Feras Moussa started out investing long distance with his first 4 plex.
He now studies real estate markets seeking large multifamily opportunities.
Listen as Feras talks about how he successfully invests in investment properties out of state.
Transcript:
Chris Bounds 00:02
We were working on a project that never materialized but should have. It should have. Amazon seemed like they were better. It was like what we were kind of done with the concept of Amazon released like a 95.5% mock up. So I Okay, let’s do something else.
But at that time, you’re like, Hey, I’m kind of Petaluma in this like multifamily space and considering investing in that. When Jamie and I were scaling or single family flips. In hindsight, I should have should have been like, hey, let’s go forward. But you built an amazing company with your business partner and you’ve invested like your very first investment in multifamily was out of state. Right.
Feras Moussa 00:51
Absolutely.
Chris Bounds 00:52
You talk more in detail about that on a BiggerPockets podcast. So if you’ve never heard of them great podcast, go check it out. Feras combo with bigger pockets. How did you effectively go from living in Houston never buying a property out of state before to buying your first multi-family and multi million dollar project out of state?
Feras Moussa 01:17
It’s funny. It actually started with even step back one other step. Right. I was in Seattle, my very first purchase was actually a fourplex, that’s about a mile and a half down the road from our office. I kind of started it early on. Right. It all boils down to people. Right. There are people that want to do everything themselves.
There are people that are willing to partner. Right. You need to have people around you that you can trust and lean on. Whether it’s me being in Seattle and I literally called up a random agent off of BiggerPockets and had him transacted for me. I had family go drive the property tour for because I had not come out here. I came out to look at it. I think whatever it was pretty much two minutes from closing. Right. That’s where I came out.
Chris Bounds 01:54
When you arrived he was still there?
Feras Moussa 01:55
Yeah. I had a friend go drive it out of my brother and my parents. You got to lean on people. Right. Times that by 10 for multifamily. It’s all a team sport. Buying a fourplex is very different than buying an apartment in the sense that of the fourplex, it’s not big enough to support a dedicated team. Right. But with an apartment complex right it is.
That first deal was a $4 million purchase dedicated property management company. Right. They had dedicated resources that are looking and breathing that all the time. The buying is the easy part. Right. I think your question is really about how do you manage that from remotely. Right.
It really, for us on that deal is we’re doing a deep value add. Right. We literally brought the property occupancy down to 40% and then brought it back up to 95%. Right. Complete turnaround. I mean, that’s stressful. Right. That kind of situation. It’s not a clean and stabilized kind of deal.
Chris Bounds 02:46
You’re bleeding like an artery exposed and very gentle.
Feras Moussa 02:51
Absolutely. It’s funny. Ben and I tell the story, remember torn that deal before we bought it. Right. So there’s a question, pick a place to invest that you can easily get out to the first thing. Atlanta, there’s literally five flights a day out there. We’re out there on the 7am flight out there. We’re back on the 7pm flight back. I wake up and sleep in my bed. Right. I can get out there. You know, Chris, if you’re out there, you call me there’s a problem.
I can literally be out there tomorrow morning. Right. It’s easy to get out there today. If it’s right now. Probably the last flight I think was like one o’clock. It’s easy to get out there. That’s the first thing. Right. I’m not investing in some random place Bozeman. No offense to them, but it’s probably two hops to get there. Right. I’m gonna burn the whole day traveling.
Then the second piece is just having a dedicated team. Right. I remember torn that property before we bought it. Literally, tenants were throwing trash over the balcony out into. That’s literally the kind of property we bought. Right. But, you know, you put a plan together, execute that business plan and luckily, with this day and age you can do most of this remotely. Right. It’s beautiful.
You’ll know how to lean on people for the onsite things that you do need someone out there. I remember those first eight months. We were out there every month. We were literally booking the flights out there just dedicated in making sure things happen. The biggest feedback to people is pick a good market, have good people around you and just have a well defined business plan and stick to that plan.
Don’t let everything randomize you. It’s really easy to get distracted. Right. Just focus on these 10 things. You know where you’re going and you know the next five steps. Don’t worry about everything in between.
Chris Bounds 03:30
A couple things on site management. That was one of the lessons learned when Jamie and I bought a 29 unit . It did not have onsite management. We used a resident manager which is incredibly risky. Thankfully as far as we know she never stoled promise. Although she could have is I did not like that.
Feras Moussa 04:22
That’s probably the problem with multifamily is a lot of money’s coming in a lot of money’s going out right. It’s really hard to track it all once you have buttoned up process.
Chris Bounds 04:48
Yeah. Grant Cardone has said it and he’s probably not the only one but you’re talking you don’t have a money problem. You got a people problem. He ultimately good people solved problems. When problems are solved there’s financial incentives for that usually for everyone involved.
How did you find the root cause? You brought it down to 40%, it was not running well which means you solve the management problem. How did you find the people that were going to be able to solve that problem?
Feras Moussa 05:25
Referrals. Even right now, Ben and I were talking about this last night. About bringing in key strategic positions. Right. Really only being willing to do if someone’s referred. Right. It’s really hard to know if someone’s going to work out if it’s just blind faith. The resumes is nonsense. They mean nothing to me. Right. I mean, best resume can be the worst performer and vice versa. I mean, the biggest thing is about referrals. Whether that’s hiring out an employee or hiring a property management company and so for us, it was a company that we know someone that was already in Atlanta.
That’s why we picked the market that we knew someone is out there because multifamily it’s all about relationships. Right. Whether it’s partners to get the deal done or people to operate. We had a friend out there that already had deals in Atlanta and who knows the market. We had a Rolodex that we could tap into. Right. And then, included property manager, we had a couple of different ones.
He had one that he liked. We went out there. We vetted three management companies got to know this one very well. They can handle that type of asset class. Right. It went really well. It was definitely chaos. Right. It was a tough deal. But they performed. We did our part and it worked out well. Just it’s referrals is key for that.
Chris Bounds 06:33
Love it. We got like 60 seconds left. You’re vertically integrated now realizing some of the problems that are inherent in property management. I remember some stories you told me early on. So now you’ve got that in house team that at least manages managers or creates the systems for effective property management.
What are some of the key takeaways for others to consider like not everyone’s going to vertically integrate but what are some of the things that folks should look for whether it’s single family or multi family when they’re trying to vet the right property manager for their asset?
Feras Moussa 07:12
Vetting a management company? Okay, so let’s see. So first thing is just look at their portfolio. Go ask them for deals that they manage and don’t tell them when you’re going out there, but go look at them. Right. I mean, there’s no management company is perfect. What I’ve learned and management is my bar was here, it’s a really hard business. Get out there. Go look at things. Find people that are easy to get ahold of. Right.
You have a business plan, but it’s constantly evolving to some extent. Find a management company that understands that and really understand your business plan. The reason we started our management companies, we literally fought back on it. We’d never once had a management company that asks us what is our business plan end to end. Right. How are they gonna help us execute if they don’t even know what it is? Right. No one ever asked. So really get to know that and it’s people.
In my last bit of feedback, I know we’re short on time is same as employee hire fast fire quicker. Right. We made the mistake of holding on way too long on a non performing management company here in Texas and we’ve paid that price. That was a big mistake in the sense that extra three months can really make a deal. Go further out there that you spend the next six months to recover from.
Chris Bounds 08:13
It is in another podcast. I heard you mentioned that you have assistants actually call in and almost do like test calls to the property management team to make sure that they’re answering calls and actually following up like, I loved that tip.