We recently sat down with Joe Ekis, a local Des Moines property owner with an impressive breadth of experience within the real estate industry. From managing day-to-day operations to investing in properties and helping operate a property management company, he’s had his hand in all aspects of this type of business. In an exclusive interview with our team, Ekis shared about his experiences in the commercial real estate world, including helpful tips and advice for anyone interested in diving into multifamily rental property investing. Check out some valuable real estate investment tips he has for beginners.
Commercial Property Management Tips: Owning, Operating, Managing and More
What Role Do You Play as an Apartment Owner, and How Do You Handle Day-to-Day Operations?
Early on, I was working for somebody else and learning the property management system and career. When I stepped out on my own and bought my first commercial property, I started out self-managing. I was very hands-on — changing toilets and collecting rents and mowing grass. I progressed in my investment career, and now I own part of a property management company. We have weekly meetings where we talk about property managing, and I’ll wear both hats — owner and property manager.
What Did You Learn From Your Self-Managing Experiences?
I think starting out self-managing was a good thing because it gave me perspectives from both sides. When you can be the person in the trenches, doing the day-to-day stuff, you can talk more intelligently with the property management companies you hire later on. You can be a more informed owner/investor when you’ve done it yourself.
Was it Challenging to Give Up Your Role as a Property Manager When You Started Hiring a Property Management Company to Take Care of Day-to-Day Operations?
It’s challenging to transfer that responsibility over to somebody else. You just feel like you know it all, and you’re used to staying involved with the day-to-day decision-making. It was challenging at first, but now I can concentrate on big-picture opportunities in the real estate investment world. And I’m also older now and less inclined to want to be involved with cleaning every apartment and strapping on a tool belt to do maintenance tasks. It was a natural transition for me and my career path, but it wasn’t always the easiest transition.
Can You Talk About Some Commercial Property Management Tips From Your Early Years as a Property Manager?
I had an old boss and mentor who told me, “Spend my money like it’s your own.” I was managing a large apartment complex for this man, and he also owned the property management company. He wanted me to pretend like I owned the place. If I did, how would I make investment decisions?
Usually when you hear someone say “Spend my money like it’s your own,” it seems like you’re supposed to avoid spending money. But that’s not necessarily the case. Sometimes spending more money might be worth it in the long run because you’ll just get more value from what you spend it on. Here’s an example: Do you spend $200 to fix a 12-year-old refrigerator? The answer is no — you spend $450 to buy a new one because that’s a more cost-effective decision for the property in the end. Don’t scrimp on preventative maintenance, prolonging the life of your current appliances will pay off down the road.
What Is the Hardest Part of Being a Hands-on Property Operator?
It’s a 24/7 job, 365 days a year. If the phone rings on Christmas day at 10am and there’s a fire or a flood or a lockout, you’ve got to respond. Fortunately, when I was first in that stage, I was single and didn’t have a family. As I got older and got married and had kids, they understood that was part of my job.
On the flip side, the advantage of working for yourself is having the flexibility to do activities, hobbies and errands when most people are working their 9-to-5 jobs.
Commercial Property Investment Advice: How to Own Rental Properties
Is it Challenging to Get Started Buying Rental Properties?
When you’re first starting out, it’s tough to find deals. You need to have a good real estate agent. And making your first investment can be tough because you need to have a sizeable amount of cash upfront. My first deal was a $160,000 8-plex in 1993, and I need to provide a 10% down payment. I later sold it for double what I paid. Having a good network of people to help you find deals is one of the best things you can do.
Should Investors Explore Different Types of Properties or Stick With One Type?
In the investment world, it’s easy to want to get involved in a bunch of different things. But if you find something that works, stick to what you know. I invest in what I know. I don’t overpay. I can drive by my properties and keep an eye on them. It’s easy for me to feel comfortable about my investment decisions.
What Real Estate Investment Tips Would You Give to Beginners Looking to Get Involved?
- Pick a market and run with it! Whether it’s apartments, industrial, mini warehouses, mobile home parks or something else.
- The first deal is the hardest. The second deal is much easier when you’ve had a little experience.
- Invest in the property.
- Drive net operating income.
- Eliminate bad expenses and make wise decisions when it comes to expenses.
- Repeat.
Investing in a property might involve rehabbing units, tearing out 30-year-old kitchens, moving walls, updating light fixtures, changing hardware and ripping out carpet. Know your market and give people what they want. You’ll wake up one day and realize it’s not as hard as you thought it would be.
How Can Property Owners Increase Income and Decrease Expenses?
It’s easier to control the income side. You don’t have a lot of control over expenses, especially when you need to replace something like a water heater. Even though it seems kind of counterintuitive, raising rents and creating vacancies can be a great way to increase income. If a unit may cost $700 to rent, but there may be renters willing to pay $800, and that’s not something you can find out if you never have any vacancies.Another example of increasing income would be doing a $6,000 kitchen rehab on a unit. If that renovation allows you to increase rent from $700 to $800, it will only take five years to start seeing your return on investment. And you will also see the additional benefit of adding value to the property overall when it comes time to sell and decreasing yearly maintenance costs for units with new plumbing or appliances.
2020 Commercial Real Estate Trends
What Trends Are You Seeing in the Multifamily Apartment Market?
One trend we’re seeing is RUBS – Residential Utility Billing System. These systems allow landlords to bill tenants for utilities that may have traditionally been rolled into rent cost and offered as part of a “utilities included” unit. Residents seem willing to pay more when charged separately for rent and utilities than when utilities are included in the rent price.
Another commercial real estate trend is the growing quantity of investors, including institutional investors coming into Des Moines and other secondary and tertiary markets and inflating property costs.
Technology is driving trends. Marketing and advertising have changed drastically along with technological advancements. In 1993, you would have to look in the Sunday newspaper to see a list of available apartments. Convenience stores and grocery stores would have apartment catalogs on a rack. Technology and the internet have made print advertising for apartments archaic.
Do You Have Any Final Pieces of Commercial Property Investment Advice?
First of all, just dig in and grind it out and do it. Don’t sit around reading books about it. Educating yourself is important, but at some point, you just need to do it.
If you’re using traditional financing options, consider what a banker would look for in terms of risk and reward for any given deal. Know your stuff, know your numbers and be involved.
Learn More About How to Own Rental Properties
From real estate investment tips to commercial property management tips, we want to provide you with everything you need to be a successful commercial property owner. Reach out to our team if you have any questions about how to own rental properties or how to manage your multifamily rental properties. Browse our listings if you’re ready to dive into the commercial real estate investment world.