Episode 3: Property Management, Problem Solver With Christopher Benedict

Chris is a pretty good friend with a sharp wit, and you’ll definitely get a lot out of this episode. He will bring you a unique perspective from a pretty big guy in the property management industry and Philly, he’s been doing this for more than 20 years. Chris Benedict began his career in real estate investment, sales, and management in 1997. After a decade of working with RE/MAX as a brokerage agent. Chris became a broker/owner to Big Realty and was spun off as a new company in 2012. After celebrating five years of investment and property management last 2017, the residential part of Big Realty split off and RE/MAX franchise was opened. Helping and serving the agents in the community and for residential needs. The company’s business core philosophy is to become a public world class service and information source for all real estate thing. Chris enjoys all things “Disney” as well as biking, riding his motorcycle, being outdoors and spending time with his wife and business partner Stephanie and their 3 children.

Take Aways:

• He started to manage his own property and because of his real estate experience, he began to managed properties of friends and families.
• In 1997, he started getting into the flipping game. He knew that he wanted to be in real estate from a young age and bought his first house right around 25 years old.
• Bypass those mistakes and learn to avoid them
• As real estate investors, whether you’re on the property management side, you are problem solvers.
• Provide world class service.
• Issues can be solved by putting in a property manager that has the right mindset.

Snapshot Round:

1. What is the number one thing you need as a new investor to get started?If you want to be a sole investor and you want to do it on your own, you would need capital. 
2. What is one nugget of investing knowledge you want to give us?Avoid staying in residential investment property.
3. What is your dream?Is to share with as many young people as possible that happiness will never come from the things that you own.

Contact Christopher:

Website: https://www.askthebigguy.com

Facebook: https://facebook/askthebigguy.com

Transcription:

Welcome to another episode of Lessons in Real Estate Show. I’m your host, Anthony Pinto, and we absolutely thrilled to have you here today. So today I want to switch up our guests and bring you a unique perspective from a pretty big guy in that property management industry in L.A. who’s been doing this for almost actually more than 20 years. Chris Benedict is a pretty good friend with a sharp wit, and I think he’ll definitely get a lot out of this episode. So since March seven, the root of all things big began when Chris Benedict started his career in real estate, sales, investments and management. After decade with Remax brokerage as an agent, Chris became a broker owner and big reality was spun off as a new company and 2012. But the emphasis on property management and the 17th celebrating five years of investment and property management growth, the residential portion of big reality was split off in a new Rimac franchise and open to help serve agents in the community and the residential needs. The core business philosophy of the big company is to become a world class service and information source for all things real estate. Outside of his passion for real estate, Chris enjoys all things Disney as well as biking, riding his motorcycle, being outdoors and spending time with his wife and business partner Stephanie and the three children, Chris brother.

Welcome to the show, Anthony. Thank you so much for having me and thank you for my introduction and bio. It’s been a while since you and I have had a chance to talk, but when you reached out and said, would you be interested in connecting with your audience, the answer was yes. I love to share information and talk to others and hopefully help them avoid some of the pitfalls I’ve made in my past.

Yeah, and that’s what we’re all about in this show, is kind of taking those lessons learned so that we can avoid those that I the same kind of pitfalls and stumbling blocks and hopefully save people a lot of time and money and effort not having to go through the same thing over and over again. So so that was a little bit about your background. So you’ve been doing this since nineteen ninety seven, more than 20 years already. So how did you get into real estate in the first place and how did that kind of evolve into a property management company?

Well, I tell you, you know, if I could go back and do it all over again, there are so many things I would have done differently.

And there were so many lessons that I had to learn the hard way that that that’s what I want to share with people.

Some people will make their own mistakes, too. Don’t kid yourself. But I tell you, if you can bypass some of those mistakes and learn to avoid them, then I’ll save you a lot of years of pain and heartache. So in nineteen ninety seven, I started getting into the flipping game. I knew that I wanted to be a real estate from a young age, but my first house right around twenty five years old, but you know, didn’t really understand me. I’m twenty five. I didn’t know much about business planning. I had very limited amount of cash. So just like most flippers you know. Well, if you can’t afford to hire that contractor, do it yourself. And what you end up doing is you learning that you’re training your time for money. So I flipped a couple of houses, made a lot of money on one house, lost a lot of money on another, and started realizing that all I was doing was trading time for money. So I just switched one job to another. So flipping was not a great lesson for me. I had to go through a couple of years of pain points on that.

Left the corporate world right around the time the towers fell, that what that was, I tell people that when the 9/11 that was my wake up call, like, OK, maybe it’s time that this is a sign to go after your own dreams. So I quit my job Christmas Eve right after 9/11 and other than a couple of side jobs to make some extra money when I was younger for the kids for Christmas, that I’ve not ever worked for anyone else. Now since 9/11, I’ve pretty much been on my own, on my own boss for almost 20 years. So I kind of duck down out of investments, my brother and I bought a couple of property singles and started building a small portfolio of single family residential properties. I was doing residential real estate. Does this sound familiar?

I did some flipping by selling some real estate, like the blueprint for almost every real estate agent out there who’s getting started in their real estate career and invested and real estate sales were fine. Make it a six figure income working the hours I want to see with the clients I wanted to handle in a couple of these these single family residences and then the 08 market crashed. I did not plan on becoming a property manager in the beginning at what happened was that the market crashed. I had little kids at home. My wife lost her job a week after she left maternity leave after having twins. So we went from two incomes, one of them being the benefits and everything, and one kid to no benefits, both being self-employed and three kids, all a part of space that excuse me of about a year, a little less than a year. And you can imagine that now all of a sudden, I can’t pay for the insurance. I don’t have any benefits. There’s no guarantee paycheck coming in. It was very stressful. Not something I would recommend anybody do any time with their future. But what happened was over the time, because of my experience in real estate and management of my own properties, we had some friends and family would say, hey, could you help us out, manage this one property? You want to manage their sweet a couple of one offs and we would joke, look, you know, it pays the car payment. I do believe that the number is like right around three hundred and eighty seven dollars a month.

We were grossing because it was like. Right. Exactly the same amount as our car payment. So we’re kind of like, hey, isn’t that great? Like this just comes in. Every mother pays our car payment. We didn’t think about it. Well, when the market crashed, I was like, OK, well, what if we could pick up a few more properties and manage them and that would pay for our second car payment? Yeah, to car, I forgot to mention the two car payments on top of all the kids and everything else. Oh, so we did that and I credit my wife, Stephanie. She is my business partner. We just celebrated our ninth anniversary here in twenty nineteen and we’ve been together twenty two years and she got off her duff and hit Craigslist back at the time when Craigslist actually I felt was worthwhile. I just started plugging away, reaching out to rental listing, saying Are you interested in property management services. Also found us our first homeowners association. So between the market crash of October 08 and the spring market of two thousand nine by spring of 2008. So by spring of 2009, we were averaging around four thousand dollars a month property management fees. Again, not enough to pay for my growing family, but now all of a sudden, I have four thousand dollars a month cash flowing and that just that was it. That was the sign, like everyone else is complaining about the sales and hanging their heads low and nobody. And then I found a niche. People couldn’t sell their homes.

They didn’t want to ruin their credit. And I offered them a five to seven year plan. You let us manage it will turn key, sell it when the time is right and you could go on with your life. And we just started picking up clients left and right. And within a year and a half of the market crash, we were making more money in management than we were in sales. And I’ll never forget this. I share this with people that this was like this is where the eye opening, like passive income, like doesn’t matter where it’s coming from, but you’ve got to have passive income. It’s got to come in whether you’re paying attention or not. And I’ll never forget it was like Christmas or New Year’s Eve. I believe it was twenty ten. I just remember being on Christmas Eve, New Year’s Eve, and I looked at staff and I was like for the first time in 12 years, whatever I’ve been doing a real estate sales. If we don’t pick up a single new client, if we don’t rent a single unit, if we don’t sell a single property, I know how much we’re going to make this year. Because of the contracts, Anthony and I had never been able to say that, I mean, your real estate brokers were like, well, it’s a game plan and I have a real estate broker and I do this. Let’s be polite. But I know you don’t know if you’ll have a great year or bad. You know, you could do things to help assure you’re going to have a good year.

But in the end, you just don’t know. We could have another market crash in six months and everyone’s twenty plans could be laid to waste. So my point for all of this was that this was our niche, like how do we solve the problem and how do I create a steady cash flow stream? And then what I created was a form of properties that when it came time to sell. Ninety nine percent of the time they let me sell it, because my selling point was we know the property. We could deal with the tenants and sometimes help them break their lease and get them out while helping you sell your home. And typically we would give them a five percent to six percent commission as a discount. And, you know, every year we’d sell five to 10 properties. So we had this big book of business and it’s just grown. And now, right around my fortieth birthday seven years ago, my wife’s like, we don’t need to be hanging our license with at the time the Remax office I was with. And she gave me 90 days for my fortieth birthday to open my own brokerage. So we opened up Big Realty, twelve, twelve of twenty twelve. We’re getting ready to celebrate our 75th anniversary and we haven’t looked back since. And that’s why last year we opened up the Remax office. So now we have two separate businesses. We have a real estate sales portal, Remax on point and big realty property.

Wow, that’s an incredible journey going from starting with single family homes and hitting the crash and realizing that property management and those that kind of passive income that that brought in for you was definitely the way to go. Wow. Four thousand dollars in cash from property management. It’s that’s crazy to think about. And how long did it take you to get to that point? A couple of years, right?

No, we will. We were able to ramp up to four thousand dollars a month within less than six months.

Wow. So that’s really interesting that a lot of you kind of took advantage and saw that the problems that were coming up from the 2008 crisis and that people could sell and other alternatives as people then rent now. And you provided that solution that people, when I’m sure they were overwhelmed by the thought of everyone trying to sell, no one wants to buy this property. What’s the alternative? Is renting instead? That’s that’s great. And I think that’s a really important point, is that as real estate investors, whether you’re on the property management side or actively investing, we’re just problem solvers. Right. So realizing the problem and providing a solution for it is almost the answer for one hundred percent of what comes up with real estate, at least in my opinion, what I’ve seen so far. Right. And it’s really just breaking down the problem and thinking about what the solution can be for that and how you can bring in to help with that, what you can bring in terms of expertise. And obviously, you had a lot of real estate experience going into these deals. So that’s that’s really interesting that that’s how you kind of transitioned into it. So property managers are, I hate to say it like this, especially Myer, that kind of a dime a dozen. And there’s a lot of people that think they can just get into property management. And it’s pretty simple. You know, you got your list of contractors, you you get your list of clients and you just kind of juggle the balls as they come up with any tenant issues and stuff like that. So and I see a lot of people have very small margins in property management. So what is your key to success and how did you go from zero to 60 so quickly and continuing to build upon that and continue with your success?

So that’s so that’s a good point. I mean, it wasn’t it wasn’t it wasn’t a smooth transition as that bell curve goes up or I mean, we didn’t it wasn’t a straight line to the top. There were definitely ups and downs. We built clients, we lost clients, we fired clients. The fortunate part for me was because of my flipping background and a construction background. I knew a lot of things about what was a real problem, what was it I knew how to talk to contractors and things like that. So I had a bit of a step up as far as my education in real estate. But, you know, we the consumer out there has to understand that they see property management as like this necessary evil. And I have explained to my clients time and time again, like we are a partner with you, like we’re as important as your attorney, as your CPA, as your lender, like you. They see us as just another expense. And I’m like, you know, if I’m saving you money, if I’m showing you how to better utilize your property and how to keep tenants happy, I can actually make you more money in the long run. The problem is that most investors will call and the first thing they want to know is the price. Tell me the price. And I’m always like, look, I this is where I get these calls all the time, because at this point now your business comes to me.

I don’t market for business. We have a nice book. So the very first thing will happen. Some will call me and say, hey, you know what kind of fees you have? And I said, look, I want to tell you straight out of the gate, I’m not the cheapest company. So you’re going to call around and you’re going to find a whole bunch of other brokerages and management companies. They’re going to tell you they’re low fees. I said, do you understand me? We’re not here to make the money on the back end for your mates, our fees or what they are, because we provide world class service. We are here to manage your investment. And you need to invest in your investment property if you just want somebody to take the pain of the calls so you can go on being a slumlord, hit the road, we don’t want you. And and we know those people and we know who they go to. And traditionally, a year or two later, they will finally become my client when they finally realize they’re not getting what they pay for and that they’re stepping over dollars to pick up dimes. And I try to reteach them. So. So one of the things that you have to understand for me is the margins. I mean, I hear people say, oh, the margins are slim, the margins are slim. Well, if you run a very top heavy business, yeah, your margins can be slimmer.

But also, if you’re taking any property anywhere in any condition and not factoring in time factor like how much work it’s going to be, how long it’s going to take to fill a building or a pain in the butt, and I’m going to have to do a lot more work. And are they charging the right ancillary services like we do for property that we do? We go to court on behalf of our clients. We charge a fee of 10 to 15 percent for JC for work order fees. I mean, these are realistic. So if your property is in good shape, there’s no work to be done on it. We’re not going to charge those 10 percent. But if you run a slum property, we’re going to be having calls every month. So you’re going to feel like you’re getting punished. But that’s because you’re not putting the right money in the infrastructure. And the other thing that what we did over these 10 year period of US managing properties is my wife, my brother and I who run this business. We whiteboard every year and we decide who are the 10 percent of the clients we’re cutting off. So over the span of 10 years, while we did a lot more work in the beginning and took on clients, we probably shouldn’t have at this point say I’ve got a 10 unit, but it’s requiring twenty five percent of my property services guys time and I’m off.

It’s not worth it.

So we have a nice book of really good properties held by really good owners in really good condition. Well, most of them I mean, obviously not every property is in great condition, but they’re not leaking ceilings or roofs collapsing or sewer up and we’re just ignoring them. So for me to run a profitable business, you’re calling me and you’re saying, hey, I need a property manager and they think they’re interviewing me. What they don’t realize is I’m really interviewing them as well. Do I want to work with this person? Do they have the mindset of what it takes to be a good owner, whether it’s a single family home or a portfolio of seventy five, one hundred units? The question is, are we going to match? And the ones who do not make it with us are the ones who they just want someone to step in there and be the in the firing range so they don’t have to deal with it, but they don’t want to fix anything, they don’t want to invest in it, but they just don’t want to get the nasty calls. We’ll take the abuse from tenants or.

Wow, yeah, that I mean, that definitely makes sense, and I like that your point is that the private owners are your partners and that’s definitely a thought that I had when I first started getting into multifamily is like I write down all these different expenses, property management, vacancy capex.

And the property manager is kind of like an afterthought. But the more I got into these different properties, like larger apartment buildings, I started realizing that a good property manager can totally make or break your investment right. It can totally skyrocket your profits and your cash flow, or it can just be a lawn dart and completely ruin your property. Right. And potentially the point where it’ll take twice or three times as more money as you would be spending on that property manager, that good property manager. Right. To fix the property now. And it’s a common factor I like to look at when I look at apartment buildings is it being managed correctly? Because a lot of the issues can be solved with putting in a property manager that has a right mindset, that has an alignment of interest with the investor. Right. And that they are that they think about that they are partners in the end rather than just an expense. I think that that’s awesome that you have to explain it like that.

Well, think of it. Think of it this way. Like, you know, you have to remember what you and I have talked offline. You’ve heard me talk about the fact I’m all about passive income and I’m also about time management. What I mean by that is your time has value. And what we’ll see is an owner who doesn’t really want to pay us a 10 percent work order fee or they think that we’re not shopping hard enough to save that money on vendors. And I explain to my clients my job is not to find you the cheapest vendor. My job is to make sure you pay a fair price for the right work. So, no, we’re not going to shop five roofers for your job. I’m going to go back to my one or two guys that I know do the job right at a fair price. And there’s no call that what they don’t want to do is hear that. So they will sometimes say, hey, for this large project, maybe two or three quotes, we get them two or three quotes. None of them are within reach range if they feel is acceptable. So they spend a whole bunch of their own time finding someone to work out of a back of a truck, or usually they hire them outside of us.

We don’t normally work with these clients in the long run, then go do the work so they can save money for other problems. And we are doing everything you think. You just say you just gave up in your own time. What was the point? So we start to realize that so when they come back to oh no, we’re not going to get you three to five quotes, what’s the point? You’re not going to hire the guy that we recommend anyway. So, again, in the long term, these people wash themselves out. And and so one of the things that I know that you wanted to talk about was like, what makes a good investor? What makes a bad investor? And I can tell you, after the last 13 plus years of just doing property management, I can tell you from talking to a landlord, I can tell you who’s going to make it and who in the long run is just going to wash out and or maybe hit a couple of properties and really never make any long, long term.

Yeah, I mean, that definitely makes sense. I mean, you see all kinds of kinds, I’m sure, with being the probably management side of that.

And I think it really gives you a perspective on you can take those kind of lessons learned from the clients that you’re saying and apply that now that you’re moving into multifamily with the partners that you’re working with, they’re all inside that property managers. They’re passive investors. And you kind of get that that Spidey sense of is this person worth my time to work with it? Partnerships, whether it’s passive investing or active, just like a marriage. Right. You really have to date the person and get to know them, because if you get into a deal with them and it doesn’t work out, you’re kind of stuck in that deal. Right. And it just it just hurts everyone in the end. And it’s an ugly divorce at the end. And you say that you’re staying together for the kids and the property and it just doesn’t work out for everyone in the end. So I think that’s key. Is this remembering that your partners in the end and thinking about it together and are your interests aligned?

And that’s a huge one. Are you’re like, I will very gingerly enter into partnerships at this point in my life. I’ve made some great partnerships. I’ve made some not so great ones. I’ve made some awful ones. And you’re right, it’s easy to get into, tough to get out of, depending on how involved you guys are. So it is important that you know that. And that’s why, you know, people are in such a desperate mode, like, OK, so they’ve not been saving for a long time. They’ve not been putting money away or they’ve not been investing. And then all of a sudden they want to become like zero to 60 investors. And you say, hey, look, I can help you bypass that. Right. We put you in a group of other investors to get involved in a property that’s way bigger than you’d ever be able to get in yourself. And you can avoid having to learn all the lessons of being a landlord. And you know what? The number one answer that comes back to be when I when I offer this? Well, you know, I don’t know. That sounds OK, but I think I’d rather learn first on my own and do a couple of single properties.

And I just I use this line all the time. Like, I don’t have to put your hand in a pot of boiling water to teach you that it will burn you. But if you want to go out and put your hand in the pot of boiling water so that you can say, well, I did it and now I know, fine, once again, what’s the likelihood of success? And those guys will flip a property or two or they’ll buy a single or maybe a second single. Then they realize they have no cash left to buy anything and then they just get on with their life and maybe they’ll buy another property down the road. So they don’t want to learn. They know they’re not open to to education and they don’t want to collaborate. And if there’s one thing, Anthony, you and I have talked about, especially that event back in July in Dallas, is, man, real estate investing is all about collaboration. It’s all about collaboration and your team and who you’re putting together, and if you can’t learn to work with other people and play nice on a team, then I can tell you where your real estate investing future one.

Now, make sense, man. A lot of great information, Chris. We’re running low on time here, so we’re going to give you a snapshot of questions that work for you. It’s going to be. There we go. First question, what is the number one thing you need as a new investor to get started?

What is the number one thing you need is a new investor to get started? Well, usually capital. I mean, what I mean by that is if you want to be a solo investor and you want to do it on your own, you would need capital. If you want to invest, if you want to, if you want to invest with other people, like if you want to invest and skip the singles and get right to commercial property, then you need the right team. And that team could be other investors. It could be mortgage people, bankers, it could be brokers. But you need to put together your team. And I know there’s a whole bunch of information you can link in with these types of interviews of how to how to build a team and what you need to do.

Yeah, of course. I think that’s great information. I haven’t actually heard that one yet. Is is building a team and leveraging that experience in that capital and that time, you know, whatever you’re kind of missing in your equation there.

All right. All right. Next question. What is one nugget of investing knowledge you want to give us that you already haven’t given us? You’ve given us a lot.

Ok, so I’ll give you one. And that is, if at all possible, avoid staying in residential investment property. What I need is anything that’s four units or less. There’s no economy of scale. Your risk is greater. One vacancy, one one empty unit, one hundred percent vacancy. You have 10 single family homes. You have 10 sewer laterals and 10 rooms that can go bad phases versus one 10 unit where you have one sewer lateral, maybe one on one roof. There was something else I forgot to say about that. That’ll be the big one. Stay out of the single. Oh, and then the third reason to stay out of singles is because it sounds great and you can make money doing it. But it is very difficult to unload a portfolio of 10 to 15 properties or more, especially if they are not literally within a couple of blocks of each other.

And that’s a really good point. I don’t really see single family home values that often because I’m sure I know exactly what you said. It’s very hard to actually sell as so you typically do in one at a time. Awesome. And then last question. What is your dream?

My dream. Is to share with as many young people as possible. That happiness will never come from the things that you. And that you need far less to be happy in your life, and I will save you 20 years of misery, trying to always chase a dream, what you think is going to buy to make you happy, realize less is more and experiences will always make you happy. So the purpose of your real estate investments and the cash flow is for you to do more things, not to have.

I love that man, I love that song.

Well, Chris, I appreciate you coming on today. We’re running low on time here, but how can people get a hold of you?

So if you want to get a hold of me, you can always find me on Facebook or through my website. I go by, ask the big guy dot com, just like it sounds to ask a question. So my website is ask the big guy dot com or you could look me up on Facebook, Facebook and ask the big guy dot com and you can be able to connect with me there. And I always love to talk to people about investing and investing strategy. So feel free to reach out and connect.

Perfect. Perfect. Well, Chris, we’re definitely have to have you back on. I feel like we were cut short on time here. I’m sure. I know that you have way more to get to our listeners here, so I’ll have to have you back on. But I appreciate your time, Chris, and thanks for being on. And I hope you have an awesome day.

Hey, have a happy holiday. And I appreciate you, too.