Welcome to The Accelerated Investor Podcast with Josh Cantwell, if you love entrepreneurship and investing in real estate then you are in the right place. Josh is the CEO of Freeland Ventures Real Estate Private Equity and has personally invested in well over 500 properties all across the country. He’s also made hundreds of private lender loans and owns over 1,000 units of apartments. Josh is an expert at raising private money for deals and he prides himself on never having had a boss in his entire adult life. Josh and his team also mentor investors and entrepreneurs from all over the world. He doesn’t dream about doing deals, he actually does them and so do his listeners and students. Now sit back, listen, learn, and accelerate your business, your life, and your investing with The Accelerated Investor Podcast.
So, hey, welcome back to Accelerated Investor. This is Josh Cantwell, thank you so much for joining me on this podcast. I don’t know when you’re catching this if, you’re catching this as a brand new release or whether this is already six months old. But you’re here, you’re listening. We’re excited to have you always flattered when I get new subscribers, new listeners, people who are taking, you know, taking these podcasts in, these videos in and helping them with their real estate investing business and their entrepreneurial journey. Thank you so much for engaging with me. This episode is a solo cast where I cover our takeover plan.
I cover our nine-step takeover plan every time we buy a new single-family home, every time we buy a new multifamily property or a large commercial apartment building, we have the same nine step takeover plan every single time we take over a property. And you’re going to learn in this podcast, in this video, you’re going to learn that nine-step take over plan so that you can incorporate this into your own business. I hope you enjoy this.
So welcome back to Accelerate Investor. Hey, in this solocast, I wanted to spend some time with you guys talking a little bit about our takeover plan. Every time we take over a property, every time we take over a new commercial apartment building or a residential single-family rental rehab, whatever it is, got to have a plan to hit the ground running immediately upon your purchase. And so let me walk you through our takeover plan. It’s basically nine steps. We do it the same way every single time, every property. And it really works well for us because we know that this plan is going to get executed every single time. So I’ll walk you through it fast and simple and easy. Take some notes so that you can do this, too, in your own business.
OK, so let’s take, for example, this new 16 unit apartment building that we just bought. It’s called 16 acres. We just bought it about two weeks ago. We paid five hundred and forty thousand dollars for it all cash. We paid cash. We recruited six hundred thousand dollars of private investor money. And so they gave us the cash. We bought the property all cash, and we’re paying our investors a 10 percent preferred return. So that’s done. We raised the money. We found the deal. We did our due diligence and we closed. Now the takeover plan comes into effect.
The takeover plan looks like this step number one, get a letter out to all of your tenants, letting them know that there’s a brand-new management team in place, that the property has been transferred and what they should expect.
Number two, on board a online payment system and an online maintenance system. So online payment, online maintenance, number three, get started with the exteriors. OK, the point of sale violations, the exterior of the property, cleaning up the yards, cleaning up the landscapes. If you have any exterior work to do, no for maintenance, make sure that you’ve got a maintenance person or people multiple in place to immediately handle maintenance calls. Number five, management. Management includes leasing.
Evictions, collections, tenant inquiries, that’s number five, number six, evictions, evictions is take over a property if there’s any past due tenants set the expectation that they’re going to get a three day notice and they’re going to get evicted. Number seven, your income plan. This is the most important part. The income plan for us is broken down into three separate phases.
Typically the laundry, the garages and then the actual units. That’s step number seven. Step number eight is the CapEx budget versus the proforma. So where are you actually going to spend the money on your capital improvements in order to make sure that you hit the proforma that you need to hit in order to refinance the property or sell the property down the road? And lastly, step number nine, which is my favorite, which is just execute. Execute the plan.
OK, so let’s back up for a minute and talk about each step in a little bit more detail. Step number one, tenant letters. Very simple. Obviously, if you’re on site at the property, we don’t bother mailing them. We tape them to everybody’s doors. OK, pretty simple. People get home from work. They see a letter taped to the door. They get the letter, OK, the tenant letter is very simple.
Hey, in my case, my company is called Nine Fifty Management 950. Management is taking over this property, 16 acres will. We will reference the former seller because a lot of the sellers have owned these properties for 15, 20, 30 years. So we’ll say something like, hey, Ron, the former owner has owned the property for twenty six years. He was ready to slow down and retire. Ron has recently sold the property. Nine management has taken over the management of the property. Here’s what you should expect going forward. You should expect to pay your rent on the first of every month.
You should still expect it. If you don’t pay within the first three days, you’re going to get a three-day notice on the fourth. If you don’t pay by the by the 5th, you’re going to have a late fee. And then after the fifth, if you don’t pay by then, we’re going to start the eviction process. OK, secondly, you should understand that there’s a new payment portal, a new place to go to pay your rent. We include the link. We tell them to go sign up with a username and password so they can pay their rent online, just like they pay all their other bills online. Third, they should expect to include any maintenance requests in the letter. OK, this is how you submit a maintenance request.
If their maintenance request is not on the portal, if it’s not submitted online. We’re simply not going to do it, OK, if it’s not on the portal, it’s not going to get done. We tell our team if it’s not in the software, it didn’t exist. So we tell our tenants if it’s not in the maintenance portal, it didn’t exist. OK, so the first piece is the letter. The second piece is you must actually on board this online payment system and maintenance system. We use a program called Buildium. It’s one of the top one or two or three programs for this. And so we encourage all of our tenants, go here, pay your rent, go here, handle your maintenance requests. You actually have to set up that online system.
That’s step number two. Step number three is the exteriors. So what part of your budget, when you did the takeover, what part of the budget is the exteriors? So if you look at our property, it’s 16 acres. You look at our property at 80 maple. You look at a lot of our other properties we’ve done over the last 15 years. As soon as we own the property, you’re going to spend the money on the exteriors. Just get that done, knock it out right away. If you have to rebrand the property, do it. If you’ve got a point of sale violations, curbs, parking lots, landscaping, sidewalks need to be repaired.
Knock it out, get it out of the way. That’s step number three is the exteriors. Step number four is maintenance. So who’s going to be your maintenance guy that’s handling your maintenance calls? OK, one of our properties, we have a guy named John. He handles all of our stuff in the Akron, Canton market. We’ve got another guy named Leonard that handles all of our requests at some of our buildings in the Cleveland market.
And so they take care of all that stuff. So the maintenance. And so what’s the goal for maintenance? Again, the tenant has to put the maintenance request in the software and then it immediately goes to Vanessa, who is in charge of that department. Vanessa validates the requests, gives it to Leonard, who we got. His nickname is Butch. So we give it to Butch and Butch goes and takes care of it. OK, we also have some ongoing maintenance for Butch to take care of. Cutting the grass is snow removal, painting the common spaces, checking up on units, things like that. OK, checking on the boilers, the electrical systems, those kinds of things.
Number five, the fifth part of the piece of the takeover plan was management, OK, management, meaning handling all the management, all the leasing, all the tenant inquiries, you know, making sure that the manager knows how to use building them, making sure the manager knows how to communicate with tenants. What are your office hours? When are you going to be available at the building? When can tenants expect that you’re going to be on site?
OK, all the management of a tenant turnover tenant executes and leaves a unit, and when they leave a unit, then that that can be turned over. It can be improved and it can be released.
OK, make it you have somebody responsible for management for us, it’s Vanessa. She does a fantastic job. Number six in the takeover plan is evictions. This is part of Vanessa’s job, but separate because we have to hire an attorney. So what units are behind on rent? Which people are there and have a problem paying the rent because of covid, if we’re dealing with coronavirus, right, we are right now, which tenants can actually be evicted? Which tenants are people that we want to keep? Which tenants we want to kick out?
OK, what’s the eviction plan? So with all of our buildings, we have an immediate eviction plan and then we have a longer term plan to just not renew their leases. If we have tenants that are dirty, they’re not taking care of their units.
They can’t they can’t clean their unit like a decent human being, then they’re going to get on our kick out plan. So it could be two months from now, three months from now. We’re projecting when is our CapEx crew going to be ready to step into that unit and have the time to allocate to that unit? Well, then, great. We need to start that kickout plan about 60 days prior.
So that we can do the eviction or non-renewal of their lease. We can then do the eviction, they get kicked out and then we can start the unit turned. OK, step number seven, this is the income plan, this is the biggest piece of this. Now, this all should be done prior to closing with you and your lender and your team to talk about how you’re going to bump the rents, how you’re going to increase the income at that property. Whether there’s laundry income, whether it’s a garage income, whether it’s unit turns and raising the rental income, whether it’s reducing expenses. Step number seven is the income plan, the income, an expense plan? How can we increase the income? How can we reduce expenses?
I’m not going to spend a lot of time on this because this is a big part of it. But you’ve got to allocate and say, OK, what can we do to increase the laundry income? Are there garages or self-storage units that are not currently being leased? What can we do to market those units? Can we market them to our tenant base? Can we market them to anybody outside of the tenant base, maybe in the surrounding community that would rent a garage or rent a self-storage unit? Can we move people from one garage to another? Can we free up a garage space to store our materials?
And then, of course, the unit turns. OK, I spent a big part of my morning today looking at one of our apartment buildings that we just took over and we said, look. We’ve got a plan to turn seven of the units in November and December, another 11 units in January and February, and another six units in March and April.
So we have a unit turn plan and our whole team, our maintenance team and our CapEx team, they all know which units we’re going to be in each month and how many units we want to turn every month or every two months. How many total square feet is that? How much is going to get turned? How much of the budget is that?
OK, then step number eight in the takeover plan is comparing the CapEx plan to the pro forma. Again, every time we look at an apartment building that we’re buying or single family home or a duplex or a quad that we’re buying, there might be one unit that needs a lot more TLC and there’s a bigger rent bump. There may be some units that need a lot of TLC and a unit turn, but the opportunity to bump the rents is not much. OK, so where are you spending your CapEx versus the pro forma stuff to go back and revisit the pro formas that we put together with our lender and say, OK, the plan was we’ve got to turn all the two ones or the plan was we got to turn all the one ones or the plan was we’ve got to lease up the garages.
The plan was we’ve got to spend more money on the three ones. Great, well, now where is that money coming from so we could turn the units and increase the rents? So we just did that today, we revisited our CapEx budget versus the proforma to make sure that we were turning the right units, not just any unit, but turning the right units.
OK, finally, step number nine is to execute once we have all that stuff, we print it all off. We have a little binder that we put together, we distribute that to all the team. We make sure everybody understands their goals and objectives. This is what I need you to do for maintenance. This is what I need you to do for management. This is what we need you to do for CapEx. This is what I need you to do for the point of sale violations. Here’s what I need to do with the tenant letters. Here’s what to do with the garages. Everything’s written down now.
I’m going to tell you, it doesn’t make any sense, really, to to plan beyond six months, OK? Our plans usually when we take over a building our six months long. Six months is plenty because inevitably that plan will change. OK, and that’s the only thing I’ve learned in this business for 15 years is the best laid plans are great. They’re great for guidelines, are great for swim lanes, but they will change. Something will come up, something will change.
And but you’ve got to have a plan. Got to have a written plan. Then you have to have the flexibility in the adaptability to change the plan. OK, so we have the plan. We start executing on the plan. Then whatever happens, then we need to adjust the plan as we go forward.
OK, so that’s our nine-step takeover plan, step number one tenant letters, step number two on board an online payment maintenance system. Step number three, the exteriors. Number four. The management number five, I’m sorry, number four, the maintenance. Number five, the management. Number six, evictions. Number seven, the income plan. Number eight, make sure the CapEx. Budgets up against that income plan, make sure the CapEx matches with your pro formas. Step number nine print it all off, de-brief your team and execute.
That’s exactly what we do on every building that we take over. Well, there you have it, guys, thank you so much for engaging with me in this podcast, the takeover plan, the nine steps to taking over a brand-new property that you just bought. I hope you enjoyed it. If you did, please subscribe. Please leave us a rating. Please leave us a review. Share this all-over social media so that we can grow and build our community. Don’t forget to go into Facebook right now and make sure that you become a part of our community. Look up the Accelerated Investor on Facebook. It’s a private Facebook group just for my subscribers, my numbers of my students. Go ahead and check that out.
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No matter what kind of property we’ve just purchased, we have the same 9 step takeover plan. We’ve just purchased a property we’re calling 16 Acres, and our team is ready to go in because we’re all lined up on the same page. So no matter how big or small your latest property purchase is, please feel free to copy this takeover plan and make it your own.
- Write a letter to tenants.
- Create online maintenance and payment systems.
- Get started on the exterior.
- Set up a maintenance call line.
- Management sets up: leasing, evictions, collections.
- Start evictions.
- Identify income plans for laundry, garages, and actual units.
- Calculate CapEx budget versus the pro-forma.
- Execute the plan.
Some of the units may need more TLC, but you may not be able to bump the rents up enough to make up for that. That’s going to affect your CapEx versus pro-forma. As we renovate units, we need to make sure that we’re not just turning any unit, but the right units.
We plan about six months out because inevitably, there are going to be some surprises in your plan’s execution, and you need to give yourself some flexibility. The written plan will put everyone on the same page, but you need to be prepared for the changes that naturally occur. We’ve had the opportunity to put this plan into play again for our newest property 16 Acres, and having everyone on the same page from day one really helped us hit the ground running.
- Our strategy for keeping everybody on the same page to reduce unexpected expenses.
- Why we only plan 6 months ahead at a time.
- The online and maintenance payment systems that we use for all of our properties.
- How we balance the CapEx budget against what we actually find on the property.