April 2020 update

I hope you’re doing well and staying safe! If your inbox is like mine, you’ve seen COVID related updates from every company you’ve ever heard of, so thank you in advance for freeing up brain space to read this.

I’ve re-written this note several times as the pandemic unfolds and its impact on the real estate market becomes more clear. A few things I’ve noted from webinars, articles, and discussions with industry experts:

  • Housing demand has held up better than expected. On the supply side, it may take some time to see the impact the pandemic will have on construction labor and new housing / building start permits.
  • Nationally, collected rent through April 5th is at ~70%, down from ~80% from March 2020 and April 2019. The looming question is how well this holds in May, and whether people with stimulus money and unemployment checks will use those funds to continue paying rent.
  • There’s overwhelming frustration with the SBA. Business owners looking to throw their hat in the ring for small business relief funds authorized in the CARES Act are running out of patience. Just look at any SBA tweet to see an angry only mob attack like vultures. As an SBA intern during the ’09 crisis, I know they’re doing everything they can at the local levels to push these funds out. There’s an extreme disconnect between what’s being promised and communicated to the public vs. what is actually doable given their staffing levels and system constraints.

Rental portfolio update

It will take a while to understand the long term, structural impact this pandemic will have on multifamily real estate.  I’m convinced that over the long run, multifamily is the best risk (and headache) adjusted asset class. Commercial office, retail, and vacation rental investors have felt significant pain already, and I’m not sure when / if any relief will kick in.We’re fortunate to work with great property managers who took proactive measures to work with tenants and adapt quickly to the new operating environment. When we started reaching out to residents at the beginning of March, a handful even paid us early for April. Our main goal was to let them know that we empathize with the community and hope that they think of us as a partner rather than a hostile.We’re also fortunate to have a great balance sheet with healthy cash reserves. Typically this has been to address unforeseen capex issues, but apparently it works well for pandemics too! We won’t need to fire-sell assets to pay operating costs and keep the lights on. We’ll be able to service our debt and cover operating expenses for the foreseeable future. Private investors, lenders and operating partners for the rental portfolio will all be paid in full and on time.

New acquisitions will be on pause momentarily (we have one deal under contract that we’re going to extend) to focus on managing the existing portfolio.

Active development projects:

In mid-March, Mayor Walsh issued a city-wide construction ban in Boston (with a few exceptions for emergencies). Likewise, our Saratoga st. project with OnPoint Capital is on pause until the construction ban is lifted. We’re doing as much as we can to get ahead on non-construction related activities, but shovels are down for the time being.

Spencer Ave is still in “go” mode, as Chelsea has not yet banned construction. Steel production is in-progress and the modular boxes should be on site in the next few weeks. We’re seeing great results already from our social media campaign to help with pre-sales, and expect demand for these units to remain strong.

What I’m..

ReadingLiving With A Seal by Jesse Itzler (owner of the Atlanta Hawks and husband of Spanx founder Sara Blakey). With the Boston Marathon postponed, I’ve lost some (all) of my fitness motivation. This is a funny and interesting read and gives me a good jolt into working out regularly.

Listening toWhy Rent Control Doesn’t Work from Freakonomics Radio. This was recently rebroadcasted and I think an important listen in current times, where many politicians are calling for rent / eviction moratoriums and related regulatory measures. Without thinking through the downstream implications, some regulatory actions could be detrimental to renters in the long run.

Watching (other than Tiger King): John Krasinski decided to start dominating youtube with his “Some Good News” series. Episode 1 treated us with a guest appearance from Steve Carell, and is already up to ~14 million views.

Thanks for reading and please give me feedback by responding to this e-mail. What do you want more or less of? Let me know!


Rob Landry on starting and scaling a property management company


This month we interviewed Rob Landry, co-founder and CEO of Four Points Property Management based out of Haverhill, MA. Rob has steadily grown his company since starting it in 2014, and has stood up a plowing / landscaping business, brokerage, and is working on starting an in-house construction company. He also talks about his transition from software sales to business owner, and the stretch of time he was working full time at his day job while running the management company.  If you’d like to get in touch – his info is linked at the end of the interview transcript. Enjoy!

James: What a time to be a property manager…

Rob: Yes, definitely interesting times.

Before we dig into all the craziness surrounding the Coronavirus / COVID-19, can you give us a quick background on yourself, your company, and how you got to where you are?

We founded Four Points Property Management back in 2014. At the time we owned some property and we were looking for management. We weren’t impressed by any of the companies we called, especially around the systems and technology they had in place. I was in technology sales at the time, so I knew what was out there from a tech perspective just saw an opportunity to start a tech-enabled management company.

How did you go from working in sales to starting a management company?

The whole reason I got into sales originally was because of a Bigger Pockets podcast. My goal was to own a bunch of real estate, retire, and spend more time with my family. In 2011 / 12 when I first started exploring real estate, I realized I needed more income to buy real estate. So I decided to move into a sales position at my company and ended up quadrupling my earnings. I wasn’t really in love with sales, but thought it was the means to the end and enabled me to start buying real estate.

And so you decided the next logical thing would be to start the management company.


How many units did you have when you decided to start managing for other people as well?

We only had eight or nine units, so we definitely didn’t need to run a professional property management company at that size, but based on how we wanted to grow, we were thinking bigger and longer term. I’ve always been a ready, fire, aim type of guy.

Do you remember your first management client?

Absolutely – I’ll never forget them. We started in 2014 and it was probably a couple months before we even had a customer call us. We invested in a great software platform, Appfolio, so we had all of these features for maintenance requests, tenant / owner portals, online rent collection etc, but we only had our 10 units on the platform. So our expenses were high, but we knew it would allow us to grow and scale up our business. Fast forward a couple months and we still haven’t signed up any management clients. We had done some pay-per-click ads, and had a lead come in through Thumbtack. It was a Sunday afternoon around 3pm when the lead came in, and my family and I were up at my parents’ camp house in New Hampshire. I knew from my sales background that the odds of closing a sale increase immensely if you can call the lead back within the first hour. So I dropped everything and made the call, which lead to another call, which lead to us booking the contract.

What was the property, and what do you think got you guys the sale versus an established management company?

It was just one condo unit they asked us to take on. They had purchased it, lived in it for a number of years and then moved out to the west coast for work. So we’ve never actually met in person, we just did phone calls. I think I did a good job of listening to what their needs were and they trusted us to take care of their property. I don’t think they ever asked how many units we had under management or how long we’d been in business. They saw our website, and we had some good conversations, and they went with us.

So you had enough smoke and mirrors to draw them in, and you had enough substance to keep them around

Absolutely. Anyone trying to run a property management company can tell that the first 100 units are the most difficult. At first we did everything ourselves without any staff. My stepdad was our part time maintenance tech and then when I wasn’t working at my day job, I’d go and take care of the non emergency items.

So at this point, you’re working a full time job, running the day to day of the management company, and going out to units yourself and plunging toilets?

100%. The first couple of years, I’d have a change of clothes in my car so I could go right from my office after work or during lunch to unclog a toilet or whatever the work order was.

How did you find time for all of this, and keep your sanity, and keep your family on board? 

There were years where people at work would be going out for a walk or local restaurant during lunch, and I would sit in an office and make all my calls for the business or go to the bank to make deposits. It came down to making sacrifices in my free time. I also started waking up early so I could get work done before my regular job, which helped me keep time with my family when I got home at the end of the day. I just kept finding ways to sneak more time into the day.

When did you get to the point with your business where you brought in non-family members to help with the business or maintenance requests?

So it kind of all came to a head in the summer of 2017 when we were right around 75 units. I took on a new job that was based out of Texas. It was another sales job and I had the entire east coast as my territory. I was traveling to Austin for training while running the company, and we had signed on a new owner that was bringing on about 30 more units. As you can imagine, trying to onboard these while traveling to Texas was a ton of work. I realized that if I continued on the path I was on, I was either going to fail at my job and my business. I had to commit to one path and go for it. So I took the plunge and went full time into the management business. I figured at the end of the day, if it didn’t work out, I could always go back into sales.

Was there any time where the business wasn’t profitable?

The business is interesting in that you grow, grow, grow, bring on units, and then you hire to support the growth. So it’s almost like stairs – your revenue grows and then you make hires and then your profit flat lines. I can remember the first year me and my brother went full time. We both sacrificed tremendously on our earnings in the business and weren’t paying ourselves much. There were times we weren’t sure if we were going to be able to make payroll. There were nights I’d wake up at two in the morning and just sit in bed and think about everything that had to be done, and I’d just get out of bed and start working. I didn’t want to fail. I didn’t want to let my brother down. He had trusted me and believed we could make this leap and succeed in our business.

In a bizarro universe, let’s say you don’t have a family, don’t have a brother, and it’s just you and the company. Do you think you would have had that same drive and sense of accountability? Would you still be getting out of bed at two or three in the morning to start working?

That’s tough to say. I know that I hate being told what I can’t do, and I had a bad experience in the corporate world so I did have a lot of drive to make it work in my own company. I remember when I had applied for a sales position in my company, and a the day before I was supposed to interview, my manager at the time took me aside. We went into a conference rooms and told me. “I know you have the sales interview tomorrow, but I don’t think you have the personality type for sales.” I really nice thing for him to say the day before my interview…

So he essentially called you boring.

Yeah, exactly. So there I am, I’m being told that I don’t have what it takes. My personality doesn’t match. I could have taken that and said, you know what, he’s right. I need to just play it safe and stay in this dead end job and makes shit money. Or I decided like, I don’t care what he says, I’m going to work as hard as I can. I went with the second option, and I was in sales for five years and exceeded my goals every year. I still use that as motivation. My advice to people is that you have to be self motivated because at the end of the day, if you want to start a business or get into real estate, nobody’s going to be tapping you on the shoulder to say “Hey, shouldn’t you get up to work on this or shouldn’t you put time?” It has to come from within.

It’s interesting that you identify as an introvert as the host of a popular real-estate meet up . Can you tell us a little bit about how you got started with the Haverhill Real Estate Guild and what that’s done both for you and for the community and other investors in the area?

The Havehill Real Estate Guild has actually been going on for 15 years or so. I started attending as a member when I first started investing in real estate investing. Eventually I was elected head of the group, and we’ve grown significantly the past few years. We’ve benefited from having a few rules prohibiting selling your products or services. None of the guests are allowed to pitch or sell anything, The focus is always to just provide value. I want investors, whether new or experienced, to be able to come to a meeting and leave with more information and a closer network. I’ve found that just by doing those two things, we’ve helped the group grow and get better.

So where is your business at today?

Today we have 320 units under management We also have a plowing / landscaping company, brokerage, and are launching an in-house construction company. We’ve never borrowed money for any of the businesses (other than mortgages for our real estate purchases). We’ve bootstrapped them from the get-go. The property management business has historically low margins, but we’ve had success using it as a hub for our other businesses. We’ve gone into related businesses like plowing / landscaping that are more profitable and also help our customers. I think within the next year or two, the plowing company is going to be larger and way more profitable than the management business

And similar to when you started the management company – you’re in the plow at like two, three in the morning servicing the account.

Yup. I don’t foresee myself doing that forever. But until the companies get to a certain size, it’s all hands on deck. Growing a business, you have to be willing to get your hands dirty until it gets that point where you’re able to take a step back.

Not long ago in the fall of 2018, we had houses literally blowing up from the Columbia Gas disaster in the area you manage buildings. I bet you thought that was the craziest thing you would see in your property management career?

It was definitely up there. And I remember that that day. I think we were actually texting. Our company was having a nice happy hour downtown at a bar with an awesome outside patio overlooking the river, and everybody’s phones start going off. The next three to six months we were involved with the aftermath and recovery, getting people switched from gas to electric heat and cooking etc. And you’re right I figured that was the craziest thing we’d have to deal with. And now we’re dealing with the coronavirus and a lot of unknowns on how it will affect our business, residents and owners. There’s no playbook out there, so we’re all trying to figure it out as we go.

What steps is Four Points taking right now for COVID response?

First thing we did was have all employees work remotely. With our technology platforms that really wasn’t a huge undertaking. We also suspended any non-emergency maintenance requests and putting those into a waiting list. This was to help protect the residents and our maintenance techs from potential exposure. As we approach the next rent collection cycle, we’re brainstorming with our owners and other management companies on how best to work with everyone. The financial and economic impacts from this will be huge. I look at the other countries that got hit before us to play out our likely trajectory. Italy is on lockdown. I can only assume that’s likely going to be the case here, or at least with some states / cities. If people can’t go to work, they’re not going to be able to pay their rent. Then the same thing is likely to happen with owners who can’t pay their mortgages if they’re not collecting rent. I don’t even think even the government as a clear outline as to what the next steps are. So there are some things that you can be proactive about but we’re also waiting for guidance from the city, state, and federal government.

Is now a good time to be buying investment property?

I would definitely look hard at downside scenarios. What happens if rents drop 25%? Are you still able to cover costs? I know everybody will do a pro forma and they will take the current rents and project rent growth over time. But I think it’s very important to do the reverse as well to see what you can handle in cast rents drop or vacancies spike. I would also caution people to have plenty of cash reserves to ride out hardships and unexpected capex.

Last question… if you could pick any trade skill to work in the rest of your life, what would you pick and why?

Plumber / HVAC for sure. I don’t think there’s enough electricians either, but you’re always going to have plumbing issues, no-heat calls etc. I can’t think of a reason why that would go away in our lifetime. Plumbers make crazy money and are always in demand. I wouldn’t be surprised if we start a plumbing business soon now that I think about it.

Want to get in touch with Rob? Send him an e-mail at Rob@fourpointspm.net or call him at 888-944-5827 Ext 702