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[00:00] Hey guys, welcome back. If you're an investor and you've been looking at Tampa lately, you've probably noticed the same thing I have. Traditional rentals here don't cash flow like they used to. Prices have moved up, rents didn't keep up, and after reserves, insurance, and management, a lot of
[00:13] deals feel uh thin or even negative, especially uh single family houses. So, we know there are people out there who want to invest in real estate, but they're searching through multiple markets uh and different rental ideas, Airbnb, long-term rental. they're trying to see what makes sense. So, today I'm
[00:31] sitting down again with a highly experienced Padsplit property manager who operates right here in Tampa, and we're going to break down in plain terms uh why out of state investors keep choosing Tampa for padsplit [snorts] and and what makes it work better here than a lot of other markets. Uh we have five
[00:48] big reasons and we'll jump into it. Uh Fred, do you want to introduce yourself? Who are you? What do you do? Hey everybody, my name is Fred Velhower and um we're owner of PMI Palms. We're regular property management company, but we specialize in Padsplit property
[01:04] management. We're about one of the biggest property managers for Padsplit. We do have investing experience ourselves. So, we understand both sides of it. We do own Pad Splits. We do own rentals. So, again, we come with more experience than a traditional property management company. And we're based here
[01:19] locally in Tampa area. >> Gotcha. Thank you for that, Fred. And you know, one of the the one of the first big reasons that I think people um are choosing Tampa and there's been some investors who have uh gone out into other markets uh from Tampa and they come back and I think one of the big
[01:36] things is um and this is not all these combined is what makes Tampa a market. So it's not anything individually, right? There's probably other markets that have some of these same category uh positives I guess for for lack of a better word. But I think, you know, Tampa has stable and deep tenant demand
[01:53] all year round. Well, you actually the one who who needs to tell me what you see because you have, you know, a lot of a lot of data points to look at. But I think tenants tend to fill like these houses if they're priced properly and and uh you you do the rooms and you you you put them together the right way, I
[02:09] think they're going to fill pretty fast. >> Right. Right. Yeah. We have data and statistics and all that stuff, but we're we're there. We're in the trenches. We're doing it. They're doing it every day. And the plus side about Florida is too, you know, up north people are panicking this time of year if they have
[02:22] a rental, right? If it's not rented, they're probably not going to get it rented till the new year after the new year. And the great thing about Florida is we're maybe it'll slow down the week of Thanksgiving, maybe slow down the week between Christmas and New Year's, but it doesn't stop, right? So don't
[02:36] panic if your properties are vacant, right? So, I mean that's the great thing about Florida and just year round, you know, it might eb and flow a little bit, but year round people are looking for places and, you know, people are still moving to the Tampa Bay area. I mean, it it's so much on the news lately about,
[02:54] you know, the bigger cities and the bigger states have state income taxes, businesses and and and homeowners and everybody they're they're coming to the Florida area and, you know, because we don't have a state tax and, you know, just increased population and again our our house values have gone up and we're
[03:10] having a little bit of, you know, a disparagy between what you can buy the house for and what you can rent it out. So now that, as you mentioned, deals are getting thin. Well, that's the great thing about padsplit, right? Because maybe this house will work, maybe it won't. Do I want to buy it? And then you
[03:25] put that padsplit formula into it and it kind of takes that deal and gives you that buffer and and makes it more worth the risk. You we can't say nothing comes with no risk. But, you know, we definitely can say, you know, that's another option that's great. And, you know, this is a great model to work
[03:40] with. >> Yeah. Who are these tenants? There's so much tenant demand, but who are they? >> The pass designed to be affordable living, right? Because we have people that think about you going to Walmart, McDonald's, wherever. Those people work and they have to live somewhere, right?
[03:52] You know, maybe a McDonald's cashier shouldn't be a not saying shouldn't be able to, but it's hard for them to purchase their own house, but they should be able to, right? They shouldn't be homeless. I mean, we got working people like they would be homeless if they didn't have a roommate. And then
[04:06] this is where Padlit opens up to, you know, what what we're getting for a room for a month is what I was getting for a whole house in our rentals when we started. And so I mean and that's how much rent has gone up in >> that was like six years ago too and ago that was not that long ago.
[04:21] >> Yeah. >> I remember the houses out in Newport Richie. I mean it was like $900 for a three-bedroom two house long-term rent. I was a leasing agent doing you know hundreds or maybe a hundred a year leases a year and yeah it was I know I I've seen how the rents have gone crazy
[04:35] as well. >> Yeah. You know so and that's where they're at. So these people deserve if they work to have a place to live and so we are getting a lot of the workingclass people. Now there is a big broad spectrum. It it encompasses everybody. We have 18 year olds just coming out of
[04:51] their parents house all the way to people in their 70s. So think about this you know if you had a two-bedroom bathroom house six eight years ago and you had a tenant living in there 10 years and now they're a senior citizen. and they're fixed. They're on fixed income and you know now all of a sudden
[05:09] [clears throat] insuranceances went up and taxes went up and now you have to raise or or people are acquiring properties. You can't put a tenant in for $800. And the owner goes, "Man, I got double the equity. I'm selling. Sorry, Mr. tenant. You've been great for 15 years. Love you to death, but you
[05:22] know, this is I'm cashing in on my equity." And then the new owner comes says, "Sorry, we can't leave you in for you,00." Right. >> Yeah. And so now where does this senior citizen who's 70y old 70 years old that doesn't have the ability to increase
[05:37] their income unless they're going to go back to work at 70 years old. So we can't send them to an apartment because the apartments are not that cheap anymore either. So we are getting our senior citizens living with us, you know. And >> can you set sorry to interrupt you, but
[05:51] can you can you set an age limit for a padsplit property where like like a 55 and up? >> Is that possible? [laughter] >> You know, we haven't tried that yet. Um, you know, we tried to keep it as a broad spectrum and stuff like >> I wasn't sure if that was a thing.
[06:04] >> Yeah. Like we we've tossed around the ideas about male, female only or age and things like that. Um, it's not a ton of population, but I mean maybe that would help out and we'd have to check the legalities all behind that. And 55 and up community in one house, but you know, we do we do have a couple houses where
[06:19] we do have some 50 55 and up people. Well, 55 and up, you're still working, right? So, we're talking about 70 and up. >> Yeah. >> And um so anyway, um this has been great for him. the one lady she was interviewed by a pass with because she's
[06:32] like, you know, I come there, oh, you're a savior. I would be homeless if it wasn't for you. And so, I mean, think about it, right? Where would our seniors go if they didn't have family or friends to live with pets, but they're still independent. And >> yeah,
[06:45] >> you know, it's not meant to be an assisted living by any means. It's just they're roommates, but the good thing is now it's affordability for them. you know, when you when you have different types of tenants and you have different types of rooms and there's there's demand for these rooms, do you ever see
[06:57] um I don't know, like is there like one employer or like a a sector that you see typically these tenants are are employed by? >> Well, we we actually tried to chase down a business and you know, when you you base that on, hey, we're going to open this house up in this area for this
[07:14] certain company and and we weren't getting it. We were just getting other people. So, it was a good idea to try to do that to work with them, right? But, you know, I think passport they are going out to the Amazon distribution centers and the other especially in our area. Um, I don't know how many people
[07:28] around the country hear about the I4 corridor and that leads from Tampa to Orlando. We're actually bringing on another property halfway between Tampa and Orlando because Lakeland area, Lance City, Davenport. They're along that, you know, I4 corridor and there's a lot of distribution centers there. there's a a
[07:45] newer 1 million square foot building that one company now has has leased this huge building. So the more we buy from home and all that other stuff we have, which what's kind of neat is because we do have people working from home. Like when I first started, I didn't know. I thought we were going to get 20 and 30
[08:01] year olds. Do you know >> where they work? What are they going to do? And I heard someone working from home on their computer. And then now there's at least half of our houses or more have at least one person working from home. And so then, you know, we just it's a whole mixture of where
[08:18] everybody's working. And you know, >> so it's just not one class. And that's what's kind of good. It's kind of a long-winded answer, but >> No, it's >> it's a big mixture. So, and I would say don't specifically focus on because you might be surprised. You might have been
[08:30] focused on this, but you got that and your house is still full. >> Yeah. People are just so like so curious on like who who is living in these things. And so, I'm just I was trying to build a profile, you know. Would you say it's probably 25 to 45 year olds on average? I mean, there's this this is
[08:43] like a a very rough average, you know, but >> Yeah. I mean, you can say that's the average, but I mean, we still have >> you still have younger and older, right? Of course. >> Younger and older, so Yeah. >> Okay. Gotcha. All right. Uh, reason
[08:55] number two, and this is this is the the the fun one because we can talk about cash flow. I think the spread here is bigger in Tampa. Now, I'm not an expert on other markets, so I know there's a lot of um uh popularity with like Jacksonville, although maybe that's died down a little bit lately. I don't know.
[09:10] There's uh Atlanta is like the headquarters for for Pad Splits where they started out. So, I know there's a lot of enthusiasm for that market. And there's a lot of other markets all around the states now. Uh they're not in every single market, not in every single state, but you can correct me if you
[09:24] have a different thought, but what I was I was thinking about this. We have turned more into an appreciation market than a cash flow market. So, if you were to go into like the Midwest, um, where cash flow is typically higher, but there's less appreciation over the years, I think, you know, there's
[09:40] there's a chance you might be able to get into a pad split that outperforms the cash flow a little bit, but wealth is created by appreciation. It's not created by cash flow. So, if you're able to get cash flow in an appreciationbased market, which I I I feel like Tampa's more of that, then I think you you
[09:57] you've hit a very nice, you know, you stroke a nice balance and it's it's a hybrid opportunity for you. So, I don't know if you have any thoughts about that, you know, Tampa versus other markets and just the the ability to cash flow with a pad split is it's much better than any other long-term rental
[10:14] out here. >> Yeah, I understand like what's what's your investing style? What's your investing goal, right? Um, it's always great if you can cash flow. Everybody wants to cash flow and get appreciation. That's you got a home run, right? But, um, you know, I would say the Tampa
[10:27] market, we can cash flow if you do it right. You got to buy right. You got to do the right house and we can get both. Um, because you definitely want to cash flow and and I do see people cash flowing because you're doing it right. If you do it wrong, then then you know you're hoping to break even and no one
[10:44] wants to lose money. So, and that's why from the start you're going to have to say no to some stuff and and >> a lot of stuff >> because because don't try to afford something. That's the biggest problem I see is people trying to afford something. So, yeah. I mean, we do got
[10:57] the cash flow and we do got the appreciation here in this area. >> If I don't say no to it, you'll say no to it. >> Yeah. Right. [laughter] Yeah. Between the two of us. >> Yeah. Or both of us. Usually, it's either both or none. Tell me about the
[11:09] best deal you've seen and maybe the worst deal you've seen. I don't know. >> [laughter] >> No time for that. >> So, how about we'll end on a positive note. So, kind of one of the worst deals I've seen is, >> you know, someone bought right before,
[11:22] you know, the market start to cool off a little bit. You know, they they bought too high, then they bought a smaller house and they're trying to and I I know the intention was great to make it a smaller room count, make it a more quaint, you know, not overcrowded and stuff like that. The intentions were
[11:38] wonderful. And if if that was your goal, you like, I don't care if this house makes money or whatever. I want to do something nice for people. That's one thing. But the problem was that you know that the c the house never made money. It was always a losing venture. And here's the problem. We had nowhere to
[11:51] expand to because it was already a all the space was used and it was a fivebedroom. There was no room to make a sixbedroom. >> And so when when you run into a couple little problems, you run into some maintenance issues. Maybe you you know >> you have someone we'll just put out
[12:07] there sometimes somebody might not pay, right? So then if you need to be fully rented 100% 100% of the time to break even >> without any major repairs, that's the wrong investment. >> Basically zero vacancy, zero reserves. And we can talk about this later too or
[12:22] even now like you have to factor those things into it. I mean the simple thing people do is 15% for that's for long-term rentals. They do the 555 for maintenance, capex, and vacancy. But it's really like, you know, 15 or 20 because you need at least 10% for vacancy and then probably I don't know I
[12:37] don't know what you think but I I still think 5% and 5% is probably good for maintenance and repairs because it is such a large gross rent you know that you're collecting the 5% from. >> Right. Yeah. And so like there was nowhere else to go. I did save one lady she had a living room that you know she
[12:51] was just leaving set up with a desk and stuff like that and um we had an extra room and then that took some of the stress. I mean, she cash flowed with she had a fivebedroom we turned into a sixbedroom. She cash flowed at five, but the six made a nice buffer. But, you know, some of the home runs to think
[13:06] about is um sometimes square footage is works to for your to your advantage and sometimes it's just wasted space and you're not going to be able to. But we turned a 2,000 foot house into a nine-bedroom house. That was a three-bedroom house, you know. >> Yeah.
[13:18] >> You know, that's a good deal. And and then also kind of the right multif family will work too, you know, some because >> you're already paying the water for that and the trash for that and lawn care for that. So, you know, sometimes you got to pick the right multif family, but you
[13:34] can turn that into, you know, >> yeah, we're venturing dangerously close into into reason number three. Reason number three is the predictability of Patlit in Tampa, converting them in Tampa. So, we have a lot of layouts in Tampa and the way our houses were built, a lot of them are actually a lot a lot
[13:51] of the older houses are actually very suitable for padsplit. The way you can the way you can break them down like you were saying from a three-bedroom house to a ninebedroom with just 2,000 square feet like that that's an ideal layout. Now, I don't want to talk about I hate talking about unicorn deals, like the
[14:08] ones that do super well because then everybody's like, "Oh, I'm going to find that deal and I'm not going to buy anything until" and it might be two years before you find something as good as that again. Uh because maybe somebody beats you to every other property or you just never find it. There's a lot of
[14:20] reasons. >> So, I hate talking about them, but there is like extreme potential with Pads Split to to um provide a good experience, but also make a lot of cash flow each month. So, um, yeah, let's just talk about the the layouts. And I think, um, the common one we see is like
[14:37] the threebedroom, fourbedroom, two bath, three baths, I think, are probably preferable because, you know, when one's a master, you still have two open guest bathrooms instead of having to take a master and turning it into a guest, which is also very feasible that that can work. But one of the reasons why I
[14:51] think it's just easy, it's not easy to find a property because it's still a needle in a hay stack, but um, there's there's more needles out there. >> Right. right? You know, so something to think about too. There there's two style houses to pick from. One that's already renovated and ready to be, you know,
[15:08] flipped to an end user, right? So that needs that needs no renovation. So you're going to pay more top dollar and and you know, >> expect lower Yes. expect to pay a premium and lower lower cash flow, but it's like simplicity, >> right? And but your conversion is
[15:21] quicker, too. And like you're only doing conversion, you know, you're not doing a renovation, you're doing a conversion, right? Conversion means you're throwing up the wall. to have 20k cash after you close roughly. Maybe a little bit more depending on the deal. Yeah. >> Yeah. Yeah. So, you're just putting up a
[15:34] couple wall stones and furniture. You're not adding, you know, changing kitchens, bathrooms, but you know, um, think about Florida. There's, you know, Florida rooms, family rooms, things like that. There's a lot of those things already added on. So, there's a lot of square footage in the houses that can be used.
[15:49] Um, you know, I've trained some other offices around the country and, you know, went up to Baltimore area and stuff like that and they got row houses and they're just kind of stuck. you know, they're just doing four or five bedroom pads squid houses and they're not getting the full potential. Seven,
[16:02] eight, nine bedrooms. Um, seven bedrooms is kind of when you really start feeling that extra cash flow, right? So, those are you can property, but yes, >> right. So, once you get that sevenbedroom, that's where you really start to feel that money kick in, right? Because you're not buying a pass house
[16:15] to make what you're making on a long-term rental or a couple bucks more, right? You're you're doing all this extra work to make a lot more money, right? If you're going to put the risk and put the effort, put the time and put the headaches involved in this. You want that extra mind, right? So, there are
[16:28] these houses out there. They're not unicorn deals. They're great deals that you can find. Yeah. And >> think about we have a lot of houses in Florida have garages, so we can convert those. Um maybe it's going to cost you a little more to convert the garage. Do it right. And you can get you can get a
[16:43] couple bedrooms out of the garage if you get a two-car garage or more. You know, >> we're sometimes we depending if it's oversized two-car garage, we can get four bedrooms out of it, you know. So, we we just had someone acquire one, you know, >> yeah, we're going to make it a
[16:54] 10-bedroom house. Um, and and think about you can take advantages of the add-ons to add-ons. Um, those deals that are sitting on the market, right? Because the regular homeowner comes and looks at this house and go, "This is a weird layout." Well, guess what? We can make that weird layout work.
[17:10] >> That's almost sometimes better. Yeah, the weird layouts are actually better. I found, you know, >> Right. And and so there there is a lot of um houses in this area that And if they're older, too. And we have a lot of concrete block houses and stuff like but then there's a lot of wood frame too. So
[17:26] if you do get that wood frame with the crawl space if you want to add bathrooms and stuff man plumbing right under the house and make it easy. So there's a lot of pluses and minuses to every house. Um >> yeah I think and not to give away my like cheat sheet here too much but you know like the things that I look for
[17:40] typically are block homes uh single story. How many twotory houses do you have that you're managing that are successful? I mean would you say it's like a 10% 5% like how how many are out there that you're managing that are pad split because it to me I've just rarely walked through a to make sense.
[17:56] >> Yeah. So we we do have two bedroom out we have a two-bedroom duplex right up you know then we have a 100-y old house that was made into a duplex years back and so that's successful too >> but we do have a couple twostory houses that were >> if you're going to do it you got to make
[18:12] sure you get the right house. >> So yeah mostly singlestory. Yeah, generally generally speaking. Yeah. And that's one of the things too in Tampa like we have so many ranch style homes are just like singlestory block slab foundation. Very durable homes. And you worry about the hurricanes and stuff,
[18:26] but like these are pretty sturdy homes overall. They've already survived, you know, 50 years plus. So, >> Right. Right. But again, don't don't discount twotory homes. There there are some that are out there that that do work, you know, and they are they are great. But then, you know, we have one
[18:39] that was kind of like an 1940s upn north style house. Had a finished attic. But guess what? the the dormers are there. It's it's just closed off. It's just a waste of space. We use it as storage, but you know. >> Okay. >> Um but
[18:52] >> garage conversions, I think, are al also key. But then, you know, it you know that that's a different type of person. That's less of a of a turnkey conversion. That's more of a of a distressed renovation or, you know, fix and flip. But >> you know, I just realized I never I
[19:05] never got to hear you're the best deal you've seen. >> We have a we have a couple great deals. you know, it's just when the best deals are when you can just take a regular house and make make nine bedrooms out of it, you know. I I think >> Oh, well, here you go. So, we had one
[19:21] and Dan was the selling agent on this and we this house had some additions already on it and what's great is it had the kitchenet and everything already on the back and it was it own separate entrance so we kept that and this house is just again had a couple additions but >> it was kind of weird though. It was a
[19:38] kind of weird layout, >> but since we made it a pad split, we made it 10 bedrooms. And this owner, he keeps wanting more of those, you know, because this was his home run. And so we made it 10 bedrooms and we had room to make it 11 or 12. And so, um, we created a follow-up email to to automatically go
[19:56] out three months later after we got it up and running to to re-evaluate because he wanted the 11th bedroom. I said, "This house feels open. It's nice. The kitchen's wonderful." And we left the living room not converted. >> It didn't have a window if I recall. >> No, it had a window and it had that
[20:14] light coming in, but then it would made the kitchen like a dungeon and owns another house. It felt like a dungeon once you got inside. Didn't have any natural light and this house just felt right. And so >> three months later, the email went out to both of us. We said, "Let's just keep
[20:28] it. This is my best performing h performing house." So he goes, "I want everyone to look like this and everything just compared to that." So again, we could have put an 11th bedroom and maybe even a 12th, right? But are you really going to profit more off of that? And that's when you need your
[20:44] actually boots on the ground. You need the experience. Cram extra room. I mean, this house, it's 10bedroom and it's cash flow. >> That house was a unicorn deal, though. I'll tell you what, it was in a such a great area with such like one of the lowest dollar per square foots I've ever
[20:58] se I've I've seen in a long time. And so it was it's kind of unbelievable that that we found that in the first place, but that's why it's it's it's nice to compare that to as like a benchmark, but it's also >> it's discouraging to other people when they hear about [laughter]
[21:13] like, oh no, I never been able to compete or you match up to that. But you know, a few years it'll >> you're going to find if you Yeah. If you're out there doing it, you're going to find them, man. That's your home run deal. You're going to come across one over time if you stay in the game. I
[21:25] think it was an old like nursing or assisted living facility, I think is what it was, which, you know, anyway, if you can find those, that those are those are going to be some some of your best deals, too. But there's just none out there. >> So, you know, good luck.
[21:37] >> All right. Um, let's go on to the next one. Reason number four, we have a lot of mature operators in this area in Tampa. So, you have agents who know what they're doing. You have property managers who know what they've doing, know what they're doing. Fred here, for example, um he's been doing this for
[21:51] many years and and manages a lot of properties for basically all the clients I've ever worked with. We have general contractors who for the most part know what they're doing. And then, you know, Tampa is pretty established. We're surrounded by many other markets in Florida where Padsplit has their own
[22:06] marketing and their their just their presence is here. So, uh especially with education and webinars and all that type of thing. So, I think having people in place like if you were to go to um there's some markets out there that are very new and very fresh and it would probably be a little bit worrying if
[22:22] you're out of state to invest in a market like that where you know it's somebody's first year working on a pass deal. They don't know the layout or they don't know how the layout affects the home, you know, and the management style gets completely whacked. So, I think that's one of the big things too is
[22:36] Tampa. And again, there are other markets out there that have experienced operators and managers and agents and stuff, but another one of those those big things. So one of those big key points for for fire market here in Tampa, >> right? Yeah. And here's the great thing
[22:48] is the outlying areas of Tampa, too. So don't even just >> Orlando, >> right? Yeah. Or or even just across the bay over into county or just a little bit north. So you know, so definitely Tampa itself is a great hot market there. It it's not getting smaller, it's
[23:02] only getting bigger. Um more and more people are needing places to stay. There's really there's not much left. I mean, we're finding more dirt here and there, but you know, it it's built up. it's established and you know we're still growing but um yeah like you said it's established it's mature you have
[23:17] your operators you have your contractors it's not you're like well if I don't pick this contract I'm out of luck you know you have all the vendors you need in this area you have the experience you need in this area and then you also have the population to fill the houses especially affordable housing is never
[23:30] going to go out of style right I mean people are you know and when times get rough you know that's going to be in more demand too what I'm saying people are having to downsize and and and finding places to stay. And when the times are great, maybe the the rents go up way high at these luxury apartments
[23:45] and people go, I can't afford, you know. So, um rents kind of stay level over over time, you know. I think maybe during the pandemic is when it surged, but other than that, >> yeah, >> where where house values are always going up and down where rents are pretty
[23:59] stable, you know, and this was the only time in history we really seen a surge in in rental value. >> Yeah. Yeah. That's that was my experience, too. I'm not I haven't been in the market as long as you, but um I mean over 10 years and yeah, as far as the rents go, they're a little bit more
[24:12] stable. They might be usually they're flatter or they're a little up. I I I haven't really seen them go down, but that's also because I wasn't, you know, I wasn't in the market back in like 08 9 10 11. I think that rents might have gone down then. Reason number five is Tampa is a growth market still and it's
[24:26] a long-term growth market. And so whether you have a property that cash flows significantly or just a little, at the very least when you're ready to get out of the out of the market, you have a a property that's going to be worth a lot more than what you paid for it. You know, again, rents or not rents, uh
[24:39] apprees go up and down, but if you're holding for five or 10 years, there's very slim chance you'll be underwater on that property, especially with a pad split when you you've been collecting cash flow throughout the years. And this is one of the things I like to uh put together on my calculator um uh cash
[24:59] flow charts so people can see when you do the IRRa and you're collecting cash flow like $800 a month or 500 or whatever it is you over 10 years that's a lot of money and especially a lot of debt payown. So, you know, and then if you have an average of 4% of the uh property value
[25:18] increasing per year, which is the historical 20-year average I put together, uh some zip codes are like 6%, but many are like four to five. Then you can really see how these properties make a lot of sense. Anyway, any thoughts on you with with the Tampa market? I know you've been, you know, in the real
[25:34] estate, you know, an investor yourself, >> right? Right. Yeah. I mean, we we got in when it was the market was down in '08 and stuff like that. So, I mean, I hate to say we got in at the perfect time because people are suffering, but man, that was >> you're not going to see that again, but
[25:48] but um you know, we've seen a couple little surges come and go. Um but over time, real estate goes up, you know. So, don't don't buy at the very high dollar peak of the market. Let it cool off a little bit and that's when you purchase. And now's a good time to buy, right? You know, the market's cooled off a little
[26:01] bit and then that's when people be more willing to come off their price, too, because things aren't flying off the shelf. And and what greater a way to to to build, you know, cash um you know, just a substantial net worth because of uh appreciation, cash flow, and paying down, you you're
[26:19] letting the tenants pay down your debt. I mean, >> yeah, you're not getting rich off of one like one deal or anything. See, like just some simple base hits stacked together like, you know, a couple times once every two years even like over over, you know, five or 10 years like
[26:32] that's that's significant for you. But yeah, exactly what you were saying. Yeah. And you never know when the next up's going to be, you know, and and the great thing about these pads split houses is you can you have options, too. So, if you if you don't overpay for the house, then you have you have an exit
[26:46] strategy, multiple exit strategies, right? You can sell it as an up and running padsplit house. You can sell it to another we've been on both sides of the deal. We're selling and buying. I mean, we're in the middle of that right now. You know, someone's like, "Hey, we're we're just done. We want to
[26:59] >> we're in a part of our life. We bought this a few years ago and we decided we want to cool off. We just we want to cash in, right?" and they're like, "We're kind of done doing the rentals and stuff like that." And another person's like, "I'm getting in. I'll take that off your hands." And then you
[27:11] can always convert it back to a single family home and sell it as a single family home. You can convert it back to a single family home and another person keeps it as a rental as a single, you know, there's there's so many options once you once you buy, right? And and again, you get to hold this thing and
[27:24] and decommissioning it is a lot cheaper than setting it up, right? So, you're just fixing a couple little things, but again, you don't have to. >> You get depreciation, too. Sorry, this is a little separate, but you get depreciation on the furniture you put in there, too. So, once that wears out and
[27:36] you decide to sell, it's like, well, you don't you don't have to pay for the furniture again. It's like it's just a loss anyway, >> right? >> So, there's there's there's other random perks, but, you know, you talked about com, you know, comparing the long-term
[27:47] rental, like decommissioning it. I think >> the target buyer for most long-term rentals right now, like a single family, is probably just a a family or a retail homeowner. Whereas a pad splitter, I think the target buyers, I mean, of course, this could change in a few years, but as long
[28:03] as the property is functioning right, I think you won't even have any decon conversion costs. I think you'll just find another I actually came across somebody told me about a a guy who's got two properties he's looking to to get rid of that are operating pads splits right now. So, I'm going to take a look
[28:18] at those. And I, you know, it I just don't I can't see it making unless you have a four or five bedroom pads split, I can't see it making sense to deconvert it, you know. >> Yeah. And so, and here's the thing, too, because there's value in paying a few dollars extra. You say, "Hey, look, I'm
[28:34] paying a few dollars extra." Yeah. >> Because I can get this house because think about it's an up and running pad split. So, people are in it. Of course, you need to do your inspection and do some due diligence, but you don't have any of those surprises, right? Because maybe you're buying a vacant house or
[28:46] maybe you're buying this or you're doing a conversion and found it. The conversion is done, right? So, you should be out of a lot of surprises. >> No surprises. No vacancy. Yeah. No vacancy, >> right? So, you don't have any vacancy. step into it. As soon as you sell it,
[28:59] the platform turns over to the new owner and you're making cash flow day one, you know. So, if things go right, you're not getting this. You're not getting rents for a month or it lightning fast. You're still not getting rents for a couple months. By the time you purchase a house, maybe fix it up, do your
[29:14] conversion, buy the furniture, assemble it, take your pictures, put that listing up, get the the the members, you know, in the house, get, you know, there's a lot of steps. So you can save thousands of dollars by buying an up and running and there's value in that. So if you buy an up and running, what's that worth to
[29:30] you? Is it worth an extra 10,000, extra 20? >> How long does it take to stabilize a property typically for you? You know, like when you you get tenants in there and then some of them immediately leave, you know, within three months maybe. >> Yeah. So it's about a 60 to 90 day.
[29:42] Don't it you follow averages. Don't know why, right? Because you you have an up and running house and someone stays for three years, they move in and stay, right? But like it it seems maybe because there's so many, but we've had a couple home runs where again someone bought one, we filled every room in 24
[29:58] hours. Someone finally moved out and it filled it right back up. And I told the owner, I was like, "Don't get used to that. You know, you got the one." But I mean, you're going to get people start they'll start trickling in the first week, the first couple days, but give it a time. Someone might move in go, you
[30:12] know, co-l livinging is not meant for me or this is the wrong area or whatever, you know. So just for some reason it takes 60 to 90 days to kind of settle down. Um there are houses that you know bam they fill up you got lucky you know you perfect house perfect area perfect whatever. Um but yeah just for
[30:29] historically when you do law of averages that's what it takes. But again during that period you're still making money. So it's not that's the other wonderful thing about patchwood. Each one's a little mini multif family. You're not completely we never have a completely empty house except during renovation
[30:45] right. So even if you lost half the house, you still got money coming in. >> Money coming in. Whereas, yeah, with a single family, there's been times where somebody can't fill it for three months and you have zero income, but you have a mortgage, zero income for three months, maybe four months. Um, I know somebody's
[30:59] going through that right now. There's probably some people on watching who are going through that right now. So, [laughter] it's not fun, especially, >> right? And think about this because we have long-term rentals, too. And if they go vacant now, you have to turn the water on in your name. You got to turn
[31:13] the power on your name. you got to spend time chasing them down, right? You know, so even if you lost half your house for some crazy reason, and we've had that just a couple times like two or three people go, "Oh, I'm moving out of town. I got I'm buying a house. I got a new job." I mean, that every random every
[31:29] now and then we'll have we'll lose a couple at the same time for just random reasons. Nothing to do with the house, but you still got people paying your your taxes and your mortgage or whatever. You still you're not zero. And again, you don't even have the utilities are already in your name, but it's just
[31:42] not like if you have a $2,000 a month rental, but it's not really 2,000 because you got to turn utilities on. You got to clean. You got to repair. >> You can't look at the gross. You can never look at the gross. And I think that's a that's a mistake that uh a lot of investors make when they're early on.
[31:56] They they they know there's other costs, but it's hard to quantify that until you own a property, >> right? >> So, well, hey, man, I I really appreciate it. I know we didn't really talk about a like a a sample deal or like a little little case study here,
[32:09] but um you out of curiosity, maybe I'll just ask you, you know, you talked about turning a three-bedroom into a ninebedroom. Do you have like a property in mind? Would you mind sharing, you know, what the numbers look like on that property? >> I'll have to double check the numbers on
[32:24] the property, but I mean, it it just this is one of those houses that it had add-on and add-on and then it was >> had plenty of square feet. It just was kind of laid out a little funny. And to get to a bedroom, it it was big enough for two rooms, but there was only one doorway in. We actually took the
[32:43] cabinets and moved them over and you know, so I mean, you get a little creative. And that this was a woodframe house, but um and it was a big house and it was on a big lot and and so I mean those are awesome to kind of because this house was a it was purchased and used as a
[33:00] short-term rental and then as the market cooled off then people were still paying a little high dollar for rent. So then tenants were put in place and now the tenants moved out and then the owner is like well now you know I'm not really cash flowing anymore. So, this owner already
[33:16] had some pads split houses and um so we we converted in but and this owner owns actually bought an an old assisted living facility. So, those are if you can find one of those, think about it. They already they have multiple rooms and there's probably a little bit more parts.
[33:32] >> There's always more than two bathrooms as well. Usually three or four. So, >> um but yeah, I as far as the numbers, I don't have them in front of me. That's okay. Again, this >> I go through those on different videos anyway, so I I don't have to discuss those here, but I mean, usually I would
[33:48] say the c the cash on cash return for some some of these really good deals is almost always above 10. >> Um, I've seen some like close to 13 and 14, but those are like the hard ones to find. Um, so just, you know, you can compare that to to different um different properties, different markets,
[34:04] and and kind of see how the um, you know, apples to apples, >> right? >> So, >> yeah. Well, appreciate it, Fred. Uh, where can people find you and, uh, you know, uh, tell us about Yeah, tell us about your where you're looking. Our
[34:21] >> company address. >> Yeah. Yeah. [laughter] Come on over, have dinner. Um, so, no, we're we're official, uh, property management company. We're PMI Palms. Um, you can look us up and reach us that way. Um, and, uh, they can also re call the office, go online and find us that way.
[34:37] Um, they can be in touch with you. you can put them in touch with me. Um I'm always there. I >> Yeah, >> I if I don't pick up my call, I'll call you back, you know. Um yeah, we don't we don't go days. >> I appreciate that, too. Yeah.
[34:50] >> You know, so uh yeah, we're busy, but um yeah, we're here. We're local and we're ready for everybody who wants to come put a padsplit in the Tampa Bay area and um it's it's a great market. >> Yeah. So, we got we got the demand for padsplit. We have uh cash flow here, appreciation here, we have houses that
[35:07] work like gener like of course there's there's layouts that don't work. I have to like give a caveat to everything, but generally we have a lot of houses here that do work. Uh the layouts and and the builds that work. Uh we have management. We have all the people you need in a in a maturing market here. And I think we
[35:23] have location on our side with with being in Tampa Bay. So one of the like the second or third largest metro in Florida. Um thank you guys for watching. Appreciate you. Um, if you have any questions about what we talked about, please uh drop a comment below. Please like and subscribe and uh we'll let you
[35:40] go. Thanks. Bye.
