Maximizing Your Real Estate Investment Team

Nate Trunfio: Welcome back to another episode of The Real Estate of Things. I'm your host, Nate Trunfio with Lima One Capital, and we have my dear friend, Value- Add Multifamily Mike Taravella with us today. Mike is, again, not only a dear friend of mine but super knowledgeable in all things multifamily, has a really great story that I like to get into here, leaving the corporate world and corporate jobs in order to get into real estate investing, and now off on his own, owns about to be over 700 doors, $ 81 million assets under management. There's a whole lot of, really, knowledge and brain power stuck up inside that man's brain, so I'm excited to dive into it. Mike, welcome to The Real Estate of Things show, my man.

Mike Taravella: Thank you, Nate. Yeah, excited to be on here and just talk shop and tell people how to and how not to do things in the real estate as they try to leave their W- 2 and just tell real stories and keep it real for everyone.

Nate Trunfio: That's why we call it The Real Estate of Things'cause we keeping it real, man. Look, our journeys all in real estate investing are certainly never perfect because I think if they were, I don't know, if I had to find guests that had perfect trajectories and careers, I wouldn't find anybody. But everybody also has their own unique start into getting into real estate. You've come from the corporate world. I also know Michigan State alum.

Mike Taravella: Yes, sir.

Nate Trunfio: You got to be a relatively smart guy. I mean, I know you were, audience will hear that throughout this, but I think you started, what, at Ernst& Young? Tell us the story of your corporate career and more so the transition into real estate, man.

Mike Taravella: Yeah, so in college I started a screen printing company and that kind of opened my eyes of just entrepreneurship because I was Michigan State, a CPA, go work for a big four, stay till your partner, then you make money. Then once I started my screen printing business in college, I'm like, " Oh, we can make money by not having a job. This is cool." We did 20 grand in sales in nine months and I was like, " Oh, this is it for me." It felt right just going off Craigslist, buying a$ 900 screening printing press, and then making shirts, so that changed the game. Even my professor before I graduated with my master's was like, I'm like, " Am I going to accounting?" She laughed at me and I have a good rapport with her and she's just like, " No, you have no risk. Your risk tolerance as an accountant is so far high that no, you'll just lose your mind." Did a couple of years in public accounting with Ernst& Young. It was really helpful there, just managing teams, and that actually helped me work with virtual teams overseas, which alludes to later,'cause now we have two virtual team members in the Philippines on our staff. But then that helped me just get the financial bearings and the backgrounds and what could go wrong and how people can manipulate stuff by just being an auditor for two years and just seeing the systems. Then I worked for Dan Gilbert who owns Quicken Loans and the Cleveland Cavaliers and I was pretty much-

Nate Trunfio: And all of Detroit, I think, just about.

Mike Taravella: ...Just about. Between them and the Ilitches, they run everything. I was just the point guy for these startups, so I managed 12 of them from paying bills to BizDev to where corporate strategy and just how to scale and helped just build a lot of systems and processes'cause that's where a lot, and my screen printing business failed and a lot of startups failed'cause they don't have systems, so I realized there, I'm like, " Okay." I saw him doing everything in real estate in Detroit. I'm like, " This is how you get money." Yes, the startups are cool, they have the flash, but it's like one out of a hundred are good investments, but real estate is the foundation, so bought two single families, thought I was the man making$ 400 a month. I'm like, " Yeah, I did it," and then I was raking 27 bags of leaves in Michigan and I hated it. Went to a real estate event hosted by John Casmon, saw everyone in the room doing deals and I was like, " Oh, I need to do multifamily," so stopped doing single family, moved to Chicago to be closer to them and just mentors and I just worked for free for about a year educating, blogging, helping people get to meetups, introducing people, connecting people just so I could be at the table and underwriting deals for free. I got the call to work for a group in Knoxville, has 1500 doors, and got three years of experience working with them. Then July of last year, like Nate said, 600 doors, 81 million, and now in July, moved to Nashville to go independent and partnered with groups in Denver, looking at deals in North Carolina and the Nashville MSA and just try to take over the world one brick by brick.

Nate Trunfio: Man, I mean, it's an exciting journey. I know the short amount of time you just articulated through and backwards to it doesn't really exemplify the blood, sweat, and tears that you took to get to where you're at. You talked a little bit about some inflection points, but what went through the mind as you were like, " Screw this corporate shell, let me get away from this coat, let me keep going down this multifamily real estate investor road"? What was the mindset during that?

Mike Taravella: Yeah, so I think it's a couple. The mindset was like, " I have to have all of my money to do this," and then I thought I'd partner with a buddy in high school who wanted to do single- family houses as well. But then I was doing all the work myself and I'm like, " This is so inefficient," and I was helping these businesses and startup scale, but I wasn't doing listening to my own advice when it came to real estate, so I was like, " How do I build a team? How do I become bigger?" Every cliche, the network is your net worth, so it's just meeting John Casmon, going to the events, being around people who closed, and I'm like, " Oh, these are..." Even Joe Fairless was there. All of these people have built teams and scaled their business. I see a lot of people who start off in multifamily and real estate, they're like, " I have to do everything so I can make the most money." I'm like, " Well, that's what a job is and you'll hate your life, I promise," so just be really good at one thing, and for me it was underwriting and just connecting, just underwrite. I underwrote every deal for three years in my markets because I wanted to know the numbers and just understand how different properties operated. I didn't read a textbook on how to underwrite, but I was calling tax assessors. I underwrote lease up every time just so I know what the market was doing and what rents were. Obviously, I got that experience by working for free at first, but I think that's a huge differentiator. But after that, you take full ownership of your career and what you do and by literally knowing every deal and underwriting every deal in your market, that's worth an MBA in inexperience, for sure.

Nate Trunfio: Well, I know you said that a teacher of yours said, " Nah, Mike, you got too big of a risk tolerance to stay in this corporate path," but you still followed that for a little bit. I think a lot of things that prevent people from taking the leap and the jump and the step is the risk, so from your perspective, looking backwards now, what was the true biggest risk and how easy was that perceived risk to overcome at the end of the day?

Mike Taravella: I think just the biggest risk is people are afraid to leave the people that got them to where they are. At Ernst& Young, I had people say, " Who would want to do business with you?" My ex- girlfriend was like, " I think you should stick to accounting." When I closed my first rental property, my mom cried because she thought I was going to lose all my money. If you surround yourself with those people that don't have that ambition, they're going to hold you down, and you're not going to live to your full potential. I think once you get into a room with people who are doing it, it becomes exponentially more believable that you can do those things. It's like the five people who surround yourself are the who... It's just that's the path you're going to take, so if you hang out with drug dealers, you're going to be a drug dealer. If you hang out with real estate investors, you're going to be a real estate investor. It's a matter of fact. Once I changed the room, all of those negative people left. I mean, it's tough, but once you change the room and you learn from them, the game changes, and there's no true potential in what you want.

Nate Trunfio: Man, that's some interesting stuff, who you surround yourself with, the law of attraction, or the law of belief. It's crazy how much power our minds have. It's also interesting, I think you hit it on the head, the question asked really ends up being they were just perceptions at the time and you just had to break through all of those and then you opened your eyes to new visions and opportunities mainly because from what you said, the people that you surround yourself with. I think that's just really important, so I think as you listen to this, if you're in any of those stages, just making sure that you surround yourself and absorb, do things for free, take some risks, and I think it will open up your mind to how you look at risk, I guess, in that perspective. Hey, I learned that from you right there. Man, last July, less than a year ago, you went off on your own. I know you had some stuff under your belt at the time, but dude, just walk us through that massive acceleration. I know you're a humble guy, so you'll say that 700 doors and 80 plus million AUM, no big deal to Mike, but walk us through how that happened and how you did that, man.

Mike Taravella: Yeah, I think the first thing is I had a virtual team member just helping me with my day- to- day and then I just told people what I was about and what I was doing and just had a lot of connections and partnered with Quantum Capital. It was funny. They literally were like, " Oh, you're leaving and doing your own venture? Great. We'd love to partner with you." It's with someone I've known for three years and the KP is the writer of Family Guy, so it's just, I really wanted to focus on just people who had scale. I think your first deal is your high school girlfriend or boyfriend. It's a great time, everyone has a good memory of it, but it's like that's not the person you're going to marry. That's what I took is I wanted to focus on people who've done deals before and who I can add value to them and help scale their business from a hundred units to 300 units. Working with Quantum Capital's been great. Nick Ameluxen's just great at finding deals and he is just very detailed in just how he operates and he just needed that step back in terms of just having virtual team members in place and just helping him scale his business, so helping raise money, being on the asset management side, I got to do four deals, and it'll be our fifth and the beginning of May. Then just been in, July did a couple of deals with them, and then in November hired a virtual analyst. My first team member hired the second team member, so for all the virtual assistants. I think it's just if you build a good culture, even virtually which people think, " Oh, it's harder and not in place." But I think if you just care about your team and show respect to them, that goes tenfold. They sent me the greatest birthday gift of just them and their families wishing me a happy birthday where I almost cried because it's like even yesterday they're like, " You give us a voice in how to run this company." I look at them as partners and not just a number in the Philippines. I've really helped focused on building a good corporate culture of just growth and from there we looked at deals in Tennessee and North Carolina. We've gotten like four LOIs accepted, but none under contract, but just keep calling brokers, keep working on the brand, Value- Add Mike, and just keep adding value to people because I know with just the karma, if you keep helping other people, they'll want to help you in return and just caring'cause it's a people business and people want to know. I like to think I am a little bit different by just being overly transparent because it's just way easier to operate that way.

Nate Trunfio: We share a lot of the same principles, man. I just commend you for again the risk you took but then the success that you had, man. There there's a lot of topics that you just touched on that I want to do some little bit more deeper dives into. You've been bringing up VAs/ virtual assistants a good amount here. How do you look at disseminating work to a virtual assistant versus what are the valuable tasks and items that Mike should be doing?

Mike Taravella: Naval Ravikant has a four- hour podcast on how to become wealthy and not through luck. The biggest thing he said is, " What is my highest dollar- per- hour activity?" I think the biggest thing for that is I just think in systems and I'm really good at finding out how to do one thing once and building a system so I never have to do it again. My virtual analyst underwrites every single deal. To be honest, I've gotten to the point where I try to increase the purchase price and tweak a couple of things, but it always ends up to his amount, and so the biggest thing to get to that is leverage. I need to train my analyst. I trained them for two months, underwriting every single deal together, and explaining everything how I see things and just creating a checklist of is the median household income too low? Is it in a flood zone, is it too old? Is the city population growing? People try to think, there's a huge ego of, " I'm the best at this." I challenge you to be, have so little ego that I can replace myself from everything. I'm focusing on doing the content because there's one brand of just me. But after that, I'm trying to delegate just about everything. Obviously, the investor relationships we can't delegate out, but from marketing asset management, my virtual assistant, my chief of staff, she does all of our prep, she does our numbers for our current portfolio, she's making sure that investors are up to speed, she's making marketing. She's literally handling my whole back office. We even we had a call yesterday and she's like, " We need to make this system to be more organized," and I'm like, " Yeah, run with it." I give them all the power to make a lot of decisions. I confirm it and just to make sure it's in the right direction and where we're going. But I look at my team members as partners because if I just looked at them as an employee, they wouldn't have the buy- in, and they wouldn't care nearly as much. But in real estate, you got to find it, you got to fund it, and you got to manage it, and so I'm trying to have one chairperson over each category. Right now, for the broker relations, that'll be me and the investor relations. But outside of that, anything with an email should be handled by another team member. I know it's easy to say, but it's a work in progress. Just build that most important system now for the first thing to give you some levity to do build another system. They're fully competent team members. There's a lot of training upfront, but that's any new team member.

Nate Trunfio: Sure.

Mike Taravella: I think that's helpful when you think of it that way instead of just someone in the Philippines or anywhere else in the world.

Nate Trunfio: It's cool just peeling back the layers of onions in the brain, man, because you can see why you've been able to accelerate and scale at the pace that you have is because you look at all things systems and processes to enable scale and growth, which yields scale and growth, which is what you've done, man. That's really cool. Let's dive in, then, to some things related a little bit to the market, but more specifically on the acquisition front. Right now, in multifamily and CRE market, the number of transactions has materially dropped over the last few quarters and months. But it doesn't mean there's not good deals out there. But what are you doing or what are your coaching VAs to do in order to go out there, find source, and see if there's any good deals to go out and buy, man?

Mike Taravella: Yeah, so this is maybe a little bit different, but I rely solely on brokers. I think a lot of people when they first start off, they're like, " I need to do an off- market campaign on a hundred- plus units." It's like, a broker's going to handle all of that. I befriend, just constantly call brokers. I was even joking on Twitter, I was like, " Called a broker," and they're like, " How do they get them to answer?" I'm like, " Well, if I call them every three weeks for the last four years, they're going to know who I am. They're going to see our offers. We have that relationship," so continually just calling brokers just to get deals because we've seen the call- to- offer model has changed and it's more of a more discreet, " Hey, we're giving this to the first five people that we know that can close if they like it and that fits their buy box." Constantly calling brokers, just doing lower leverage. In Denver, we've seen 60- ish loan to value even getting quotes of 55, but just not being afraid of that lower leverage and just Real Estate Titans and Peter Linneman's textbook. What gets you caught is if you're overlevered and then you can't pay and then you're underwater and then it's just a bad scenario for everyone, so doing lower- levered. Then I think another one is just more creative financing, which has added a lot more negotiations with it because now you have to negotiate loan to value, term, amortization, interest only, and a lot of the people that we've been doing with that on that are not sophisticated. We've been talking on a deal for six weeks and we haven't gotten anywhere. Then on top of that, it's just constantly reviewing rents, so we've seen rents go up and down and it gets all over, so we're just constantly updating our rent roles. I even told our analysts, I was like, " We're going to underwrite this deal a lot before we even submit offers just to make sure we can get in the game. Have all of the correct info'cause the last thing I want to do is get it under contract, the market changes, and I'm like, " Oh, crap, I ruined that relationship with that broker," so constant follow- up and just even asking if the sellers are even interested in selling at the price that I need because before it's like if you were 10% off, you'd be like, " Hey, nevermind, this isn't for us." But I've had offers where I'm like 20,000 a door off and then they're like, " Hey, let's see what happens."

Nate Trunfio: Hey, you never know. You have sort of the Wayne Gretzky, " You can't make any shots that you don't take," type of mentality. Let's go down here a little further. Two things related to just calling on brokers because it sounds like that's a core focus, obviously. What's your pitch to brokers? How do you gain attract them or get them to be attracted to you? Because brokers do get a lot of phone calls. Then the second question is, what expectations do you set with brokers? Because if you don't set expectations, people will come back to you with things that is not your cup of tea and you'll waste your time and their time and then usually that relationship gets sour, so pitch and expectations, man, how do you speak to brokers?

Mike Taravella: Yeah, it should be a sub- 10- minute conversation. If you're on the phone 20, 30 minutes, the broker's not making money because they're not calling owners, and so like 10- minute increments, " Hey, my name is Mike Taravella. I'm looking for 10 to 150 units depending on if we have existing portfolio there'cause if we have a 36 unit, we can add 10. 10 to 150 units in the Nashville MSA. We're looking for vintage of 1970s or newer and median household incomes of 40, 000 or more at the track level." Those three criteria eliminate a lot of deals, and to be honest, it takes a lot of follow- up with the brokers because they need to know who you are. But call them, text them. If you don't have that experience, because I've had the experience that I've put in the work and worked with teams, leverage, I think making sure you have your partnership team aligned, meaning don't go submitting offers on a 120- unit complex when you don't have the EMD money and you need to scramble and find key principles. You're going to waste everyone's time. You're going to ruin your reputation. I've seen people do it and it's a tough pill to swallow. But if you ever get hit with, " I need proof of funds," you said something too noob- ish and need to go back to kind of what happened because there's no such thing as a proof of funds in multifamily and that's more of just because of what you said and not the broker. Just making sure you have your key, your team aligned, key principle, your partners, your boots on the ground because even though you may not have that experience, you can leverage the key principles and you have the team lined up. But if you are new, start to those smaller local brokers to make sure they're giving you intros to banking relationships and insurance because they can help pave the ways for that first couple of deals. But after that, you need to just hit the phones, and being an accountant, well, it was a new skill, so I'd highly recommend Fanatical Prospecting. Short, sweet to the point of intros, what to say, and how to say it

Nate Trunfio: Man, I think we share a lot of the same library, brother. Jeb Blount is my favorite sales author, is another plug there for Fanatical Prospecting and all of his books. What has changed or what is your tactics right now with offers? I mean, I know you mentioned low leverage is one component that you think sets you apart, which it likely does because especially as a lender, everybody wants max leverage, so if you tout that" I'm fine with low lever deals," it opens up what you can buy because it's just less parameters that need to be hit as well as it shows your strength, meaning you have more equity. But what have you seen change recently and what are you doing on the offer side, specifically?

Mike Taravella: Yeah, on the offer side, I'm having more backend support because I know a year ago with offers, it was primarily who had the highest dollar and the highest probability to close. But with everything changing from insurance to interest to banks, I'm trying to get full quotes from our tax analysis, from calling the assessor, having insurance quotes so that I can share that with the broker because even if I don't win it, I can give that to the broker to give to the person who's buying it and I added value to the broker to help with them. Pretty much laying out the business plan because in terms of just, " Here's the property manager, here's our bank, our bank already quoted it, here's the emails," and so just showing up a lot of numbers. I know you're supposed to do that on the underwriting already, but showing my work, and they're not in terms of, " Here's my number and why," but just any of these resources the broker can use to help them ensure that the deal closes and just constantly following up. There's deals that go under contract all the time and don't get to close, so following up every week or two, just checking in, " Hey, what's been the biggest hurdle? What's going on? How can I either help? Or is it do I need to re- underwrite the deal because rents have changed?" Just staying in constant communication and following up, but also showing my work to help either the broker but also prove that I've really thought out this number to stand out. But I mean, sales is always follow- up.

Nate Trunfio: They say, I mean, all the different stats, but it takes 12 attempts to get somebody the next stage in the sales process, not just to close but to the next stage is how I always look at it. But look, I think it's interesting as you listen, you can hear that what you're doing is creating credibility, you're giving that confidence, you're giving that surety of execution, you're backing it up with a bunch of, as I'll call, receipts in numerous different ways. That just goes back even to how you're pitching brokers because you didn't come out and say, " Hey, I pitch them on this, that and the other and I'm this really sleazy salesperson," you're just more saying, " Hey, I tell them what I want. I set the expectations and then I walk the walk behind it and show them this is why I do it. Or when I have a deal opportunity, this is why I want to buy it at this. This is what I know, this is the support I have for my team, for my banks, from all those different elements." We've been talking then and you've been talking around elements related to just how do you find then the deals in underwriting, we just surpassed and are moved into Q2 of 2023, what now is most important from your perspective, Mike, related to underwriting a multifamily deal?

Mike Taravella: Yeah, I think really avoiding... Oh, one thing, too, to piggyback on the brokers, I named my deals after the brokers because I have no ego in this. Literally, our 36 unit we named after the broker and that's helped win a couple of deals get it forward before everyone else. Alex Rodriguez, I was like, " Listen, is A- Rod going to name the deal after you like I did?" He's like, " Yeah, you're right," and then he just hung up. But I think going into Q2, I think I have a different perspective in terms of I look for more appreciation and I know there's people who are like, " Oh, my god, I need cashflow." But when I hear" cashflow," how I think of cashflow is that's my margin of error. I'm not buying deals that don't make any money. I'm hoping to make before a year ago, it was four to 5% year on average. But realistic, now that the risk for free rate with T bonds and stuff have gone up, I'm looking for about 6- ish to maybe seven if it's on average because I know if I'm a really strong operator, I have a lot of metrics, I back it up. We were talking about my 36 unit, I was property manager the last two months just making sure a 36 unit was back on track, so I know operationally I'm better than many. I need to continue to scale and get that out and build even better systems to get there. But I will go into the weeds and do the property management if I have to myself, so I know when I'm underwriting deals, if I have an average of 6%, I know, " Okay, we can sharpen the number for our CapEx budget." We can probably, because I assume taxes change day one, I'm getting quotes from insurance and assuming them they're going up 5% year over year, so I know operationally, if I'm at my worst- case scenario, low leverage, 3% rank growth, I have max CapEx budget, and my taxes changing day one, if I can average five to 6%, I may have something. That's where I start looking at more at the CapEx. How are the roofs, the parking lots, sharpening our management fee and asking what they'll actually charge'cause I always bump it up because with inflation and payroll and materials costing more, I'd rather underwrite for more and then shave down and it costs less because the last thing I want to go to a broker is like, " Oh, I underwrote 10 grand a door in CapEx," but it's 20 because I didn't look at the roofs or anything, so I always go super heavy on my expenses and CapEx. If it's around that five to 6%, that's when I'll go sharpen the pencil and make sure we can get a higher cash- on- cash for our investors.

Nate Trunfio: That's awesome, man. With that, as you're finding some of these good deals out there, you have the name and the branding Value- Add Mike, so how do you look at adding value? You've talked a little bit about adding them to people always is what I've learned from you, but how do you add value to property, especially nowadays? Dissect that for us here.

Mike Taravella: Yeah, I think I know everyone, I'm sure you've sick of everyone's, " Just implement rubs and pet fees." But we've really looked, I think the biggest thing that we do a little bit differently is that instead of charging a security deposit, we're doing a$ 500 nonrefundable move- in fee and then we're using a security deposit of alternative called Rhino. What that does, when a resident moves in, they pay first month's rent, then they're paying a security deposit, and we just did on our 36 unit, a security deposit would be one month rent, so that's$ 1300. Then there's always that at the end of the lease, that bone of contention, they're like, " Oh, this isn't good," or, " This isn't..." There's always that weird fight and tension at the end. So we just have that nonrefundable 500 and Rhino costs about$ 180, I think. We did the math. Or maybe less. All in, the resident pays us$ 680 to get keys and move in versus a security deposit's costing 1300, so we get to recognize that$ 500 on a move- in as revenue, we avoid confrontation with the resident on the backend, and we have coverage with Rhino because you can get two to three times the coverage of rent for damages, missed payments, et cetera, so we get more coverage, the resident has to pay less and 500 times 36 units at a five cap, that's a good spread on top of rubs a creative one if you're having animal feces and people not picking up poo prints is another one that we've seen implemented when it's a more stabilized property and it's, we'll call it the Karen problems, but every pet gets DNA tested. Then if maintenance or managers are on site and they see any, they can get a sample, send it, and they can pinpoint whose dog it was, and you can charge a$ 300 fee. That one's not a huge revenue generator, but it's more of just making sure the community stays clean.

Nate Trunfio: Those are some real in intimate value- add opportunities there. " Value- add's" such a cliche word in multifamily investing, so what are some of the myths that you see people have when they think they're adding value when you're like, " Yeah, that's not a Value- Add Mike value- add"?

Mike Taravella: Yeah, I think, well, I look at value- add as other income as a big component that should be 10 to 12% of your total income. I think a lot of people spend a lot of exterior in terms of, I think the pergolas are great. I think the communities are great, but just having a fenced- in dog park doesn't do it. It's important, yes, but I think people get lost in the sauce of having that amenity that's, it's used once or twice, it's not a huge deal. We're really focusing in the next year or so. I think it's still working on the process, but an amenity fee and what that will look like for the resident is like, " Hey, you get one apartment cleaning whenever you want, all the air filters, plus the service to replace that," and just charging a baked- in fee and not even to break money on it, but how sick would it be if you're in a class B or C apartment complex and you got your apartment cleaned, no questions asked once during a 12- month stay? We're just working on trying to get creative, but not nickel- and- dime our residents, but really focus on the experience of like, " Oh, hey, work orders are getting done. Hey, I'm out for the weekend and I want my apartment cleaned." We have good rapport with vendors, so it's like, let's take care of them. Then we all know renters don't care about air filters. I just looked at mine, I'm like, " Ooh, this has been a minute," so it's just handling those things that residents have to deal with that we know they should do. But we all know it's just one more thing on their plate on top of living their life, so we're trying to make it easier for them as much as possible.

Nate Trunfio: Yeah, what I'm interpreting from that and seeing it a number of times, too, is people trying to overcook and overthink the value- add and doing things that they sound sexy, they sound really cool, but do they really add value? There's also a significant value to the lifetime relationship or the tenure that a tenant stays at the property because obviously you have to turn it when they turn over and if you can get them to stay longer, you don't have to have that expense and things of that nature, so people want to stay where they feel appreciated and where they can have things that truly add value. The other thing that you hit on, too, is we see a lot of people on the lending side,'cause we see a lot of deals, a lot of performers try to call out deferred maintenance is something that adds value, where it's like most deferred maintenance are, they're required items to live in a specific place or asset, and so you're not really driving value when every place needs heat and electricity and lights. Sorry, that didn't really do much to get there.

Mike Taravella: Yeah, you don't get a $ 200 premium for having a roof. I think that's just expected.

Nate Trunfio: Most places. I'm sure we could come up with some creative options where maybe not as much. No, appreciate you sharing those insights, man. Clearly, we can see and hear a bunch of the nuggets that you've learned along the ways. But again, like we began with, it's not all sunshine and rainbows. I'm sure over this fast escalated growth trajectory that you've taken, there's been a couple of unique stories or learning lessons that you've had, so hit me with a good one because I know you probably got stories for days, man.

Mike Taravella: Yeah, the see, what had happened was segment. Yeah, my 36 unit, we paid out 10% cash on cash, year one, killing it, killing performer rents, making money, high- fives. We thought we were the man and just killing it. But then to start the year, we had eight vacant and that was just primarily due to lease exposure. I was like, " Why are these units...? We paid for apartments. com, got leasing. What's going on?" I just walked on site to the worst. If I had a 30 rack and a foam roller and a gallon of paint, just that's the quality I walked into, I was like, " Oh, I'm paying$ 500 a month for apartments. com to show the worst unit turns on Earth." Which then led to, I knocked on what I thought was a vacant door, it said" Vacant" on the rent roll, I knock, and this woman goes, " Are you here to evict me?", and I'm like... Then this person introduced. Then I think a lot of people are like, " Am I the owner?" But things were so bad that literally this woman introduced me to every single resident. It was like, " He's the owner, he's here to fix it," so literally to start the year, we had eight 80% occupied with five people not paying rent. I've been micromanaging turns, which anyone who knows me, I can't fix anything. But I've learned to ask really good questions. Since January 17th, 2023, and it's April 6th, I've been micromanaging and my property manager having calls every day, huddles, what's going on. He doesn't believe in working weekends, so I was scheduling showings through the texting app on our full, so I was doing property management, entering bills, paying bills, catching up to vendors. I did everything in property management since January 17th. Now, I just checked our rent roll. We're 96% pre- leased. Before people paid rent by the end of the month. We're getting everyone paying by the 10th. Residents still call me, but I want to make sure people know I'm the owner because they associated me with that property manager. I'm like, " Oh, no, no, no. He works for me and I am on him all the time." We only caught him in that lie was because obviously the turns were bad, but we caught him in a lie that we were supposed to get possession on a Thursday. I called the police to verify and they're like, " We don't have a writ of possession," so I called the courts and he goes, " Oh, this eviction didn't get filed till two weeks ago." He told me four months ago it was filed, which caused me to go on site, which caused me to keep going. Then you just, for a whole month, I'm like, " What's true? What's up? What's down?" I take it seriously. I think anyone who's in this business needs to know, these are people's homes, this is where people live. I was ashamed as an owner of this quality. He was overspending 25 grand on turns that were terrible, so just these are people's homes and it matters and you have to just, obviously it's not a non- profit, but you don't want to end up on the news for just being a terrible landlord and just being a slum lord and that was the perception we had. But now, residents care and know that they can call me if anything happens and we'll get it done, whether it's Friday at 10:00, a water leak Saturday at 8: 00 AM, I'm here to represent them and make sure they have a safe home to live in.

Nate Trunfio: That's awesome, man. Look, I know you're a smart guy and I know you're the type of guy, you only need to learn a lesson once, so I mean, clearly there's a lot of lessons there, but what's the main takeaway from there that Mike won't let happen again?

Mike Taravella: Yeah, I think it's trust but verify. I think the system I was thinking is, " No turn will not..." Trust but verify. I think that's super cliche, but to make it more palatable for the listeners is like, " Hey, if we're paying 10 grand for a turn, I better see every turn." I'm not driving to my property. I mean, I will, but unless a video is submitted of the turn and its quality and we approve it, then we can pay the bill. I'm not paying for terrible shoddy work and it's not done. I think just seeing a lot of the paperwork, so it's like a trust but verify is like, " Well, how do I know the eviction got filed?" Just having a lot of proof, and as an auditor, I'm kicking myself that it didn't happen and you hear the stories. But always have proof. It's like if the vendor turn finished the turn, let's do a video walkthrough to make sure it's approved to get paid. All right, it's approved, let's get the invoice, let's pay it, and then keep going. That's just mental system I developed and I'm going to work with our property manager to have moving forward. But yeah, verify everything because if not, if you don't hold your property manager accountable, your investors are going to hold you accountable for not paying them. The whole time I've been going through the saga, I've been recording all of our property manager calls and giving them to investors because I got that from Ray Dalio. I'll let you know if it's like, " Hey. If it's great, we're high- fiving, you can see the wins. If it's not going great, well, you're going to see the losses and we're going to fix it and make it right" I'm just too transparent to just deal with the fluff and be like, " It's fine, trust me." It's like, no, here it is, here's everything. Take it or leave it. But you'll know where you stand with me very quickly.

Nate Trunfio: That's awesome, man. It allows you to go to sleep and put your head on the pillow without many things to worry about because you've put it all out on your sleeve throughout the day, man, so that's awesome. As we close here, I want to look for two things. One, how do we find you? Then two, what's just one piece of advice you have for the listener here?

Mike Taravella: Yeah, so everything, all my handles are Value- Add Mike'cause no one can spell Taravella correctly, so YouTube, Facebook, Instagram, Twitter. Twitter's an underrated platform for those listening. That's where people who are doing a lot of stuff and not bragging about it are there. Then I think the biggest piece of advice that will differentiate you more than anyone, and it sounds crazy, but if you work for someone for free for a year, you'll get more experience. You'll be at a table that you couldn't even imagine. I did it for six months a year of just educating myself and helping other people. But if I worked for a Nate or even myself for a year, willing to do everything, literally everything and not expect payment, that's how you get in deals. That's how you learn from the best. That's how you get to be one of the best operators and investors or whatever you want to do. Work for free and lead with value. Don't just say, " I'll work for free." Do a YouTube thumbnail or recommend someone to Nate, lead with value, and I think can your opportunities you couldn't even imagine to happen, because I wouldn't be in Tennessee if I didn't do that and would've never in my life thought I'd be in Tennessee, living in Nashville, owning this many properties and just talking to great people like Nate every day.

Nate Trunfio: Well, my man, you truly live up to your name, adding value, Value- Add Mike. Just appreciate all the knowledge and insights and expertise that you dropped here, man. I'm excited to see you continue to grow yourself, your team, your portfolio, and looking forward to seeing you on that road to success. Mike, thank you very much, man. That's a wrap. Check us every Tuesday for a new episode to drop on The Real Estate of Things. This was Mike Taravella, Value- Add Mike dropping tons of multifamily insights and knowledge. You know where to catch us next time. You can always find things on our website, www. realestateofthings. co. That is a wrap. Mike, thank you, my friend.

Mike Taravella: Thanks, Nate. Great talking to you as always.