JF1296: How To Acquire & Control Over $100 Million In Property with Maureen Miles
Maureen was frustrated with her corporate job, which led to quitting the job and buying small multi family properties to provide for her family. The smaller apartments were okay, but she still wanted more. Now a very successful multifamily syndicator, hear how she says anyone can do what she has done! If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!
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Maureen Miles Real Estate Background:
- Frustration and instability with her corporate job drover her to find another way to provide her family
- When small multis didn’t produce enough, she knew she had to go big
- 3.5 years after closing on her first +100 unit apartment complex, her and her business partner’s portfolio just hit the 100M dollar level
Has invested in 1,700 units with a portfolio valued at $100 million.
- Based in Hartford, Connecticut
- Say hi to her at www.tudormcleod.com
- Best Ever Book: Think and Grow Rich
Maureen’s Demo Sequence:
Basic demo sequence –
Mechanical rough (linesets – if needed)
Framing for closet
Install interior doors as needed
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Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any of that fluffy stuff. With us today, Maureen Miles. How are you doing, Maureen?
Maureen Miles: Great, great! Hi, Joe.
Joe Fairless: Nice to have you on the show. A little bit about Maureen – she’s invested in 1,700 units and she has a portfolio valued at 100 million dollars. Three and a half years after closing on her first 100+ unit apartment complex, her and her business partner’s portfolio have now hit that 100 million dollar mark.
She started out with smaller multi’s, they didn’t produce enough, and then she went bigger, and boy, has she gone bigger. Based in Hartford, Connecticut. With that being said, Maureen, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?
Maureen Miles: Sure. I had a corporate job with one of the big telecom providers; I just kind of got frustrated there… We never knew if we were gonna have a job month to month with layoffs, and kind of all that crazy stuff that goes along with that. We just needed a better way out. My husband didn’t have any pension at his job either, so we originally got into multifamily just trying to look for something for the future, to kind of show our kids a little bit about business and that kind of thing, and just to kind of provide our own retirement plans for the future was the original goal.
So we started buying up the multifamilies, just looking at 2-4 units, rehabbing them, getting them to rent them out, keep them full… We learned a lot there, and I knew that there was more potential in this, because I learned I was good at it, I enjoyed it, and with the small stuff I just didn’t have enough time in a day to work my full-time job and to continue to grow. I think we got up to about 30 units in the smaller kind of local stuff in Connecticut.
I started attending different education seminars, kind of learning what I could about the larger multifamily buildings and eventually kind of put it all together. I happened to get a nice package at work that was kind of my escape after I was planning for years and years and dreaming of being able to leave my corporate job. With that package I got a couple month’s worth of pay, so I figured “Now or never…”
I met up with my business partner now, and we just started buying within Atlanta, and it’s where we invest currently. But we’re anywhere really in the South-East, looking at some other markets there. But yeah, we hit it fast, and it’s been wonderful. I remember one of my first checks was over what I used to make in a year at my job, my first acquisition fee tax. That was a great moment.
We’ve just crushed it, and it’s fun. You get to work with partners you like and people you like, and people you don’t wanna work with, you don’t work with. It’s really a great world.
Joe Fairless: How many 2-4 units did you buy prior to leaving and buying in Atlanta?
Maureen Miles: At our height I think we were at about 30 units, so it was probably around 10 properties or so. We had some 4-units, some 2-units… A mixture of them.
Joe Fairless: And did you sell them?
Maureen Miles: Actually, it was really nice – they were like little savings accounts. We did make some cashflow, but it wasn’t enough to really leave our jobs at that point. Connecticut didn’t really come out of the recession; a lot of areas in the U.S. are actually still kind of it in… It’s terrible in some of the locations there. I actually still have a few of those properties today. I have two kids that are in their early 20’s, and along with my husband, they kind of manage them from Connecticut, and they take care of those.
I think we have like 8 units left, so 4 properties, maybe 5. I forget now, it’s terrible. That’s how much I think about those. But yeah, I think we have six two-families left, so 12 units.
Joe Fairless: And I think you already answered it with “Connecticut hasn’t come out of the recession” part, but I’ll ask you the question anyway if you have something else to add to it… Why not buy larger stuff in your backyard versus going to Atlanta?
Maureen Miles: One thing I like about the Atlanta market is it’s quicker on a flight; I can do a direct flight and in two hours be there, and back in the same day. So the distance wasn’t as much of a hurdle as you might think. Connecticut didn’t see the growth. When I’d go down to Atlanta, especially three years ago, each skyline in Atlanta that you saw, you were looking at cranes everywhere, and building was massive, and the jobs coming in. In this type of business of what we do, we really follow job growth. You wanna go where the people are. As long as there’s people going into that community, there’s gonna be renters, especially with what the millennials are doing now, and stuff. We didn’t have that type of growth in Connecticut.
Also, the buildings themselves… When I go down to Atlanta, an older property is 1970. In Connecticut, I rehabbed properties from 1860. So we don’t have the mass scale of 1970’s, 1980’s, 1990’s products like we have in Atlanta.
Joe Fairless: If you were forced to do what you’re doing – I assume you’re syndicating these deals, yes?
Maureen Miles: That’s correct, yes.
Joe Fairless: Okay. If you were forced to syndicate the deals in your backyard, what would your approach be?
Maureen Miles: In my backyard, if I had to buy in Connecticut and it was an older place?
Joe Fairless: Yeah.
Maureen Miles: I’d just make sure I have good product, good bones. Every property is a little different. I like to look for what I consider “a property with the right things wrong with it.” I have certain skills that might be different than what your skills are, and so a good deal for you might not be a good deal for me. That’s something to be aware of. But I would prefer those that are not too old, unless I had a huge amount of cap-ex that worked out into the deal to be able to do it.
So I would just get out there, I’d start meeting with the brokers or the owners, trying to get as close to the source as I could for these properties, and just start tenaciously networking and letting everybody know who I was and what I was there for.
Joe Fairless: Fortunately, you’re not forced to do that… You can hop on a flight and you go to Atlanta. You mentioned the demographics or the growth for Atlanta, but initially you had the whole United States to look at, so what other cities did you look at and what made you decide Atlanta over those other cities.
Maureen Miles: Charlotte was my original market that I was looking at, but that was probably going back now four and a half years, when I first was kind of poking around the bigger properties. I liked Charlotte. What attracted me to Atlanta is that I feel – and somebody might have a different opinion, but that was the last major market to come out of the recession, so there was a lot of growth. I think they were hit a lot harder than other areas, so you had more room to grow, as well. And I just liked what they were doing for their businesses. It seemed like they were doing everything they could to attract businesses and really be business-friendly, with perks. We saw a lot of Fortune 500 headquarters moving down there… It’s nice to be in an environment where they’re really making an effort to have businesses grow, instead of trying to kill them with taxes and things like that.
Joe Fairless: In three and a half years you’ve gone from a portfolio of 30 units that you owned by yourself (or with your family) and now to 100 million… You currently have how many units in your portfolio?
Maureen Miles: Right now about 1,500.
Joe Fairless: 1,500, got it. How many properties does that consist of?
Maureen Miles: Six right now. There’s six properties. Our typical deal is about just over 200 units. Our smallest one is 150 units, our largest is 280 right now.
Joe Fairless: How did you go about getting the right team members in place for the first large on in Atlanta?
Maureen Miles: Your team is so important. A lot of referrals, a lot of research already in the market… I like to really get to know people. We actually get information from the postman. They’re always a great source of “Is this a good property? What’s going on in the area? Is it growing? Is it rough? Are you scared when you come in the area?” I always try to hit that source, it’s really good.
And the first team members – just a lot of referrals. The brokers will refer you to property managers, they will refer you to attorneys, and once you set your zone on the area you want to get into, just keep asking everybody, interviewing different people. I’m always one — I like to learn everything I can. I figured we’re dealing with large amounts of investors money, we have to do that; we have to absolutely know everything we possibly can about not only deal structure and running the property, but also about the market, because what I’ve learned is when an investor invests with you, they don’t research any of that. They’re really going on your word 100%, so you really have to understand it. I would never at a whim just jump into a market and buy a deal. You really can’t do that. As you know, Joe, this whole business is really referral-based and relationships-based.
Joe Fairless: Are you using the same property management company on all six properties?
Maureen Miles: Actually, we went through some transitions with different property management companies, and we actually took it in-house this year. Our business – we went from 6 employees to 60 employees in 2017, so we actually grew a property management company as well as a construction company, and we have control over more aspects of it now, so that we’re able to really cut down on our cost.
I realized that I was spending so much time arguing with the property management company or trying to force them to do things the way that I wanted them done, that I figured the effort was better spent on developing our own property management company, rather than just being in this constant battle all the time with explaining why they need to do things this way, and trying to save money and cutting costs… But yeah, delivering a good product. So there’s a yin and a yang to that, but right now we took it in-house.
Anyone starting in a new area, for your Best Ever listeners, you definitely want to go with a reputable third-party management company, and a broker can refer you to them; they’ll know the good ones versus the bad ones, for sure.
Joe Fairless: What are some of the things that you wanted done that they weren’t doing?
Maureen Miles: Actually, I was just speaking with someone earlier today about this… For instance, I showed up on one of my properties, we had just taken it over, and there was a terrible drop-off to like some drainage overflow area that was there, and I was like “Okay, we need a fence there…”, so just out of the blue we have [unintelligible [00:12:31].26] wholesale pricing, and we have really good installers… But just out of the blue I show up one day and there’s this wood [unintelligible [00:12:37].28] fence. There was like a mile and a half of this fence… And I asked them, I said “Whoa, what is this?” Now it kind of blocks the view, everything was closed off; it’s something that’s easy to tag if somebody wanted to [unintelligible [00:12:51].03]
I asked the manager, “What is this fence thing?” She says “Oh, one of my contractors had extra materials so he did it for free.” I’m like, “What are you talking about? That doesn’t even make sense, that you would come down and fill like a mile and a half of fencing for free.” She’s like, “Oh yeah, he does that. Just, he had extra material”, and we find out three months later we get the bill in the mail for all the fencing that she got approved, but she was afraid that I would get upset… I would have, and I did…
Joe Fairless: How much was it?
Maureen Miles: I think they wanted about $11,000 maybe… But it was discounted, and all this funny stuff. For that kind of stuff they need to send approvals, but there is kind of an under–
Joe Fairless: Under the table type of thing?
Maureen Miles: Yeah, I think some of that stuff goes on with some of the management companies, as well. Not all, but sometimes that goes on. They refer their uncle or their buddy to do a job, and I think it was something like that… But I don’t like surprises with my investor’s money, I like to have control over that. It’s been better, but I wouldn’t recommend it to anybody coming out of the gate, for sure. You definitely want a professional third-party manager, because these 100+ units are a little bit of a different beast than the two to fours.
Joe Fairless: That’s pretty ridiculous – she just lied to you, straight to your face.
Maureen Miles: That was the end of the relationship with them.
Joe Fairless: Yeah. Clearly, that rule you don’t want to break – don’t lie to your client. But what about from a process standpoint? Anything that they weren’t doing that you now can do? Maybe paperwork, or reporting, or anything along those lines?
Maureen Miles: Yeah, a lot of things, like for instance the most recent management change we had was due to a few specific issues. One was using a rent referral company, so they were using — now, Atlanta is a pretty hot market. There’s not an occupancy issue or anything like that. If you have a good-running property, it will stay full. And they were using like a $499 referral company. We were getting these referrals, and then they were paying out $500. They never asked for our approval of this. The management company had this relationship.
Again, there could have been a kickback for them involved or something, I don’t know… But we were spending thousands of dollars a month because they were hardly leasing, so I questioned, like “Why do we have a leasing agent if we’re just relying on this referral company to send us at $500 a pop?” That’s a whole salary and a half in itself, if you have enough referrals like that. So it’s just certain things like that, that they like to go ahead and do on their own, without running by you, and they’re unnecessary.
Another thing is one of the management companies was hunting our delinquent rents as rents collected, and then they would write it off as they chose to. What that did is as you look at the numbers, is hard to really read how the property was actually doing. I like as real-time as possible with delinquencies and collections, because the way that they were structured, they were getting a little bump on their management fees, which was probably the reasoning for it…
Joe Fairless: Oh yeah.
Maureen Miles: …but it was hard to really gauge on where I need to send extra support, or what properties I should be concerned with, because we couldn’t always tell in real-time. If there was a high delinquency at a property for some reason, it was kind of covered up for a while. That ended that relationship with that company. I felt like a horrible person, but I’m really hands-on and I really like to make sure that everything’s running as efficiently as possible, and those kinds of things just drive me crazy.
Joe Fairless: And the delinquent rent – was that rent that was not paid yet, or was it delinquent and then they said they collected it but it just was late?
Maureen Miles: No, it was rent that was not paid. In Georgia, depending on the season, it takes about two months to evict somebody, maybe six weeks… So if you’re showing the rent as collected, you really can’t see that there’s maybe five people that are waiting for eviction. It can add up to four or five thousand dollars in a single month, and then they were writing it off kind of as they pleased… So it wasn’t even like they would write off the $5,000 when somebody got kicked out; they might write off $1,000 one month, and $15,000 another month… It was insane.
Joe Fairless: That is insane, but it’s obvious why they were doing it – because their fee was based off of collected income every month, so they were just batching in money that wasn’t collected, and they were getting a higher fee, right?
Maureen Miles: Yeah, you got it. And it took the pressure off them too, because the numbers looked good, but the actual numbers were not so good… So it’s a way to fluff it, which is terrible. I mean, their job is to kind of be our eyes and ears, but… Except for those few things… I mean, in general — and there are some really good property managers out there and property management companies, but you do need to know what to watch for.
Joe Fairless: Six to sixty people in one year’s time… Did I hear that right?
Maureen Miles: Yeah, it’s been a pretty crazy year.
Joe Fairless: Please elaborate on that.
Maureen Miles: So we took management in-house. There’s between probably four to eight employees for each property, and then also the construction company. We actually bought a property in May that was 40% occupied – also something I don’t recommend the Best Ever listeners do, unless they have a background in it… But it was a major, major rehab on this 280-unit property, so we’re going through that.
We ended up bringing a lot of the help in-house for the construction side. Going through that renovation just allowed me to save so much money on products across our whole portfolio. So having the construction company, we can really buy in bulk, so not only for the 1,500 units, but also for this major rehab… So it saved our whole portfolio quite a bit of money. We’re buying things like trim, and our paint costs have just — I think we’re paying about a tenth in paint than we were before the project started.
It’s been actually good for our whole portfolio, and then going forward now we’ll be able to look at renovations and upgrades at a much lower price point than we used to and than a typical buyer would.
Joe Fairless: With the 40% occupied property – a couple lessons that you learned with that property.
Maureen Miles: Oh, boy… There’s a lot of lessons–
Joe Fairless: Careful what I ask for, huh? [laughs]
Maureen Miles: Yeah. We’ve gotten our sequences in renovations down better. What have we learned–
Joe Fairless: What’s the sequence for your renovation?
Maureen Miles: Just as far as — you make sure that your upstairs units are renovated before your downstairs units… Some of them pretty obvious. We have almost 70 contractors show up every day at that project. We bought it in May, and we’ll have the whole thing completed by May. It was in one year – that was my goal, and I think we’ll be done in about ten months.
As far as our typical sequence in getting it down and eliminating hand-off – there was a lot of lost time at hand-off, when different groups would take over. So we have our demo, and then they go on and they do all the utilities kind of work, and then you have your sheet rockers, and at what point does your HVAC guy enter, how many times does he have to go in there…? Just all of those little nuances that we really had to get down cookie-cutter. You know, how many could a group handle at once? Do we give them four? Is that more efficient than eight or one at a time? So just all those things to really get everything done quickly…
Joe Fairless: Would we be able to just go through that sequence? I was writing it down. You said 1) make sure the upstairs units are renovated before downstairs, and then the demo crew, then utilities and sheet rockers, and HVAC… Do I have that so far correct?
Maureen Miles: Yeah, that seems about right. Then we go on with our sheet rockers. The HVAC people – they have to go in at a few different points. We had some [unintelligible [00:20:27].20] that were abandoned for a while, so they had gone in and stripped some of the copper and electrical out of them. Windows, too – we like to do windows; if we can get the windows done before the interiors are renovated, and the interior guys can do the trims and paint the trims consistently with the rest of the unit; you’re not going back afterwards to replace windows… So we’re trying to keep the window crew ahead of everybody.
Then we go on with our painting, or final punch, which is putting in all the electrical fixtures, your faucets, things like that… I’m trying to think of the sequence here. Then you have the flooring and the cabinets have to be fit in there… I can send you something, Joe, if you want. I can write down the sequence of that. I don’t wanna leave anything out.
Joe Fairless: Yeah, we’ll do that, and then we’ll put a link to it in the show notes of this episode, so Best Ever listeners, you can just simply download the document.
Maureen Miles: Yeah, because there’s nothing worse than when — especially with so much going on at once, it’s hard to keep track of every unit… But I have some really good team members on site. My daughter is actually — she’s rehabbed since she was about eight years old; she’s lived in rehabs with multifamilies and everything else, so she keeps an eye on the guys…
The worst thing ever is when you go in and there’s brand new carpeting and flooring and somebody’s cutting out the sheetrock above it because somebody forgot to tie something in, or something… That’s just such a waste of time and money. I joked about it with my whole team, I said “Don’t worry, by the end of this project we’ll have a really good process down.” It was just kind of a joke, but we have the process down. It’s good. You know, when you order appliances – all that stuff is just so key.
Joe Fairless: That’s gonna be very beneficial for the Best Ever listeners, so I thank you on their behalf.
Maureen Miles: No problem, I’m happy to help out anybody I can. Like I said, there’s a lot of figuring out to do, but we gain experience by making mistakes, so I think if somebody does get kind of messed up while you’re in a rehab project, or even buying your first multifamily, or maybe you could have bought better, the important thing is you did it, and just try to learn what you can and keep going forward. You don’t really stale unless you give up is the way I look at it.
To be successful, you have to have a lot of plan A’s, B’s and C’s. We very rarely miss a beat in anything, because we already have a plan in the back of our head of what’s gonna happen if this doesn’t work or if that doesn’t work. I think that’s why we’ve been so successful.
Joe Fairless: And along those lines, and perhaps you just mentioned it, but what is your best real estate investing advice ever?
Maureen Miles: Best advice ever… I’d say don’t ever think you can’t do it, that’s one thing. Learn everything you can about the type of real estate you wanna go into, and then don’t let the haters ever keep you down. I guess what I can say — when venturing from kind of a corporate world to this, there’s a lot of people that don’t understand it, and I think they try to keep you safe, it’s just been risky to them, but… If this is stuff you understand and you enjoy, then go for it, and don’t let one deal stop you, don’t let a conversation with a broker that didn’t go well hold you back, or one investor not wanting to invest with you keep you down.
If you know this is right for you, just keep moving ahead, because it really is a totally different world. I can provide for my family now and the opportunities we have in the future because I made this leap. So have grit, be tenacious about it, and just don’t take no for an answer, because I started with no money. My first two large deals like this – I didn’t put a penny in; I didn’t have any money. And my 30-unit portfolio you talked about – I started with an investor who had to put up all the money, so it’s not like you need a lot of money to be able to do this… Just keep at it and it can be done.
Joe Fairless: We’re doing a lightning round… Are you ready for the Best Ever Lightning Round?
Maureen Miles: Uh-oh… Okay, go for it.
Joe Fairless: Alright. First, a quick word from our Best Ever partners.
Joe Fairless: What’s the best ever book you’ve read?
Maureen Miles: Think and Grow Rich.
Joe Fairless: Best ever deal you’ve done that wasn’t your first and wasn’t your last?
Maureen Miles: A 250-unit deal we bought for 6,8 million and sold 24 months later for 12.5 million.
Joe Fairless: How much did you put into it?
Maureen Miles: My own money was zero.
Joe Fairless: No, total renovations.
Maureen Miles: Oh, that was another mistake [unintelligible [00:25:06].27] we did that with 250k in cap-ex.
Joe Fairless: Well, that doesn’t sound like a mistake if all-in you’re at seven million and you sell it for – what did you say?
Maureen Miles: Well, I’d say it’s the best ever real estate deal. Did you say biggest mistake? I’m sorry…
Joe Fairless: No, I thought you just said “That was a mistake, we only put in 200k.” But if you’re all-in for seven million (6.8 + 200k = 7 million) and you sold for 20-something, then that doesn’t sound like a mistake, that sounds like a really good thing.
Maureen Miles: It was a really good thing, but there was a little luck involved with that. We should have had more cap-ex for that property. That was our second property, and you learn as you go along. We got lucky, nothing major happened. We went in and did some renovations, and the market went along with us, and we totally crushed numbers.
We laugh with our investors, because I think we were projecting a 20% annualized return over five years, and we ended up doubling their money in two years, and we laugh about how bad we were at projections back then. [laughs] So we have fun, but that was the best deal to date.
Joe Fairless: What’s a mistake you’ve made on a transaction?
Maureen Miles: Probably not being confident in certain properties and being too cautious and too conservative, which again, our portfolio performs awesomely because of that, but we missed out on a lot of opportunity over the years, because it took a while to really know where we could be more aggressive. We were just cautious on everything in the beginning, so our biggest mistake is probably not moving forward on some of the deals that we just got scared on.
Joe Fairless: What is the best ever way you like to give back?
Maureen Miles: I get a lot out of turning the units and seeing nice, young families moving into our apartments. One of the reasons why I do this and why it kind of hits home and I’m very passionate about it is I remember when I was young — I’d just had my daughter at the time, and with my husband we were looking for an apartment… And remember leaving the apartments that we could fit in our price range and getting in my car and crying, because they were so horrible and dirty… I’m just like, “Oh, my gosh… People would live at this place?” It was horrible.
So that kind of just resurrects itself when I see the young families moving into my places… Because you don’t have to spend a lot money to have a nice, clean, safe place to live. So I feel that by caring about that, I’m actually giving back.
We do like to support the local community. Something I’ve found out in the last year and a half or two is when you really get to know the police force around and support them, they help you out; when you team up with the police – this is if you’re in a C area – that really is a win/win. They get really excited that they have owners willing to work with them, and it helps your efforts too, by them really looking out for you and your property as well.
Joe Fairless: How can the Best Ever listeners get in touch with you?
Maureen Miles: They can send me an e-mail at Maureen@tudormcleod.com.
Joe Fairless: Well, Maureen, this has been a very informative conversation. I love it, because we were talking about your personal experiences, and you gave us stories and a lot of helpful tips along the way, so we’re very grateful for that… From a couple things that we should look for when working with a third-party property management company, to make sure they’re not trying to pull one over on us. One is if they’ve got a leasing agent, and then also are consistently paying a referral company to bring in people. Two would be something that’s even more egregious, and that is counting delinquent rent as rent collected, because they are getting compensated on what rent is collected (a percentage of that). So those are two things.
And then the sequence for a renovation. Best Ever listeners, you can download that document… And if it’s not in the show notes – for whatever reason we have a technical issue – then just e-mail email@example.com and my team will personally send you that document once Maureen sends it over to me.
Then the last thing you mentioned with — I believe you mentioned the mail carrier, where you like to always talk to the mail carrier…?
Maureen Miles: I do. They know everything about the properties. They’ll know who has lived there, if they’re happy, if they’re not happy, what’s been happening, what owners have owned it, what’s going on on the street… They know everything.
Joe Fairless: Yeah, so there we go – put that on our due diligence checklist when we’re viewing properties and doing walkthroughs. Thanks for being on the show. I hope you have a best ever day, and we’ll talk to you soon.
Maureen Miles: Thanks a lot, Joe, I appreciate it. And thank you, Best Ever listeners. Keep moving forward! Thank you.