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[00:00] We don't want people that are staying less than 12 weeks. [music] When you're running the numbers, it makes sense. Hey, I can get two extra rooms. I can make extra money. But when you can't fill the rooms or they're constantly turning, then maybe really in the long term wasn't worth it. So, that's going
[00:13] to start taking over your life. And that's not why you got into real estate is to be a matter. You got into real estate to make money. >> Uh, this is kind of a dangerous question. All right, welcome back everybody. This is Dylan. I'm a Tampa broker for
[00:27] investors and this is the follow-up to my Padsplit 101 video where I covered the basics of Padsplit. Today we're talking with somebody who manages over a thousand Padsplit rooms right here in Tampa and his name is Fred Vilhower. Did I say your name right? >> Yes, you did.
[00:40] >> Okay. Okay. >> Fred started investing after the 2008 housing crash while serving as lieutenant uh firefighter and paramedic. Over the last three and a half years, he's become one of the true experts in padsplit property management. So, I'm excited to have this conversation. We're
[00:55] talking about what it actually takes to run these properties, uh, what investors get wrong and where this model is heading. Welcome, Fred. >> Welcome. Thank you for having me. >> Yeah. Can you tell us a little bit about yourself and how you got into pads split in the first place?
[01:09] >> All right. As you mentioned, we started buying houses after the 2008 big real estate crash. And so, um, we're investors by nature. So, it makes a lot easier when we're dealing with, you know, our owners or, you know, property, you know, versus other property managers where some of them just don't have that
[01:25] investment background and they just don't know how to talk to their owners or or understand the full pain behind the repairs, the vacancies and all that. So, um, but anyway, we started, you know, buying houses and then we had a franchise bug. Um, we were going to open up the rest, some restaurants. Um, but
[01:40] then we we're going to have to move out of area. So, we still had our franchise bug and um we end up buying our property management company. Um bought a franchise of that and we're just moving along doing long-term rentals. We we've been managing our own houses so it wasn't a huge transition to start
[01:54] managing others. >> And then um we're doing short-term rentals as well and Padsplit was um mentioned by one of the other franchises out of Atlanta. And so we just kind of checked into that and there was like a big uh group coming to town um looking to buy some houses and so we started
[02:12] managing their houses. It started off nice and slow and then um there was nobody really in the area like one other person managing padsplit houses in the area and so Borg got out about us because we were doing such a great job and then it just took off. Yeah. >> And within a couple years we went from
[02:30] you know 30 houses to 160 houses. We're at a thousand rooms right now. Um so impressive >> and and the thing is there's there's not a lot of training behind it. So you have to kind of >> trial by fire, [laughter] right? >> Um and so what you don't know that the
[02:46] members and tenants will teach you of the houses. And so we we've uh overcome um a lot of that. They're going to teach you something new, you know, at some point. But uh yeah, we we there's a lot of the common mistakes, common errors, and and and common practices that help you out. And so um we've come across
[03:01] basically most of them. >> Yeah. So would you mind sharing what your um company name is for those out there who may be interested? >> Okay. We're called PMI Palms. It's called Property Management Incorporated and we're a local franchisee. You there's um like 500 offices around the
[03:16] country. It's one of the fastest growing. We've been around since like 08 or so um around the country. So >> Gotcha. Gotcha. >> So that kind of leads us into you know you've been around for a few years. What's what's driving the explosive demand for pad splits in Tampa right
[03:34] now? I mean, do you have any opinion on that? >> Yeah, it you know, it this is kind of multifaceted, but the big thing is this area, the cost of living versus the wages is kind of the biggest thing. You know, when we were when we started with our own houses, what we were charging
[03:50] rent for a two-bedroom, two bath, onecar garage block house in a subdivision is what people are paying for a room right now in this area. So, you know, it it the rents have definitely gone up. Um, you know, we never really seen rents go up like they did historically. They they settled down a little bit, but they
[04:08] haven't come down much. And so, that's one of our biggest issues. And, um, you know, there's >> and it's not just the young people, right? So, there's other things factoring into that, too, because now the old people, you know, our seniors are retired, you know, citizens of the
[04:25] community. They can't afford like their their landlord comes in. Hey, we're selling >> fixed problem. Yeah. >> Like, hey, what do you got for $1,000? I'm like, I can't find you an apartment for $1,000, you know? So, now they're
[04:37] kind of stuck. >> It's hard to find a studio for a,000 even these days. I mean, it's it's uh you have to go pretty far north. >> So, and then how does that, you know, the market's changed over the past few years? So, how what do you think it was like when you first started versus now?
[04:49] It might be kind of hard to determine, you know, because it started out slow and now you know, you started out and there's 30 rooms like you said and now there's like a thousand. So, do you see any differences between I don't know like the the demand for the returns in my mind are still there from a few years
[05:04] ago to now and that's one of the main drivers for the investor side. But, um, I guess would you say that, you know, the difference between now and then would probably just be that it's harder for people to find rooms to to rent or or studios and onebs to rent and so now they're having to kind of get into
[05:22] these, you know, smaller room setups. >> Yeah. And and and there's also a habit of people where the habit and and and what we're doing in society is people want to just working from home, working remote, and so they're kind of hopping around. has kind of got this trend of people not buying houses. So that also
[05:39] factors into it. Um but right now the biggest thing is the affordability, right? So yeah, um >> that that's our biggest thing. And what makes it appealing to investors is like, you know, I I wouldn't wholeheartedly and everybody's got their own investing strategy, right? But if you're buying a
[05:55] house and you kind of like, man, those numbers for buy and hold just they're kind of tight. But if you had this pad split model, you go, there we go. Okay, now it works. much more like leeway, more comfort, like make an error, you're still cash flowing a couple like 100 or at least 100 or 200 a month. So, yeah, I
[06:10] can see that for sure. >> And so, that makes like, you know, when when you're getting ready to close on a property and you're just kind of walking that line, when you can put that pad split model in, it it's now you have something it's a little bit more worth the risk of the purchase,
[06:22] >> right? Yeah. Yeah, for sure. I mean, and we'll I don't know if we'll get too much into the numbers on this um video here, but I mean, I' i've done that before on a couple other videos in the past, and like the numbers are just huge comparing from long-term to to pads split. This model isn't just, you know, investors
[06:41] chasing returns, right? It's it's actually tenants are choosing this type of housing for for real reasons is what it what it comes down to. >> Yeah. And it's it's not just for fun. It's a necessity, right? So, you know, you find out a lot of this is a necessity for these people. It's um
[06:55] >> whatever the necessity is is like, hey, I make enough money, but I don't qualify for three times the rent or, you know, um I'm not certain how long I'm going to live here where you don't have to sign a 12-month lease. you know, there's a minimum commitment, but you don't have to sign a 12-month lease. Or maybe you
[07:10] do have the money, but it's hard to come up with, you know, first and security and deposits on power and >> well, you're waiting for the return of your last security deposit from the last place you're moving out of. Or maybe it gets cut in half because Yeah. So, I get it. I get it entirely. What this is what
[07:24] I'm really interested about is what does it actually take to manage a pad split dayto-day? because I I I venture to guess that none of your your uh obviously if you're managing them, they're not they're not managing them, but you don't have any clients who are managing self like self-managing
[07:38] somewhere else where where it's outside of your zone, right? Probably anybody who owns these are are like they're paying somebody to manage them because it's as you'll get into, it's not passive, >> right? Right. So, it's it's a lot different than, you know, long-term
[07:52] rentals where you sign a 12-month lease and, you know, you have tenants that you don't hear from except when it's time to renew their lease. They take care of the house. It looks great. Nothing ever breaks. You know, th those are easy. Those are wonderful, right? You know, property management, people like, why
[08:07] would you do property management when you're buying houses? I'm like, that's easy compared to patch split. And the reason I say easy, it's that it's a lot labor intensive, right? Because you're >> you have to have your systems in place. you're managing people with, you know, all the years I had in the fire service,
[08:20] I had to manage people. We were co-living. We shared a refrigerator. We shared dishes. We, you know, I lived in that shared environment. You know, again, I I was their supervisor and it was a little bit easier. But, um, you know, again, it's co-l livingiving and I understand co-l livingiving. People
[08:35] know, people want to watch what they want, you know. So, Right. Right. I I get that and it takes that certain individual of, you know, you have to handle these daily chats and and on on the Padsplit platform, the way the members and communicate back and forth with us is through a chat feature. And
[08:52] it's great that they're asking about what there's a trash pickup or pay my lock, you know, the battery's going dead or they have, you know, whatever they need to talk about, they can talk about on the chat. And so if we don't hear from a house that week, that's an oddity, right? So we hear from them all
[09:07] the time. And then of course we'll have >> I think a lot of people have never heard that before probably that if you don't hear I mean maybe the people who own the houses do but like the people who are getting into it for the first time probably have not heard that before. >> Yeah. So like you I call property
[09:19] management on steroids because it's just it's non-stop. Um you know we go from it starts off around 8:00 in the morning is when it really picks up until about 10 11 o'clock at night. So it's all day long with the chats. We have booking requests and moveouts and pay, you know, people sometimes, hey, you know, my
[09:35] paycheck got delayed and my direct deposit didn't go through. Can I get an extension? So, there's just it's constant churning all day long. So, um and that's that's something that >> self-managing and and um what happens is when someone buys a pad split house, right, and if they do it right, they're
[09:52] going to say, "Well, that's a good return on my money." Because I have people what I thought were only had the means to buy one house. They're brand new investors, right? They're brand new investors. They've never owned anything other than the house they lived in. They purchased a pad split house and it was
[10:06] doing so well that they found the means to acquire the next one, right? So, look, you put $20 in, you get $30 back, you can look for more 20s. So, um, >> but then it gets to a point of you can try to self-manage, but the thing is >> you're going you're going to run into stuff you haven't run into before and to
[10:24] save a few hundred a month, right? I mean, >> you're you're buying the Pwood houses to be an investor to make money on your money and you're not, >> right? And you're not buying these houses to be a property manager. And we come to find out when people get to
[10:39] about five houses, maybe 10 houses back if they're they have free time in their life. They don't have anything else going on and they're great with systemizing stuff. But >> five houses kind of where we see them getting overwhelmed. you know, 10 houses, they a lot of times when they
[10:53] get to 10 houses, they quit buying because now they're a property manager. And so, we got our systems, we got our staff, you know, we have in-house maintenance, we have our staff that mans the chats. We you you know, you're you're going to need these things because now that's going to start taking
[11:09] over your life and that's not why you >> or got into real estate is to be a manager. You got into real estate to make money, >> Cory. Of course. So, and what does the turnover cadence look like when you're you're talking about managing these properties? So like how often are you
[11:20] inside these rooms? I don't know each each year like >> so um we always it's not required by pass that you do a monthly cleaning but we always do it a monthly cleaning because you want the members of the house are responsible to clean up after themselves and I try to instill with the
[11:38] owners and with the members of the house that this is your home. This is not an Airbnb. It's not a hotel. this this we're not really in a hospitality based industry because these aren't hospitality based prices. This is an affordable housing solution, right? It's meant to be a place to live. So, we try
[11:54] to teach them that like and so we stop by at least minimum, let's just say the minimum minimum is once a month we're in the house at the very least and and it's usually more than that because maintenance stopped by um someone moves out so we call a room turn. So if you have a seven, eightbedroom house, you're
[12:12] going to even though you're not losing a person staying monthto month, >> right? >> But once you get that volume about once every month or so, you're going to get a vacant room. Again, we've had people in our houses three and a half years and then sometimes people say three and a
[12:25] half weeks because it's not meant for them because they get to go, I didn't realize I had to share a bathroom. I didn't realize, you know, so but again, right, >> the the average stay is eight months. Um >> Okay. I was going to ask you like you know cuz and I know that they sign a
[12:39] lease with padsplit for a minimum as well. So when they stay for these 3 weeks cuz I haven't talked about this before but when they stay for a very very short period of time there's like an allowance from padsplit. Maybe you can describe this further but how can they get out of that room early?
[12:55] >> So they have a couple different options. Um they can transfer to another house. Maybe they're like, "Hey, I I booked, but I didn't realize Zephr Hills is an hour from Tampa cuz I'm moving from New York, you know." So, um, you know, or or this is, you know, sometimes people we've had houses where people butt heads
[13:14] and we put them in separate houses and we don't hear from them again. So, um, sometimes you have to manage, you know, people, but, um, right, >> don't want to get off topic, but they can transfer they can transfer to another house, but still stay in the pad split, you know,
[13:28] >> eos there. Yeah. And um but the other thing is maybe they decide, you know, I'm just getting out of pads split or I unfortunately my job transferred me 3 weeks after I moved here. So again, there's two options. One is they can sign a week toe commitment where they pay extra when they first move in. So
[13:45] that way if they break their their lease and it's a again 12-week commitment. So if they leave before that, they've paid up front, they don't have any penalties. Um however, we don't want people that are staying less than the 12 weeks. Sometimes we'll take a chance on people that are staying two months, but they
[14:01] say, "Hey, I'm just coming to town for three weeks and then I'm back out and I'm like, well, that's an Airbnb or something else." >> So, when I know they're not going to stay, because some people say, "I'm going to stay a couple months and they stay, you know, 6 months, 8 months, two
[14:14] years." So, um, but if someone chooses to sign their 12-week commitment and leave early, um, then they pay what's equal to two months, two weeks rent. So, let's say the rent's $200 per week and they leave early. They have to pay $400 to get out of that. >> Not too bad.
[14:32] >> Okay. So, one of the questions that I get about this though, like all the time, is the evictions. How many how many evictions do you get? Because so that's that's a clean move out setup. What you just described when somebody leaves a little bit early. It's it's pretty clean and and it benefits both
[14:47] parties. But what happens when like how do you deal with evictions? How many are there? And well, yeah. So um ironically we since we have such a large room count we can look into percentages. So when they say, "Hey, there's one to one and a half percent." You know, we can go, "Okay, well, out of
[15:08] a thousand, this is how many we have or gotten. You know, we had 3,000 members, we've had 30 evictions or whatever, right?" So, but if you have a house and something went wrong and you have a sevenbedroom house and you had three evictions, like, you know, I have one lady who,
[15:22] >> right? I'm like, that's just out of the norm. I'm like, we have houses that never most of them never have an eviction, right? And so, um, it just when you only have one house, it just seems like a lot. But, >> right. >> Um, but anyway, the eviction percent,
[15:35] it's about one to one and a half. >> Okay. >> And unfortunately, the eviction rate is going up across the whole board of all rentals. So, if you got a long-term rental or a pad split, it they're all kind of going up a little bit equally because we, you know, we we deal with
[15:52] evictions and when we speak to the sheriff, like it was what's called we'll get into this in a minute, but what's called rid of possession is if the sheriff has to physically come pull you out, it used to be a week, but now it's turned into two or three weeks because they've gotten a lot busier. So, it's
[16:07] just not pad split. It's it's the whole rental market. It's the the economy you're in right now. So, gone up. So, if people choose to have a long-term versus a pack split, again, percentage- wise, it went up equally. >> Interesting. >> So, a clean move out is someone says,
[16:21] "Hey, I'm moving out." They leave. They leave the room. And again, most move outs are simple. They leave um and and they've paid their balance. Their room is fairly clean. Um repairs aren't usually needed. Just a wipe down, a mattress cover, change, um tidy up, sweep mop, you know, all that stuff. Um,
[16:40] again, you're not closing down, >> just one room, right? So, and and you know, we turn them in about one to three days. You know, they go in and off we go. Now, the complicated part is when they don't pay. >> Um, you can tell them to leave and pass says
[16:56] we'll put you in eviction, but pass rules don't hold up in court as far as eviction goes, right? So, what we have to do is do it legally and we treat it just like we do a long-term rental. We give them a 3-day notice to pay or vacate. at the end of the three days. Um, you can't count holidays and
[17:11] weekends and stuff like that. So, it turns into a more than three days usually, right? So, we give them the three-day notice. At the end, they've either left or they've paid. >> So, a lot of times we post a notice on the door. They see that it's real. They pack your stuff up, they leave. Maybe go
[17:27] owing you a few dollars, right? Um, but to get them out, get the room vacant, get it reented, not having the court fees, the filing fees, attorneys, and all that, you know, it's great just to get them out and gone. Um then if they don't go then we then it turns into an official eviction. So we have attorneys.
[17:42] We got a great attorneys. Um we actually brought them on to Padsplit and they do the whole entire state of Florida now. >> Um >> so and it's a simple process and here you don't want to do an eviction yourself because once you make a mistake you got to start all back over and now
[17:58] you're six weeks into this and you made a mistake and it's got to this timer restarts. So that's why we're using attorneys and half Yeah. You know, basically half what they charge is filing fees that you'd have to pay anyway. Okay. >> So, we got it down to a great process.
[18:12] That's that's what I've always I've I've worked for many property management companies and that's what we've we've always recommended like don't do it yourself because especially if the people know how the the system works then right >> I don't know if it's as prevalent in
[18:24] Florida as it is in many other states but you know because Florida is more of a landlord friendly state but um >> yeah they can talk and they'll they'll know how to kind of the little loopholes to extend it longer and longer and that's just more vacancy for you essentially so it's definitely not of
[18:39] not not a passive investment like a long- term rental that's is easy to self-manage. >> But you know what is um what's the one thing that investors consistently underestimate about operating a pad split successfully in your opinion? >> Maybe maybe not even opinion. What's
[18:58] what's the numbers on this? >> Yeah. you know, they they underestimate how much work it is, you know, and and and >> and they also underestimate >> like if you if we don't set this up right, you got to set it up right from the start
[19:10] >> because, you know, the owner buys it, the GC's there dating it, and then they pass it off to us and we're married up to it, right? So whatever wasn't done. So we like to be brought in as early as possible like hey you guys forgot to put an AC duck in this room or you you know hey look have you thought about this
[19:30] whatever we we come in you know you bought the wrong kind of locks or what whatever they're doing they thought would be great or hey I spent a lot of money doing this but you need to kind of consult with us and go hey this is the best use of your money. A lot of people think TVs are again they're a benefit,
[19:47] right? >> But they >> but we're getting more asks for, hey, I work from home. I need to be hardwired to the router. >> Oh, interesting. >> You know, so like and it was funny when we first started, we're like,
[19:59] >> I heard someone working from home in a pad split. I'm like, I wasn't expecting that. And yeah, there's a lot of people working from home in padsplit houses. So, >> and not most of them are fine with Wi-Fi, but some companies require people to be plugged into um to the router
[20:14] itself for security purposes like health insurance companies, um Amazon, things like that. >> Very interesting. So, like getting that investment done like when you purchase it is is well worth it because there are people like you might even be losing good like not even just tenants but like
[20:28] I don't know if I should say tenants or members but but the good ones like the people who are who are you know have have solid jobs. [gasps] >> Yeah. Yeah. Like I said, it's not every house. It's not every room, but it's just something we get more asks for that than we do because the TVs are
[20:41] inexpensive. And we found out, well, I don't know how to use this. It's broken. The remote's lost. My batteries are dead, you know? So, um, and again, that's I feel that's you're stepping over into the hospitality based industry when you do that, >> right?
[20:53] >> Like, >> everybody's got a computer, you know? Like, yeah. Yeah. >> And we had another one where the owner made this like big master suite in the sitting room. The guy goes, "Can I take the TV down and put mine up?" you [laughter] know, so they'll have a
[21:05] better if they like TV, they're going to have a better TV than the one you'll provide. That that is for sure. >> When somebody comes to you, I know floor plans are crucial, right? You have to have a good floor plan. It's not just how much square footage that plays a role, but you know, I don't know like
[21:19] what other blind spots do you think that there are for investors when they're when they're when they're actively buying so they don't buy like the wrong property? >> Yeah. Yeah. Yeah. I'll I'll touch on both. Right. So one is if you think about this, you don't want to be the
[21:33] only rental in a community and especially you don't want to be the only padsplit rental, right? So you don't have to get in a 100% rental community. You can, but you don't have to be, but you need to have some other rentals around cuz you're going to have a few extra cars. Again, if we have an
[21:47] eight-bedroom house, typically we don't have eight cars. About half the people drive. The closer you are to the city, the less they drive. These one-off houses out in the middle of nowhere, they're going to have to drive and you're going to need more room for parking, right? But the closer they are
[21:59] to city, ebikes, Ubers, bus, you know, walk to works, things like that. I have people walk an hour to work every day. I'm like, "Oh, you know, so um uh and they're local in the city, but uh yeah, so one is more of the location. Definitely no HOA neighborhoods. Look down the street, see if there's other
[22:17] cars parked on the street, other cars parked on the grass." Um again, you don't need a whole eight parking spots for an eightbedroom. You need about four or so. Uh, and then like you mentioned, square footage isn't always what's needed. You do need square footage, but the layout too,
[22:32] >> you know. >> And speaking of layout, so so I I I can hone in a little bit on my question here is is one of the big things is how many and I'm curious on your take. How many bedrooms should we have, right? Versus how large should they be? Because perhaps more bedrooms will make you more
[22:49] money, but you might have higher churn, higher turnover, might be more expensive to manage. larger rooms, they might stay longer, might get a little bit more per per room, but you won't have as many rooms. So, I don't What's your thoughts on on that as you know, from a from a manager's perspective?
[23:04] >> Yeah, that's a great question. So, I had um one buyer, very well-versed, very experienced um investor. He goes in and guts the whole entire house. Starts with just blank slate, bathrooms, kitchen, all the 2x4s, trust, everything kind of just comes down. And so he made eight rooms 80 ft. And that's the minimum of
[23:25] ad split. You got to have at le your shortest wall has to be 7 ft, >> right? >> So you can't have a 6 foot wide room. And um you got to have at least 80 square feet. And so he made eight 80 foot rooms. And he says, "What do you think of my house?" I said, "You
[23:39] renovated very nice. You I mean he did everything right. You know, he even made an electronic clock. He's definitely got some tech background. you know, outlets in the ceilings for to plug in, you know, like a camera in the common area and you, you know, like electronics are in a locked into one room. And I mean,
[23:54] he did it great. But I said, "Next time, don't make every room 80 square feet." He's like, "Okay." And he bought two more houses and did the exact same thing. And then he's got a high turn rate. And so here's the thing with these smaller rooms. >> You take what the house gives you first.
[24:08] I mean, if you have a room that's 80 square feet that's already part of the house, that's fine. You don't need to make it any bigger cuz you can price that one a little bit lower cuz you're going to have a working person who needs a clean house and a place to lay their bed and they don't need the bigger room
[24:21] which you can charge for more money and all the other amenities. They go look I just need a bed. I need a bathroom. We're good to go. Internet that you're you're all set. So, but um the larger rooms you'll get longer stays and it just seems like you know we have one house that it's six bedrooms and they
[24:38] have one small room and the owner insisted a queen-sized bed goes in that room and it just that's a house we have a guy there three and a half years but it's hard to keep someone in that other small tiny room for three and a half months. you know, they threw a big bed and small room and so but again,
[24:54] >> not every house is going to turn into a small room, but we want to try to get so squeezing as many rooms in as possible. When you're running the numbers, it makes sense. Hey, I can get two extra rooms. I can make extra money, but when you can't fill the rooms or they're constantly turning, then maybe really in
[25:09] the long term wasn't worth it. So, again, take what the house gives you. >> Of course. Of course. There's sometimes there's little tricks you can do to cut out closets and add a little little bit of square footage to a small bedroom, but I mean on average would you say 100 square feet is is like is pretty average
[25:23] and it's maybe ideal or I mean maybe ideal might be the larger but I mean ideal to I don't know minmax it I guess. >> Yeah, you will not believe what two extra square you know two extra feet in width and length gives you you know 100 square ft difference versus you know 80 versus 120 extra square feet. But those
[25:40] two feet just mean a whole lot because it gives a little more room to walk. And even in an 80 foot bedroom, we can put a small little computer desk, a chair, and then they either have a closet or an arm. We we can fit all this stuff in 80 foot room. And then once you once you have 100 foot room, it definitely makes
[25:58] it feel more room. Yeah. Just that two extra feet. >> Especially in Kodak, some of our some of our uh our our ceilings are pretty low, right? So, when you have a small bedroom and low ceilings, it's like you kind of feel like you're a little trapped there. But,
[26:11] >> um, kind of going a little bit more into the furniture cuz that >> another question that I get is like what is the typical bed size? I mean, because 80 square feet that's like a twin, right? Um, or you going to put a full in there? >> Yeah. Yeah. So, I say again, we have
[26:26] like five twins out of all our rooms. >> Oh, wow. >> And so, Wow. Um, >> that's like five out of a thousand, huh? >> Yeah. Yeah. [laughter] I mean, think about it. I'm >> saying I don't know what that number. >> Okay.
[26:37] >> I mean, so I'm 6'3 and I slept in a twiniz bed for 25 years in the fire department, right? So, I can make it work, right? And um but you can always almost always put a fullsize bed in a room. >> There's a huge jump from twin to full. Full's I think like 52 in or 52 or 54 in
[26:56] wide. And then like a queen is 60 in. And so, um, the difference between queen and full, it's in people's mind more, you know, they they got to prefer a queen over a full or whatever. But when you come in there, a full is plenty for one person. >> Yeah.
[27:11] >> Because again, one person per room for the most part. And um, >> so we shoot for a full-size bed. We can And what we do is we we we picked our furnishings for a reason, right? They all they all have a reason why we have what we have. And it's just not like, you know, one owner can say, "Well, I
[27:28] got one house. I got seven rooms. I can go pick my own furniture. I can go down to the repurposed store, whatever." But when you're doing volume, you you have six, seven, eight, nine furnishings, you know, you don't have time to sort through that. And again, we picked what we picked for a reason. We
[27:44] picked an elevated platform bed. Um, one, because we have elderly people. We have people with back problems. So the platforms all the way to the floor make no sense, right? And then it's elevated. So they one so they can sit on it easier and get off it easier and two they can put belongings
[27:58] >> storage. Yeah. Like that's even more storage. Um you said something there though. Uh for the most part what do you mean by like one person per room for the most part? Like has has pad is there something that I'm going to [laughter] not >> Yeah. So Pad Split has um
[28:13] >> they start doing this. >> Yeah. So they have what back when they started they allowed dual occupancy and then um during the pandemic they went down to one person per room >> and now they opened it back up to what we call dual occupancy. >> Okay.
[28:27] >> And um >> so what we do is >> if you have eight bedrooms and you have dual occupancy in every room you got 16 people. That's just too many in the house. >> So we we try to find not every house supports it. I mean if they're in a
[28:42] septic system like sorry we keep dual occupancies or you know but some owners don't want it um but we manage such a large portfolio that we can say hey we got houses over here that allow dual occupancy like we have a fourbedroom I see >> I mean eight we have an eightbedroom
[28:56] four bath >> and two of those bedrooms have private bathrooms >> so we can make >> they're large enough and have private bathrooms I can definitely see that. Yeah. And then sometimes you can make a floating room like room two, we're going
[29:09] to allow this couple to stay in this room. Um, but now we we can't make any more. We have the one because we want to overload the house because we have to have the right bathroom ratio and >> right which is I mean in my opinion it's always like 1 to three. I mean listen one to one is like perfect, right? But
[29:24] that's ideal but it's it's almost prohibitively expensive. Prohibitively expensive. One to four is the minimum. Is like one to three kind of like where you like to see things. >> Yeah, it is good. Um but uh we've had some people do something like a sixbedroom like a fivebedroom house
[29:40] where four to one for the common and then one >> for master >> and I and I say try not to do that because if you have a problem with one bathroom >> than everybody else like >> contact it you know
[29:53] and and so I think it's best to have two bathrooms no matter how matter how you cut it up right I really say you should have two bathrooms as a spare. >> That's interesting. Yeah. Yeah. I I try to stay above five bedrooms anyway. So yeah, we're generally looking at two guest bathrooms all the time,
[30:09] >> right? >> Um so that man that's been very helpful um especially for me kind of you talked a little bit about areas though. I mean is there >> how do you decide what decide what are the best areas for padsplit? And just to preface this, like I do know, and most
[30:24] people know that there is the uh market insights map on Padsplit where you can go, you know, you have to have a a a [laughter] sign up. You just sign up, create an account into their portal, and then you can look at their like it's like a zip code map and it'll show you how many
[30:38] active um properties are kind of there's just some some nice data per zip code there. And I don't know, do you think that that's do they keep that relatively updated? >> Yeah. And you know, you can like we do have people that have houses in outlying areas and they want to try out Padsplit.
[30:54] And um I would suggest if you're it's going to be your first one, stick it in the market area where there's other houses, right? >> And um there's a couple different reasons. They Padsplit just didn't willy-nilly pick an area, right? They did their research and so and they know
[31:08] that the populated cities is where the the housing's most needed and you know the walking things as far as convenience store down the corner, the buses, the whatever. There's a because um a lot of these people don't have cars and and you know they don't they don't need them. Again, it's not New York City where
[31:25] there's a you know >> very walkable. But I tell you what, these electric scooters that people are just fooling up and they're charging and they're just zipping around like man, way more portable, way better than a bicycle for like getting around to like the bus stops and and it's pretty I
[31:39] think that's kind of opened up some stuff too. I see those all the time now. >> Yeah. So, um but again, and there's a marketing um method, too. They they pick, okay, here's Tampa City proper and we're going to go 20 25 miles out in a radius and that's where we're going to drop our marketing dollars. Well, you're
[31:57] paying Padsplit for a reason, right? So, you're paying for their marketing. They're a big marketing engine. So, if you go outside their marketing circle, yes, padsplit's becoming a name where people we have outlying houses that people book and yes, they are showing up on Google, they are showing up other
[32:12] places, but the the mass marketing is done in that radius and you know that that that's the the place to be. And then again, within that radius, you need to pick the most appropriate neighborhood to be in. >> Right. Right. And and I think the zip code again that that map from from
[32:27] padsplit is very indicative of kind of like the the higher performing versus you know weaker performing areas and there are still some areas that aren't very filled in but then a lot of them kind of are. You can you can kind of look within those areas and it's a much safer bet. Who is actually renting these
[32:42] rooms? You talked a little bit about it and I know we're going a little bit over on time but you know who is renting these homes and has it has it changed over the last three and a half years. >> So I you know >> I get this question a lot. Sorry, this is a very important.
[32:55] >> Yeah, I will let you know cuz this surprised me. Who would you think 20 and young 20 and 30 year olds, right? >> 18 to 20 year olds. Yeah. >> Yeah. Like I was thinking even people in their 30s, right? But I was thinking we're going to get a bunch of 20-y olds. We had student rentals, you know.
[33:07] >> Right. Students, that's the biggest guess that people Yeah. >> Right. Right. I mean, we own student rentals and we were like, "Oh my gosh." You know, we were You see what 18-year-olds who think they're adults leave a place, you know? But um but anyway,
[33:20] >> it's worse than a section 8 vacancy, you know. >> Right. Right. And so it turns out it's it's everybody. It is a big wide [snorts] diverse group of people. We have 18 year olds to 79 year olds. And I I'll make it quick, but the reason why is again we touched it on the seniors.
[33:37] They're on a fixed income. Where are they going to go? So we're getting seniors. We've had a lady, she's I think two and a half years now. You know, she's like, "You're my savior. I had nowhere to go. I'd be homeless if it wasn't for you." and um you know >> but it is again it is good that they
[33:53] have a place to go. So again we have our seniors, we have our young adults and keep in mind it's it's you have to have an income source. So it it's not people coming in who who don't have an income source >> because Pat does the vetting and then >> they they pre-qualify I guess not
[34:10] necessarily pre-approved, >> right? And and a lot of our people do have jobs. they're we're more of a working class. But again, we have our retirees and there is an option of like, hey, I'm coming, you know, they're they can be a student, but we we don't get that too often, but like if they don't
[34:26] have a job, they can prepay, you know, couple months worth of rent and stuff like that. So, um but yeah, people are coming in. It is and it's not a weekly place. Even though they pay weekly or bi-weekly, it's not meant to be a weekly rental. Again, they signed that 12week commitment,
[34:42] >> right? Um, and so it it it's all different races and sexes and and ages and it big and we've noticed that the more diverse the house, the better everybody gets along, too. >> That's actually interesting. That's that's very interesting. Um, do you think that this is like a mix of like
[35:01] workingass gig economy? Uh, do you get like a lot of people traveling to Florida and staying in these things for like work for a short period of time? um like I don't know maybe health care I don't know like any of those types of fields I don't know how much you know information you have or how how you know
[35:17] how much that's provided to you. >> Yeah. So I I can just see our numbers right because we get to see our booking requests and um every now and then someone says I'm going to be in town for four weeks. We're like you know like we don't want that because then it creates another vacancy of return. It's so we we
[35:31] try to stay away from that. Um >> Padsplit does charge by you know each new tenant right there is there's a new tenant fee. So it's like the first 10 days you're not making any money anyway, >> right? And that's again if they pay the ones $175 that kind of offsets it. >> I see. I see. Yeah.
[35:46] >> Yeah. But we don't want that. We want the habit of like this is your home. This is affordable housing. And people are like, you know, we have owners going, "Oh, I got a house close to the hospital. Let's let's chase the traveling nurses." But you're constantly chasing
[35:58] >> because they're not Yeah. They're not usually there for like a year from my my my >> knowing different ones. Like they're they want to go to Alaska. They want to go to Hawaii. in Tampa for a few months, but then they're kind of on to the next thing.
[36:09] So, >> Right. Yeah. And and you know, a lot of times a couple of them travel together, they know each other, they just go to Airbnb and stuff like that. Um, but there we have people trying to chase them and again, you don't want to be in the chase. You want to try to get
[36:22] somebody that you know is going to stay. Again, people are going to stay two to three months and because life happens, but you're looking for someone who plans to stay more and and we do. Like I said, the average stays eight months. >> Gotcha. Eight months. Okay, that's perfect cuz I always thought it was like
[36:35] 8 to 10, but it's it's probably closer to eight now, huh? >> Mhm. >> Okay. >> Yeah. And then, you know, those are averages. Again, we do have people stay 2 months and that unexpectedly had to leave. So, we're not going to say
[36:44] everybody stay in eight months. You >> banking. >> It just sounds like the model is maturing a little bit, too, because like we're we have you have more years of of data now, too. It's not like, oh, we think it's going to be 8 to 10 months, though. It could be like a couple years,
[36:57] but like we kind of know now the average of a lot of things. And so it's that's a it's kind of a good sign that you can base your numbers on when you're looking for these properties or you're thinking about converting a long-term to to a pad split. So um where do you see co-l livingiving and padsplit heading to uh
[37:13] in Florida over the next 5 years. >> So depend no matter what the economy does co- livingiving's here it's it's not going away right so and it was here it it it's just more controlled now because I was before we were talking from the fire department >> structure around it. Yeah.
[37:29] >> Yeah. I'm watching our seniors and it's sad to say um but you know we go to a house and I'm like what do you know about this person is your grandson or whoever the I don't know I rent the room to this guy and it's like a nice middle class neighborhood and you know a senior is now spouse passed away and they're
[37:45] trying to offset their increased taxes and insurance and their you medications and the cost of that and so they're renting their rooms out and they don't know these people. they get stuck with them. And so now this is more of a controlled environment and that's from the the the the tenant member
[37:59] perspective, right? So that's always going to be there. And I think this is better because now everybody that comes in the past has had a background check, >> right? >> So right where some senior allows two people to come move in with them and like
[38:11] >> what does he know about being a landlord? Nothing against them, but I mean it's it's safer for everybody. So again, that's not going away. I'm sure it'll eb and flow a little bit, but this is here to stay. >> I get a lot of questions about this. Do you think how important is permitting
[38:25] everything? Uh this is kind of a dangerous question but >> right. Yeah. >> How important is it? Because I have people who are very worried about you know permitting everything and what if we're you know what if the except said
[38:37] we've had situations in St. compete and and other places where people maybe did not and other other circumstances kind of brought the lack of permits into question, right? Or >> you know question it as like a um transient hotel or some sort of thing. So how what is your kind of take on
[38:55] that? I didn't discuss it with you before so I you know sorry if I'm springing this on you. >> Yeah. No, no. Um, you know, it people are going to do what they do to their houses regardless, right? That's whether it's >> owner occupied or flippers or buy and
[39:10] hold people. They're going to do what they do. They choose to permit not permit and stuff like that. Um, there's two separate issues. There's permitting, the physical structure, and the zoning. You know, are you doing the right zoning, right? >> And we're watching around the country,
[39:21] it's getting more regulated and which is a good thing, right? So I think over time they're going to say, okay, you know, this is needed because the pad splits of the of the country take the affordable housing off the the local cities and now they're not having to pay for housing. It's already there. So I I
[39:44] think that as over time and we're and we're seeing it too, like I believe it was Denver, they're all for it. There's other cities that were for this and you brought up St. Pete. St. was against ADUs, right? So, >> but now they're like, "Hey, these areas can do ADUs." And I I think over time
[40:02] what we're going to see is it's going to be better regulated and they're going to say, "Hey, this is the requirements to be one of these houses. We're going to do an inspection. This is what we require. We're going to do the checklist. We're going to do the inspection. You're good to go. And these
[40:16] are the areas you can do it." This kind of, you know, like Airbnb, you know, there's areas you can do it and areas you can't. I think we're just going to approach that as time progresses. >> Right. Right. >> Is there a certain zoning that you think that most people are are focusing on
[40:28] right now or that you see that you would >> stay within? I mean, I know residential multif family tends to be a good one and maybe it's a little bit safer, but those are really hard to make financially work compared to single families, right? So, is there like a single family zoning that you think um
[40:45] >> Well, well, there's always exceptions to every rules, you know, because we have properties that I mean, you know them, too, that um you can turn a duplex, triplex or whatever into um a pad split, right? Where I I say no to a fourbedroom because you're going to We didn't touch this. I know you didn't
[41:02] want to touch too much on the numbers. >> Sure, we can touch a little bit. >> Yeah. um to make passport work, you you need to not make what you're going to make on a long-term rental. You need to make more than you would more expensive because >> yeah,
[41:14] >> why why go through all this extra work, >> right, >> for the same for the same return, right? So, I say if you do it right, you triple your gross and double your net because you're going to have a lot more operating expenses. You're going have to pay water, power, sewer, trash,
[41:27] internet, and stuff you wouldn't have to with a regular long-term. However, you know, there's uh got an owner that has multiple duplexes all in one property and you're going to have to pay for the trash service here. You're going to have to pay for the lawn care and the twotory duplexes. So, you instead of paying
[41:45] internet for both, you're paying internet for one. So, you split that cost. Turned a threebedroom into a fourbedroom. Again, fourbedroom I say don't do, but with this now you have eight bedrooms in two units, you know, >> and and so then now where it makes sense. It's multif family already,
[42:00] >> you know, and so >> again, the water you would have to pay if it was a single family or um not a single family, but you know what I'm saying. >> Right. Right. Right. Right. Do you think that we'll see institutional players entering this space and like what to
[42:13] what extent? Because I have an opinion. I think that we are seeing some like I have a couple people who have contacted me already, but I'm just kind of curious on what you know if you're managing for several of those people already or kind of kind of what what you think what you think that's going to happen over the
[42:28] next 5 years too. Are are more people going to get into this space in 5 years? >> Yeah, I I think over time, you know, um there there was what I have is mainly, you know, it's amazing how many one two houses they had. You know, I got one or two, but um but we do have some larger buyers because they see the advantage of
[42:46] like, hey, I'm I'm dropping my money in this. I'm getting more money back. So, we we do have single buyers with multiple houses in their portfolio, but we do have a couple institutional buyers that we manage for and you know, they're just trying to acquire a lot. Um, but again, there's plenty of room for you in
[43:04] this space either. So, they're not taking over the space, right? It's not like the invitation homes and all those other >> progress. Yeah. >> Yeah. you know, we're just scooped up all the the the single family homes and stuff like that, but um yeah, there
[43:17] there's most of our owners are just an individual. >> Yeah. Yeah. You know, um we do have a lot of first-time investors, too. So, um >> it's a really good investment for a first-time investor, and it kind of sounds like it probably shouldn't be just because of all the like the the
[43:34] newness kind of of it compared to the established long-term rental. But I mean, everybody, it sounds like wants to grow their like they want to grow their I can't think of the word besides empire. They want to they want to basically kind of acrue capital. They want to grow and scale and leverage. And
[43:49] like the only thing you can really do in Tampa that that really gets you that cash flow at like a $300,000, you know, um, purchase is like padsplit. You know, I think especially I'm getting some worries about Airbnb lately, but we don't have to get into that. people scared and people backing off and
[44:08] actually stopping their operations with Airbnb. I've heard a couple of those recently actually. >> Um, >> so we'll wrap up here. I think um, and I appreciate your time. If somebody has a property right now in uh, in Tampa Bay and they want to convert it to a
[44:22] padsplit property, you know, where do you come in and how can they find you? >> Okay, so um, I like to come in as soon as possible, right? because we want them not to make mistakes and and so it's a lot easier to bring us in and take a look at the property, talk to them. Like don't force, hey, I got a fourbedroom, I
[44:41] want to make a five bedroom. Don't force an existing house. And that that's a big mistake we see people make. So don't convert your existing house. I'm going to say, hey, look, you're going to be making what you made before or less. So um >> bring us in early. If you're looking to
[44:53] purchase a house, you know, um contact you and uh bring us in as soon as possible, you know. Um and and that way we can work with the GC's and we can >> we can be there from A to Z, you know, right? You can, like I said, you can already have your house purchase and renovate. We'll come in at any step
[45:10] along the way, but again, bringing us in sooner definitely is the way to go. Um our company name's PMI Palms, and you know, you can look us up on our website, pmipalms.com. Um you can give us a call and um you also can contact Padsplit. They know who we are all the way up to the CEO. So, I mean there that's how you
[45:29] because they'll have a local account executive. Um, but yeah, I mean you can just reach out to us directly. We'll be glad to to sit and talk with you. Um, I strongly strongly suggest, you know, that this is not something to be self-managed. A single family home long-term.
[45:45] >> Yeah. Don't manage. Don't recommend it. >> Yeah. You you know, you're just gonna >> and if you're new to investing, this is definitely not the thing to cut your teeth. You know, you don't >> I mean, yeah. [snorts] You don't want I mean one eviction is a lot but if you have to do three in one house I mean
[45:56] that's like unfair you know so >> well well that's cuz somebody is self managing for >> you know and when you when you try to do it yourself out of state or even if you try to use a virtual assistant out of state you know it it's you need boots on the ground you just have to you have to
[46:13] see you coming to the house they have to know it's you >> because that helps control because people are going to bend rules and so if if you're here they know you're here. So >> Brad, this has been awesome. Thank you for giving us an inside look. And um for everyone watching, if you're serious
[46:27] about padsplit uh investing, watch my original 101 uh padsplit 101 for the basics. And drop your questions below for future videos. And be on the lookout November for um when I'll be getting with a a knowledgeable mortgage broker on how he finances uh dozens of pad splits this
[46:44] year. Um any last thoughts, Fred? >> Um thank you for having me on. Again, I like it. It's a It's a great revenue source and um looking to hear from everybody. >> Appreciate it. Thank you again. >> See you. Bye.
