Multifamily Property Management 101

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Learn multifamily property management through the eyes of syndicator!

VIDEO TRANSCRIPTION

00:00
we double check all the stuff but i
00:01
guess the batteries still
00:03
failed i don’t even know what happened
00:04
but continuing on our path so we talked
00:05
about property management right so for
00:07
those of you tuning in for the first
00:08
time
00:08
monday mondays 3 30 central typically
00:11
run for about 30 minutes
00:12
and you know we do live q a and kind of
00:14
talk about different topics so this week
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we’re talking about property management
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one-on-one
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yep and really you know what does it
00:19
look like from the syndicator’s point of
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view right
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when do you involve them what do you do
00:22
with them and kind of how does that
00:23
relationship continue
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yeah so what we mentioned the beginning
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right very first time you’re
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interviewing them
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once you’ve identified your property
00:29
management company the next time really
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is whenever you think you’re close to
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having a deal under contract right
00:32
kind of helping validate the budget
00:34
talking to them have they
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and have they managed that property
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before have they not right really work
00:38
you through that
00:39
what do they think about the area did
00:40
they like the deal all that stuff and
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then
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really from there if you get the deal
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under contract right it’s working
00:45
through due diligence
00:47
what does you know and all of the things
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that involve due diligence right they’re
00:50
helping validate things helping doing
00:51
lease audits rent
00:53
you know unit walks all of that stuff
00:55
right and so that’s where we left off i
00:57
think
00:58
right so continue on that’s that’s the
01:00
major time that you’re going to
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interact with your property management
01:04
company and then obviously after the
01:05
takeover that’s
01:06
that’s the cadence is usually you’re
01:08
going to have weekly calls with them
01:10
right assume it’s going to be 30 minutes
01:12
to an hour you know and if you have
01:14
multiple properties then it might be
01:15
longer
01:16
right you’re going to get at least your
01:18
monthly reports
01:19
and then there’s going to be emails and
01:21
phone calls in between that but usually
01:22
there’s going to be a weekly call
01:24
monthly financial reports that you’re
01:26
going to be you’re obviously dealing
01:27
with your property management company on
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right
01:29
so one of the big things that we wanted
01:31
to cover today though is you know some
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tips on picking the right one
01:34
right you know ultimately you have to
01:37
rely on people that you trust
01:38
right so a lot of our business and this
01:40
is just real estate in general is all
01:42
referral driven right
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who have you used that you like know and
01:46
trust and if
01:47
i trust you and you trust this person
01:50
then there’s a high likelihood that i
01:51
probably will like this person too right
01:53
so you have to go out and and ask people
01:56
that are doing deals
01:57
who are using for property management
01:58
that’s number one way of picking a
02:00
property
02:01
exactly except for you know i don’t know
02:02
about ben’s friends right i like ben but
02:04
i mean his friends i question so maybe
02:05
it doesn’t apply all the time right
02:07
transitive property is not always
02:08
accurate but anyways continue on didn’t
02:10
mean anything it’s not always but i mean
02:11
it’s it’s at least a good start right
02:13
you know ultimately you need to feel
02:14
comfortable with the people too right
02:16
but that at least gives you
02:17
a good short list of people that you can
02:19
potentially call one of the other tips
02:20
that we always say is
02:22
go out and secret shop their current
02:23
property say i want a list of
02:25
the five properties in the area that i’m
02:26
looking at and go out there and start
02:28
secret shopping them and that’s not just
02:30
driving around right
02:31
get out and actually try to tour the
02:32
thing right and come up with a story and
02:35
say you’re moving in
02:36
town and you need a place to stay and
02:38
that might not work in every sub-market
02:39
right but
02:40
for the most part people don’t ask a
02:42
whole lot of questions they’re there to
02:43
do their job
02:44
right so they’re not going to question
02:45
why does this person want that so don’t
02:47
get hung up on those types of things
02:49
secret shop it because i want you to
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know from there’s there’s a
02:52
certain reason why you do this right you
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want to make sure is the staff
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well-dressed
02:56
did they greet you properly or were they
02:58
rude right did they ultimately follow up
03:01
whenever you left did they answer the
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phone did they actually
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answer the door is the property clean or
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is there trash everywhere
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what’s the tenant profile right you know
03:09
i mean are they handling tenants
03:10
properly i mean
03:11
we’ve been on property tours where
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they’ll have a manager’s yelling at
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you know at one of the tenants right you
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know now maybe in certain circumstances
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that’s a good thing
03:19
most of the time it’s probably a bad
03:20
thing right when they’re when there’s an
03:22
adversarial um you know approach to
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property management yeah it usually
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never goes well
03:27
right so those are some tips right that
03:29
you you could use to potentially
03:30
you know yeah my favorite store is i was
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touring a property and you know the
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manager there literally there’s a kid
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that was going to throw the trash away
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into the trash bin and along the way
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kind of
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basically drops half of it and the
03:40
manager literally right there hey is
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that how your mom raised you
03:43
is that how you’re supposed to do it no
03:45
all right well you should pick up your
03:46
mess and ultimately we hired that guy
03:48
and he’s already
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cracked the whip yeah that’s that’s abel
03:50
yeah he did it he did it in the right
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way
03:52
yeah right you know the other thing that
03:53
i forgot to mention that’s another good
03:55
tip right is
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you know picking property management
03:58
companies to do what you need them to do
04:00
so for example right you’re not going to
04:02
go pick graystar to manage your class c
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property right
04:06
you know they are class a operators
04:08
that’s what they do that’s what they do
04:09
best they do it very very well that’s
04:10
why the
04:11
biggest of the business right you need
04:13
class c
04:14
people to manage class c deals you also
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always want to
04:18
you want to err on the side of caution
04:19
and usually get people that have
04:21
experience in the sub market that you’re
04:22
in right
04:23
it’s not always the case right there
04:25
might be a good reason that they
04:27
they can they can pull it off but for
04:28
the most part you want to go hey if i’m
04:30
looking in this sub market
04:32
they’ve already got deals in the sub
04:33
market that’s a good thing right
04:35
so that’s another tip for picking the
04:36
right property management company right
04:38
so how you can perform a successful
04:40
multi-family takeover along with your
04:41
property management company right
04:43
that’s one step at a time that’s the end
04:45
that’s my answer one step at a time
04:47
right
04:47
right no but there’s a lot that goes
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into it so you know takeover is not a
04:51
trivial thing right there’s a good
04:52
property management company has it
04:53
buttoned up
04:54
right we took over four properties in
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dallas last week yeah week before last
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and
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you know there’s just a lot of moving
04:59
parts there’s a ton of them so
05:01
first thing it’s important to have a
05:02
checklist so if you need a checklist
05:04
right we have one disrupt equity.com
05:05
takeover checklist go there you can
05:07
download our checklist for free
05:09
yep and it kind of helps and it really
05:11
we started that from kind of what our
05:13
property management company has
05:14
right it helps kind of make sure you’re
05:16
not dropping the ball there’s 50
05:17
different things from
05:18
you know how do you plan what do you
05:20
what documents you need to ask for when
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do you ask for them
05:22
all of that so definitely work through
05:24
that but takeover is really about
05:26
taking control of the asset right from
05:28
staff from you know tenants and where
05:30
they pay
05:31
to even vendors and contracts and all
05:33
the other pieces and one thing
05:34
to note folks is that you you’re not
05:36
gonna be integrally if you were
05:38
if you’re really really involved in this
05:40
process either a it’s
05:42
a really small property or b you don’t
05:43
got the right property management
05:44
company because
05:45
they should be handling all of this a to
05:47
z and you’re just there just to
05:49
plug in the gaps right you know if they
05:51
need something from
05:53
say the seller whenever you’re buying a
05:55
deal or they needed something from the
05:57
from the former property management
05:58
company maybe you’ll go chase after that
06:00
or you need something from the lender
06:01
that as a sponsor is where you’re
06:03
supposed to be plugging in right they’re
06:04
going to come in
06:06
they’re going to hire fire retain the
06:07
staff right
06:09
they are going to get the utility
06:11
switched over
06:12
they are going to you know on board the
06:15
staff they’re going to do the whole
06:16
entire shebang
06:17
they’re going to go over to the tenants
06:18
they’re going to give them a a letter
06:20
and say hey
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now you’re going to be paying us the
06:23
rent right so they’re going to handle
06:24
all of this so this is really the
06:27
takeover is just to make sure that
06:28
the property management company is doing
06:30
what they are supposed to be doing
06:31
right not necessarily what you’re doing
06:33
as a sponsor as a syndicator and so
06:35
really the performance successful
06:37
multi-family takeover is having your
06:38
property management company lined up
06:40
and figuring out whenever you close and
06:42
they’re ready you literally they’re
06:43
out there they’re on standby until you
06:45
tell them hey we just took over
06:46
you know we just closed go ahead and
06:48
take over yeah they’ll be hovering too
06:49
they’re literally like in the
06:51
parking lot right like and then we’ll
06:52
give them their green light hey we just
06:53
closed right because
06:54
you can’t technically take over
06:55
something that you don’t own just yet
06:56
right so
06:57
there’s been you know times when it’s
06:59
it’s 9 a.m they’re out on site but we
07:00
don’t close until 2
07:02
p.m right and then they’ll walk right in
07:04
at 2 p.m and
07:05
you know if the staff is going to be
07:06
retained most of the time you already
07:08
know that at this point because
07:09
that’s part of your due diligence you’re
07:11
interviewing this yeah you’ve asked for
07:12
permission to interview the staff you’ve
07:14
already kind of figured out the owners
07:15
told you who they want to keep maybe on
07:17
on their payroll and who they’re you
07:18
know who they’re who they’re willing to
07:20
let you interview
07:21
so you know so those are those are some
07:23
just you know some
07:24
some things to kind of take into
07:25
consideration when it comes to property
07:26
management so yeah so we have some we
07:28
have some questions that kind of came in
07:30
prior to this
07:31
yeah so we’ll go through those for those
07:32
of you just tuning in money mondays doom
07:34
every monday 3 30 central
07:36
we’re talking about property management
07:37
this time but you can ask any question
07:38
you want to know so we’re happy to kind
07:40
of talk to that so
07:41
you know we’ll go through a few of these
07:42
and if you guys have any questions
07:43
comments go ahead and
07:44
drop them so david yes it’s monday
07:47
monday
07:48
it’s a long time to see iggy we’re doing
07:50
well yes and we had some technical
07:52
difficulties earlier so we appreciate
07:54
everybody hanging tight with us
07:55
so um how involved are syndicators
07:58
within the takeover process
07:59
i’d say not very involved right like you
08:01
know i mean really it’s the property
08:02
management company’s job to interview
08:04
the staff it’s their job to
08:06
set it up in their system it’s their job
08:08
to have accountant writing you know i
08:09
mean all the other pieces
08:11
as an owner you’re really focusing on
08:13
closing during takeover
08:15
and you make a phone call and you know i
08:17
mean nine times out of ten i mean
08:18
you know we’ve never closed on a deal in
08:20
houston ourself right
08:22
and we’ve never had to go to a property
08:23
for takeover right so that kind of gives
08:25
you guys an idea we’re we’re in the back
08:27
office and
08:27
right i don’t think there’s been a case
08:28
i can think of where we should have been
08:30
no no i’ve never been on site
08:31
whenever we yeah that’s right we’ve
08:33
always been back here in houston
08:34
because all this stuff’s done remote
08:35
folks this is not done in some title
08:37
company and they give you the keys and
08:38
then you go over there right that’s not
08:40
how any of this works right
08:41
in fact i don’t even go to a title
08:43
company you know i’ve closed everything
08:44
from our office right it’s a remote
08:46
you know closing coordinator and you can
08:49
kind of so
08:50
you’re very hands off and that’s that
08:52
should really be the the sign of a good
08:54
property management company is that they
08:55
they say hey follow our process we’ll
08:58
get you through it right and then they
08:59
handle that and you’re just
09:01
managing them because remember what i
09:03
said earlier the biggest role is
09:04
us is to manage the property management
09:06
company make sure that they are
09:08
implementing our business plan as an
09:11
asset manager that is your number one
09:13
role right the property management
09:15
companies the boots on the ground
09:17
right so we should not be too involved
09:19
in the takeover process right unless you
09:21
just want to be there but most of the
09:22
time you’re going to be in the way
09:23
anyway
09:24
so another question biggest issues
09:26
you’ve experienced in taking over
09:28
property i’ll give i’ll have i have one
09:30
story that’s
09:31
kind of tragic and somewhat funny so we
09:34
took over our property in san antonio i
09:35
won’t name
09:36
the name of the property but we were
09:38
literally going to
09:39
closing it was about 2 p.m in the
09:41
afternoon on a friday
09:42
and we had gotten word that the
09:45
boiler had gone out now for anybody that
09:47
knows the boiler on these big commercial
09:49
properties these are not
09:50
a couple grand this is a 40 000 thing
09:52
that was literally out
09:54
and they were trying and so we forced
09:57
the seller to send somebody out there
10:00
right they patched it up you know as
10:02
best they could
10:04
and then literally the next day the
10:06
thing crapped out and we had to spend 40
10:07
000
10:08
now luckily we had known through our due
10:10
diligence process that the thing was
10:11
already on its last leg
10:13
but it was funny that it was literally
10:15
one of those things that was happening
10:16
as we were trying to close and i even
10:18
tried calling the seller
10:19
and the guy was they were out of
10:20
california they were a bigger shop the
10:22
guy was so taken aback that i’d actually
10:24
found his number and called him
10:26
and said hey we got a problem here man
10:27
like we’re not going to close this deal
10:29
unless you guys get somebody out there
10:31
and he was like well this is not you
10:33
know proper procedure and you’re
10:34
supposed to be working with the broker
10:36
well as you remember man our broker was
10:38
on a flight
10:39
he was on an airplane so he wasn’t even
10:41
anywhere to be found
10:43
so it was just one of those things that
10:44
hey that’s really where you got to step
10:46
in as
10:46
an asset manager as an owner you got to
10:49
get stuff done right
10:50
you know so luckily they did the right
10:51
thing they sent somebody out there they
10:53
got it back online that one night
10:54
but it literally only lasted 24 hours
10:56
yeah you know
10:57
so that’d be one of the biggest issues
10:59
that i think we’ve taken over
11:00
right you know the other thing being
11:02
that we’ve been on the properties where
11:04
they’ve completely taken a staff yeah
11:06
right we’ve had that we’ve had
11:08
drama where you know before closing you
11:11
have car crashes and every fires and
11:14
everything under the sun so there’s kind
11:15
of all the mechanics right it comes with
11:17
the business and the territory you just
11:19
kind of have to be ready for it
11:20
so yeah you know if yeah so for those of
11:22
you tuning in monday mondays
11:23
every monday 3 30 central typically for
11:25
about 30 minutes
11:26
and you know we’re talking about multi
11:28
uh property management this multi-family
11:30
property management this week so if you
11:31
have
11:32
you know any that’s what we presented
11:33
earlier if you have any questions feel
11:34
free to ask them regardless of its
11:36
property management specific or not
11:38
um we did give out a checklist earlier
11:40
so you know if you have if you want to
11:41
take over checklist
11:43
www.disrupteequity.com
11:45
take over checklist and it kind of goes
11:46
through all the things to kind of keep
11:48
in mind from a takeover perspective
11:50
but really you know if you have any
11:51
questions go ahead and ask them and
11:53
we’ll go ahead and answer them
11:55
so i know uh savion asked the question
11:57
when selecting property management what
11:59
are some general questions regarding how
12:00
they handle problems such as fires
12:02
crimes floods and lawsuits
12:04
yeah no absolutely they need to have all
12:05
that documented there needs to be
12:07
processes involved
12:08
in all of this and you have to realize
12:10
that the folks that we usually are
12:11
dealing with are going to be at the
12:12
regional the vp
12:13
and sometimes the ownership level these
12:15
folks have been in the business for 20
12:16
or 30 years it’s not anything they
12:18
haven’t seen yeah
12:19
so they usually will have a process for
12:21
pretty much everything but usually when
12:22
there’s a crime or there’s something
12:23
major that happens there’s an incident
12:25
report
12:26
that the staff has to to fill out
12:28
pictures have to be taken
12:29
and that’s all that’s from a liability
12:31
standpoint but also in case an insurance
12:33
claim needs to be filed right
12:35
you know or or god forbid there’s some
12:37
kind of a
12:38
criminal complaint that needs to be
12:39
filed you know all of that is documented
12:41
right
12:42
yeah and this stuff happens quite a bit
12:43
folks not necessarily the criminal side
12:45
but
12:45
you’ll have oh it all happens on every
12:47
property yeah you have fires that happen
12:49
right
12:49
you know you guys should see ben’s face
12:52
how it how red it turns
12:53
whenever fires and all this stuff all
12:55
happens in the same week you know
12:57
what the flight comes in just you know
12:59
in our business you have good days and
13:01
bad days right
13:02
and so um you know but it comes with it
13:04
and it’s about having a problem
13:06
and working through it so yeah like i
13:07
tell everyone you know don’t no need to
13:09
stress about it but
13:10
it’s important to understand your
13:11
property management company and just you
13:12
know make sure that they know what
13:13
they’re doing right what’s their
13:14
experience and
13:16
you know they’ll all i’ll be surprised
13:17
if any management doesn’t have a plan
13:18
around what to do with the fires or what
13:21
to do with crime what do
13:22
all these other things they’re just so
13:23
common yeah no absolutely
13:25
yeah and our business is just almost a
13:27
monthly basis right somewhere in our
13:28
portfolio something is happening
13:30
yeah so you know but yeah no i know we
13:33
missed a few folks so if you guys have
13:35
any additional questions i don’t know if
13:36
anybody does yeah if anyone has any
13:38
questions go ahead please
13:39
you know ask them in the comments we’re
13:40
happy to answer them here live whether
13:42
it’s about property management or
13:43
something else feel free to ask
13:45
and so we’ll take a deeper dive property
13:47
management is probably something that we
13:48
could have
13:49
yeah right now we focus more on the
13:50
takeover part i think a different
13:52
conversation we’ll have probably more on
13:53
the asset management property management
13:55
relationship
13:55
operations probably is a good topic you
13:57
know just property management operations
13:59
in general so
14:00
we’ll kind of i guess we’ll wrap up
14:02
there man yeah if anyone has any
14:03
questions ask them now or forever hold
14:05
your piece because we will wrap this up
14:06
in the next two minutes
14:08
all right all right two minutes or two
14:10
seconds next two minutes two seconds
14:12
potato potato so you know whatever you
14:15
want no and we want this to be
14:17
interactive folks so
14:18
ask questions reach out to us you can
14:20
direct message us
14:21
if there’s something that you want us to
14:22
talk about it doesn’t have to
14:23
necessarily be multi-family
14:25
it could be real estate it could be you
14:27
know being an entrepreneur being a
14:28
business owner
14:29
best practices on that type of stuff
14:31
right we’re we’re technology guys we
14:33
talk about technology too right you know
14:36
so anything that
14:36
you know that involves any of those
14:38
topics would love to talk about right
14:40
yep
14:40
you know but otherwise you know yeah
14:42
like i mean if you guys can’t tell ben’s
14:44
just itching to talk i mean come on give
14:46
us some questions guys we’re happy to
14:47
talk that’s what we’re all here for
14:48
right you know but if you don’t have any
14:51
questions any comments we will
14:52
keep going then we’ll call it a day then
14:54
oh wait we got one
14:56
when choosing a securities attorney
14:57
doesn’t matter if his background is
14:58
drafting ppm
14:59
doesn’t need to be multi-family specific
15:01
i would say yes you want to you want a
15:03
security attorney that knows how to
15:04
draft pbms
15:06
not all attorneys are the same they all
15:08
do their special
15:09
question was a question if they’re an
15:11
sec attorney but then don’t do
15:12
multi-family
15:14
no oh that was that was just two
15:15
questions okay yeah so the first part is
15:18
do you want one that has this background
15:19
in trafficking ppm’s absolutely
15:21
yes there’s you know i mean it’s a lot
15:22
of compliance that you have to make sure
15:24
you so don’t get your local attorney to
15:25
try
15:26
to draft something up because they’ve
15:27
got a template brother-in-law’s friend’s
15:28
sister’s house
15:30
it’s not worth it because yeah people
15:31
try to save a couple thousand bucks just
15:33
to do it that way or they’ll find some
15:35
template where they think they can draft
15:36
the ppm on their own
15:37
don’t do it folks yeah focus on the
15:39
folks that know what they’re doing with
15:41
the sec
15:41
now to the second half of the question
15:43
does it have to be multi-family specific
15:45
i’d say no it’s good to it’s nice to
15:47
have some experience yeah
15:48
because they they’ll have some things in
15:50
the pc that happened to them at a
15:52
previous client that they’re you know
15:53
carrying forward and helping their other
15:55
clients but
15:56
you know i would i would definitely want
15:57
someone that has done ppms and
15:59
securities before
16:00
i would if i had to choose one it’d be
16:02
definitely the ppm i would get i would
16:04
give up the multi-family experience yeah
16:05
that’s
16:06
that’s less isn’t that’s less important
16:08
than just knowing how to do a ppm and
16:10
that’s
16:11
you know and there’s there’s folks if
16:12
you guys want to reach out we’ve got
16:13
we’ve got a good one dugan kelly
16:15
yeah you know uh so yeah let us know if
16:17
we want to make introductions
16:18
yeah otherwise we can call it a wrap if
16:20
anyone has any more questions
16:22
all right money mondays join us next
16:25
week folks
16:25
3 30 p.m central standard and do we know
16:28
what we’re talking about next week
16:29
because i don’t know shannon what are we
16:30
talking about next week
16:32
getting started getting started in
16:34
multi-family that’s a good one
16:36
well i like that one so yeah we know a
16:37
thing or two about that one
16:39
you know happy to answer them and look
16:41
forward to seeing you next week
16:42
all right sounds good

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