Join Vee Khuu and Jason Pero as they talk about investing in multifamily during the pandemic. Is it safe? Should you bite into the market with all the uncertainty? It’s as simple as raising the rent later, right? These are the questions that we will get into. With everyone talking about the potential benefits of going all in, it’s essential to know the value of staying conservative and investing in stable markets. While focusing on growth is needed, you cannot forget about maintaining your business by making room for unexpected situations!
In his experience during the911 market aftermath, Jason found that his tenants were still paying rent, in contrast with what everyone expected. He realized that it’s a simple business – just rent your vacant space for more than your bills. Make sure you have enough rent coming in to pay for your mortgage taxes, insurance utilities, repairs, and some profit. With that mindset, he was even able to buy three additional properties! In an up and down market, he was still able to operate.
What was his secret? He utilized the predictability of the market he was in. His grounds were in Erie, Pennsylvania, a tertiary market that doesn’t get hit hard with an economic downturn. Jason didn’t chase for fast growth by investing in certain metropolitan areas. There was more focus on being risk-averse, putting money in stable markets that allowed him to avoid downturns like what Atlanta and Nashville had. The stability and predictability limited any adverse changes to his quarterly distributions, even in the middle of a pandemic!
A Conservative Counter to Carelessness in Multifamily
It’s essential to hold a preference for being conservative in real estate. Before the Coronavirus, a lot of people said they’d be adding value and push rents higher. While that in itself is a valid strategy, the mistake that people make is that they have too short of a timeline to raise the rents, not to mention being aggressive with their assumptions. If you get deals that only work with that plan, it’s going to cost you if things go wrong. Now, we have the pandemic putting a halt on the market. Does pushing for higher rent make sense now? Absolutely not. Because you can’t predict the future, find those deals where the rent has space to grow. Give yourself some room for ten other crazy things that could go wrong!
Looking for more conservative tactics? Tune in the full interview on the Real Estate Lab Podcast!
About Jason Pero:
Jason Pero was born and raised in Erie, PA and attended college at nearby Westminster. After college Jason began a sales career in pharmaceutical and medical device sales. He started his real estate investing career in 2001 when he and his wife purchased their first duplex. He built a portfolio of real estate rental properties while working a career as a medical sales representative. He was able to leave his job in 2012 as the portfolio grew to nearly 300 units. Jason balanced the demands of a high pressure sales environment, a young family, and growing a real estate portfolio. Upon leaving his day job Jason continued to build his real estate holdings and currently owns around 900 rental apartments. He is the President of his local landlord Apartment Association and a frequent guest on podcasts and occasional speaker at real estate investing conferences. Jason enjoys coaching and mentoring both seasoned and beginner real estate investors. He continues to grow his real estate business but enjoys spending his free time working out, traveling, relaxing with family and friends, attending sporting events and concerts.
Outline of the Episode:
- [02:21] How did Lebron James’ career choices affect Jason’s relationship with his wife?
- [04:29] Not wanting to work on a farm and the kind of life in Pennsylvania.
- [06:51] The mindset of making money to get the things you want, even from a young age. How did a couple of school teachers have a net worth in the millions?
- [11:51] A $32K duplex as the first rental property. Set up for your financial future!
- [13:42] The market before and after 911. Was it really a crisis across the country?
- [16:36] Enjoying predictability and stability in his market through investing in small towns.
- [18:18] Mistakes in multifamily – being too aggressive with assumptions. It always pays to have a conservative approach.
- [23:06] How a conservative approach is going to preserve you as an investor. Make sure to have available reserves for “break in case of emergency” situations!
- [27:30] The definition of financial freedom and the importance of finding mentors. Copy the successful methods of the people that have done it before you.
- [33:04] Trying to keep on an even keel. Don’t get too high or too low. Remember where you came from!
- [34:37] Be radically open-minded and at peace at the same time. It’s a life of continual learning and finding opportunities.
- [38:38] Having defined goals and expectations in real estate. Are you ready to fire people?
- [41:20] The challenge of feeling satisfied and knowing where to expand.
- [43:10] Crash and Learn: what is it about? You don’t have to brag about your nice things!
- [46:54] Financial goals are empty – focus more on your happiness!
- [48:55] Experience with the Darren Hardy mastermind. Is it necessary to join one?
- [55:14] Hiring people that are better than you. Be comfortable in having other people make the decisions for you!
- Pero Real Estate
- Jason’s LinkedIn
- Jason’s Facebook
- Crash and Learn
- Rich Dad, Poor Dad
- The Millionaire Next Door
- Three Feet From Gold
- Darren Hardy
- Adam Adams
Connect with Vee Khuu!