Max Reinbach III (00:00):
We’re a management company, but we’re more of an HR business. I mean, think about it. You’ve got a thousand people, right. A thousand miles to feed a thousand personalities. Um, so I mean, it’s, it’s a tremendous effort to make the dream come true, per se, on every single property, whether it’s a value added property, a stabilized cashflow planning deal, um, or a brand new Lisa, you know, it takes a lot of work. It was sometimes little reward, right. But again, being in the management business can sometimes feel like a thankless job, right?
Reed Goossens (00:42):
Welcome to investing in the U S a podcast for real estate investors, business owners, and aspiring entrepreneurs looking to break into the U S market join Reed, as he interviews go getters risk takers and the best in the business about their journey towards financial freedom and the sheer joy of creating something from nothing. Ladies and gentlemen,
Reed Goossens (01:04):
And welcome to another cracking edition of investing in the U S podcast from Los Angeles. I’m your host, Rick, Goossens good as always every with us on the show. And I’m glad that you’ve all tuned into learn from my incredible guests and each and every one of them are the cream of the crop here in the United States. When it comes to real estate, investing, business, investing and entrepreneurship, each show, I try and tease out their incredible stories of how they have successfully created the businesses here in the U S how they’ve created financial freedom, massive amounts of cashflow, and ultimately create extraordinary lives for themselves and their families life by design. As I like to say, hopefully these guests will inspire all of my cracking listeners, which are you guys to get off the couch and go and take massive amounts of action. If these guys can do it.
Reed Goossens (01:50):
So can you now, as you know, I’m all about sharing the knowledge with my loyal listeners, which is you guys, and there’s absolutely no BS on this show, just straight into the nuts and bolts. Now, if you do like to show the easiest way to give back is to give us a review on iTunes, and you can follow me on Facebook and Twitter by searching at Reed Goossens. You can find the show, every podcast on iTunes, SoundCloud, Stitcher, and Google play, but you can also find these episodes up on my YouTube channel. So head over to Reed goossens.com, click on the video link, and it’ll take you to the video recordings
Reed Goossens (02:20):
Of these podcasts. You can see my ugly mug for the beautiful faces of my guests each and every week. All right, enough of me let’s get cracking and into today’s show, I the pleasure Of speaking with Max Reinbach III, the third now max currently serves as vice president client services at Roscoe property management or RPM, a full service multi-family management company based in Austin, Texas. And they are actually the property management company on our portfolio at wildland capital. He’s responsible for all the business development efforts related to the third party fee management platform. And prior to joining RPM, max served as vice-president of stream Realty’s multifamily division. And he’s also worked with both Cypress Realty advisors and apartment Realty advisors. Prior to that for several years, max was a marketing principal at Greystar real estate management. So he comes to the show with a massive amount of wealth and knowledge in the property management industry and space. And I’m really pumped to have him on the show today to share his incredible insight and knowledge. But not that, I mean, let’s get him out of here. Get IMAX. Welcome to the show. How you doing tonight?
Max Reinbach III (03:30):
Hey Reed, thanks for having me, buddy. Um, great to see it too, and in great to, uh, be a part of this wonderful, uh, podcast. Uh,
Reed Goossens (03:38):
You know, I’m really happy that you have to come on the show and share your experience. And for those people, the listeners listening out there, it’s like max has been quite influential in bringing our company or Andrew, my business partner at Walton capital over to Roscoe. And, uh, before we get into that, max, um, do you want to rewind the clock and tell me how you made your first ever dollar as a kid?
Max Reinbach III (03:59):
Yeah, sure. So, um, I grew up on a small east Texas town and, uh, outside of town on a farm, um, and looking back, you know, I’ve got a young child now, almost 17 month old, little boy max the fourth. Um, and I think about kids growing up that had allowances, or they did chores and got, you know, paid a nickel a day or a couple bucks, you know, whatever it is. Right. But they had, they had spending money and looking back on it, I never truly earned a dollar, um, growing up, I mean, from the ages of, I don’t know when you’re doing chores, what is it at seven before you can get a real job at like 15 or 16, but, uh, jokingly enough looking back. And I talked to my dad about this all the time. I worked for dinner right. And growing up and I worked for the sports teams and, and, and what I mean is, you know, I made the mistake and I jokingly say that I made the mistake to tell my dad when I was probably 11 years old, that I wanted to help maintain the farm.
Max Reinbach III (05:00):
Right. It was 60 acres. We probably had 30 head of beef cattle. Uh, we had a horse, we had three big pastures, two bass ponds, catfish, ponds, that sort of thing. And, and the big problem with that is my dad worked in the oil and gas business and he was drilling Wells all over Texas. And so he was gone a bunch. Right. And so when I took the leap and told him that, you know, I wanted to help him, he kind of said, all right, great. Here’s the keys to the tractor? Here’s the keys to the lawnmower. This is what you needed to do. I’ll see you next week. You know, so for five hours, uh, every Saturday growing up, basically, you know, more so during the spring and summertime, I was, I was more in the pastures, you know, keeping a very meticulous eye on, you know, how high the grass was growing at the bottom of the barbed wire fence.
Max Reinbach III (05:47):
Um, and you know, I, I remember, you know, when I was younger, my buddies were all at the swimming pool at the country club, in our small east Texas town, or riding their BMX bikes and doing cool stuff, you know, 11 and 12 year old kids do. And I was in the very far pasture with a, uh, one of our weed eaters. And it was a steel, super heavy weed either, probably bigger than I was definitely weighed half of what I did. And it was probably a hundred degrees, Texas heat, and, you know, three, 4:00 PM. And I remember I was so upset that I was doing that and not playing with my buddies and I sat down and started crying. Right. And I remember I got up and I threw that weighted her as far as I could probably went three feet. Right. But, um, I sat down again and I was so upset and I was like, well, I’m still at the very far back pasture.
Max Reinbach III (06:34):
And the only way I’m gonna get home was I got to walk this thing back. So I picked the weeder back up and we did it the entire way back and finish the job that I was supposed to be doing. And, um, you know, the life lessons that just the hard work and, and, and earning and, and understanding what it means to maintain and complete a mission or a task or something like that, I think has carried me throughout, you know, just my personal life and, and, and to my career and, and my decision making.
Reed Goossens (07:00):
Awesome. No, I think it’s really powerful as a kid and I didn’t grow up in 60 acres, but I grew up on 20 acres and, uh, we had horses and, you know, mowing the lawns and all that sort of stuff and getting on the weed Wacker underneath the fence, because the lawnmower or the, the slasher as we call it, didn’t get underneath the fence. But those types of morals that you build within yourself. And I remember always worked with my dad alongside of him and like, you know, we, we finished the job together, if that makes sense, like not one person knocks off early. And, uh, I do remember having that responsibility early on as a kid, you know, 13, 14, 15 living a little bit out of town, uh, from where I grew up in not easily accessible to my mates and stuff. And, uh, yeah, but it definitely builds a callus on your sort of knees and hands that you know, how to grind. Right. And I think that’s the most important thing coming out of those, that those sort of early life, childhood life lessons, so well done, but maybe walk us through the journey because obviously you’ve come from the farming land. You have that background and knowing you personally, I know you’re still very much a country boy, so how’d you make it into the big smoke and into property management?
Max Reinbach III (08:06):
Sure. Well, so I moved to Austin in 2003 when I graduated high school to come down to the university of Texas at Austin. Um, and I really fell in love with the city. I mean, it was completely different than what I grew up with, right. There was one movie theater in our town and an Austin there’s hundreds, right. And there’s, you know, multiple one way streets here that I really didn’t know how to navigate. And so it was one of those kind of overwhelming experiences. But as I got to know new people and, and, uh, you know, joined a fraternity and had all my business classes at UT and all that good stuff, it just, I kinda told myself, Hey, I’m gonna live here forever. Right. Or at least I’m going to try my damnedest to stay in Austin once I graduate from, uh, UT.
Max Reinbach III (08:46):
Um, and so I, when I graduated in, I guess, may of 2007, I was fortunate enough to have had, um, a job offer, uh, that, you know, I guess the Christmas or winter holiday, um, you know, to, you know, Brent before they ended my year, right. The last spring semester. So I went home for Christmas. Um, I had gotten a job offer or shortly thereafter. And so I knew that I was going to be working and staying in Austin. And, um, I’d interned, uh, at a company called commercial, Texas later years of my college career. And it’s just as a runner and, uh, you know, commercial, Texas is now, um, uh, purchased by Avison young. But, um, you know, one of the guys that I worked with there had encouraged me, I needed to go, went in for an interview at Cypress real estate advisors, which was two blocks down.
Max Reinbach III (09:36):
Um, and a gentleman in my office had encouraged me, you know, cause I hadn’t gotten a follow up and hadn’t heard from, it encouraged me to walk down the street, uh, where their office was and asked for the guy I interviewed with and said, Hey, remember me, maybe two weeks ago, I haven’t heard from you. I want that job the next day I got that offer letter. And so I was stoked to be able to, um, stay in Austin. So Cyprus private equity group, they, they, they now have evolved and, and, um, develop on their own account. They have their own management company, but so I joined as a financial analyst. I really touched everything. I didn’t know what the hell I was doing. Right. But as an analyst, you, you learn and you sit there around the folks that know, and there there’s a ton of smart people that work there then, and now.
Max Reinbach III (10:16):
And, um, I navigated the way through, you know, uh, actually they owned apartment complexes. They own a lot of raw land. They, they had land that they had, um, planned developments on, you know, fast forward 2010, or I guess really 2008, 2009, you know, as everyone is aware, um, if they’ve been around for the past 10 years, you know, the world kind of fell apart, right. From a financial side of things. And, um, I experienced my first layoff, um, and I told Tim Clark, who was one of the founders, one of the two brothers at Cyprus, you know, that I’d been waiting on him. It was April of 2010. When he finally let me go. And I said, look, I’ve been waiting on you to let me go, thank you for keeping me on so long. But just to let you know, I found the end of the internet.
Max Reinbach III (10:57):
Like there’s nothing else I can do to better to spend my time here. Um, so it was really grateful for he and, uh, Steve, um, to keep me on that long and, um, you know, fast forward I’ve thought about going to grad school, um, at UT my MBA. Um, and in the meantime I was studied, well, I started, started, started studying for the GMAT and I was working for a Yeti coolers actually in their warehouse, a friend of mine, Cameron Hart got me a job in the warehouse, 14 bucks an hour, doing quality control, um, studying for the GMAT, that sort of thing. I’m awful at taking tests. Right. Um, and I found a job, um, with the secondary markets team at apartment Realty advisors, which is now Newmark Knight, Frank, um, Jeff Patterson and his team, and hired me over there, um, to be their analyst.
Max Reinbach III (11:45):
Right. And so it got me back into real estate as I call it right. Or, you know, in a warehouse. Right. But I got back into the real estate business, um, after having kind of a blow, you know, getting laid off you’re 25 years old, you know, you think the world’s over, um, that I got back into the game per se. And I was with them for about nine months. Um, and you know, we underwrote probably 25,000 units. Nothing was selling at that time. Right. I really figured out that being an analyst to being behind a computer screen all day long is not something for me. Right. I think, you know, breed, you know, me, but I just, I feel like I, I do better talking to people, whether it’s existing relationships or new relationships, you know, that’s how I thrive and what I’m getting to, you know, at about month nine, it was may of 2011.
Max Reinbach III (12:29):
I got a call from, uh, Derek brown at gray star is the central Austin, or at the time, I think he’s still involved heavily in the central Austin development side of things. But for gray star, his wife actually was an accountant at Cyprus. And I’d met Derek at a Christmas party when a Cypress, his Christmas parties. And he must’ve either thought I was a nice guy or had the, had the, what it took to, to sell a management service. And long story short, I interviewed for a position at Greystar, um, in Austin, uh, to fill a gap that they had there and got the job. And, and that’s what I really recall, you know, where I’ve started my career, where I had a lot of training and a lot of just time in the trenches, um, learning to understand the, you know, learning the business and learning the modeling side of things and understanding the metrics of the multi-family side of the commercial real estate industry.
Max Reinbach III (13:19):
Um, but now I got to kind of use twofold, right. Talking to people, selling something, um, creating relationships. Um, and I was fortunate to really get my training there and, and understanding how it really works. Right. And gray star then probably had, I don’t know, 150,000 units under management. Right. And they’re such a whale of the industry right now. Um, and so, you know, I was there for about three years, really wanted to do something more entrepreneurial. Um, and Jeff Patterson, my old boss from ARA, um, decided to break away, uh, before the new mark acquisition of ARA, um, cause he wanted to do senior housing development. So we’ve always been says, Hey, do you want to come to stream? Uh, I’m going to do development. My other partners are going to do investment sales. I want you to do management. Was like, sure. Um, I remember thinking I’m not 30, I’m not married.
Max Reinbach III (14:09):
I don’t have any children. Why not? You know, what, what am I, what do I have to lose? Right. Um, so we went over there and took a stab at it all. And, and I was there for about two and a half years. And um, I got to call my cell phone rang one day. Um, and it was Angela. Good enough. Um, and Jason Berkowitz, Jason Berkowitz is the president of Roscoe, uh, property management and Angelica is the EVP executive vice president. She called me and said, Hey, this is Angela. Good enough. How are you? And I was like, kind of like, good. How are you doing? You know, um, in long story short, got courted and, and ended up, uh, taking a chance on them. And they took a chance on me. And, um, you know, I think if I wouldn’t have ever taken a leap of, you know, Hey, I’m not 30, you don’t have any children that sort of thing, um, to go try something different, the, the, the opportunity that presented itself and, you know, call it October, November of 2016 would have potentially never happened.
Max Reinbach III (15:05):
Right. Um, and so I joined with them, uh, late December Rosco, uh, joined Roscoe late December of 2016. Um, and we had roughly, let’s say 10, 12,000 units under management, um, as a third party, right. A third party, just a third party management business was roughly 10, 12,000 units that are management. Um, and fast forward to today, it’s July 10th, 2020. Um, we have roughly 40,000 units under management. So it’s been a tremendous, um, growth run so far. Right. Um, and, and, and, and, and a tremendous group of people to work with. And, and, uh, really an entrepreneurial group that really has unlocked my entrepreneurial spirit, right. To kind of let me have my own bandwidth and figure out, you know, Hey, you run business development for this company. How does that look? Right. Well, I don’t know, let me figure it out type thing. Right. So while I’m not the pure owner of the company, right. I feel very empowered to, to make business decisions for the betterment of the firm. And so, um, long winded, 20 minute answer probably, but, um, you know, this is where we are today and, and, um, couldn’t be happier with what we’ve done over the past three, four years and excited for what’s to come.
Reed Goossens (16:23):
Well, I think it really has a good example of how someone coming out of uni coming out of school has a bit of a knock through the market conditions changing, but picking yourself back up and going into those more entrepreneurial roles. And I remember when I was still in the corporate world, I always, actually, I dabbled a little bit in the big corporate stuff, but actually I really enjoyed being a big fish in a small pond and joining those smaller teams, because you could flap your wings a little bit more. Now it was maybe not as big as salary or whatever, but you’re, you’re able to be at the helm and direct the ship to where this is going to as the north star. So, um, I think it’s really admirable of you to jump and make the career change and keep, you know, moving from pillar to pillar to further your experience and your expertise, but also getting a taste of that entrepreneurial ways of starting businesses and growing them from, from the scratch, because that’s what Roscoe was, right. It really was. And for those people who don’t know Roscoe property management was an in house, um, PM firm for FMB capital, which is another multi-family acquisition company. So I guess at what stage did you guys decide to bring in third party and, and with that, was that pre your time or is that posted?
Max Reinbach III (17:34):
Yeah. So I’ll kind of give you a little bit of history here. So Jason Berkowitz, um, started Roscoe, uh, properties and we’ve rebrand re re we rebranded call it 18 months ago to RPM Roscoe property management. But Jason started Roscoe in 2002. Um, he had, when he was a senior at UT, I think he graduated 2001 maybe, but he had bought a duplex and renovated it and leased it and, and decided that, Hey, this is pretty fun, you know, to, to be in the real estate game. And I call it a Cinderella story. I’m sure, you know, whatever the right term is. I don’t know, but I think it’s pretty appropriate. He, he flipped two to four and then a fourplex to an eight Plex and eight to 16, and then started syndicating some, you know, friends and family to buy some 50 unit projects that turned into a hundred unit projects.
Max Reinbach III (18:22):
And, and really Roscoe properties was that was this business. Um, and funny story. And, uh, he went to go collect his first rent check from one of his first residents. And, and, um, they said, well, who do we make the checkout to? And he was like, Hmm, I don’t know. He had his dog with him. So he goes, make it out to Roscoe. His dog’s name is Roscoe. Um, and so that, that really stuck. And so he, as, as he started to acquire larger properties, um, and he will tell you to the, you know, he did not follow his mentor’s advice to, to not manage his own properties. Um, he said, look, he determined that that was his passion. Uh, he’ll tell you, you know, in anyone who’s got a sickness and it’s called multi-family management, thinks about it, dreams about it, stays awake about it.
Max Reinbach III (19:12):
It’s just his passion. Um, and so while he was growing his own owned portfolio, um, other groups in town said, Hey, will you take a look at ours? Um, and that was, that was probably not until maybe eight, nine, 2010, maybe. Um, and then along the way he met, uh, Hank Pharell, um, which is the F and F and B capital. So that kind of subsidiary spun off and it started as Roscoe, but then they separated it. And, but, you know, for the listeners out there, um, any potential clients, Roscoe properties as a company does not own Roscoe property management does not own any multi-family, um, assets where pure third-party, but we do, we do manage for F and B capital,
Reed Goossens (19:55):
A good snapshot of how people evolve one in terms of pivoting, because you have to, uh, you know, falling into, uh, managing your own duplex and triplex and just keeps rolling on from that. But also, you know, with other firms, they start to see that the property management is profitable and they want to hire someone like yourself, and that’s where you’ve gone out. And you’ve really helped grow that from 10,000 units to now 40,000 units under management in it with Roscoe properties, which is, you know, not a small feat whatsoever. So I guess that was the reason why I want to now segue into the, the nuts and bolts of what we got you on the show today for which is to talk about the multi-family best practices and what you’re seeing in the market. Um, before we do, I just want to quickly talk a little bit about how you quoted us, because we went through at Walt horn, a really, um, a transition, you know, and we’re, we’re new to the industry.
Reed Goossens (20:46):
We had only been a of years into it at that stage. I think we only had five properties or four properties. Um, and I remember Andrew telling me about this guy, max, and I was like, who the hell is max? You know, it keeps, keeps pestering me to come, and I’m going to get your, I’m going to get your business one day. You’re gonna get your business one day. I’m going to get business one Monday. And sure enough, we come to a point where we needed to make a transition. And, and for us, it was more to do with, we need, and I always use this analogy. We needed the BMW with the seat warmers. Like we will cruise around in a 1990 Toyota, nothing wrong with it gets you from a to B, but it just wasn’t that extra that we needed for, as we were looking to grow.
Reed Goossens (21:22):
And I think that’s where, where you guys stepped in and it was just a natural fit. We interviewed a couple of other firms, but given your persistence with Andrew, it was a very natural decision to say, yes, we’re going to go with Roscoe. And you guys obviously rolled out the red carpet for us when we came in, we felt very loved and welcome. And so I just wanted to say that little story, because it’s kudos to you and your persistence. Um, probably back to the days of throwing that weed Wacker in the, in the field to get in back up and say, I’m not going to lose this sale. And in knowing that’s a long game. Um, so just wanted to say that before we get into the sort of the best practices, but, um, yeah. Any comments on that,
Max Reinbach III (21:57):
I’m a big relationship person. And I, I pride myself on hopefully creating good relationships and, and long-standing relationships and, and being liked and respected in, in the, in the field. Um, not because I think I’m a nice guy, because I think I can add value to whatever business relationship it is or even personal relationships. Right. But, um, a broker in, in San Antonio had said, Hey, these guys are, I’ve been poking around town. And, um, they just bought a couple of deals and I, you know, once you bought a deal, it’s too late. Right. So my whole mindset was okay, well, let me just meet with Andrew he’s local. Right. Because a lot of, a lot of owners that we manage for aren’t necessarily in Austin, right. I mean, they’re out of state. Um, so, uh, it’s easy if there’s somebody that is an active buyer or somebody that wants to buy that is in the city where I live to get a lunch or a beer or play golf or whatever it is.
Max Reinbach III (22:52):
Right. I think it might’ve been, I don’t know, April, may, June of 2017, that I got wind of it and finally met with Andrew and, and basically, you know, hit it off with them. Well, or you’re, I think I did at least write it. Like I hit it off there, but I might not have. Right. But polite persistence is something that I think it is. Right. Um, but, um, long story short, you know, I kept offering to help underwrite properties with them and, and, and eventually met you. And then, and, um, just basically said, look, if there’s ever anything we can do, if there’s anyone that stubs their toe, that’s your current, you know, your current management provider, you know, let me just take a look at something with you. And, and it finally just, you know, it hit, I was actually looking through some emails earlier and I think it was June of 18 that we kind of started a conversation and then kind of took over our first, I think we took over four properties at once with you guys, that’s it, um, in January of 18.
Max Reinbach III (23:49):
Um, and thankfully, I mean, wow. I mean, a Testament to y’all’s, um, um, leadership and, and, and acquisition ability. Um, I mean, we now manage eight properties for you guys. Right. Um, and, uh, I mean, and look, our relationship as a management provider, right. We’re, we’re a vendor that has a 30 day opportunity, right. Every 30 days we’ve got to keep the business. Right. And so, um, I think that, you know, kind of leading into the best practice side of things, and the question is, you know, the people that we hire and, and, and really the folks that we, um, or how we interact from, you know, even starting with me at that the business development side of things, right. Um, down to the regional vice presidents and regional managers that get involved with the, on the guide involved with you guys on the front end to earn your trust.
Max Reinbach III (24:40):
Right. Um, but then the first property we took over the second, third, fourth, and now up to eight is, is the team that we built around. Right. So to, to kinda go into best practice, I think there there’s, there’s so many different things that, that management companies can do, um, to talk about best practice, but really at the end of the day. And I’ve had so many people say, max, thanks for your persistence. But like, I need to know, I need to talk to the person that’s going to be managing my property, like literally on the ground managing the property. And so the people, um, you know, we, we say the people behind the properties, it’s one of our slogans and, and that is true that people, um, in the business that are in the trenches day in and day out, uh, are the most important asset of any management company, right.
Max Reinbach III (25:24):
Um, that is from the Porter to the manager. And the further more to the folks that oversee from the corporate office and then all the support departments that management companies have, and that we have are imperative to our success, right. Because owners can, uh, buy a deal and maybe it’s a bad by the bat the wrong time, but there’s still operations that have to be done and done well. Um, and so really if I highlight anything on best practice, it’s the people, um, not to mention, you know, being forward thinking and, and technology forward and, and keeping up with the trends and, and using, um, you know, business intelligence and data analytics to understand, you know, what are trends look like for certain properties, or why are certain things and the sub market turning poorly. Um, but you know, marketing department practices with digital spins and, and, and, and, and strong SEO presence are huge for, um, you know, the whole picture to come together. Right. Um, there’s, you know, I think we have, I don’t know, a thousand employees now with the bulk of those being, um, the onsite folks, right. Um, but it’s, it’s the one piece of the puzzle, um, that, that creates the entire puzzle, um, you know, makes everything come together. And the biggest factor of all that is the people.
Reed Goossens (26:44):
Yeah. A hundred percent agree with that. And for those people listening out there, you know, you can underwrite and you need to underwrite well. And, and coming into pre COVID, there was pretty frothy, um, times and cap rates were really compressed. And, and that is, you know, can cause pain on the operation side when you take over an asset, but really how you get out of the gates is determined upon how well the bomb in the seat is on the property. And if you’re doing a large value at rehab controlling, that process is really important. If you get out of the starting blocks, you stumble, it’s very hard to catch up, right. And you spend a lot of time and we’ve had, you know, not to your fault at Roscoe, but just to the quality of the market of which you’re trying to pull good talent from is tough.
Reed Goossens (27:26):
Right. And you know, the differences between San Antonio and Austin, there is there’s nuances to that. And it’s really comes down to the people who are in those key regional management positions, um, understanding and, and creating teams around them that is to support the vision of which, you know, we, as owners want it to happen. And they’re stumbling all the time. Like we’re, we’re always learning, I’m learning as a, as a new owner, you guys are learning as you grow, but it’s really important that team aspect. And I, I can’t drum that home enough, that there will be challenges, uh, on assets. So let’s not lie, but having the right people in place to manage those challenges and making sure your north star is to build the best team possible. People are engaged. People feel like they own the asset, because that’s probably one of the hardest things from an owner’s point of view is making the onsite managers feel like they own the asset, right.
Reed Goossens (28:14):
So how do I empower them on a weekly call or a monthly call or whatever, to take ownership of it. And it’s their baby. And that’s been a lesson for me to have to learn to not be too overpowering and not be too, you know, coming down like, oh, I’m an owner and this didn’t go right. You know, whatever it might be, I’m saying the negative stuff, but I’m saying it from a point of view that when you’re paying someone 50 to $70,000 a year, depending on the asset to manage a 40 or $50 million asset it’s to have to go to try and find that right person to think the way that owners want to think. And I think Roscoe does a very good job at recruiting and pulling in the right team members in order to, you know, for me as an owner to feel satisfied that that is being, that box has been ticked and take away. Right.
Max Reinbach III (28:57):
Well, and in the best practice, if you think about it from kind of the high level side of thing, right? So, um, one of the biggest things we, we like to do when it’s a new client or a new opportunity with the new person is, is to really understand the client. So who is Wildwood Warren, who is Reed, who’s Andrew, um, how are they as people, are they good to work with? Are they not good to work with? Are they realistic? Are they unrealistic? Right. Right. And what I’m getting at is, is we want to do business as partners. Although we’re a third-party management company, we want to feel that we are in partnership in partnership. Excuse me. Um, and mainly because if we don’t have our, our strategies aligned right, or our interests are aligned to where we, we, we have buy-in meaning we believe that the plan that you’re trying to achieve is achievable. Um, then we can be successful together, right. Because I’ll be the first person to tell somebody you’re not going to get a $500 premium bus in $3,000 in putting vinyl plank flooring and black appliances. Right. Um, um, you know, if you, if you start out the gate, um, by understanding and being, you know, partners per se, in that mindset, then, you know, in theory, all you can do is go up. Right. Right. Um, but working through the challenges together with our clients is something that, you know, our operations team do day in, day out.
Reed Goossens (30:18):
Right. And it’s super important to self-reflect on my own ability as an asset manager, being new to the game as well, being last five years, you know, making sure that I check myself at the door, um, to make sure that I am bringing the right type of attitude when I interface with my managers onsite, even though they’re not my managers or they, they’re not my employees, but I have to sort of treat them like an employee. So we’re all rowing in the same direction. We’re all in the boat together. And we’re all going to that, you know, that same direction, because sometimes it’s hard to get in the boat together. Right. And then everyone says rowing in the opposite direction. So as a good asset manager, I need to manage you guys and your team, but they need to also the effective communication and not just telling part of where we want to go, like saying, we need to, this is where we’re going with this asset. And here’s why, and then people, people feel like, okay, I now understand, I now see the clear picture. And I feel like it all just comes down to people management at the end of the day, you know, and effective communication.
Max Reinbach III (31:09):
Yeah. Well, I mean, Jason will tell you sometimes, you know, he we’re a management company, but we’re more of an HR business. I mean, think about it. You’ve got a thousand people, right. A thousand miles to feed a thousand personalities. Um, so I mean, it’s, it’s a tremendous effort to make the dream come true, per se, on every single property, whether it’s a value add property, a stabilized cashflowing deal, um, or a brand new Lisa, you know, it takes a lot of work. It was sometimes little reward, right. But again, being in the management business can sometimes feel like a thankless job. Right?
Reed Goossens (31:44):
Most owners and most people I interview on the show, the first thing they are putting up their hand and say, I’m going to sign up for property management, you know, you know, so, um, but it’s, it’s definitely, uh, it is a thankless business and it’s something that you, but it needs to happen. It needs to be done well. And I think Roscoe’s doing it doing such a great job. Here’s what I’d tell,
Max Reinbach III (32:00):
You know, several people, I mean, it’s a recession proof business. Um, there’s always going to be, uh, properties to be our main, uh, unit at the apartment communities to be leased. There’s people that are always going to rent an apartment, um, good, bad, or indifferent, great people. Right. Um, but there’s always going to be somebody that needs to change that air filter or fix that light bulb or, or at least that apartment. Right. And so, um, the apartment business feeds a lot of people. Right. Um, and it th that there’s a reward in that. Right. And, and for me, if we’re able to add, you know, 10,000 units a year or 5,000, whatever it may be, if we’re growing, that means employing more people, um, and really hopefully changing people’s lives for the better, right. Because, you know, they, people that rent an apartment trust you with their home and think about it, that’s their home, their biggest check they’re out every month to live in a box, right.
Max Reinbach III (32:58):
Um, with their decorations is where their kids take their first steps. That’s where they cook their family meals. And it’s a very personal, if you really boil it down, it’s a very personal experience. Um, and kind of best practice going back to the people that they first meet when they walk in the door, um, you know, the attitude of the person greeting them can change their entire day. Right? So it’s, it’s customer service, number one, um, and inner personal communication is huge in this business. And, um, you know, there is reward, right? We say, it’s a thankless job, right. But there’s tons of reward if you boil it down to think about the, I mean, think about it. We, we probably service at least 50, 60,000 residents in the 40,000 units that we manage. I mean, that, that’s a huge impact. Um, and that’s the cost, how many sites, so, uh, we’re headquartered in Austin.
Max Reinbach III (33:49):
Um, but we have regional offices in Houston, Dallas, and our Dallas Fort worth, Houston, Dallas, Fort worth, and San Antonio. Um, we’ll be opening an office in the Phoenix MSA. Um, and we, we have a presence between Tampa and Orlando with plans to expand deeper into the Southeast. So the Sunbelt markets, um, we also in Colorado, I thought, yeah, we, we, we had, gosh, probably 1500 units. And, and, um, in the Denver MSA, um, for probably two years, it was, uh, uh, several class, a lease ups that we start from start to finish, um, that unfortunately in today’s business climate, the merchant builder mentality is, um, has been super successful. Um, and so the, our efforts in growing Denver were unsuccessful per se, right. But there’s, there’s big plans to, uh, make a big splash back into Denver soon.
Reed Goossens (34:40):
Awesome. Awesome. Well, I want to pivot here as we come towards in the show, just talk a little bit about what you’re seeing in the Austin market, or maybe even nationwide as we’re coming out of COVID or quote unquote coming out of COVID. Cause I know there’s potential second wave here in the Austin market. As, uh, as the 10th of July here, I know all our leasing centers are closed, uh, across our portfolio. So maybe give any sort of statistics that you can point to in terms of collections or in terms of, uh, demand or in terms of just people moving to different markets around the country, given that you, your headquarters is in Austin.
Max Reinbach III (35:13):
Sure. You know, I’ll go high level for, let’s say Texas, right? Cause the bulk of our, you know, 98% of the 40,000 units is in the four major markets in Texas. But once all this hit, I mean, I remember March 13th was kind of the day for us to kind of sit back and go, you know, folks from the corporate offices go home. You know, our, our executive team immediately got to work on, on policies and procedures and do’s don’ts and Gaz constantly been navigating the COVID protocols that are ever changing. And, you know, I remember thinking, gosh, you know, I thought 80% of people would pay their rent in April, right. Because all the news came about about you can’t evict anybody and people were losing jobs and that sort of thing. And, and um, in April we collected 98% of billed rents and our entire portfolio.
Max Reinbach III (36:00):
And I remember thinking, great, I’ll be optimistic about may we move into, may we collected 98% again? Um, and I kept pushing it a month, right. I was talking to a potential client earlier today and I said, I’ll be optimistic until December, if we keep collecting these rents like this. Right. But, um, so 98%, April 98% may, June. Um, we are, uh, we, we, we, we tickled 98%. Um, and into July right now, Rick collections are super strong and typically all rents due by the fifth or you’re, you’re getting filed for eviction, but that, that the policies have been very, um, relaxed. Um, and, and having people go on payment plans. So, you know, in a couple of weeks, you know, in another 10 days or so, we’ll be able to really have a grip on where we think collections will be for July. Um, but I I’m, I am personally, um, encouraged by the strong, um, rent collection data, um, because people are prioritizing paying for their rent and job or not. Right. Um, the stimulus checks and unemployment, if you, if I had to go that route, but, um, that’s for action. So just generally speaking, if you look at the marketplace, um, my opinion, right. Rents are flat, um, new leases at least, right. Um,
Reed Goossens (37:17):
Yeah, no, continue to be flat, right. You think in the next, yeah.
Max Reinbach III (37:20):
I mean, any deal that anyone’s buying likely to there’s 0% rent growth in year one and maybe two in year, 2% in year two, and then maybe take back up to three to four in year three, just God willing. We can all make, you know, we can make it through all this pandemic stuff. And, um, but the big focus is, is occupancy, right? So closing the back door per se, on a stabilized property. Um, so not trying to hammer, um, renewables at, you know, five, 10% renewal. We’re, we’re really working to keep residents. Um, if they’re happy, you know, and want to stay there, or don’t have some type of life event that has occurred, we want to keep them. And so a lot of renewals are you’re seeing flat. Um, there are some pockets where there’s been deals that clients have purchased that there’s been long-term ownership.
Max Reinbach III (38:05):
They were occupancy focused to where we knew that there was some rent, uh, uh, upward mobility. And so we have had some communities that have had, um, very strong, uh, new lease percentage increases over old leases. Um, but really it’s flat. I will tell you that, um, we made the decision to be very careful with our staff and our residents to close offices and, and be very thoughtful about the cleanliness of the communal space and the amenity space and, and the offices and, um, throughout, um, you know, this new normal, if you want to call it that we’re still leasing apartments. Um, whether it’s virtually, um, at one point we were doing it by appointment with masks. Um, now we’re doing still doing virtual tours, still doing self guided tours. Um, online leasing is still huge for us. Um, we’re still leasing apartments and deals that are in lease-up, we’re still getting 20 leases a month. Right. Um, that is in most cases, people’s proforma, right. And so, um, I’m encouraged now. I don’t have a crystal ball to, to understand what’s going to happen tomorrow or what’s going to happen in August. And, and, but like I said, God willing, um, the, the, the, the market continues to be steady. Uh, and, and, and hopefully it doesn’t slide backwards. Um, why
Reed Goossens (39:24):
Do you think there’s going to be any cap rate expansion in potential sales coming here in Q3, Q4?
Max Reinbach III (39:30):
Yeah. I mean, it cap rate expansion, it only deals with what’s is based upon what price the seller will let a deal go. Right. Right. So I haven’t seen any quote unquote, blood in the water right. Or heard of any major, um, you know, people losing their butts per se, but, you know, they’re, if you talk to the brokerage community, you will say, they will tell you likely that there’s somewhere three to 5%, um, uh, in price reduction, um, whether it’s a retrade or, or just, they’re not hitting their strike. Um, but again, cap rate compression or cap rate expansion, per se. I think really, if you boil it down to it, it’s, if I’m a seller like your portfolio, what are you willing to sell your property? You know, are you able to hit your numbers by taking a 10% less, you know, value or do you have to hold on to pay your pref and pay your investors back?
Max Reinbach III (40:21):
Um, so I, I wish I could tell the, your listeners out there that, you know, come into Austin, Texas, baby it’s it’s on fire, right. It’s the best deals ever. There are deals being done still. I mean, it’s funny over the past 45 days, you know, from March to, let’s say, I don’t know, just say March to June 1st or March to May 15th or whatever it is. The, the, the blast, the email blast from the brokers were there was nothing coming out. And then I think everyone was like, guys, let’s test the market, let’s go to market. Right. And let’s get the interested parties. And so deals are still getting done. Um, the brokers are still calling for offers, I think, which is extremely encouraging. Um, you know, I went on a property tour, uh, on Monday, um, for a project that was, you know, just came out on the market and wore a mask and was very careful and that sort of thing. And it’s encouraging to, to continue business as usual, um, whatever that means, right. Whatever that means. Right. And look and tell for me as a people, persons, I thrive on getting out of the house to go to work and, and, and try to make a difference. And whether it’s personally, professionally, whatever it is. And, and so I pray that, you know, the will pick back up and we can all get back to work.
Reed Goossens (41:35):
And I think part of what we’re seeing, you know, as well, and you would be seeing over 50,000 units is unfortunately the lower demographics are being affected. Right. We have had ski, you know, just to sort of be the other side of the column we have had skips. And I know, you know, you know that, and, um, but that’s where people are getting scared or freaked out in the market as renters. They can’t, they don’t think they can afford rent and some assets of cycling through this. And we’ve got a couple of them and other assets are getting a bit of a stumbling blocks. And I feel like the longer it goes on for, and the more uncertainty there is in the market, or, you know, where where’s the, the end of the tunnel, the more maybe the T it goes back to people, you know, there’s businesses, people, business that tenants feel like they can’t afford the rent and they, they get flighting and they skip, or they have to move out with, with friends and family.
Reed Goossens (42:20):
So, um, depends, I think it depends on where you are in your MSA and your business plan, how you are turning your, your rent roll will determine really where, how well or not your asset will cruise through COVID or not. And, and I think in the longterm two years from now, we’ll look back and laugh. But I think right now is when the coalface was still quite close to the fire. Um, it’s, it is sort of month to month, week to week at, at this point in time, uh, until pretty, I think pretty much the end of the year, the only thing I don’t, I can’t see anything changing really.
Max Reinbach III (42:50):
I’ve, I’ve, uh, I’ve made this comment to several people, you know, you’re an acquisitions guy, you unrented on a five to seven year hold. Most cases you’re selling your three, right. In a green market, cause you’ve already hit your returns. Right. You know, you’re, you’re going to be able to return money to your investors, you know, given the, this, this crisis or pandemic, whatever, you know, people want to call it, you might just have to extend your, your, your underwrite by those two years, because you have the bandwidth, or you have the, um, the, the proforma that states X, Y, and Z. Now, if there’s a, just a complete catastrophe for whatever reason, then it will be completely out of whack. Right. But it’s patients. Right. And then a lot of us have, you know, in the business, uh, have seen just amazing success, you know, from people that are buying deals low and selling them extremely high or, or, you know, there’s deals that have traded three times the cycle already. Right. Um, and it’s still one of the longest cycles, right. 10 plus years. So let’s hope we can all keep moving forward. Exactly.
Reed Goossens (43:49):
Exactly. Well, we like to get to the end of the show and we like to dive into the top five investing tips, ready to get into it. You bet, mate, what is daily habit? You practice to keep on track towards your goals?
Max Reinbach III (44:02):
You know, um, I used to be asleep in type guy and my wife and I had a son, uh, roughly 17 months ago. And so that’s made me go to bed earlier and get up early and, and really trying to get to the gym a couple, three times a week or so. Um, but trying to reflect on how lucky we all are, right. Um, whether it’s a family or in our careers, but just really practicing, you know, thankfulness, um, and, and staying realistic about where I am in my life and, and, and where I want to go. And, and just really going back to the fact that happiness is key, right? So just staying humble and, and, and, and trying to do my best every day, um, for the people I work with and for the people that, you know, look up to me or rely on me
Reed Goossens (44:48):
Yeah. A hundred percent. I think it’s really important as we come through, particularly in these times, right. Where so much uncertainty having that quiet time in the morning to do a bit of self-reflection bit of gratitude, um, and being humble, um, I think helps us mentally, um, keep, keep, keep chatting these uncharted territories and waters, and that we’re currently going through right now. So I think that’s a really, really awesome stuff. Uh, question number two is who has been the most influential person in your career to date?
Max Reinbach III (45:17):
You know, I I’ve, I’ve shaken a lot of hands. Right. Um, and, and I, I feel like I’ve learned from so many different people along the way. Um, you know, this will sound corny, but going back to growing up and, and having, you know, my parents instilled in me a great work ethic and then meeting my wife, who was an extremely passionate person who challenges me every day to be better. Um, but from a work side of things, I mean, I’ve had many mentors, you know, Tim Clark gave me a chance to my first job. Right. Um, helped me on, you know, Stacy hunt, gray star, who, who really is the king of business development, um, you know, in our, in the multi-family industry, was it an extreme, um, benefit for me to, to, to look at and to, to learn from, um, but really now, I mean, Jason Berkowitz and easily good enough. And the team here at Roscoe, um, who have made me realize my worth and have, have, let me have my own bandwidth to stumble and fall. Right. Um, or to, uh, see great success. Um, so I, I can credit many, many, many people, but those are just some of the few
Reed Goossens (46:27):
Awesome, awesome stuff. Uh, question number three is what is the most influential tool in your business that you use on a daily basis? And when I say tool, it could be a physical tool, like a journal or a phone, or it could be a piece of software that you just cannot handle your day without it. What is it?
Max Reinbach III (46:42):
Well, I’ll tell you lately, it’s zoom, right? I mean, we’re staring at each other right now, thousands of miles away from each other, but, um, you know, I, I think technology in general, uh, I mean, gosh, um, I’m old school and, and still use a scribble pad, but you know, several members of my team use Salesforce to keep up with what’s going on in our pipeline. But you know, me being a, um, face-to-face type person, um, and thriving on having a coffee or a lunch or a beer, um, to get to know someone and create a relationship, um, is, is, is, is how I feel I get up and then do my day to day everyday. But literally, I mean, zoom throughout this process as has been the way that I can see people and read reactions to if I’m pitching business or, um, um, you know, even just giving an update on something it’s very hard to, um, understand, um, what the other person receiving, you’re saying, if you’re just talking on the telephone. Right, right,
Reed Goossens (47:42):
Right, right. No, I think Zoom’s their stock price must be going through the roof right now. Everyone’s using it. My question number four is in one sentence, what has been the biggest failure in your career? What’d you learn from that fight?
Max Reinbach III (47:55):
Sure. Um, gosh, I’ve been working for 13 years now and, and which is a tiny speck on the time spectrum of, of a career. Right. So I think, I think I’ve had thousands of failures, right? Whether it was not being the best at Excel and turning in a poor report or, um, uh, maybe not taking the advice of a mentor correctly. Um, we’re not training someone that reports to me effectively to where they’re not growing. Right. Um, but I think even just failure and maybe, you know, approaching something the wrong way in a pitch and maybe not winning the business that way. I mean, there’s so many failures, it’s hard to point to one, or I wish I could say, this is the only time I’ve messed up and this is what happened. Um, and it turned in my, my, my life left versus, right, right. I think that the failures that we all experience, we might not even know it. Right. Um, uh, what we failed at, I think helped shape our, you know, our life and our careers, lessons,
Reed Goossens (48:55):
Rot, and stumbling stones or valley is a lesson. So I completely agree with that and we all will have them and we’ll continue to have them as, as we grow and evolve as people, as humans, as leaders, as investors and all the rest of it. So, yeah. Good answer. My last question is where can people reach you to continue the conversation they want to be in your sphere? Where do they go?
Max Reinbach III (49:16):
Gosh, you find me on every social media platform out there. Uh, my cell phone is great. Um, uh, you can always get me there. 5 1 2 6 0 8 5 4 1 9. Uh, my work email is max dot Rhinebeck. That’s R E I N B as in Bravo, a C H at R P as in Paul, M as in max living L I V I N g.com. Awesome.
Reed Goossens (49:41):
Awesome stuff, Mike. Well, look, I want to thank you so much for jumping on the show today. I just want to reflect some of the things that I took away from today’s episode. I think, you know, having the, the art of the hustle and learning that from a young age is definitely something that I know you personally. And I know that you’ve worked really, really hard, um, and you’re not afraid to roll up the sleeves and get it done. All of a sudden, I think the biggest thing I took away from you today is one your humbleness. But to your ability to look at this business in property management, as a people business, you’re helping so many people from employing, but also providing a shelter and a home for you. You said nearly 50,000 people, which is which you seems like the juices flow within you to make you get up every day to go to work, to do that. And I think that’s really admirable. And through that, all the lessons you’ve learned along the way to bring you to this point. And, and I think just, you know, being in the people business is tough and it can be sometimes thankless, but I know that you do it, um, day in, day out, and it’s like, you do it because it makes you tick and you do it because you love it. So I think that is some of the big things that I took away to. Did I leave anything
Max Reinbach III (50:43):
Out? No, I mean, look, I I’ll be the first one to tell you that, that, um, you know, my passion is getting the business and then I trust the team that, uh, has been built behind me, um, to operate the business. And without me given the trust up right. And giving it to them, you know, I wouldn’t be successful if they weren’t successful. Um, and I truly believe that, um, that, um, if they continue to do what’s right and continue to operate in the correct way, then we can all be successful together. I truly believe in teamwork and I’ve been thankful to be blessed with where I am today.
Reed Goossens (51:19):
A hundred percent. Couldn’t agree more. Well, my look, enjoy the rest of your week and thank you so much for jumping back on the show today and we’ll catch up very, very,
Max Reinbach III (51:27):
Absolutely thank you for the opportunity to speak with you today.
Reed Goossens (51:30):
Well, they have another cracking episode. Jam-packed with some incredible advice from max and just his journey over the years, coming to where he is today, being humble, being very self-aware. And as we grow through COVID and in the business of property management being sometimes thankless, uh, and understanding that it is very much a people based business. If you do like this episode, please remember reach out to firstname.lastname@example.org or I thank you all again for taking some time out of your day to tune in, to continue to grow your financial IQ, because it’s what we’re all about here on this show. And if you do like this show, please jump over to iTunes and give a five star review, and we’re going to do it all again next week. So remember be bold, be brave and go give life crack.