YOUR DAILY REAL ESTATE INVESTMENT SHOW
May 8, 2022

All Things Property Management with Shawn Johnson

Tune into the 24th episode of Cash Flow Pro, where we talk about property management with Shawn Johnson from HomeVault. Shawn went from flying helicopters and potentially going to flight school to flipping his first house and eventually starting...


Tune into the 24th episode of Cash Flow Pro, where we talk about property management with Shawn Johnson from HomeVault. Shawn went from flying helicopters and potentially going to flight school to flipping his first house and eventually starting his own property management company. Today, Shawn conducts business in more than 4 States. 

 

HomeVault aims to diversify its services with niche experts that cater to all sorts of single-family property management needs. They mix passion and skill to ensure that homeowners, tenants, and properties are taken care of and provided transparent services, tools, and systems. 

 

In this episode, we discuss:

  • Goals and finding new paths 
  • Growing your business and generating leads 
  • Challenges that arise in property management 

 

If you are interested in learning more about what it takes to be a property manager and how to scale your business, make sure to tune in to this episode to find out more!

 

Find your flow, 

Casey Brown

 

Resources mentioned in this podcast:

  1. https://www.linkedin.com/in/shawn-johnson-a6b71813/
  2. https://homevault.com/team/
Transcript

Casey Brown  0:00  
Sounds good. Hey there, and welcome to the cash flow pro podcast and channel, I want to welcome you to your daily investing podcast. And today I am here with Jason with home vault. Shawn and I were talking prior to the show, and he was just telling me all of the ins and outs of everything they've got going on. And I can't wait for you all to hear exactly what he's going to tell us, Sean, how are you today?

Unknown Speaker  0:36  
I'm good, Casey, thanks for having me on.

Casey Brown  0:39  
Awesome, man. That's great. I was just, I'm just intrigued with this whole, this whole thing, and I can't wait for you to tell us more about it. So tell us, I want to hear a little bit first about the backstory. And I know my listeners, you know, we usually always kind of dig into to maybe where somebody was when they started. Maybe somebody had just, you know, whatever the case was, when you got started, you were like, Hey, man, I want to be there. And then of course, that kind of is leading you to where you are today. So start with tell us a little bit about how you got started.

Unknown Speaker  1:08  
Yeah, so believe it or not, I was I was flying helicopters. Going to go into flight school, and I bought a house in Phoenix, Arizona. And this was 2002 to 2004. And I literally wanted to live in the house long enough to avoid capital gains, two years, and it was live in flip that I didn't know nothing to really I just did some, you know, basic handyman stuff. And by pure luck, was able to sell that house for a $65,000 profit because the market was stupid, stupid, crazy, like it is today.

Casey Brown  1:46  
Sounds familiar? Yeah, they really

Unknown Speaker  1:49  
kind of got the real estate fire in my belly. And that's what kind of sparked my interest in in this lifestyle. So

Casey Brown  1:58  
awesome. Awesome. Well, that that kind of brings us to a little bit of course. And again, I'm notorious in my house for repeating things to my kids, but they don't listen, I know my listeners, listen. So. But what I always try to go back to like, you know, you make a profit like that, because there's always that thought of don't ever sell. But then there's that thought of how do you how do you turn down? Or how do you say i Your 65,000 really isn't good enough for me. But what I'm getting at is, is if you were looking back today, the dips that we've been through and the peaks that we've had since 2000, what will so you would have sold it oh four right.

Unknown Speaker  2:36  
Smart loss theory. Okay, if Oh, four. Yeah. So So

Casey Brown  2:39  
from Oh, four to today, as many peaks and valleys we've had what do you think that that that total profit on that house would be would be today? So 65,000? Oh, 2204. What does that house worth today?

Unknown Speaker  2:52  
Yeah, that house is probably worth 425 I'm guessing I bought it at 125. So yes, the regret is I shouldn't have sold it. college kid.

Casey Brown  3:05  
But But no, but I mean, 60 and that's that's the that's the you know, the lawyer scale that always balance you know, that's the scale, what do you how do you just say, Hey, you're 65,000 isn't good enough for me. And and I need more. And then it just it's, it's it's an unbelievable, but I go back and say look at look at the difference. I mean, that Mark is nothing but golf gone up. And I assume obviously, you took the 65,000 and probably reinvested it and wasn't a total loss. I mean, what like you just completely lost 300 more college loans. Well, so yeah, I mean, so so so then you're, you know, you're, you're not paying interest on other things. And so I get it, but anyway, so that lit the fire in your belly, and that's Oh, four. So 18 years ago, roughly. Well, yeah, if it was May of Oh, four that just shoot that's dang near eight deaths a year 18 years ago. So what what did you do after that? She paid off school loans. And then you just went to like w two working or had you already been flying helicopters?

Unknown Speaker  4:09  
Yeah, so I didn't finish flight school, went to the web to work in was flying out of San Diego, California. And I set this goal so at the time and C 2004. I was 22 years old. And the goal was to own three rental properties by the age of 27. That was my goal. And I didn't reinvest this remember, this was the payoffs you know, flight school and and I had a business degree as well and pay off that kind of stuff. And I did not make the goal. It was super depressing. 27 hits and I'm depressed because I didn't meet this goal. And so I really refocused and started my wife and I started really getting you know, bearing down on real estate investing at that point. So,

Casey Brown  5:00  
yeah, well, you know, and then you hit too too hard points there that we always talk about. And that's that's goals. For one. I mean, you know, your goals have to be attainable for one. And I think that's a very attainable goal. But the second word that you hit on there that I that I'm adamant about is focus. And I'm bad about that myself. So I don't want to act like I'm the kind of the I'm kind of calling the kettle black there. I mean, it's, it's one of those things where if you don't focus, you don't have that goal. You know, that happens, just like you said, you just you get there and you're like, oh, wait, what? If I already have this? And I'm supposed to be here, there, whatever. So, so, so yeah, sorry. So you all refocused? And then what was your first step in towards actually saying, hey, let's maybe push this goal out a little bit. Give us some more time. And let's really get going. So what was the next step?

Unknown Speaker  5:51  
Yeah. So we moved. It took a pay raise to move away from California. And my wife and I started a property management firm in Farmington, New Mexico. And we figured, you know, that was a good way for us to have a continued lead source of real estate investing. Sure, that's exactly what was on ball. Right. Yeah, back then it was called independence, capital property management. And we've rebranded since then and done a national rollout. But yeah, so yeah, that was that was the mission that was 2000. Fast forward to 2012, we started buying properties one by one, when our clients don't want it anymore, back then the market was way softer. Sure, you could pick up real estate and especially with tired landlords, I'm just sick of having this rental property and you guys don't sell it, but if you want to sell it, I'll buy it. It was kind of a conversation. You know,

Casey Brown  6:50  
we run into here a lot and a lot of our local we have a local military population, I mean, a pretty pretty heavy military population, what happens is, as people move in, now, this I'm talking more of single family kind of stuff, and I we're gonna get to what your what your deal is, but people move in. And what happens is as the market shifts, and they've paid too much for a house, and they're like, gosh, dang it, all of a sudden, now all of a sudden, their landlords, unintentional landlords, they have a VA mortgage, they can't really afford to move somewhere else and buy something else or rent something else with a payment here. So obviously, the out is to say, Hey, I'm just going to rent this well, then what exactly to what you just said they become tired landlords, and they're there the market starts, like it's doing now back up, and they're like, Hey, man, we can make a little bit or we can at least pay our mortgage off and I can tell you people call us a hedge, I just want to pay my mortgage off and then you can just hear the elation in their voice and you're like, Hey, how about we pay that mortgage off and get you 15 grand or whatever over that? I mean, you know, there's so is that the kind of scenario Are you single family kind of stuff? Yeah, that's

Unknown Speaker  7:56  
exactly right. Single family. A lot of them were bought on real estate contracts or owner finance. Oh, yeah. A lot of have bought that way and zero down sometimes zero interest and just creative financing was is was

Casey Brown  8:11  
the people get the then the owners get the income without having to change the light bulbs or pay to change like to worry about a mortgage is being paid. Yeah, yeah. And so it's so it secures everybody, but then you're getting compensated for your service, your service business, but you're compensating yourself and building EQ. I mean, that's, that's like, you know, you hear a win win situation. That's like win, win, win win. That's, that's everybody all the way around, the bank gets their money, the owner gets their house payment, you get to build equity, and somebody gets to rent a place to live. I mean, that's, dude. That's an All right now. So what year is this? Go back what years this is pre OA? Well, yeah. This is post everybody pulling their hair out, as you can tell, mine's all gone. And so, you know, we just we came, so that's 2012. Now, you're in New Mexico, property management business. 2012. You're buying these how many doors? Did that end up being before? Maybe like your first day expansion into into? How did that look?

Unknown Speaker  9:26  
Probably about 2323 or so. And then before it was more expansion, it's gotten to like 36 single families. Wow. In commercial, we really liked some commercial stuff. We've got an interesting, like a long term government. Lease. Yeah, that man, that's a cash flowing cow.

Casey Brown  9:52  
Oh, sure. I mean, who doesn't want the full faith? I mean, you know, everybody talks about all this or that or The other bit I guarantee you that right there is just as good as the gold that used to backup our currency. I mean, government lease, man, they're there. That's that's pretty solid date. And that's great. So 30, would you say 3233 636 36 single families and some commercial? Now, this by now, so is that where it's grown to now? I mean, yeah, it's what you're at now. Man. That's killer. Any of those any of those owner financing contracts still left or have you been?

Unknown Speaker  10:32  
Yeah, quite a few of them are we've we've refinanced some of them, they were on a shorter term owner finance, but, man, there's several, probably six or seven that are still owner financed. Yeah.

Casey Brown  10:45  
I mean, that's just that's just money in the bank. I mean, that's, that's a that's what the what I always call in the show mailbox money. I mean, that's just, it's money you go pick up now. So the property management company itself, do you do? Do you you had told me I think prior to the show that you're in seven states, six state seven markets? Yeah, state seven markets. So talk a little bit about that. I mean, so So you're obviously doing your own owner, you know, your honor management with what you've got there? And then what does it look like? Because in the in the real estate, syndication world, you know, property managers and interviewing property managers is like, I mean, that's he, that's one of the biggest, I don't even want to call it a speed bump, it's like one of the biggest, you know, blocks you've got to drive over is to figure out because, A, you don't want somebody stealing your money. B, you don't want somebody neglecting your property. And see, I mean, which both of those go to the C's trust. And, man, it's such a so if you're, if you can scale that into some type of forward looking business, I mean, how did you How are you able to scale that?

Unknown Speaker  11:59  
Yeah, so I'm really just relationships and you know, local relationships really. And then what? Why it's in multiple states in multiple markets. We've done some acquisitions in other markets, like Albuquerque, New Mexico, and expanded throughout New Mexico. And then was was really a group of guys in a mastermind that were all property managers running things by running things past each other to really learn the business. And we decided, let's, let's merge some of these together and, and make a national brand from it. And that's kind of how that formed.

Casey Brown  12:36  
Do you take on third party like a safe I like I'd say I own I own 100 units in Roswell? Do I call you and say, Hey, man, I want to talk to you all about being a property manager of my of my buildings? Or is this solely just stuff that you and your, your guys are doing?

Unknown Speaker  12:54  
Yeah, great question. 90% of it. 95% of it is all third party and we Oh, wow. A family. So it's not actually any multi. So.

Casey Brown  13:04  
Okay, what do you what do you feel is the biggest challenge with the single family? Of course, we don't have a lot of I don't, you know, we don't do a lot of syndication stuff with with single family. What do you feel like is the biggest challenge from a property management standpoint, especially if there's single family owners out there that are, you know, looking to move or thinking about leasing out? What's the biggest challenge there?

Unknown Speaker  13:27  
Yeah, it's, it's managing expectations, just like anything, I think people have a different preconception of what it looks like to be a landlord and then understanding the financial backing and, you know, the capital that it takes to run an effective, you know, single family or business, I call them a business because it should be treated like a business. Yeah. But that that lack of understanding or expectation is just not, not easily gravitated towards, you know, it's education and experience and get people to do that.

Casey Brown  14:01  
Well, and, you know, in a lot of times, especially from the investment stamp of investor standpoint, like like when you're when you're an investment, investment relations, you know, like in a, the expectations that people have, like, like, I had a guy tell me one time that one of the biggest things about being a real estate agent, was being able to call somebody and talk to them when you really don't have anything to tell them. Does that make sense? Like us, you call it like your your, your homeowner wants to hear from from from Why isn't Shawn called this week? I hadn't heard from him. Well, you know, Sean's busy doing other things. But that homeowner doesn't doesn't seem to know that, hey, Shawn, really has anything to tell you. I mean, they pay their rent on the way whatever. And so managing those expectations is really like some I can master that you're you can you can scale to just about anything you Want to scale to? Yeah? So how many how many total doors is home vault responsible for

Unknown Speaker  15:08  
just a little bit over 700. And I wish they were 700 in one apartment complex, but they're 700 scattered and six, six states?

Casey Brown  15:21  
How many? How many different properties is the 700? Makeup?

Unknown Speaker  15:26  
As far as like the size? You mean? Or? Yeah, like, is there?

Casey Brown  15:29  
Is there anything like 50 unit complexes or anything like that? Or they just say six unit

Unknown Speaker  15:33  
or less? Yeah.

Casey Brown  15:35  
Oh, my Wow, man

Unknown Speaker  15:38  
years, which is a challenge and a beast?

Casey Brown  15:41  
Yes. I mean, you're doing things that that that I mean, people have been trying to figure out, because I've always said, if somebody could, it's kind of like desalinating saltwater, the person that figured that out was a genius. And I always said, the apartment that figures out how to scale, single family ownership, or like single family rental management, I mean, to Ascena when I'm saying scale, the scale like y'all are doing. I mean, that's, that's unbelievable. And I can only assume that the hierarchy from from there goes, you know, you all at the top. And then of course, you've probably got sub managers for you know, and then and then on down to the people that actually change the light bulbs and unclogging toilets, but, but what, you know, I guess, the then the next thing that kind of clicks in my mind is, is expense, you know, and of course, there was always a, there was always an idea that, hey, property management is, you know, 10%, you just, you do 10%. And I can only assume that with the setup like that, I mean, you, you couldn't be doing a whole lot less than 10%. I don't want you to necessarily disclose what you're doing for anybody else. But I just mean, the expense of that has got to be huge.

Unknown Speaker  16:53  
Yeah, you really how we keep expenses down as we we like to have remote team members, virtual assistants, remote team members, we, we pull them in just like any other employee, they're part of the team. They're highly skilled. I mean, we have people with PhDs and engineering degrees and whatnot, across the country or across the world that work for us. And then so that's a, you know, labor expense is your biggest expense. And, and then the scalability, you did do get some economies of scale of trying to back end and corporate ties, the property management have a playbook and how you operate the management side. But really, yeah, you can't, you know, in the in the multifamily space, I have a small GP share in a in a 200, or 357. bed in Weatherford, Oklahoma. Oh, yeah. And, you know, the management of that is, you know, management fee, plus, you get to, you get to pay for all the labor and you know, the expenses, the property and whatnot, in the single family world is the opposite. We pay all those expenses and pass the cost through management fees or additional services. So it's really kind of a flop and, and yeah, we like to, we like to average a lot more than 10% per per door, because, you know, like, treating residents and giving them the services that they need. We do like Resident benefit packages on a monthly basis that help provide them services, like we drop ship filters for their HVAC units, so they don't forget magically forget.

Casey Brown  18:31  
That's always been the, that's the, that's the part of scaling. That's what I'm talking about. Like, like, I don't even own house, but dropship and H back filters. I mean, and that's the thing, and from a homeowner standpoint, they're like it almost seeing that that's the communication part of it that I'm talking about. And, and the idea that that homeowners like well, that's kind of unnecessary, monthly, whatever, but But you know, at the same time, that six or 810 12 $15,000 H HVAC unit goes out because somebody didn't. You know, I mean, it's, that's, that's we saw

Unknown Speaker  19:10  
a 15% drop in our maintenance calls on HVAC units, because we do this service that saves our clients. Let's save our clients, tons of money.

Casey Brown  19:21  
Wow, our listeners out there change your air filters. Man a lot. That's unreal. That is absolutely. You

Unknown Speaker  19:32  
know, there are services out there that do that do so much of the work for you. And yeah,

Casey Brown  19:36  
well, that's the Amazon, you just you just plug it in Amazon Subscribe and Save and move on. I mean, it just it just dropship the filters there every month and be done with it. I mean, that's, that's the part of this whole, this whole post Amazon world that we're in is is you know, setting and forgetting and that's that's the big like scaling and that's that's the part of it. So So on the on the management side, I guess I want to, you know, the property management stuff that I've been involved with, has always been an absolute headache. Like, I mean, it's just so you all are doing these things and and it's not that it's a headache necessarily because somebody's it's somebody's home they're living in, they want water at their, you know, their toilet, it's not flush, and whatever the case is, but I'm talking about from a service standpoint, it's basically just a nightmare. So you all are managing 700 units across six markets, seven markets, six states, and you found a way to scale it by use of tight like dropship kind of things and stuff like that. Now, what's, what's the next step? Like? Where are we headed? Are we are we just going to continue to grow one one door to time? Are you looking at like, well, like, where are we headed to?

Unknown Speaker  20:58  
Yeah, yeah. So acquisitions, we, we want to buy more portfolios. Like, there's a lot of tired property management company owners that, you know, it's stressful, it's hard to scale. We'll, we'll give them their out, you know, if they want an out or just acquire and we really want the people to stay on board and, and manage those portfolios, we do focus on the markets we're into. Yeah,

Casey Brown  21:23  
I was gonna say what states what's go ahead and list that if you don't mind list the states in the markets that we're talking about. I mean, is that is that something you don't care if you if you get up?

Unknown Speaker  21:31  
Oh, yeah, I'll share it. Yeah, absolutely. It's on our website to Flagstaff, Arizona, Denver, Colorado, Farmington in Albuquerque, New Mexico, Charlotte, North Carolina, Oak Hill, South Carolina, and Bonita Springs, Florida.

Casey Brown  21:46  
My gosh, Man, that sounds I was thinking like New Mexico, Colorado, Utah. Like this guy's talking to six states where, but do so that's like, getting on jets and having to go talk to people. I mean, that's people for that. Yeah, definitely. And, of course, the virtual assistant world. And I was I was talking about the other day, and you know, not that not to discount but but some of my, some of my personal, close, closest friends that work for me right now are in the Philippines. And they've been working for me for several years. And I mean, they're like family, you know, they take Good Friday off, we take a week at Chris, you know, we just it's a business, but But you have to treat them like family, because they are people too. But the bottom line is, is that you can like you said, you got PhDs, you got masters, and MBAs basically, and just because someone gets an MBA in the Philippines, why do we, why do we tend to to, to automatically be like, Oh, well, that's, that's, that's an MBA in the Philippines, not in America. So it's, it's valued at this. But whatever the what I'm getting at is, is that like eight bucks an hour, and they're tickled to death because it buys so much more there than what $8 An hour would buy here. So what I'm getting at is, is that you're you're spot on there with the virtual assistants and, and the the challenges of training them and finding people who are actually who are who they say they are. You know, that's that seems to be the biggest challenge with us is just is the training and with bringing on new folks, I guess, is what I'm saying. So well, that's great, man. So so we're headed to new acquisitions and Enter. And I'm assuming that that I just can't get my mind around that being Arizona, New Mexico, Florida, South Carolina, North Carolina. I mean, that's and what was the other one? Colorado, Colorado, Denver, that's I'm from Colorado Springs, originally. And so but and those markets, man, those oh my gosh, that's crazy. But single things. You know, half million dollars gets you like house built in 72 that needs 50,000 or 2001 of the work. So, but so sorry, man. So we're headed down the path and you all are getting there. And I'm assuming that life is just kind of going by at this point. And you're going to just continue to to make acquisitions and make this deal roll, right.

Unknown Speaker  24:20  
It's pretty much it if someone offered to buy the company and we consider you I mean, you always you always entertain those things. How do you then redeploy the the capital that you've gained to make better investments? You know, yeah, and

Casey Brown  24:32  
try to get that try to get bigger mailbox money or you know, then maybe you transfer into two or three big big multi families or something, you know, something that did, but But yeah, so that's awesome, man. Well, listen, we're pushing up close to the end of the of our time here, I want you to tell the listeners so I'm assuming that somebody calls you that is listening in one of those markets or close to one of those markets or a where basically, if they had a big enough portfolio, I'm assuming it would be worth at least look Yeah. So from an acquisition standpoint, like anybody out there that's looking or thinking about selling or has something that maybe you're you're feeling, I just need to, I just maybe want an app, like you said, give them that out. Tell people how they can get in touch with you, whether that be email, website, even I've even had guy given phone number one day, it just makes me no difference. I just want you to tell people how to get a hold of you so that they can so that they can reach out and maybe even I'm assuming, do you do anything with investor funds? On the on the investment side? Yeah, so

Unknown Speaker  25:32  
we, you know, we use our, you know, our client pool, I guess, to look at syndicating for other deals. Yeah, I'm looking at a apartment complex right now in Albuquerque, and, and if if we could get a good return for them, obviously, they trust us as managers. So we want we want to, we want to make sure they get a good return on their money, you know, so

Casey Brown  25:51  
yeah, so somebody uses so so what I'm getting at is, is if somebody is interested in investing in any of those markets, you could potentially look at something like that. And then of course, if somebody has something they want to sell in any market that may or may not work for you. I mean, just to get in touch with you. So how can they reach you? Yeah, sure. Shawn

Unknown Speaker  26:09  
Johnson at home vault. So it's Shawn at home. vault.com is my email. Our website is home. vault.com.

Casey Brown  26:17  
Okay, and I want to just just to clarify because there's a couple of different ways to spell it. It's SHA W N, correct? Yes, it is. Yeah, right. So Shawn SHA W. N. Johnson at home. vault.com H o me VAUL t.com. And we'll be glad to hook you up. So Shawn, Thanks, brother. I appreciate you taking the time out of your day to be with us and talk a little bit because I just I'm still just sitting here wrapping my mind around Hey, this guy is not going to bed anytime soon, because he's got 700 and something single family rentals spread across the states that that but man that's that's that's killer, dude. That's that's scaled the max. So anyway, thanks again, brother. We do appreciate it. And I hope you have a great rest of the day.

Unknown Speaker  27:04  
Thanks, Casey. Appreciate it. Thank you.

Transcribed by https://otter.ai

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Shawn Johnson

HomeVault