Matthew Maschler:
Welcome to the Real Estate Finder podcast. I’m Matthew Maschler, real estate broker with the Signature Real Estate companies here in the great state of Florida. And with me, my real estate partner,
Jill Glanzer:
Jill Glanzer. Hi,
Matthew Maschler:
Jill. How are you?
Jill Glanzer:
I’m doing awesome. How are you?
Matthew Maschler:
I’m doing okay. I’m very, very excited for today. Do you know what today is?
Jill Glanzer:
What’s today?
Matthew Maschler:
Closing day.
Jill Glanzer:
Yay. I
Matthew Maschler:
Like closing day and it’s for, we are closing on. We represent the seller closing day. We can represent the seller or the buyer. We are representing a very, very special seller, a V I P customer, if you will. Should we say his name?
Jill Glanzer:
Yeah,
Matthew Maschler:
We are closing on their v i P customer, our v I P seller, Matthew Ashler. I am selling a unit that I own and that’s always interesting. So for the 95th episode of the Real Estate Finder podcast, it’s very exciting. 95 episodes, only five more episodes until we get to 100 on October 10th. And we’re going to celebrate,
Jill Glanzer:
Yeah, have a big party
Matthew Maschler:
Ro Pomp Plaza, a funky biscuit. October 10th in the evening, we are going to record our 100th episode. Yeah, so I want to talk about real estate investing. I came to real estate. I wear a lot of hats in real estate. I was a real estate attorney in New Jersey. I’m a real estate investor. I’m a real estate agent, real estate broker, real estate attorney. I wear a lot of hats in the real estate business. And I want to talk about, since we’re closing today on a property that I bought in 2016 as an investment, oh landlord, that’s another hat because today is closing day. I wanted to talk about the investment and I wanted to talk about real estate investments. So I want to tell you about a particular property. The address is 8 1 8 3 THA Boulevard. It’s in a community called Boca Rio or Banyan Lakes. It’s on Boca Rio Road between Glades and Palmetto. And it’s a very nice community. One of the things I liked about this particular community is the schools. There’s an elementary school, very, very close. What was it called? Hammock something.
Jill Glanzer:
Hammock Oaks, is it?
Matthew Maschler:
Yeah. But the middle school and the high school is Omni and Spanish River. Geographically, most people think this little area of Boca would be Olympic Heights, but it’s right on the border. So for people who want to get into Spanish River High School and then no judgment there, I believe both are good. I think at the time, maybe 10 years ago, people had a preference for Spanish River, but so this community, a lot of people, if they were thinking of Spanish River, didn’t look in this community. So I think the property prices were a little bit deflated because people didn’t realize that this area was zoned for Omni and Spanish River.
And that’s one of the things about, especially Jill Jill’s really, really good at schools. Jill and Stacy are very, very good at school districts. And it’s one of the things we specialize in. Realtors can’t know everything, but if you need to know about school districts, we always talk about the city of Boca and unincorporated Palm Beach County. A lot of realtors don’t know about that imaginary line. So school districts have become very, a passion of ours and something that a lot of people doing their home search look at. And what attracted me to this community, I sold a lot in this community for people who wanted to get into Spanish, even with young children, but they wanted to be in Spanish River High School District. So I thought that these properties, if they were, they’re just west of the turnpike. So I thought if the same property closer to power line, there’d be a premium for, because people understand that what was always perceived as a better school district. Anyway, that’s what got me interested in this neighborhood where I currently own three units, and this is the first one that I sold. So I want to talk about real estate investing today. I, there’s a lot of ways to be a real estate investor, right? People buy and flip, and I did a lot of that as well.
And I was buying during the bad market and the foreclosure. So I was buying a lot of distressed properties and I was selling them. And after a couple years of that, and after maybe 30 or 35 of these flips, I said to myself, I noticed that a lot of my buyers were investors themselves. Look, I like to make money, buy, flip, sell. If you buy low and then make it nicer and sell it, you capture your profit on one, your ability to buy it a little bit lower than other people, and then two on your improvements. So get your profit, move on to the next deal, renting it out and being a landlord, you’re holding it longer and you’re getting a rate
Jill Glanzer:
Of return.
Matthew Maschler:
So those are two different aspects to real estate investing. And I thought, why not do both? Although when I bought this unit, I didn’t get it at a distressed price.
My father always taught me, you have to be unique to make money, have some unique knowledge if you have the ability to buy at a distressed price and then sell, capture your gain, anybody could just pay market. So specifically the real estate investing I want to talk about right now is paying market, right? I don’t want to talk about acquisition costs. Going to foreclosure sell and buying a property under market undervalue to become a real estate. And we have plenty of investor clients. We’ve talked about one of Stacy’s customers who buys distressed, fixes it up and sells it, makes a nice profit, but buying a house at market and then renting it out. And you do this for a rate of return. And when David was little, I bought at a charity auction to have dinner with a football player player. And so we had a nice dinner at Ruth’s Chris, me, David football player, and the football player’s manager, and he was interested, he wanted to diversify. He was interested in renting some properties. So I sat with him and I explained this method to him. And internally, Jill and I, we use the player’s name for the spreadsheet for our analysis spreadsheet, but we decided this morning we’re not going to use the player’s name.
But it’s funny, sometimes I would just text Jill and I’d send her a listing and say, Hey, send through the signature Realty funder analysis. Let’s do the rental analysis on this property. So I want to talk to you about what that is, what that means. Alright, so in 2016 I looked at this property. It was listed for one 90 down from 200, and it was a three bedroom townhouse. The community, half of ’em were three bedrooms, half of them were two bedrooms. And price-wise, there wasn’t a big difference between the two and the three bedrooms. The units looked basically the same. It’s just that the ground floor was a little bit bigger. So there was a very, very small bedroom on the ground floor of the three bedrooms that the two bedrooms didn’t have. I’m able to tell visually from this neighborhood, as soon as I see the listing, I could tell by the shape of the window and the window treatments, the awnings, if they’re the two or the three bedrooms. But that’s only because I’ve been watching this community since 2015. I’ve been watching this community for eight years. So I only want to focus on the three bedrooms because three bedrooms to me are worth more. When you rent things out to college kids, you rent them out per door. So I have a four bedroom, I can rent it for 4,000 right now, five bedroom. I can rent it for 5,000, same
Jill Glanzer:
House
Matthew Maschler:
Because it’s one room per college kid. So anyway, so I’m only interested in these three bedrooms that we were looking at. And in 2016, I did buy three of them. So this was the second one that I bought. So it was listed for one 90, it was down from 200. And what did I end up buying it for?
Jill Glanzer:
180 2
Matthew Maschler:
What? For 180 2 for a three bedroom. It was on the market for 180 days. We went to contract February of 16. We closed in March of 2016. So there was a tenant in place. So buying it for 180 2, the
Jill Glanzer:
Tenant
Matthew Maschler:
At the time was paying a monthly rent of 1750, which I thought was a pretty good monthly rate. I like to, as a rule of thumb, some people talk about the annual rent being 10% of the property value. I think that’s a little high. I think 12. I think a 12. If you rent for 10 years, that’s the purchase price. I think that’s a little aggressive. 12 years. So one 12th of the property value as an annual rent, I think works as when I look at the purchase price as a back of my hand, kind of just quick scenario, I go to 1% for the month and I think that’s too rich. I don’t think you really can get the 1% a month. I think it’s a little bit less, maybe 0.7 0.8. But just as a really, really quick way to look at numbers. If the property is 180 2 and I get 1800 a month, boom, right? Boom. That works
Jill Glanzer:
All day long.
Matthew Maschler:
That works. So that’s just how I look at it. If I’m just looking at a lot of properties and I look at the purchase price and the rent, if the rent’s 1%, I think it’s right. If the purchase price is 180 2 and the rent’s three grand, I’m like, oh, nice. If the rent’s one grand, I’m like, and that’s what makes me, then when I see the interesting one, I send it to Jill and said, run it through the analysis. So in an h o A community, the math comes out a little different because when you pay the H O A fees, there’s a little bit of a drag of return. So maybe you need a higher amount per month. So when we looked at this in 2016 on the purchase price of, do you want to go through the analysis?
Jill Glanzer:
Sure.
Matthew Maschler:
Just go through taxes.
Jill Glanzer:
Okay. So when we purchased it in 2016 for 182,000, there were different expenses. You want me to go through the expenses?
Matthew Maschler:
Yeah, just I’ll just
Jill Glanzer:
Go through the thing. The monthly rent back then was 1750.
Matthew Maschler:
The price prices 180 2 monthly rent was 1750,
Jill Glanzer:
Right?
Matthew Maschler:
Sounds good.
Jill Glanzer:
The h o a monthly was 2 97, 300
Matthew Maschler:
A month for the H O A. That’s going to come right off the top of the rent,
Jill Glanzer:
Right? The taxes were 3002 75
Matthew Maschler:
For the year.
Jill Glanzer:
For the year. The service contract. I
Matthew Maschler:
Said, stop the taxes.
Jill Glanzer:
Oh, stop the taxes.
Matthew Maschler:
Oh, but also we have to include the insurance,
Jill Glanzer:
Right?
Matthew Maschler:
H o a, taxes and insurance. Those are the three biggest expenses on your investment property, right? H o a taxes and insurance. That’s your three biggest expenses. That’s going to be your biggest drag, and it’s going to come right off the rent. So the 1750 minus the $300 for the H O A taxes were 3,200. So that’s what, that’s 250 a month. And the insurance was 1800. That’s another 150 a month. So 104 hundred and the H O a. So it’s $700 a month. Boom, right away,
Jill Glanzer:
Gone
Matthew Maschler:
From your rent. So that’s 1750. Boom becomes a thousand dollars real quick. Now my back of the envelope, 1% includes those expenses, maybe not so much the H O A look more careful at the H O A, but certainly includes taxes, insurance, all properties are going to have taxes, insurance. So after you collect your rent of 1750, you pay your taxes, you pay your insurance, you pay your H O A fee. You don’t get to keep the rest of the money. There’s more fees. I like to put a service contract on all my rentals. I don’t want to get the call. The dishwasher doesn’t work. The toilets stopped. I get a service contract. I like to use Broward Factory Service. They cover electrical, plumbing, air conditioning, basically everything. I give the tenant on move-in day. When I give them their keys, I give them the phone number for Broward Factory Service. I tell Ward Factory service the tenant’s name so that the tenant can call them directly and everybody can just leave me the F alone. Now, if there is something that’s not covered, that’s when they will call me. If they have to replace an air conditioner, if it can’t be fixed anymore,
Jill Glanzer:
It works really well. It
Matthew Maschler:
Works really well. The tenant calls me up and says, let’s call me. Cause one of the agents, right, Jill or somebody in the office, the air conditioning doesn’t work. Did you call BRI refractory service? They say no. You tell ’em, call Bri refractory service.
Jill Glanzer:
Right?
Matthew Maschler:
They’ll eventually learn. So sometimes you can go a year not hear from these people. Sometimes they’re going to call you every week or every month, but every time they say, call Brad refractory service. And most of the time, Brad Factory service just covers it all. And that’s what I like about them. At Signature, we use a company called Cinch. They’re good too. I just prefer B F s because they’re local, more mom and pop than Cinch, but there’s other contracts out there as well. So brow factory fracture service, 400 bucks, right?
Jill Glanzer:
Like $35 a month. So you could take off like 35, tick, give or take.
Matthew Maschler:
Now then you got to remember, we don’t have to pay a listing commission, right? I’ll pay a little bit of a listing commission, but I’m not going to charge myself all that much money. I give myself a discount, but I still have to pay a buyer. The buyer’s agent.
Jill Glanzer:
Tenant’s agent, yep.
Matthew Maschler:
Tenant’s agent,
Jill Glanzer:
Half a month’s rent,
Matthew Maschler:
Half a month’s rent, right? So
Jill Glanzer:
1750,
Matthew Maschler:
Half, 800 bucks, 800, right?
Jill Glanzer:
Right. Divided by 12.
Matthew Maschler:
Yep. That’s money out the door. It’s gives you an incentive to keep that tenant and let them renew. All right, so you pay tax,
Jill Glanzer:
So that’s minus 60 bucks. So you got to pay taxes,
Matthew Maschler:
You got to pay insurance, you got to pay H O a fee, you got to pay for the maintenance, and you got to pay marketing. You also, if you’re in between tenants, sometimes you might lose a half a month or a month. So you got to be prepared for
Jill Glanzer:
Vacancies. For
Matthew Maschler:
Vacancy.
Jill Glanzer:
And
Matthew Maschler:
Sometimes you want to put that in your budget. I like to put on these units, I put $500 a year in a reserve. And even if I don’t actually put the, because I’m not that disciplined, but even if I don’t actually put that $500 into that reserve fund, I like to budget for it. It is good to put the $500 into reserve and build that up. And that way after 10 years, there’s five grand. And if you do have to repair anything or replace anything, you take it from that account. But it is something you want to budget for vacancies and I call it reserve. And then the money that’s left, that’s your income. You have your gross income, then you have your net income. That’s how much you made. So in this scenario, for 8 180 3, tha the month of rent was 1750 OS 300 taxes, 3,300 a year. Brow refractory service, insurance, leasing, commission reserves. We had 21,000 in gross income, 10,000 in expenses. And that left us with 10,500 in net income for an annualized return, right? I invested 180 2 and I made 10,500 for the year. It’s about almost 6%.
Jill Glanzer:
That was at the beginning when you first got it,
Matthew Maschler:
Right? My first year I made about 6% my rate of return. And at the time that was a good rate of return. Can you put that money into a CD and make more? Well, right now there are some 5% CDs out there,
Jill Glanzer:
But there weren’t then.
Matthew Maschler:
There weren’t then. So you made a 5% rate of return. What’s not calculated in this analysis is market appreciation. If I always think about a three and a 5% a year, I just use that number three and a half percent a year for market appreciation.
And so that’s not included in the rate of return, but it’s there. It’s an incentive to do this deal. Maybe I wouldn’t have done it for the 5%, but knowing there’s a market appreciation, if you want to call it, you can call it x I call it 3.5%. You can look back seven, eight years later and see what it was. But that’s the basic analysis that I take when looking at a property that I want to rent. What’s the purchase price? How much can I rent it for? Minus all of these fees, H o a, taxes, insurance, repairs, reserves, vacancies, commissions, gross minus the expenses, net income, annualized rate of return plus market appreciation. And that is what we call, should I say the name of the player?
Jill Glanzer:
You can say it.
Matthew Maschler:
It was Kenrick Ellis from the Minnesota Vikings, and that’s what we call the Kenrick Ellis analysis, which we’re going to rename the real estate finder analysis, the re analysis, but probably Jill, and I’ll call it the Kenrick Galles analysis. We spoke to Kenrick Galles for about six months. I taught him all this. I recommended a few books for him, and then I’m pretty sure he got cut and then I never heard from him again.
Jill Glanzer:
Yeah,
Matthew Maschler:
So Kenrick, if you’re out there, if you’re listening, I hope you bought some rental properties and made some good money. And obviously in the last few years, anything that you bought back then should have gone up nicely. Should I figure out, should I figure out when we met Kenrick, Alice
Jill Glanzer:
Would’ve been probably sometime what, in 2015 or 2016?
Matthew Maschler:
Well, I already owned these properties, so it would’ve been,
Jill Glanzer:
Oh, you already owned them by the time, okay.
Matthew Maschler:
I told Jill we’re we’re going to have tangents, and I try to wait until after the show and then I’ll tell my tangent stories. So fast forward over the year. So I told you I owned three of these units. This was the second one I bought. The third one that I bought, I bought one, I bought for 180 2. This one I bought for 180 3. The third one I bought was for 180 5. And then the next one I bought was going to be about 1 93. And I ended up not buying it at 1 93. I tried to negotiate a little bit. They called my bluff, I didn’t buy it. Then the properties went to 200. And then after that they went a little bit higher than that. They went a little bit higher than 200 when the properties went to two 15. And I just kept watching them go up and up and up in value until eventually I stopped even looking. Once they hit two 50, I was like, nah, I’m not buying these anymore. And the rents didn’t go up that fast. That’s one of the problems I had with buying more.
Jill Glanzer:
Right? And then it went up and then it shot up around?
Matthew Maschler:
Well, yeah, yeah.
Jill Glanzer:
But before that it was pretty steady. I’m
Matthew Maschler:
Talking about in 17, 18, 19, I totally stopped buying them after a while. I don’t have a picture of Kenrick in my phone. Oh, there he is, June of 16.
Jill Glanzer:
Wow. Okay. So it was
Matthew Maschler:
Right then,
Jill Glanzer:
Right? You bought it?
Matthew Maschler:
Yeah. Okay. So we bought the three, watched the prices go to 2 0 6, 2 0 7, and then I stopped buying. I didn’t really believe in the capital appreciation, but then during Covid, certainly in 2020, I scooped up a lot of properties in 2020. I remember those showings that were one customer at a time. I would call my investor customers. The first one I bought during Covid, I called my investor. I called three investor customers. They’re always looking for a good deal if you see a good deal. And I called three of them and I was like, this is that deal that you’ve been looking for. And they didn’t buy it. And I got so mad. I’m like, they all waste my time. There’s so much money to be made on this house. And then I’m like, shit, I’ll buy it. Right? And that’s why I started buying during Covid. And so now I have these three units. I’ve been raising the rents and I try not to, in bad years, I raise the rent a little bit because if you go too many years without raising a rent, the tenant gets used to it. But I had to jack someone up from 2300 to 2,700.
Sometimes they leave and sometimes they stay. One of ’em
Jill Glanzer:
Stayed
Matthew Maschler:
On one that I didn’t sell. I told ’em what the new rent was going to be and they told me they were going to leave and they couldn’t find anything and they ended
Jill Glanzer:
Up, no, there’s nothing.
Matthew Maschler:
Is that one a month to month or is that one? No,
Jill Glanzer:
That one. That one’s a lease. They signed a lease,
Matthew Maschler:
But not 12 months. They signed six months.
Jill Glanzer:
Oh no. They signed 12 months. But they had an early release clause
Matthew Maschler:
Because
Jill Glanzer:
That was just get over because also they were going to look for other things and they’re not going to find it.
Matthew Maschler:
They’re not going to find anything. And
Jill Glanzer:
They know that.
Matthew Maschler:
And that rent is up to 27 50.
Jill Glanzer:
Right, because really finding anything under three is so hard at this point.
Matthew Maschler:
So I brought them to 27 50, but I just saw one of these units get listed for 4 0 5. Now the 4 0 5 did have a water view, and I’ve been watching this community for eight years and that’s,
Jill Glanzer:
There’s no water view. That’s why I
Matthew Maschler:
Told Jill, this is the first time I’ve ever seen one with the Waterview. They surround a lake,
Jill Glanzer:
But there’s
Matthew Maschler:
Four units per building and only one of ’em has the lake view. So only 25% have water views. And the one that just got listed for 4 0 5 really had a beautiful water view and they really did their outdoor patio and everything to take advantage of it. But I put this house up for How much do you think listeners out there? How much do you think I listed this house for? That I bought for 180 2? Nobody’s calling in.
Jill Glanzer:
Nobody’s calling in
Matthew Maschler:
Because we’re not live.
Jill Glanzer:
I know.
Matthew Maschler:
We listed it for three 80, which I thought was a little high, and we took an offer of 365.
Jill Glanzer:
We had so much interest.
Matthew Maschler:
Did we?
Jill Glanzer:
So many calls because we had it on coming soon at first.
Matthew Maschler:
Oh, people were banging down
Jill Glanzer:
The doors. People were banging down the doors. They’re like, please call us when I’m like, watch the M L Ss when it’s ready to go active, when the tenant moves out, when it’s cleaned up, you can go in
Matthew Maschler:
And I have to tell you something, this tenant, he wasn’t happy.
Jill Glanzer:
Every
Matthew Maschler:
Year he would renew and I would say to him, I go, you’re not happy. Why are you renewing? He goes, I don’t have any place else to live. But he would complain about the community. He complained about sometimes they’d break into his mail. They would ticket his girlfriend’s car. She’s not allowed to leave the car overnight and go parking and they wouldn’t give her a parking permit for the car. And I said to him, I go, I’ll give you a lease. You’ll take the lease into the office and you’ll get a parking permit. And he’s like, well, I don’t want to put my girlfriend on the lease. I go, you’re not putting your girlfriend on the lease. You’re putting your girlfriend on the fake lease just to get a parking permit and then we’re going to rip up the lease.
Jill Glanzer:
But he didn’t want that. He was nervous.
Matthew Maschler:
He didn’t want to make the commitment to the girl,
Jill Glanzer:
Right?
Matthew Maschler:
I’m like, well forge your name.
Jill Glanzer:
Oh my god, Matt,
Matthew Maschler:
No, we’re not trying to make a lease. We’re just trying to fool the ho A,
Jill Glanzer:
I hope the H O A isn’t listening. I
Matthew Maschler:
Hope they know I’m kidding. But he would complain that they booted his girlfriend’s car. I go, yeah, she can’t live with you. She doesn’t live with you. How many nights does she sleep there?
Jill Glanzer:
Seven nights.
Matthew Maschler:
She lives with you,
Jill Glanzer:
Right?
Matthew Maschler:
And he would complain about the security. He complained about the pool. He complained about his mouth.
Jill Glanzer:
The pool wasn’t open during Covid. He was upset about it. Yeah, you don’t want somebody unhappy living in your place, don’t want, and I
Matthew Maschler:
Kept him at artificially low. I raised him. I got him as high as 2300 and these units, they’re worth 3000, 3,500 a month. So I said to him, I go, listen, when we went to renew this one, and I’m like, the other one that I renewed, I jacked them up to three grand a month and they were at 27. So it wasn’t even that big of a jump. But this one, I said, listen, I told the guy it’s 32 50. I go, I can’t have you there. You’re not happy. He goes, but I don’t have anywhere else to go. I go, I would keep you, but you’re not happy. So I’m either going to sell it or I’m going to get 32 50 for the place. And he had rats in the unit.
Jill Glanzer:
He
Matthew Maschler:
Called me up about the rats. He goes, I can’t take it anymore. I go, why don’t you tell me the first time you shouldn’t tolerate rats?
Jill Glanzer:
No, you got to tell me right away and I’ll fix it. I don’t know why people do that. Sometimes they’re embarrassed. It wasn’t his fault.
Matthew Maschler:
So the reason we did it as coming soon is I know I had the rats situation fixed, but there was exposed wall behind the refrigerator that I had to repair. So in order to get it to market, I knew I had to paint and do a light touchup, and I was probably going to put in 10 20 grand into cleaning the unit up to sell, which I usually advise people against, but I knew the paint was shit. I knew I hadn’t put any money into the house in the four years that this guy lived there, and I didn’t know what it was like after the rats. So I knew I was going to have to go in and paint and make everything really nice and make it really, really showable. Maybe pay three grand for staging. But people were batting down our door. Now we
Jill Glanzer:
Wanting the house.
Matthew Maschler:
No, we listed for three 80. We sold it for 365 if they really batting down our door. But I just knew I could sell it at 365 and not put in, I didn’t have to put in any money to paint. I never even seen it after the guy left. But I knew I’d have to paint it for a new tenant anyway. I didn’t want to go through that. I just wanted to sell it for the 365 and go to the foreclosure auction and buy more. But I didn’t paint. I didn’t make any of the repairs. I didn’t make it nice. I put on coming soon. I never got a chance to see it. Then I sold it for 365. They came back to me during the repairs for 3000. I said, yeah, fine, whatever. Gave ’em $3,000 credit for repairs. So I sold it for 360 2. So now 360 2, let’s run it through the analysis,
Jill Glanzer:
Right?
Matthew Maschler:
Because you don’t want to run it through the analysis based on the purchase price. If you run through the analysis based on the purchase price, if I’m getting 32 50 a month on the purchase price is 180 2, get a huge rate of return, but
Jill Glanzer:
You got to run it on the value now.
Matthew Maschler:
But I could get 362,000 cash now 360 2 plus, but I got to pay the buyer’s agent 11 grand. I don’t have to pay me.
Jill Glanzer:
So
Matthew Maschler:
360 2 becomes 3 51, right? Because I’m only going to get 3 51. I can’t replace, there’s costs to selling it between the buyer’s agent and taxes.
Jill Glanzer:
So you got to base it on that.
Matthew Maschler:
So it does cost you to sell. There’s friction selling this and buying a new unit. So I can’t buy a new unit for 365 if I’m only going to get 3 45 or three 40. You know what pissed me off? The lien search came out back with some open water bills from 2002 and 2004
Jill Glanzer:
Before he owned it.
Matthew Maschler:
Well before I owned it, which I think they charged the seller for. And I got to go look at my closing documents from when I bought it, if they charged the seller for those liens and never paid ’em off. But anyway, there was open water bill from 2002 and 2004. So there’s little things he’d got to pay for. It’s a little friction when you sell, so you can’t put the whole 365 to work. But you know what? This unit had a good run, but between the rats and the money needed, and it really needed
Jill Glanzer:
An overhaul, a
Matthew Maschler:
Full, it
Jill Glanzer:
Really
Matthew Maschler:
Needed.
Jill Glanzer:
In order to get the market rent,
Matthew Maschler:
The
Jill Glanzer:
3000, you really had to put a lot into it. A lot of and too, another thing is you’re putting thought time, energy. Those aren’t calculated here. Your thought process, what are you worth an hour? Well,
Matthew Maschler:
That’s the thing.
Jill Glanzer:
What are your people
Matthew Maschler:
Worth for a 5% rate of return if you could buy a CD for 5%, but you don’t have to do any work,
Jill Glanzer:
Right? Also, you learn from this, which is great, but you already learned
Matthew Maschler:
To me, a
Jill Glanzer:
Lot of people
Matthew Maschler:
Don’t want to be a landlord.
Jill Glanzer:
I like
Matthew Maschler:
The action having these three units. They probably have, I don’t know, however, seven, eight rental units out there. But I like having the action. I like having the vacancies. I like being able to put up for rent to negotiate with tenants. I like to follow the HOAs, follow the market. So I like the action. I do it for the action. I have hobbies.
Jill Glanzer:
And you like to keep in
Matthew Maschler:
Practice. I don’t
Jill Glanzer:
Play golf. I
Matthew Maschler:
Do jigsaw puzzles.
Jill Glanzer:
Right? You’re keeping in practice. So for
Matthew Maschler:
Other people, the work is a negative. For me, the work, I like the work because this is what I do and it keeps me sharp and it lets me talk to other. I could talk to other investors. I could talk to other landlords. I
Jill Glanzer:
Can go
Matthew Maschler:
To the Boer Town Investment Club. I should actually go to Boer Town Investment Club with
Jill Glanzer:
Tell the story,
Matthew Maschler:
Tell the story for a deal of the week. But I can’t go. The next one is Thursday and I can’t go because I’m going to a challenge mania thing anyway. But you run the analysis, but you don’t run it on 180 2. We’re going to run it on 360 2. 360 2 if we can get three grand for rent. So right there, I know I’m not interested at 360 2, I know I want 3,500 a month, not three grand in rent. Do you think I can get 3,500 a month?
Jill Glanzer:
That’s a little pushing it. Maybe
Matthew Maschler:
If it was a four bedroom maybe.
Jill Glanzer:
Now if you redid it really nice, if you put in new cabinets, made it really modern, new floors and all that, I think you could possibly get 32 50.
Matthew Maschler:
Yeah, but I get three grand now.
Jill Glanzer:
Right? Right. That’s the thing.
Matthew Maschler:
I’m going to pay 50 grand for that.
Jill Glanzer:
Right. That’s the problem. But over the years it’s good. You already did the work. It won’t be any problem.
Matthew Maschler:
360 2 plus 50.
Jill Glanzer:
I’m at
Matthew Maschler:
Four 10. I’m going to want 3,800 a month.
Jill Glanzer:
I mean, this one that you’re talking about, that’s waterfront was listed for 4 34.
Matthew Maschler:
4 34.
Jill Glanzer:
Yeah. I’m looking at it and let me tell you, the view is gorgeous. The actual place looks no better than ours.
Matthew Maschler:
No better than ours. It’s not redundant. But anyway, so 360 2 get 3000 a month in rent. The HOA has gone up. A has gone up. I thought the H O A doubled. It’s only gone up from 300 to three 50 a
Jill Glanzer:
Month. Yeah. If you look at the listing sheets, you can see it.
Matthew Maschler:
Taxes went up from 3,200 to 4,800. So that’s like,
Jill Glanzer:
That’s a lot.
Matthew Maschler:
Taxes went up and then the insurance has gone up about 500 a year. So taxes, insurance, and HOA has gone up 2,600 a year. So that’s almost a whole month’s rent gone for the taxes. So that’s why I figured between the H O A, the insurance, let’s just get rid of this one and focus, put the 360 2 to work and focus on some other things that have some bigger and better units. And the schools, now I’m staring at the schools Hammock point, Omni Middle, Spanish River High School,
Jill Glanzer:
Right? Hammock Point, not Oaks, hammock point. And it was really walkable from the units. Walkable. You could literally send your child down the street and go through a special gate to get to their elementary school. It was awesome.
Matthew Maschler:
If you have kids in elementary
Jill Glanzer:
School
Matthew Maschler:
Plus pets were allowed. Rental restrictions are easy. It was a really good investment. I like the pets are allowed and
Jill Glanzer:
The H O A is great. The people there are really nice. And it’s an H o a, not a c o a.
Matthew Maschler:
Yeah, it’s an H o a. Now here, the h o A is great, but a lot of people don’t like the H O A and what you have to remember, and I’m not talking about the volunteer board, I’m talking about the two staff people. What you have to remember is they’re human beings. So if you think they’re, people expect amazon.com customer service from human beings sometimes. And it’s not always the case. There are two people that work in that office. They work in the office until on certain days, they work until noon, and then the rest of the day they’re in the field. They have to do inspections, they have to check mailboxes, they have to check roofs, they have to check the pool. So there’s office time and in the field time, plus the one girl, and I know she leaves early to get her kids
Jill Glanzer:
Two
Matthew Maschler:
Days a week, and then she works virtual, but they’re human,
Jill Glanzer:
But they always get back to us. It just might not be that day.
Matthew Maschler:
One of the things I do as a tenant, as a landlord is holiday time. My tenants get $50 Publix gift cards. And generally I don’t like Publix gift cards as a gift. If someone’s going to give me a gift card, it’s my favorite store or something like that. It makes sense. There’s some thought. Or you can give someone cash, but you give someone a Publix gift card, sometimes it’s like calling them poor.
Jill Glanzer:
Give someone
Matthew Maschler:
A Macy’s gift card. They could go buy a
Jill Glanzer:
Present, right? Right. They could buy something special.
Matthew Maschler:
But if you give someone a Publix gift card, I’d rather just usually give someone cash. But as a landlord to the tenant, the idea was to buy a Turkey for Thanksgiving. Right? Or for the holidays. So that’s why I do the public scope, but $50 public gift card, and that’s not on my analysis spreadsheet. I just should put that on the analysis spreadsheet.
Jill Glanzer:
The gift card
Matthew Maschler:
50 public
Jill Glanzer:
Gift card, yes.
Matthew Maschler:
It doesn’t cost a lot of money, but it makes such goodwill between the tenant and the landlord that your landlord cares about you and they know you’re a human. And I also send the H O a I
Jill Glanzer:
Was going to say the association. I
Matthew Maschler:
Send them pizza gift card,
Jill Glanzer:
Like a pizza gift card for a pizza lunch or some kind of restaurant that would deliver.
Matthew Maschler:
So other people complain about the people of the H o A, the people me. I call the people of the H O a I ask ’em a question, they get back to me. So you catch more flies with, you catch more beads with honey than with vinegar.
Jill Glanzer:
And they’re really nice women. And what’s sad is they’re always telling me why they weren’t in, because they’re probably getting mean people
Matthew Maschler:
Coming
Jill Glanzer:
At them and they have to give them a reason. And I never asked her for a reason. I feel so bad.
Matthew Maschler:
They’re always on the defensive. So you have to understand that they’re human beings. You just get more
Jill Glanzer:
Flies with honey than
Matthew Maschler:
Flies with honey. People think I do it nice. It’s not because I’m nice. It’s calculated.
Jill Glanzer:
Don’t give them your secrets.
Matthew Maschler:
No. The people that listen to the podcast get the secret.
Jill Glanzer:
They get the secrets. Okay? They
Matthew Maschler:
Listen to my podcast.
Jill Glanzer:
Matt’s not nice. I’m not nice.
Matthew Maschler:
I’m cold and calculated. I raise rents. I give bribes. I fake leases, but I do it with a smile.
Jill Glanzer:
The smile is everything.
Matthew Maschler:
So for any of my agents out there, if your customers are looking for an investment and everybody has a different definition of what does that mean? They also have different tolerances of what they want to do. They want to be a landlord. There’s other investments you could buy out in the Orlando area. You could buy those properties and put ’em in the Airbnb pools. There’s other investments that don’t require you to be a landlord. They charge more fees and you got to look at your rates of return. I went through an Orlando presentation. Jill wasn’t with me, and I couldn’t make the numbers work because the salesman, they were trying to sell it as an investment, but they’re really trying to sell the dream, the timeshare dream of the vacation.
Jill Glanzer:
But you can see through it,
Matthew Maschler:
Not that I can see through it. I was looking in a different way and I was like,
Jill Glanzer:
You were looking at it as an investment, not as your dream vacation. And
Matthew Maschler:
I was asking very specific questions and frankly, people aren’t used to me.
Jill Glanzer:
I will never go to another one of those. Josh likes to do those. And I told him after the last one, I felt so bad that I didn’t buy anything. The guy was so nice and I had to keep going, no, no, no. And I’m like, is this really worth three hours of me just feeling guilty that I didn’t help this person? I can’t do it.
Matthew Maschler:
Yeah. Well, why’d you go to the seminar?
Jill Glanzer:
He wanted to go because there was some kind of amazing gift card. I think it might’ve been like Disney tickets and he thought it was a great deal. It wouldn’t be a big problem. A couple hours. It’s
Matthew Maschler:
Great. They’re
Jill Glanzer:
Very, oh, no, it was a three night stay in some really nice resort.
Matthew Maschler:
So just like I give the $50 Pablo gift card, oh, they’re really nice people. They’re just giving us three nights stays.
Jill Glanzer:
No, he knew better. He’s been, but he tried it one more time. I go, Nope, never doing it again.
Matthew Maschler:
Do you know the psychology behind it is the type of people that will sit
Jill Glanzer:
For
Matthew Maschler:
Three hours going in. They go in knowing I’m going to say no. The type of people who will go in and sit through the pitch just to get the gift at the added, that’s the buyer they’re looking
Jill Glanzer:
For. That’s the buyer profile. The buyer, they literally targeted it, right?
Matthew Maschler:
That’s the buyer profile that will respond to the pitch.
Jill Glanzer:
The best is they bring you to a room at the end, it’s like the last ditch, and then they’re like, oh, do you want to buy this one coupon book that’s got all these restaurants and hotels and it’s like a thousand dollars and Josh is looking at me. Maybe that’s a good deal. I’m like, no, it’s not. It’s really not
Matthew Maschler:
Good sound. There’s a reason. My dad,
Jill Glanzer:
They do a great job
Matthew Maschler:
Taking Trump out of politics for a second. When the Trump casinos in Atlantic City opened, my dad took me to some of the grand openings and he’d show me the chandeliers and the food they’re giving up for free and they’re doing all this stuff, and it ain’t free. If you’re looking at those people in the casinos that are just paying for it, they’re giving it back. Nothing in life is free.
Jill Glanzer:
But
Matthew Maschler:
The pitch, we were on a cruise for Wendy’s birthday, so they had the pitch, if you want the sale, again office, you put $300 down deposit on your next cruise. You don’t have to specify. You can use it any cruise you want. Anytime in the next two years, you put $300 down, they will give you $300 off your bill, plus give you a $600 onboard credit
Jill Glanzer:
For the next cruise,
Matthew Maschler:
On your next cruise. So you give ’em $300. Let’s say your next cruise is a thousand bucks minus the $300 deposit, 700 minus the $300 promotion. The next cruise, you’re, it’s not going to cost you 400 because
Jill Glanzer:
You
Matthew Maschler:
Paid three, but the next cruise, you give them 400, you paid 700 for a thousand dollars cruise, and they’ll give you a $600 onboard credit. And the onboard credit could be used for any the spa shopping. You can even use
Jill Glanzer:
It in
Matthew Maschler:
The casino shore excursions, anything you want except for your room rate. And I’m like 300 to get 900. That’s a really good deal. I think the only reason they didn’t do it, besides the fact that I don’t know if I want to go on the cruises account
Jill Glanzer:
Again,
Matthew Maschler:
Which is the biggest reason not to do it,
Jill Glanzer:
Right?
Matthew Maschler:
We were hosting, it was one’s birthday. We had a lot of people, we were hosting a lot of people. I didn’t have a lot of downtime.
Jill Glanzer:
I
Matthew Maschler:
Didn’t really think it through.
Jill Glanzer:
And you wanted to think it through. You didn’t want to just do it. Go on imp impulse. Well,
Matthew Maschler:
I’m thinking about it now. If I was on that trip one more day, I would’ve bought it.
Jill Glanzer:
Well, and that’s what they’re hoping for. They’re hoping you’re drinking, you’re having fun. You’re of course going to fall prey to it at that point. It’s the best time at marketing.
Matthew Maschler:
I don’t think it’s following
Jill Glanzer:
Prey. Yeah.
Matthew Maschler:
I mean, look, 300 for 900,
Jill Glanzer:
It’s
Matthew Maschler:
A good deal. And when someone that was on the cruise bought it, and I was a little confused. I didn’t know if it was 300 and you get 900 or you pay 300, and when they take 300 off, your next cruise is the 300 you paid. And then you get a $600 onboard credit.
Jill Glanzer:
Still
Matthew Maschler:
A good deal. Not the exact same. So I went to the office to ask them. So I confirmed that it was the 300 deposit and a second $300.
Jill Glanzer:
That’s nice
Matthew Maschler:
Because they could sell, give us $300 now and we’ll take it off your next cruise, 300
Jill Glanzer:
And
Matthew Maschler:
600
Jill Glanzer:
And
Matthew Maschler:
It’ll look like 900. You’d still get 600 in value.
Jill Glanzer:
And your only commitment at that moment was the $300.
Matthew Maschler:
$300.
Jill Glanzer:
You don’t have to book the cruise if you don’t want to, but at least it locks it in that you have the option for the next two years to do it for that price. And
Matthew Maschler:
Why do they do it? Right now, I’m off the cruise and I didn’t book it. I never have to go on a virgin cruise again. They got $300. Now they get the youth use and growth of that
Jill Glanzer:
$300.
Matthew Maschler:
Let’s say you don’t book it for another year. So they grow their money.
Jill Glanzer:
Let’s say you don’t book it ever.
Matthew Maschler:
Let’s say you book it in a year, and then the cruise isn’t for another year.
Jill Glanzer:
So
Matthew Maschler:
They have
Jill Glanzer:
Two
Matthew Maschler:
Years growth, but they also have the guaranteed sale.
Jill Glanzer:
They got a guaranteed 300 bucks, period.
Matthew Maschler:
They
Jill Glanzer:
May not get the cruise.
Matthew Maschler:
Wait, wait, wait. Don’t take it to that extreme,
Jill Glanzer:
Okay? Okay.
Matthew Maschler:
They’re not banking on, that’s called breakage. People just not using it.
Jill Glanzer:
Not
Matthew Maschler:
Banking on the breakage.
Jill Glanzer:
There’ll
Matthew Maschler:
Be some amount of breakage, but they have the use and enjoyment of the 300 jobs. Right? Now, if I don’t book the cruise tomorrow and go on the cruise next week, it didn’t grow. But if I book the cruise in a year and I go on the cruise a year later, they have two years growth of the $300 plus they have the guaranteed sale. So that person is definitely going to go on the cruise again. And I may or may not ever go on a cruise with this line, but if I bought the thing,
Jill Glanzer:
You would’ve felt obligated. I would
Matthew Maschler:
Definitely go
Jill Glanzer:
Obligated right
Matthew Maschler:
Now. Yes, of course break a jet could walk away,
Jill Glanzer:
But more than likely you’re going. Most people are going more. More than likely you’re going
Matthew Maschler:
And I’ll buy it again, and I’ll go again and again and again. So the marketing budget, commercials, et cetera. What better marketing than having someone commit already? They’re already sold. They’re already closed. And yes, if they change their mind, you just keep the money
Jill Glanzer:
Win win.
Matthew Maschler:
I don’t think they want you to change your mind. I think they want you to go on cruise.
Jill Glanzer:
Wow.
Matthew Maschler:
Because they’re, that’s how they want to make their money. Yeah,
Jill Glanzer:
No, absolutely.
Matthew Maschler:
So you’re allowed by nine of them
Jill Glanzer:
Up to nine, and you could transfer ’em to different and you transfer. Wow. Should we do that with houses? We’re in the middle of a
Matthew Maschler:
Contract
Jill Glanzer:
And we’re like, on your next closing, you get $300 off. If you book with me now, if you sign my buyer broker for the next 20 years.
Matthew Maschler:
So I met a travel agent who bought nine.
Jill Glanzer:
Yeah, smart.
Matthew Maschler:
When she books people on Virgin, and then she gets the travel agent discounts or whatever it is. And then the onboard, there’s onboard credit, and then there’s bar money, bar tab, which can only be used at the bar. The onboard credit could be used anywhere,
Jill Glanzer:
Including
Matthew Maschler:
The bar. So there’s always promotions and whatnot. But this is on top of it. But by the travel agent booking nine, she could then transfer it to her customer, charge the customer the 300 to get the $300 back,
Jill Glanzer:
Right?
Matthew Maschler:
But transfer the $900 benefit to the customer. Now she has 900. She has a deal that no other travel agent has.
Jill Glanzer:
If you
Matthew Maschler:
Call two or three other travel agents or Virgin directly, you’re not going to get as good a deal as this travel agent.
Jill Glanzer:
And she could reserve it for her best customers make a phone call, and that’s a reason to call.
Matthew Maschler:
But if someone’s shopping purely on price, she can get that customer.
Jill Glanzer:
So
Matthew Maschler:
She bought nine, and I’m assuming every time she goes on the cruise, she’ll buy nine.
Jill Glanzer:
Very smart
Matthew Maschler:
To be able to give a $900 benefit to her customers.
Jill Glanzer:
She has inventory.
Matthew Maschler:
So they sent me an email that said, Hey Matt, I hope you enjoyed the cruise. If you want to book another one in the next 14 days, give us $300 deposit. We’ll give you 300 credit and a $300 onboard credit. They lowered it because they didn’t book it. If they would offer me the same deal now I’d probably take it. The people that bought the deal can buy more.
Jill Glanzer:
They can buy more at that same price for
Matthew Maschler:
14 days.
Jill Glanzer:
Nice.
Matthew Maschler:
I can buy a lesser deal because I didn’t buy it on the cruise. So I’m thinking about going to the person that bought and seeing, in fact, should buy four or six more undecided. I have to decide today.
Jill Glanzer:
I know you like to do that, but
Matthew Maschler:
Alright. So anyway, that is the Kenrick Ellis Rental Analysis here at the proprietary to the signature real estate finder. Really proprietary to meet Joe. But any of my agents out there who are listening, hope you enjoy that. If you have any questions, let’s go over it. I’ve been meaning to go over this analysis for a while, and actually when we ran these numbers this morning, actually even on the 360 2 purchase price, if we could get three grand a month, we’re probably still in 5% rate of return, even with all these higher fees. Then the question is, when I bought it, I said, that’s plus capital appreciation. How much capital appreciation can they really be right now? But I don’t think we’re at a high. So I think from 2016, so in eight years, I made $180,000 in eight years. So what’s that rate of return?
Jill Glanzer:
180,000 in eight years.
Matthew Maschler:
So 180,000 in eight years.
Jill Glanzer:
It’s 22 5 per year. So
Matthew Maschler:
I made 22,500 a year. So the net income in year one, the net income was 10,000 for 6% rate of return. But add that 22,000 to year one and that 6%,
Jill Glanzer:
32,000,
Matthew Maschler:
That 6% rate of return became a 20% rate of return. So I made this 5% rate of return. I made this $10,000 a year on this investment for the last
Jill Glanzer:
Eight, 17%, 17.5%,
Matthew Maschler:
But I made twice as much money if I made net income. In year one, I made 10,000 a year. In year eight, I made 15,000 a year. So 12 five times eight,
Jill Glanzer:
It’s 100,000. So I
Matthew Maschler:
Made a hundred thousand in rent and I made 180,000 in capital appreciation. So that’s not so bad. This investment really killed it.
Jill Glanzer:
Yeah, absolutely.
Matthew Maschler:
That’s
Jill Glanzer:
280,000 total,
Matthew Maschler:
Right? I mean, 280,000 on 182,000 invested eight years ago. Yeah.
Jill Glanzer:
35,000 a year.
Matthew Maschler:
Yep.
Jill Glanzer:
Yep.
Matthew Maschler:
And that’s the magic.
Jill Glanzer:
That’s the
Matthew Maschler:
Capital appreciation.
Jill Glanzer:
Right.
Matthew Maschler:
And while I don’t think we’re at a high, right, I think this is the new normal. I do think it’s going to take a long time to grow that three 80 in eight years. What do I think? Will these be worth? Will it be worth five 50?
Jill Glanzer:
It’s hard to say
Matthew Maschler:
In eight. It’s impossible to say. It’s
Jill Glanzer:
Impossible. We don’t know what’s going to happen in the next eight years.
Matthew Maschler:
Yeah.
Jill Glanzer:
I mean, I’m sure we’re running out of land more. I mean, we already basically did. There’s going to be a lot more people moving here and people are going to need places to rent or buy. I’m
Matthew Maschler:
Going to save this whole file and hide it for eight years and then go look at it.
Jill Glanzer:
What says like a time capsule? Fer it.
Matthew Maschler:
Fer it. Time capsule.
Jill Glanzer:
And then pull it out of the time capsule and you won’t be able to read it because it got wet.
Matthew Maschler:
All right. Are
Jill Glanzer:
We done?
Matthew Maschler:
We are done. Awesome. Thank you for joining us on the Real Estate Finder podcast. I hope you enjoyed this episode.
Jill Glanzer:
And if you would like to buy rent or invest in property, give us a call at (561) 208-3334. The future looks bright and the storms pass by the sky’s dark blue. When it’s almost that time, light shows cameras flash when
Matthew Maschler:
I pass living in the moment, forget about the past. They save the best for last. Matthew Mania. We about to make a splash. Life is a marathon full of sharp turns. Got to keep pace while the hands on the clock turns high stakes. Five star. I run a show. You can tell the boss, center plate, electricity, energy, vibrate. I’m always on time. Even if I’m late, I make dreams come true. Living my life. Hope the same for you. Success in my sights got a real clear view. If you don’t know you, it’s know. It it, it’s it. What’s what time it. It’s time. You know what time you know? You know time. You know what time? Yeah. Got him shook, scared kid. Look, we’re not afraid of the big bad wolf.
