yeah, so this is a good one. Alex, you know, I like to consider myself a student of the game and, to me, right now in my career real estate is my game and I want to be learning. So, I'm constantly reading and talking to others, trying to learn. And I think learning where the land mines are is super important in real estate. And so, I will share a few of the land mines that we stepped on in our time at Waypoint. I will share with our guests so that they can afford to avoid these. These are general in it really applies to every market, but I picked three that I think are especially prone to happen in a market like Vallejo that can be very block by block. It's not homogenous neighborhoods where you can have a neighborhood and kind of generalize what the rents are and building quality. It's just, it's not like that.Alex Osenenko: Like Sunset in San Francisco. Sunset in San Francisco is Sunset in San Francisco. It's pretty much 42nd Avenue or 14th. It's very similar. I mean, there might be weather differences, but in Vallejo, as you say, it's very, very, very almost to specific.Doug Brien: Yeah, pocketing. We used to think of it as pockets. And so, these pockets can impact some really big things. Number one is your rent. I think that, as a real estate or, you want to get really good at picking or performing certain variables that are going to have a big impact on your ment. The number one variable that creates the most volatility or unpredictability in real estate ment is rents. 50 bucks, you think, on $1500-$1700 rent, what's the difference? It's 50 bucks. Surprisingly, it will start to move your cash-on-cash and cap rates pretty meaningfully. So, getting your rent right is important. It also has a huge impact on the value of your property if you apply a cap rate to your NOI (). Maybe there's another episode we go deeper on that.Alex Osenenko: Yeah, we should get the nomenclature definitely explained. But, go ahead.Doug Brien: Long story short, rent matters and you have really got to understand, on a block-by-block basis, where you're owning and what you're comparing your market rents to. And then, be really careful that you don't have too high of a rent for your location so that you end up with a desperate, poorly-qualified tenant who's willing to pay your high rent because no one else will take them because of their eviction history or tenants. You can end up with a situation where you think you win, but really you’ve lost because now you have someone living in your house and they can’t afford it.So, make sure you get the right rent for your neighborhood. I think you want to have an honest assessment of the type of resident that you can attract, and to set up your underwriting criteria for residents, accordingly. So a lot of markets or neighborhoods in Vallejo are blue collar. Like, you're not going to get people who make six figures in these neighborhoods. They're just not going to live there. And so, it's going to have an impact on like what you can realistically get in terms of income-to-rent coverage and FICO score. You really have to set your box appropriate to your neighborhood. Yes, you can be really choosy, but be careful that you're not being so choosy that you have extended vacancy. It's related to rents, but getting the right resident is, I think, very important in Vallejo and in the Bay Area. In California, it's expensive and time-consuming to get that wrong and to have to evict someone.Alex Osenenko: There's one caveat I will add to this, if you don't mind. We have the Fair Housing and all kinds of very specific governmental policies in terms of non-discrimination and other things. So, folks, when Doug is talking about choosing the right resident, it's really about the income profile and stuff like that. It's very important that, I think a lot of landlords will fall into this trap of, “oh, I want a family.” Well, you can't really do that, right? There are very, very specific rules. So this is where I recommend hiring a property manager or at least hire a company that can place a tenant a resident for you. You don't want to manage ongoing. That's fine. But that's recommended, right Doug, would you say?Doug Brien: Yes, and I'm glad you highlighted that because that is very important. I talk to a lot of ors who say, “you know, I want to meet my potential tenant or resident get a feel for that.” That is highly illegal and something that, if you do enough, you're going to have a Fair Housing problem. When I say “set your criteria right,” at the companies I've always been involved with, you have a different tenant qualification standard for an A-neighborhood, a B-neighborhood, a C-neighborhood and a D-neighborhood. It's just the reality of these neighborhoods. You're going to attract a different kind of person; however, there is a set of criteria applied to each neighborhood uniformly. We're not changing it depending on who it is. It's appropriate for the neighborhood. So, that is the way you want to do this in terms of being aware of and not violating fair housing law.Alex Osenenko: Absolutely. And so, number three. What is your number three, Doug? How do people fail—the third most often reason you see?Doug Brien: Yeah, so they do not know the area well enough. And again, not diving into that block-by-block—which side of the block, which side of the street—not knowing the location well enough. They end up buying next to that parks a bunch of dilapidated trucks and has pit bulls running around the front yard come six o'clock in the evening. Or () has some other dynamic that the buyer was not aware of which is a real impediment to attracting the right resident and getting the rent that they thought they would get. So they get the location wrong—that's the third mistake.Alex Osenenko: Got it. So to sum this up: three reasons why ors could fail is not setting the right rent, not getting the right criteria established for your resident in that specific neighborhood, and then, not knowing the area and making a mistake—literally buying a house that, had hadn't been four houses to the left, you would have done well, but you didn't get the one.And so those are the three things. Now it's not all doom and gloom, boys and girls, because we've done a thorough interview with Doug on why you should in Vallejo—the five reasons. There are only three reasons for failure and five reasons why you should (). And all you have to do is go to Mynd.co. M-Y-N-D dot CO. Type in Vallejo real estate ing and you will unearth a number of interviews. So, if you're serious about doing something in Vallejo, this is probably a good resource for you. Mynd.co, type in Vallejo, get the stuff. Doug, thank you very much for your time.Doug Brien: You're welcome, Alex. Thanks for having me.Alex Osenenko: And thanks for watching.There are many things to think about when ing in real estate, and this is especially true when ing in Vallejo. With a diverse, block-to-block, house-to-house market, Knowing the correct rent to set is key to generating serious cash flow. Likewise, setting the right criteria for potential tenants can save an or plenty of heartache, in the long run. And nothing is more important than knowing the neighborhood and choosing the correct property by evaluating those around it and building a real understanding of the community, at large. Doing so can position an or for serious success in any market and in Vallejo, in particular.
Maintenance emergencies are inevitable—especially when renting a property. Today we will be speaking with Doug Brien. Doug is the CEO of Mynd Property Management and he will be discussing the best way for any investor to successfully manage whatever emergency may arise.Alex Osenenko: Boys and girls, Alex here with Mynd Property Management. We're talking about investing in Vallejo real estate. Vast topic, but I have a good, solid, knowledgeable guests to help us unpack some of the potential icebergs or opportunities within the Vallejo area. His name is Doug Brien. Doug, how are you?Doug Brien: I'm doing well. How are you doing? You sound good!Alex Osenenko: Good, thanks, great to hear. So, Doug is CEO of Mynd, which is important. But I think even more relevant—he was a founder and CEO of a company called Waypoint which purchased over 750 homes in Vallejo area. So, he knows a thing or two. Today's topic is specifically on how to handle maintenance emergency in your rental home in Vallejo. How would you go about that, Doug?Doug Brien: Yes, so this is obviously something you’ve got to deal with properties anywhere you buy. We owned all over the country and, I think, one of the good things about Vallejo is, in the Bay Area, a lot of the tradespeople that work all over the Bay Area—they live in Vallejo. So you can actually find lots of good, local, reasonably-priced tradespeople. I think the key is, you’ve got to find the ones that are willing to come after-hours. That just happens to be when most emergencies happen. That can be a little bit tricky, and I think this is one of these areas where tapping into a good local property manager can be really helpful because they've gone through and typically vetted all the best vendors and found the ones that can basically service after-hours emergencies. You know, if you want to spend the time and find those vendors, you can. And, the good news is, they're fairly plentiful in the area.Alex Osenenko: Gotcha. Any specific qualifying criteria. By the way, before I ask this question—we've done the sort of local deep dive series on real estate investing for Seattle now and few other towns in the Bay Area as well. Oakland. Specifically, for Vallejo, the access to smart, good, solid tradespeople is good, but how would you go about choosing? We're talking about building a team, you have to have a team. Because there's electrician, there's a plumber, and there's this and that, how would you go about interviewing them and qualifying them and even handling your relationship? Because look, you only have one property. You're not really that important.Doug Brien: That's right. I mean, we all think we are, but if you’ve got one property, you’re not that important. That's right. So, I think the way I've always gone about it is, you have to know enough about how the trades work to be able to interview them and really probe it and figure out, are they going to be good? Are their prices appropriate? Are they going to be timely in terms of when you need service? I think it’s about interviewing them. But again, you’ve got to kind of know what you're talking about to ask the right questions. These guys are really good at giving generic, high-level answers to people who are newbies and don't really know the right questions to ask.And then two—and maybe more important—is to find other investors. There's lots of meet-up groups and other ways to meet other investors and I would talk to them and say, “hey, who do you use? How do they work out for you? How's the pricing? Are they responsive? High-quality? talk to your fellow investors.Alex Osenenko: That's a great idea. So, boys and girls, if you are, for example, a programmer in San Jose and you’re investing in Vallejo, and you don't know and don't understand like me—any kind of trades and how plumbing works and all that—I think the good advice would be to hire a property manager or, at least, you'll get in with other investors and group-think and borrow ideas from each other. So that was great, Doug. Thank you very much for your time. Those of you who are interested in Vallejo real estate and want to learn more—go to Mynd.co. We've done a number of episodes with Doug on the subjects—some of the good reasons, some of the potential pitfalls. Check it out. Mynd.co, M-Y-N-D dot CO. Put in the search Vallejo Real Estate. All of it will pop at you and you'll get educated. Doug, thank you for your time.Doug Brien: Hey, thank you.Alex Osenenko: And thanks for watching.For investors who prefer to self-manage their properties, it is imperative to build a team of professional tradespeople to mitigate any problem that may arise. Building such relationships can prove to be difficult, however, especially for new investors or those investors with very few properties. By hiring a property manager instead, one gains immediate access to an established infrastructure of trade professionals to immediately manage any problem or emergency.
Hiring a property manager can save an investor time and money. This is, if the investor has an understanding of what fees are applied to their services. Today, we are speaking with Doug Brien. Doug is CEO of Mynd Property Management and he is here to discuss with us the costs and fees investors can expect when partnering with a property management company.Alex Osenenko: Boys and girls, Alex here with Mynd Property Management. We're talking about investing in Vallejo real estate, specifically. My guest today will help us unpack and share the wisdom with you, the viewers. My guest is Doug Brien. Doug, how are you?Doug Brien: I am good and excited to be here talking to you about Vallejo. I own a property in Vallejo, myself. So, I’m a big fan of Vallejo.Alex Osenenko: A property. That's, that's very humble because Doug is the CEO of Mynd which is great in itself—because we're a property management company, so we know a thing or two. But also, more relevant I think for the Vallejo real estate investing realm, he is a founder and CEO of a company called Waypoint which purchased 750 homes in Vallejo over the last decade or so. So he’s got a little bit of experience there.Today's topic, Doug—we're going to dig in into the costs of property management. Let's demystify this subject. Let's dig into it. How are property management services priced in Vallejo?Doug Brien: Yeah, so in many markets, property management fees are expressed as a percentage of rent collected. But I think it's important for investors to know, at the end of the day from any of the jobs associated with property management, there's a cost in dollars. So a property management company is looking at the average rents in Vallejo and applying a percentage. On average—at least in the Bay Area—Vallejo has lower rents. And so, as a result, you're going to see slightly higher percentages because a property management company just needs more dollars to get the work done and make a fair profit. So, it's a wide range. I would say, if you're talking about small residential, 30-40 unit buildings or smaller, you’re going to see anywhere from 5-10%, and it’s really going to vary based on how many units are in the building; is it a single family home and the quality of the neighborhood are going to be a factor in what your rents are. And so, with lower rents, a tougher area, or a single-family, one unit, you’re going to be in that 8-10%. But 5-10% on average.Alex Osenenko: How do you feel about—when you are searching for property management company, yourself, in the area where Mynd does not manage—how do you feel about companies who publish pricing and companies who do not? I mean, most people don’t publish pricing. Does that factor into your research? The last episode we filmed was all about how to find a property management company (), which I think was very interesting on the criteria of evaluating property management companies. We didn’t really get into price. Now is the price conversation. How do you feel about publishing the price or not publishing the price? Do you care?Doug Brien: Yeah, I care. I think that property management fees are an issue in real estate investing and I'm a big believer in transparency and just letting people know upfront. People should know what all the costs are. And hidden fees are something that bother us all. I'm a fan of companies where I can just go online and cost is part of it. To me, it's not everything. And if you don't mind, I'd like to comment on that after I answer this question. Pricing is not everything, but I want to know what it is and I want the company to be transparent about what it is, about what their pricing is and how it works. That's helpful for me to make a decision.Alex Osenenko: Now, what was your comment? Were you going to add some color to it?Doug Brien:I think that a lot of investors get too hung up on what the property management fee is. And the thing that I like to say to investors is, the most expensive property managers can be the ones with the lowest fee. So if you look at the expense structure of a building or a unit, property management is one line item. There are other line items in your p&l that are much, much more impactful to your total return.For example, the rent that you get, the amount of vacancy that you experience, and the amount of cost you incur around repairs and maintenance. Like if you don't have someone managing those three line items really, really well, your property management costs can be going through the roof. Now it’s not showing up in the property management line, but it’s showing up in your bottom-line profits. You’re paying more because you have a lower rent, too high a vacancy or way too high for repairs and maintenance, but you’re lured into thinking the property manager is the right one because that property management line item is cheap.I think I would encourage investors to look at the range. And within that range you’re going to find some property managers that are average or above average. But if you can actually look at documented results and talk to references that say these guys are reliable, they are responsive, and they deliver results, it’s worth paying another percent or two in property management fees if they can get you 50 bucks more in rent. Or, instead of 10% vacancy you have 5% vacancy or your repairs and maintenance are cheaper.So I think that's just a factor. And I would encourage people not to be overly-focused on what the fee is, but to look at your overall cost structure and who is the partner that can deliver the best overall results.Alex Osenenko:Gotcha. So to recap, in Vallejo, expect to pay 5-10% depending on the neighborhood, your rent, the size of the building—that kind of stuff (). But there are other very, very important pieces to the puzzle which we covered in our previous episode. Again, it’s called How to Find a Property Management Company. Doug, thank you for your time.Doug Brien:My pleasure. Thanks for having me.Alex Osenenko:I appreciate the wisdom here. And those of you who are watching, I hope you enjoyed it. Hope we helped you out. Thanks a lot and we’ll see you next time.Professional property management companies can save investors in the long run by providing expertise and infrastructure to mitigate any problems that may arise. But, this does not mean that choosing to hire a property manager is always the cheapest option. As such, it is imperative for investors to understand what costs are applied to a property manager’s services—particularly in a unique market like Vallejo.For example, an investor in Vallejo can expect to pay around 5-10% of collected rent on any given property. Of course, this depends on the neighborhood, overall rent and size of the property, as an example. This may seem like a lot to some investors. But, given the relative age of many properties in Vallejo, such a fee can prove to be the cheaper option—particularly for a property that requires a fair amount of upkeep and attention.
With it’s close proximity to San Francisco and a diverse and dynamic market, Vallejo presents investors with unique opportunities for success. Today our guest is Doug Brien. Doug is CEO of Mynd Property Management and he is here to give us his top five reasons investors have found success in Vallejo’s unique real estate market.Alex Osenenko: Boys and girls. Welcome to another episode of digging deeper into Vallejo real estate and figuring out if it's a good market for you. My name is Alex, I'm with Mynd Property Management. My guest today is Doug Brien. Doug, how are you?Doug Brien: I'm doing great, Alex. How are you?Alex Osenenko: Awesome, awesome. So Doug will help us unpack this complicated subject. Specifically, his background will be really helpful for this particular reason—he was the CEO and founder of a company called Waypoint which purchased over 750 homes in the Vallejo area. So, he knows a thing or two. Doug is currently CEO of Mynd, so very excited to have him on. Our topic today is: the five reasons why investors will be, can be or should be successful in Vallejo.Doug Brien: Yes. I love this question, Alex, because I'm a big believer in leveraging other people's experience. And so, I'm always talking to other investors and trying to figure out what went right—what did you do that worked, what did you do that didn't work—and leveraging that experience to help make my investment more successful. So, as you said, we have a lot of experience buying and managing, selling everything in Vallejo. And I spent a few moments and went through what I think are the top five things that an investor needs to do right to be successful in Vallejo and this is very specific to Vallejo.So, first of all, Vallejo is a very block-by-block type of city. You can't just say a certain place like downtown is good or bad. It depends on what block () and, in some cases, it depends on which house or which corner on that block. All it takes is one tough neighbor with pit bulls in the yard and a couple of beat-up trucks on the lawn and, you know what? That makes leasing up your property tough even though the neighborhood might be pretty good.So, you really have to know the neighborhoods and know what you're getting yourself into and, if you don't really know these neighborhoods, I recommend you drive by the location that you're looking at different times of the day. I think evening is the best time. Everybody's home and you get to really see the character of the neighborhood. But going by after school is also interesting because sometimes you see there's a bus stop in the neighborhood on the block behind you and there's this path between two buildings or houses with a flood of kids walking through there every single day. If you live there that might not be a super desirable thing. So there's all kinds of nuances to a location that can show up in the afternoon and I think you want to see it in the morning too—how many people are going to work and at what times. That tells you about a neighborhood. Spending time visiting at different times of day is a really important part of getting the location right. So number one: you have got to get the right location.Number two. A lot of the inventory in Vallejo is older. You have properties that were built in the early 1900s. And then a lot of other stuff in the 40s, 50s, and 60s. It's a relatively vintage housing stock. And so what that means is you have really got to know what you're getting yourself into—what are some of the characteristics of a house that was built in a certain area? Sometimes people think the early 1900s is really old. And that's true; it's really old. But they used to have really, really good construction pre-1960 with real two-by-fours. But, then you have galvanized plumbing a lot of time which can be corroded and can be expensive. So, I think really understanding the building that you're buying. Has it been renovated? What are the challenges with construction in that era? Galvanized pipes would be one to highlight and just making sure that you, A: understand it and, B: have a plan to renovate it so that you have an asset that's not going to cause too many problems for your residents and cause you excessive turnover or make it harder to rent. So really understanding the building and how to renovate it, that would be number two.The other one is picking the right rent. Again, it goes back to the block-to-block nature of the land. Rents can really vary. Just because one end of the block is getting higher rents doesn't mean that you're going to where you are. That's going to have an impact, obviously, on your return. Returns are super sensitive to rent. But it's also going to impact your vacancy. If you're going out with too high of a rent because someone around the block has it, but there's something about your specific location that is inferior, you could have extended vacancy.I think, to me, the biggest red flag on having too high of rent is—and this is specific to Vallejo—sometimes you will find folks that are not very qualified for your property who are willing to pay the extremely high rent. So you’re thinking victory because you're getting this high rent, but really it's not because, the reason that person is willing to pay your rent is, no one else will accept them because of their tenant history. Maybe they’ve had a bunch of evictions or really bad credit. You're maybe not looking at that as carefully, you're just looking at, “hey, I got a lease at this rent.” That appears to be a victory, but then they move in and, all of a sudden, they can't pay and evicting can be very challenging. So I think that really making sure that you nail your rent is important.This is one that I think, regardless of the market, is something that, at this point in the cycle, you need to be really aware of. Back when we were buying all our homes at Waypoint, it was just the bottom of the market and starting to get into an upswing and we had a little bit more wiggle room because real estate typically goes in cycles. No one knows absolutely what the bottom is and where the top is, but I know that we've been in a very, very long expansion. And so it just makes me nervous in terms of buying right now. And I think that’s something that you want to be aware of. I think it's always a good time to buy in the Bay Area if you're buying the right location, but I think—and this is point number four—have the right time horizon. I think it's quite risky to go in and buy something right now and think “I'm going to make this great return and I’m going to sell it in one, two or three years. The market may have a downturn in the next couple of years. We don't know. With every day that passes without that happening, it's more likely to happen.Again, I don't know when it's going to happen. But I want to lock in some long-term financing and be prepared to hold this thing through a cycle. So, seven, eight years—that’s kind of time horizon I would go into buying something in Vallejo at this stage in the market. Again, that's not necessarily unique to Vallejo.Alex Osenenko: Provided, Doug, that people are watching this in 2019, because we could be there forever. It could be 2025, 2050 right now.Doug Brien: This is going to be a timeless piece. It's going to be so well-watched and we’ll live on forever. So, yes, this is 2019. If we’re at the bottom of the next cycle, forget everything I’m saying.Alex Osenenko: But timing. I guess the wisdom here is understanding the horizon and the timing.Doug Brien: That's right. Understanding where you are in the market and, in general, longer hold periods reduce risk.Number five is getting the upfront renovation right. So it was related to number two. The building type. If you're buying a building that is run down, you're going to end up putting money into it one way or another because someone's going to move in there and they're going to want everything to work. And so, if you play with the math and you are aware of the importance of resident experience—I am a big believer in really figuring out what's going on with your building—just get it right upfront. Because so there are two reasons for this. Do the renovation upfront. Get the asset in working and solid condition day one.Two reasons. One is: you can include that upfront renovation in your basis or the denominator when you're calculating your cap rate and it makes for a better return. The other thing that it does is you're going to be more likely to get a higher rent, a better resident and they're going to have less issues. This means they're going to bother you or your property manager less. You're going to have less ongoing repairs and maintenance. And because they are more likely to like the house, they're going to be more likely to want to renew and even pay a higher rent.And you know this is somebody's home. We're in this business—we’re in the shelter business. And I think giving people solid homes that work well is a really important part of our responsibilities as landlords.Alex Osenenko: Well, this was really good. I was really timing this to be a four or five minute, little quick interview. This one got deeper and, I think, rightfully so. So just for those viewers who have not had a pen, like me, in their hand while Doug was talking about the five reasons, one: knowing the neighborhood block-by-block in Vallejo is very important. In fact, one side of the block can be different. Two: Understand the type of house, when when it was made and potential issue. Three: Setting the right rent is key Number four will be: time your investment based on the cycle you are in. And, five, get the up-front renovations right.This was a lot of wisdom there, Doug. So thanks a lot for taking the time. Those of you who are still with us go to Mynd.co, M-Y-N-D dot CO. Search for Vallejo real estate. And again, Doug and I will do a number of episodes on this topic so you can get educated on this. Doug, thank you for your time.Doug Brien: Thank you, Alex.Alex Osenenko: And thanks for watching.Knowledge is key when investing in the city of Vallejo. With such a dynamic, block-to-block market, having a real understanding of the specific neighborhood or block before investing in a property is a must. This means knowing the house, as well. Knowing when, and with what materials, it was built can save you money on renovations and mitigate costly repairs, in the long run.Setting the right rent is key to saving money, as well. Buying a property at the right time and for the right price with an understanding of exactly what price such a property can be rented for will position any investor for success. This is particularly true in such a dynamic market as Vallejo.
It takes money to make money, and this is certainly true for real estate investing. But Vallejo’s real estate market presents to investors its own set of challenges that could wind up costing them in the long run. Our guest today is Doug Brien, CEO of Mynd Property Management, who will discuss with us the top three things that could cost you money when investing in Vallejo.Alex Osenenko: Boys and girls, I'm Alex Osenenko with Mynd Property Management. Today, we're talking about investing in Vallejo real estate. It's a very important subject for those of you that are interested or considering investing or already have investments.I have a guest today that will help me unpack some of the specifics within the market and give all of us the advice we need to make the decision one way or the other. My guest today is Doug Brien. Doug, how are you?Doug Brien: I'm doing well, Alex. How are you?Alex Osenenko: Great, great. So Doug is the current CEO of Mynd Property Management, but I think even more important for this particular topic—as we're speaking of the specific city of Vallejo—is his previous life. He was a founder and CEO of a company called Waypoint which purchased over 750 homes in Vallejo. So that gives him just a tiny bit of experience within the area. And so we're going to just try to extract some of that and throw some nuggets of wisdom your way. They'll help you not to make mistakes that they have made in the area. So the topic today is: the top three things you see, in your experience, that will cost Vallejo real estate investors money.Doug Brien: Well, this is a good one because I don't know anybody who invests in real estate who isn't focused on making money. So you have got to know what is going to cost you money. I know that's how I think about real estate investing. Look, I think with Vallejo there are some specific things you have got to be careful of.One is: this is a part of the Bay Area that was built up in the early 1900s. There's a lot of older inventory. And so, I think getting professional inspections, thoroughly evaluating your electrical system and the plumbing. In particular, watching out for galvanized plumbing, which can get corroded and cause problems and can be quite expensive to replace with copper plumbing.Alex Osenenko: As somebody who is not as avid of an investor as potentially you are or some people watching, how would you go about discovering whether this particular house has galvanized plumbing or not?Doug Brien: Well, I would recommend hiring a professional inspector, like using a contractor or some resources from a property management company to get a professional. But, if you just want to know on your own, the easiest way to find out is to go under the house.You can typically see what kind of plumbing is running and you're going to typically see one of two things—silver galvanized or bronze-ish copper. You want to see copper. That means that you're not going to have that corrosion problem. So, really understanding the asset and all the costs that are going to need to go into that property to make it a sound investment property—that's one place where we have lost money.The other is evictions. You know, there's a very diverse group of people from all different socio-economic levels that want to live in Vallejo. And so it's really important to know who you're letting into your house and having very strict standardized criteria that you want your renter to meet. And this is, I think, a good reason to look into professional third-party property management because they're professionals and have the standards that are best for the market. And what that does is it enhances your chances of bringing someone on as a resident that can pay the rent and take care of your house.If you find yourself in a situation where someone is in your home and they can't pay and sometimes you are following up with them to collect the rent and they get unhappy and they start damaging your property and, all of a sudden, you are trying to evict—evictions in California can take 3, 4, 6 months or longer, and a lot of legal costs involved (). So, having unqualified people in your house is the second way that I see people lose money.And related to that is just delinquency. Again, this is a blue collar area. If you don't have someone in your investment property that can pay, you end up with situations where they get behind and they want to make partial payments. You really have to navigate that carefully. Some residents are very good at playing this game of telling really compelling, sad stories. And look, there are real things that happen, for sure, but, as as an investor, you have got to be really careful because you're in this investment to make money and collect rent. Be fair to people, of course, but delinquency and bad debt—lost rent collection—can be a challenge in Vallejo if you let the wrong people in. So, those are the three things to watch out for.Alex Osenenko: Gotcha. So to recap: renovations, understanding the makeup of the house, the asset, itself, being smart about what you're buying and then estimating what it is going to cost you to bring it to a condition where you can rent it out to a quality tenant. Speaking of quality tenants, evictions and delinquencies will cost you money, heartache and ruin your potential for this investment property.Doug Brien: And Alex, one point to the eviction thing that I would recommend—and I'm just remembering this as you said it—avoid evictions at all costs. I think a lot of investors get caught up in the principle of something like, “hey, so I'm going to evict them.” At waypoint, we got to the point, after experiencing time-consuming, drawn-out, expensive evictions—you hate to do it, but sometimes it makes sense to go to someone who owes you a couple thousand bucks and say “I will pay you $1,000” and eliminate this bad debt so it's not on their credit history. Pay them and eliminate their debt to get them to agree to move out. You hate to do it, it seems like the wrong thing to do, but sometimes it's actually a smart thing to do because you get your property back and it ends up costing way less. We call it CASH FOR KEYS. We hate to do it in this scenario, but I would always keep it in mind because, as an investor, you have got to look at what it's going to cost you to evict someone. It is expensive.Alex Osenenko: So just get the right tenant. Don't fall in the trap of Fair Housing issues. The recommendation here is to hire somebody who can place a quality resident. That will mean everything to you and your investment and eventually your return.So Doug, thanks a lot for helping us cover this important subject. Those of you who are still watching, go to Mynd.co, M-Y-N-D dot CO. Doug and I have done a number of these interviews. If you are serious about potentially investing in or putting your money into Vallejo—it’s a great place, but you need to know the underwater stuff and the above stuff and the good and the bad. And so, we cover a lot of that at mynd.co. Thanks a lot for watching and Doug, thank you for your time.Doug Brien: Thanks, Alex.Every real estate investor will inevitably incur certain costs when renting a property. But a block-to-block, house-to-house market like Vallejo had its own particular set of challenges that can end up costing investors even more.As many homes in Vallejo are from the turn of the twentieth century, it is best to have an up-front understanding of what repairs and renovations will be needed for the property to be move-in ready. Likewise, with a diverse socio-economic pool of potential tenants, and as evictions can quickly become quite expensive, having some strict criteria for potential tenants, or simply hiring a property manager to mitigate such scenarios can absolutely save you in the long run.
While many investors choose to self-manage, hiring a property manager can make any investment experience easier by mitigating problems as they occur. This is especially true in a unique market like Vallejo.Today, we will be speaking to Doug Brien, CEO of Mynd Property Management.
Doug will be discussing with us the reasons for choosing to hire a property manager and how an investor might choose the best one for them.
Alex Osenenko: Boys and girls, Alex with Mynd Property Management.
Today's topic is all about Vallejo real estate investing, how to be successful and what to watch out for. I have a guest to help us unpack some of this complexity within the market and drop knowledge nuggets and wisdom nuggets to help you avoid some of the potential pitfalls and be successful.
My guest today is Doug Brien. Doug, how are you today?
Doug Brien: I'm doing great. Thanks for having me, Alex.
Alex Osenenko: That's awesome. Good to have you, Doug. And so, Doug is CEO of Mynd and that is awesome in itself. It gives him a lot of experience in the background. But, the more relevant aspect of his career was that he previously was a founder and CEO of a company called Waypoint which purchased 750 homes in Vallejo. So, he knows a thing or two. Doug, let's get in the subject: how to choose the best property management company in Vallejo, how would you go about that.
Doug Brien: Yeah, so look, the most successful people I know in life build teams. People are not passionate about everything. They're not good at everything. The most successful people know what they're good at, they know where they add the most value and they know how to build a team. I think this is true and real estate too. So the best real estate investors build a team.Some people have a ton of experience, interest and time and they should manage themselves. But, for many, they have other things happening in their lives. They have families. They have jobs. They make more money doing those jobs. And so, hiring a property manager makes a ton of sense.How do you pick the right company to partner with and be a member of your team? I think having experience in an area and being local is important. So, talking to a number of companies and asking them how long they've been in the market. And probably even more important are the people that are on the ground managing. How long have they been in the market? How long have they been in property management? So really making sure that they do know the area. This is a big one and this is one where I see a lot of property managers who do not have good answers—at least by my standards. It relates to performance, right? I want my investment to perform.
Hopefully, I set realistic expectations in terms of what that performance will be, but I want to be able to talk to a property manager who can give me numbers. I want metrics. I want measurables because I want to understand if they're going to perform. And so, important questions that they can see. How long does it take a company to turn a unit over and to re-rent it? How much bad debt do they experience? Like evictions. How many evictions have they had in the last year? That speaks to their ability to underwrite. How quickly can they turn a unit? And so, these are very important metrics in terms of the performance of real estate.And, obviously, any property manager is going to be able to say something to that regard. But what I want to know is, what's your system of record? I don't want to hear generic answers like, “it takes us a couple of weeks.” No, how many days does it take you to lease? What's your average? What's the high end of that average on the low end of that average and how do you measure it? And then, is that good or bad in the market? I don't want to hear their opinion. I'd like to see that they have some market data. They actually know what's happening in the market, they measure and track how they perform and they're focused on always having good, consistent and improving performance. And again, it's not that high-level generic answer. I think you want to dig in and say, “hey, what, what software system are you using to measure all this and how do you track it? How are you alerted if, all of a sudden, the property's been sitting on the market too long? So, I want to understand if they can perform and I want to see how they measure and track that. That's important.
Alex Osenenko: Wow, that's one of the most unique answers I've gotten to this question. We've done this series in multiple cities we manage in just to help investors sort of get their footing in those particular markets. This is one of the most unique answers I've had. Go ask for data and question them on the systems they use to procure the data. And that's how you go about choosing a property manager in Vallejo. Wow.
Doug Brien: I think it's a really important question and to set expectations upfront. As an investor, my ultimate goal is peace of mind. I've got a family. I've got a job. I believe in investing in real estate and I want it to perform, but I don't want to have to worry about it all the time. So if I'm working with a property management company and I know—and look, this is seasonal and markets change—it's going to take between 7 and 20 days, depending on how aggressive I am with my rents, and as long as they're leasing in that timeframe, I'm good. I'd love it to be seven days but, frankly, if it's less than seven days the rent was probably too low.I want to know what the ranges are. I want to feel comfortable that they're measuring and tracking on it. And if I know they have that system of record, and that's how they operate, then I can have peace of mind to not have to worry because they're doing what they're getting paid for. They're performing. Results are important. And so. I'm surprised it's a unique answer. To me, that's the most fundamental thing.
Alex Osenenko: Well, I think it’s great to think about it this way. Many investors don't really know the questions to ask. And we even get phone calls—we're a property management company—we get phone calls like, “what's your fee” is the first question. And I think this is refreshing—this particular take on researching and hiring a property management company.But hey, speaking of fees, we're going to do our next episode on fees. And if you want to understand better how to win with Vallejo real estate, go to Mynd.co, M-Y-N-D dot CO. Type in Vallejo real estate. Doug and I have done a number of these educational topics. We’re not doing any selling. This is all about just wisdom and experience shared with you.And look, if you happen to hire mind is a property management company will love you, but if you don't, that's fine too. We want you to win. Thank you very much for watching and Doug, thank you for your time.Doug Brien: Alex, that was only two! I’ve got one more. We wanted three. I don’t want to sell anyone short.
Alex Osenenko: All right, let's do it.
Doug Brien: Talk to references. Say, “hey, can I have some client references? Who are some clients that you work within this area?” Talk to them and ask them how responsive are they? How reliable are they? Do they produce reasonable market-level results? I wanted to get that one in because I think that's a really important step in the process of evaluating a property management company.
Alex Osenenko: Wow. References. Again that's another first. Well, I think this is the time—Doug is this it or is there more?Doug Brien: That’s it. You asked for three; I’m giving you three.
Alex Osenenko: All right, this is how you pick a real property manager—go through those permutations that Doug just mentioned. Ask for data. Ask for references. What was the third one?
Doug Brien: Performance Data.
Alex Osenenko: Performance Data. Got it. Alright, so go to Mynd.co. Go look for more. Thank you for watching. Doug, thank you for your time.
Doug Brien: All right. Thanks, Alex.There is a lot that one has to think about when investing in real estate. Choosing to hire a property manager can lift much of that burden from an investor. But simply choosing a property manager is not enough to guarantee success. An investor must also know how to choose the right property manager for them. Doing so means knowing what questions to ask. Asking for references and having an up-front understanding of what fees apply to their services is integral in making sure your property manager is the perfect long-term partner.
For many Bay Area investors, self-managing a property is the answer. But having such a hands-on approach to investing can prove quite demanding. Our guest today is Doug Brien, CEO of Mynd Property Management. Doug will be discussing with us the reasons for hiring a property manager and why doing so may prove to be one of the best decisions an investor can make—especially in a dynamic market like Vallejo.Alex Osenenko: Boys and girls, Alex here with Mynd Property Management. Today, we're talking about investing in Vallejo, California real estate, specifically. So we're going to go deep on this topic. I have a guest to help me unpack all the intricacies of this particular topic. My guest’s name is Doug Brien. Doug, how are you?Doug Brien: I'm doing well, how are you this morning, Alex?Alex Osenenko: I'm doing great. So, Doug is the CEO of Mynd, but—I think more relevant for this particular topic—back in the day, Doug was a founder and CEO of a company called Waypoint, which purchased over 750 distressed properties in the Vallejo area over the years. And so, he’s got a wealth of knowledge. We’re going to try to unpack some of it and see if nuggets of wisdom fall out and help investors think about Vallejo real estate. Doug, the question for today’s topic is: do you really need a property manager in Vallejo?Doug Brien: Yeah, I think it's a good question. You might not like my answer, because it depends. Everybody hates that answer. It depends. Depends on what? but it really actually does depend. I have talked to a lot of investors who like to manage and in some cases, I think, you know what, if you have the time to do it, clearly have a passion for it and enough experience to do well, you should be doing it. It makes total sense for that individual to do property management.And then there are others who are clearly property managing to save themselves money. They’re not paying a property management fee, but they end up costing themselves a lot more money with standard vacancy, picking the wrong tenants or picking the wrong rent. These are all very, very expensive and I would look at that individual and say, you need to hire a property manager.So, I think at a high level, what we each need to do is ask ourselves, how do we want to spend our time? What is our time worth? What are we good at? Where do we add the most value? I think the best real estate investors are really good at building a team and having really honest answers to those questions because then they can decide how their time is most effectively spent. And what are the members of the team—a cohesive team can do everything well? What does that look like? So, I think, depending on that answer, it is going to guide you towards whether you need a property manager in Vallejo. I would highlight that, while I think there are some interesting opportunities and upsides in Vallejo, there are also some traps. It’s a very block-by-block, house-by-house type of investment market. And so, you really need to know the market. And there is also a very diverse mix of potentials residents and I think you have to really know what you’re doing to pick the right resident. Because of those mistakes, it can be very expensive. I think you better be really sure you’re strong in that area if you’re going to try to self-manage. But if you are, go for it and you can save on the property management fee.Alex Osenenko: Yeah, that's very good. So, I spoke to the investor yesterday. It comes a story, right. This was a little bit shocking. This gentleman owns nine properties and manages them all himself. And he's got a full-time job in the Bay Area—our normal type of investor that we see in the Bay Area. And so when I said, “how much time do you spend, on average, managing your properties per given month?” he wouldn't give me the answer; except, he told me this story.He said, “well, let me give you an example, Alex. We rented a boat in Tahoe. I had my family on the boat and my daughter picked up the phone to take a picture of us—a family picture. And, as soon as she picked it up and said, ‘Dad, your home in Phoenix is flooding’.”So, they’re out on the boat. He can’t do anything. And the problem was the plumber he had () quit or was no longer in business. And so, this was a challenge.Like, I rented a house once, myself, and I was only a few minutes away from it, but I hired a property manager because I don’t have a team. To me, that’s key. You mentioned having a team—that’s such a key aspect of it. I don’t have electricians. I don’t have plumbers. I don’t know anybody. I get ripped off easily. I don’t have time or mindshare to invest in this.Doug Brien: Yeah, I think there’s some simple math you can do. Most of us have jobs. What’s your salary? How many hours a week do your work? What’s your hourly rate in terms of what you make in your job? And then, what is the property management fee and how many hours a week, in a month, does that job take? And, if you’re making more money in your professional job—in most cases, people are making significantly more if you live in the Bay Area, especially, than what the average property management time per hour is—then I think you’ve got to look at that and say, “am I better off hiring experts who, that’s all they do, and spending those hours on my profession, or enjoying my boat with my family?”Alex Osenenko: Those of you who are watching, go to Mynd.co, M-Y-N-D dot CO. Doug and I will be doing a number of interviews specifically on Vallejo real estate. We covered why you may need a property manager—you may not. But now, at least you have an idea.Check us out at Mynd.co. We’ll come back with another topic. Until then, thanks a lot for watching and Doug, thank you for your time.Doug Brien: Thanks, Alex.From maintenance emergencies to legal disputes, self-managing a property is as demanding as it is rewarding. While many investors in the Bay Area ultimately choose to do so, self-managing a property is not the right decision for all investors. Having an understanding of how to manage a property is key to managing one successfully. Likewise, it is vital to have an established team of trade professionals to address any emergencies that may arise. But, overall, the choice between self-managing a property and hiring a management professional is a personal one—determined by an investor’s individual circumstances above any other factor.
With it’s proximity to San Francisco, Vallejo presents a great opportunity for anyone looking to invest in Bay Area real estate. Our guest today is Doug Brien, CEO of Mynd Property Management, who will be discussing why investing in Vallejo makes sense now and going forward.Alex Osenenko: Hey, boys and girls. This is Alex with Mynd property management. Today we're talking all about investing in real estate in Vallejo. And I have a guest, today, who will help me unpack some of the major reasons why Vallejo is a great market to invest in. His name is Doug Brien. Doug, how are you?Doug Brien: I'm doing well.Alex Osenenko: Awesome. So just to set this up for our viewers and readers, Doug was the CEO of a company called Waypoint which purchased over 750 foreclosed and distressed properties in Vallejo over time between 2010 and 2016. He has got a wealth of experience and is now CEO of Mynd. Let's get into the topic, Doug. Why do you think Vallejo makes sense in today's economy and moving forward?Doug Brien: Yeah, you know, that's a good question, Alex. It's always the question that I like to start with when I'm thinking about a market to invest in. I think that the fundamental question is: why do more people want to live here or in any particular location? I think there's some really good reasons why people want to live in Vallejo. First and foremost, it's a bedroom community in the Bay Area. Obviously the Bay Area is one of the premier job engines in the world in terms of producing high-paying jobs. So, one of the challenges in the Bay Area is having areas where more blue collar workers can afford to live. It's so incredibly expensive in the Bay Area.And so, Vallejo is a relatively inexpensive place to live in the Bay Area and it's actually not that far out. What ends up happening is a lot of people are commuting from Modesto or Stockton or way out and Oakley or Brentwood. Vallejo is much, much closer. It’s actually on the water. It's interesting. It's really beautiful real estate. So it's fairly proximate to the job centers. There's good public transportation. There's a BART station in Richmond, which isn't too far from certain parts of Vallejo, and there's also a ferry that goes to San Francisco.So I like that the proximity of it and the public transportation that's available and, for an investor, the ability to get some pretty good cash flow. It's hard to buy higher cap rate deals in the Bay Area. Vallejo has some of the higher cap rates you're going to see. You can buy properties at 5-6% cap rates, which is relatively unheard of in the Bay Area.I think two other factors I want to highlight that I like about Vallejo are: the UC system is actually creating another Berkeley satellite school. UC Berkeley is not that far away, but they own a bunch of land on the water in Vallejo. Actually, the land is in Richmond but is fairly close to Vallejo that's going to stimulate that area.Vallejo By the NumbersDistance from San Francisco: 32 milesQ3 2019 Year-Over-Year Rent Growth: 3.5%Q3 2919 Rental Housing Vacancy Rate: 4.9%Median Home Price (): $413,000Alex Osenenko: That's a juicy nugget, that's for sure.Doug Brien: Yeah, so the timing of when that all gets developed and built out is a little hard to predict, but it's in that area. And it'll drive more job growth to Richmond and Vallejo and people can live in that area. The other thing that's really interesting is that Mare Island is an old Navy base and there's a lot of redevelopment happening. Mare Island is actually an island in the bay right off of downtown Vallejo and there's a ton of redevelopment happening. There's a modular home company that’s locating. There a big developers doing a mass mixed-use development. So a lot of interesting things happening there, which I think will feed into downtown Vallejo and will feed further desirability in the area as well as job growth and household formation.So, that's why I think Vallejo is an interesting market to look at as you look at how to invest in the Bay Area and get some reasonable cash flow. I think Vallejo is an interesting option.Alex Osenenko: Gotcha. So to sum this up, we are talking about proximity and availability for the workforce to actually make their way into the Bay Area where most of the jobs are. The cap rate is probably the best in the Bay Area, and there's opportunistic development—potential development—happening through UC Berkeley and the Navy. All those things combined sound like a pretty interesting opportunity for investors to take a deeper look at Vallejo.If you guys want, Doug and I will be doing the whole series specifically on Vallejo, so check us out on Mynd.co. M-Y-N-D dot CO, and just search for Vallejo investing or Vallejo property management and you'll find our other episodes. Until then, thank you very much for watching and Doug, thank you for your time.Doug Brien: Thanks, Alex.Vallejo certainly profits from its proximity to San Francisco, presenting serious opportunities to potential investors. Though more blue collar than some of its more cosmopolitan neighbors, major redevelopment projects and a great public transportation system are major attractors to new families and young professionals. And boasting such a diverse market with one of the highest cap rates in the Bay Area, Vallejo is an interesting option for investors looking to create some reasonable long-term cash flow.
