JP Albano, what is the BIGGEST RISK?
JP : (00:12)
So one of the BIGGEST RISKS that we were unaware of that we've since become aware of is one of my properties in Texas, a small property, 28 units. I guess I'll start with the summary and then I'll go into the story. Um, is if you're going to get started as an investor in smaller properties just because it's easier, right? Easy to raise money, less overwhelming than taking down a hundred units on whatever, really investigate your third party property management options thoroughly. Have a number of backups lined up. You know, getting into this business, I thought I had an expectation that there was going to be more pacivity into this business. Passive income, passive income is a lie. Unless you are a passive investor, if you're going to be a GP and even if you hire third party property management, there's work to do.
In my experience there aren't, I haven't run into many third party PMs that will have the same level of care and attention to detail that I do. You know, you would. So we found ourselves in a situation where we had a underperforming, when all came down to it, property manager for our property and was hurting our numbers. And fortunately we were in a position where one of the partners is local to the property.
So making sure that one of the partners is physically close to it, um, take over property manager roles. And, uh, we were able in the course of I think four weeks to transfer to get, become 100% leased up and have a waiting list. Something that we were struggling for for weeks and months, um, with a third party PM. So, uh, part of the problem was we were having a hard time finding someone to take his role, uh, as a replacement.
And then one day he called us and said, Hey, I'm letting you guys go on changing our business model. So it forced us to figure something out. As a stop gap, we said, well, let's just take over self-management for now. And it worked out, still working out really well. Um, because we've been kicking butt. But we didn't, we didn't expect to find ourselves in a situation where, Oh my gosh, who are we going to find to manage it? Because the smaller property sizes you'll find there's a lot of single family property managers, which is a cool, but they're not really well suited for multifamily. Four units sure, but not 12 or 20 or 30 or 40. And then it's also too small for the bigger players. You know, they want 50 units or 60 units and above. So there's this gray area of like 12 to 40 ish where there may not be in your area or your market. A lot of third party PMs. And that's critical to the success of, of your investment. Now that's an execution risk right there.