BiggerPockets Real Estate Podcast

BiggerPockets Podcast 205: Snowballing from Single Family Houses to Apartment Complexes with Jered Sturm

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How does one transition from doing simple houses to more complex deals? That’s the topic on today’s episode of the BiggerPockets Podcast, where we sit down once again with Jered Sturm, a real estate investor from the Midwest who's made the transition from doing all his own work on single family houses to purchasing larger properties. In this episode, we dig in deep on the purchase of his newest 42-unit apartment complex and the unique “value-add” ideas he discovered that made this property a home run!

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We just waRealtySharesnted to give a shout out to our podcast sponsor on today’s show: RealtyShares. RealtyShares is a crowdfunding platform that allows you to invest in professionally managed properties without leaving your living room!

Learn more by visiting RealtyShares.com/biggerpockets!

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In This Episode We Cover:

  • A quick recap on how Jered got started in this game
  • What market is he in and how it changed over the last couple of years
  • Why he moved his investing from Cincinnati to Atlanta
  • How he uses partnerships to manage different markets
  • Tips for funding using other people’s money
  • The goal that led to using syndication
  • Self-fulfillment rather than just buying more
  • The importance of figuring out your “why
  • How he has the discipline to not spend their quadrupled income
  • Why you should separate out the “business income
  • How he found his 42-unit apartment complex
  • Tips on managing cold calling 
  • What criteria was he looking for
  • The advantages of having dedicated water lines for the units
  • The beauty of adding value to properties
  • What exactly a resident manager is
  • Why building structures made the difference in their business
  • How he financed this multifamily deal
  • Using the BRRRR strategy on large multifamily
  • And SO much more!

Links from the Show

Books Mentioned in this Show

Tweetable Topics:

  • “Self fulfillment is how can you be the best you can be while also helping others be the best they can be.” (Tweet This!)
  • “We’ve over prepared for the future, and even though we’re still pretty small, we’re running like a large company.” (Tweet This!)
  • “Management makes or break the investment.” (Tweet This!)

Connect with Jered

Show Preview

Real strategies that work for real people seeking to build wealth through real estate investments. Co-hosted by Brandon Turner and David Greene, this podcast provides actionable advice from investo...
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    Anthony Galante Investor from Morganville, New Jersey
    Replied almost 4 years ago
    Just listened to this Podcast, Great listen, Jered worked hard to create this purchase. Every deal you miss is one you won’t capitalize. Keep digging.
    Jered Sturm Investor/Syndicator from Cincinnati, Ohio
    Replied almost 4 years ago
    Thanks Anthony. I am glad you enjoyed it!
    Steve Stackman Investor from Fairborn, OH
    Replied almost 4 years ago
    Really great creativity using the sub-metering then converting the laundry room to rentable storage. Congratulations on the purchase and continued success!
    Jered Sturm Investor/Syndicator from Cincinnati, Ohio
    Replied almost 4 years ago
    Thaks for the Kind words Steve.
    Jered Sturm Investor/Syndicator from Cincinnati, Ohio
    Replied almost 4 years ago
    Thaks for the Kind words Steve.
    Nathan G. Real Estate Broker from Cody, WY
    Replied almost 4 years ago
    Every show features a lot of good advice. My favorite point in this show is how Jered increased value. By adding individual water meters, he shifted the expense to tenants. He started renting washers and dryers to tenants for an additional revenue stream and deleted the utility cost in his laundry rooms (this may be a wash because he also lost the income from coin-op laundry). By removing the laundry out, he freed up space to create storage units and generate another revenue stream. Finally, he negotiated old contracts and removed tired procedures that cut expenses dramatically. Every investor needs the ability to analyze a property and determine where they can cut costs, increase revenue, or generate new revenue streams. This is true with single-family and commercial properties with 100 units. One of the cheapest and easiest ways to increase the value of a property is to find one that is neglected, running on cruise control, or with a tired Lanlord/Manager and get it back on track. I met the owner of an 8-plex a couple years ago that had been self-managing. I told him I would be happy to manage for him if he ever needed help. He insisted everything was fine and politely told me my services were a waste of money because he was self-sufficient. I would run into him every now and then and it was always the same story. One day he called out of the blue because he had a short-notice vacancy and was too busy to handle it. We talked and I took over management that week. I quickly discovered the Landlord was paying all the utilities and the tenants were renting well below market. I converted the utility accounts to budget-billing (every month he pays the same amount, based on historical averages). I increased each Tenant’s rent closer to market value. Then I split the utility among the tenants and added that to their rent. The increases averaged about 20% per tenant so I gave them 60 days to accept and EVERY SINGLE ONE stayed on without a complaint. With those two simple changes the Landlord’s annual income increased 18%…AFTER paying my management fee! I do the same thing with single-family homes because most Landlords are not nearly as good as they think they are. Thanks for the podcast and thanks for encouraging other investors and helping them find their way. I’ll be sure to look you up on the board.
    Jody Sims logistics from Lexington, Kentucky
    Replied almost 4 years ago
    I think adding value is what the whole purpose in life is about, especially as real estate investors. Finding a balance between what value to add versus what others can comfortably afford is key.
    Jered Sturm Investor/Syndicator from Cincinnati, Ohio
    Replied almost 4 years ago
    Thanks Nathan I am glad you enjoyed the interview!
    Jody Sims logistics from Lexington, Kentucky
    Replied almost 4 years ago
    One of the things I always enjoy about BP is the lack of denial that this real estate market is changing. Too many of the “guru” types want you to believe their past success that likely began going really strong during the housing bust 7-8 years ago is the norm and you can stand on any street corner and throw a rock in any direction and hit a homerun deal. I believe we are at a seller’s peak right now and the real estate market recovered far too quickly to be sustainable. I also think real estate investors is what has driven the housing market recovery and, principally, that’s what is making this market unsustainable. BUT… that’s my opinion, based on nothing more than a hunch and the fact that Trump has made some statements about tax policy that could turn out to be disastrous to many folks (re: layoffs coming) if the congress gives him all he wants. My crystal ball doesn’t work any better than anyone else’s, so I could be wrong as easily as right. What I am expecting, however, is a new buyer’s market beginning around 3 years from now, maybe less. Thanks to Jered and the BP team for all the insights into large MFR investing. That is my eventual goal.
    Account Closed Architect from Houston, Texas
    Replied almost 4 years ago
    Jered, I really liked how you said you feel it’s not your money from the business. And how you live a simple life (just like what I’ve been hearing on the book The Millionaire Next Door) in order to give back. That’s my vision for myself and family as well. As a former Cincinnatian (UC!), I wish you the best as you move to Atlanta. You will miss the midwest as I do now (i.e. foliage and Skyline Chili). Question: you said you live on your wife’s teacher income. But do any of your partners get salary from the business? If so, how are compensations set?
    Jered Sturm Investor/Syndicator from Cincinnati, Ohio
    Replied almost 4 years ago
    Thanks Greg. I’m glad you enjoyed the show. I am back in Cincinnati about once a month so I get to enjoy all the Cincy goodies. We now take agreed and even distributions when we have done well. No salaries at this time.
    Julie Marquez Investor from Seattle, WA
    Replied almost 4 years ago
    I really loved this show! it had bits and pieces that applied to me and were relevant and implementable. – Construction background: great way to start and learn before real estate, and I love how you are specific in your construction wants of the buildings, I’m totally that way too. – Young and ambitious, but also willing to live a simple lifestyle for the sake of your business, that is admirable. – Doing deals with your own money and having the simple lifestyle to support that. – All the value add ideas, like renting washers and dryers. Does that mean you service them too? What if the tenant pays for 5 years of rent on them, do they finally own them at some point?
    Jered Sturm Investor/Syndicator from Cincinnati, Ohio
    Replied almost 4 years ago
    Hi Julie. Thanks for the post. I’m glad I could resonate on those points. As for the W/D maintenance, yes our maintenance tech services them when they have issues and no the W/D are not a lease to own deal just lease. Good idea though! Thanks for the comment!
    Tim David Lampsch
    Replied almost 4 years ago
    Jered you inspired me! I’m a soldier from oversees right at the beginning. Learned so much just from these podcast. All the information about growing up my business in real estate is welcome. thanks a lot.
    Jered Sturm Investor/Syndicator from Cincinnati, Ohio
    Replied almost 4 years ago
    Tim, I couldn’t do it without your service so thank you! I am happy I could add value to you.
    Christine Swaidan Investor from Ventura, California
    Replied almost 4 years ago
    Great podcast! Really learned a lot re value add. Especially interested in RUBS. Could you possibly recommend where I might find out more on if this would work for me?Congratulations on your success, especially at such a young age. My husband started acquiring property in his 20’s and now at 70! It has served us well.
    Jered Sturm Investor/Syndicator from Cincinnati, Ohio
    Replied over 3 years ago
    Hey Christine. I am glad you enjoyed the show. The only way to tell if property can be submetered is to get someone who has a deep understanding of plumbing into each unit to confirm. Unfortunately, there is no one shoe fits all diagnosis for this value-add. Awesome on the 50 years of RE success many more to you and your husband!
    Yitz Frankforter Rental Property Investor from Alpharetta, GA
    Replied over 3 years ago
    Amazing insight into you turned your hustle into practical steps! Looking forward to meeting you at the meet!
    Rich Ferradino Investor from San Antonio, Texas
    Replied over 3 years ago
    Could you share the company you used to sub-meter the water lines? I just purchased my 3rd mobile home park could sounds like a great idea to use a 3rd party to read the meters via wifi.
    Adam Treece USAF from Phoenix, AZ
    Replied over 3 years ago
    Honestly…one of my favorite episodes. Good stuff all ’round.
    Zack Coomer from Austin, Texas
    Replied over 3 years ago
    Jered, you’re super talented at communicating learned knowledge. Learned a ton from this podcast, thanks for sharing!
    Paul Brockland Rental Property Investor from San Diego, CA
    Replied over 3 years ago
    Great stuff Jered. I assume you specified pitched roofs instead of flat roofs because flat roofs tend to leak more? Aside from the brick, PVC drain lines, vinyl windows, were there any structural criteria for your search (e.g., no knob and tube electrical, garages, HVAC specifications, etc.)?
    Alan Brown Rental Property Investor from NY MA CT VT MT, MO
    Replied over 3 years ago
    Excellent show Jered; I remember your first show and was pretty impressed then, but this show is seriously inspirational… I’ve listened to it several times and LOVED the financing you pulled off! Also, I would love to offer the rental W/D as you did. Can you tell me if you just got them from HD or did you get more heavy duty ones that will last through any tenant? at $40 per month, it would take a couple of years to pay off an $800 pair; are you just planning on long term returns? Thanks for your info