Speaker 0:00

Welcome back to the Philly of Landlord Guy, the show where we keep the fluff and get into actual business of owning rentals here in Philadelphia.

Speaker 7 0:17

We are here to share insights and experiences, not legal or accounting advice. Be sure to talk to your attorney, accountant, or professional advisor before making any decisions. Everyone's situation is different. Get the help that is right for you.

Speaker 0:33

I'm your host, Yuriy Skripnichenko licensed real estate broker and certified property manager here in Philly. And today's guest is someone who knows my businesses almost as well as I do. He isn't just a tech professional working in the AI space. He is a seasoned Philly investors who has been in the trenches with me on everything from gut rehabs to scaling a portfolio. I was his agent on every single one of his deals. And today we manage his properties with TrustArt Realty. We're going to talk about the tech side of being a landlord in Philly. Why moving from old school bookkeeping to an AI driven tool is a game changer for you. If you ever wondered how to use AI to save time on your rental business here in Philly or if you're struggling to keep up with your books right now, you're going to want to hear this. Lets jump into it.

Yuriy 1:29

Hey Jonah, welcome to the podcast. Can you start by telling us who you are and what you do?

Speaker 2 1:35

Yeah. Great to be here. Thanks for having me. My name's Jonah Worley. I have been a real estate investor for, I would say maybe six years. We have around 20 properties now. So have seen all sides of that business. Getting deals, rehabbing them, renting them both short term and long term. And also gotten a little bit of a sneak peek of what the property management side looks like too, just from being partners with you in some business. Otherwise I work in the AI industry, so we're definitely constantly iterating. It's an efficiency tool, so our play is really about just driving efficiency, saving time. Which to me is one of the most interesting use cases of AI is like, how can you automate, save time and free up time for other things?

Speaker 2:24

That sounds fun. I need to free up as much as possible of my time. And just for full disclosure Jonah is my life partner, my business partner, and we've done multiple deals together. So it's not just, a random guest on the podcast who've known each other for many years, and we've done a lot of business together. So you've been on both sides buying your first properties and owning a portfolio now, what is your biggest Philly reality check? You had during those first few rehabs that you had?

Speaker 2 2:58

I think when thinking about rehabs I've had a few reality checks and I think I've learned over time. So starting out I try to do a lot of stuff myself just to save time and my, or not save time, but save money. I think it's not uncommon for people to try to do some DIY projects to cut cost. I've ran into a few issues with that. So one of the big things I would say is trying to do a project without the proper tools. Is something that inevitably always results in more trips to Home Depot. More time, more money. It's like better to just buy the right tool upfront or hire a pro. 'Cause what happens is you end up in the process of trying to do the workaround or the quick fix. You end up getting a worse quality kind of end result or outcome something that may end up having to be redone later anyway, and then you spend more time and money even doing it. Yourself. So just buy the right tool would be one big thing for rehabs. Another thing is putting off a non-essential project for a couple years down the line. That's something I've definitely had a regret for, where it's like, Hey, we did this huge rehab, but maybe I'll skip the kitchen. 'cause it's like it has some issues, but it can last for a couple years. If it's not something that can be pushed out like 10 years, if it's like 2, 3, 4, 5 years. It's so much easier to do it when the house is being rehabbed. No one's living in it, it's unoccupied. It's probably gonna be cheaper as well just from a, cost efficiency standpoint while you're doing all these other things. Then cost increase over time. So it's like trying to do the project later down the line after it's been rented or it's in between people. In my experience, it's just if it's a short term project that you plan on doing in a couple years, just do it initially. It'll save you a lot of frustration, cost and time down the road.

Speaker 4:46

I think that happens with a lot of first time landlords when you just buy your first property, you're just trying to save and to save on everything. But at that time, going back you said about the kitchen not being done if you. Went back in time and my guess would be that you either didn't have enough funds to do that, or it did not make sense for the deal at that time to put more money in it. Would you do it? Even if it meant that you would go cash negative or you had to borrow money to do that kitchen, or you still would think that you would just do minimum painting or whatever, refreshing of the kitchen cabinets that you had done, and then wait a few years when you in a better cash position to make that.

Speaker 2 5:34

That's a good question. I think it's like a, it's a balancing act, right? Because you're always like, the sellers are trying to get the most money out of you as they can at closing. Like you have to weigh like your down payment fees plus like closing cost. And then even if it's a turnkey unit, there's still gonna be issues. So it's like trying to weigh like what's essential versus not. But if it's something you're like on the fence about, or if you think it's gonna have to happen in a couple years. I would say do it because there's the other factor of the cost of labor and projects are gonna go up over time as well. So what could have been a $4,000 project? Three years ago, or four years ago, could now be a $15,000 project. So even if I'm maybe in a different cash flow situation now, like when you like look at like that trajectory of like cost increasing over time and the complexity of like then having the unit vacant after you started renting it and it just I think it ends up making more sense to get it done if it's something like really I think. Maybe harmful for you financially to do upfront or it doesn't make sense. I think that's definitely worth considering. End of the day you need to make sure like you're in a healthy position. But yeah, I definitely would've done it.

Speaker 6:47

Yeah, that makes sense. And since the day one, or since your PR first property, I was your agent for all of your deals. I helped you find them, buy them, and now we manage them for you through TrustArt Realty. What should investor look for in an agent if they want to scale rather than just one time buy.

Speaker 2 7:11

I think there's two big problems or things that I think are really key. One is just getting someone, I guess three actually, but one is getting someone who like knows your region that you're investing in. So someone who does like a really huge market or region, like they may have less local knowledge about. What's working, like how long are things are staying vacant for what price should it should be sold at which just helps you make an informed decision about if it's a good choice to buy. So one is like that, communication, quick follow up. Two is like having someone with a local expertise. And the last thing I think is just having an advocate who understands your goals. And can help you source deals. 'cause one of the biggest challenges is just finding the right deal. You can find properties for sale all day long, but is it something that you're gonna cash flow on or be able to in, in a reasonable timeframe? Is it something you're gonna be able to even get your money back out of? Or is it just gonna be, a loss leader. So I think having an advocate and your goals could be different. Some people could be, looking to harvest like losses or looking for cashflow or looking for more long-term investments. So it depends on your goals. But having someone who knows what those goals are and can and understand the market well enough to give you good qualified leads, makes all the difference.

Speaker 8:28

How would it determine what those goals are or how do they know what you should be looking for?

Speaker 2 8:35

I really think that's like situational, it depends on every person's, like financial, like background and where they are in their journey. Some people could just be looking to park cash. So I think that's a very different, like property that you're looking at right there. You may not be concerned with getting cash flow immediately or cash a certain amount of cash on cash. So it, it depends on what your goal is Also. There's people out there who may just buy a property and flip it. So I think the math looks different if you're like buying it just for the purpose of reselling it versus buying and holding. Really I think it depends on do you have a short term or long term view and real estate and then do you have like a bunch of money sitting there that you're trying to park somewhere? A vehicle that you feel is fairly secure or is it something that's trying to generate revenue or income for you or ano create another revenue stream?

Yuriy 9:25

That's a good transition for our next topic is how do you actually account for all of your money? What goes in and what goes out? And as you mentioned, it's very different for when you buy in property to hold versus when you buy in property to flip. And last year was the first year that we ever had to sell a property, which I always say that I do not sell. I buy. But it just happened to be that one of the properties that we were working on did not make much sense to hold as a. Rental. So we decided to sell. And this year when we want to go taxes, I was very unhappy about the result of that sale. Whenever you make those goals or make those decisions, you definitely need to look at your numbers and. Possibly talk to your account on how that will affect your bottom line or how it'll affect your taxes. 'cause it's not just from the amount of money that you get out of the deal or the cash flow that you're getting from your rental. It's also a very effective tool for how you report on your personal and your business side of taxes as well. Depends on the structure. Before we get into deep dive on AI and accounting, I want to take a quick moment to thank our sponsor, TrustArt Realty If you own property in Philadelphia, you already know that the rules are always shifting. And the day-to-day management get, complicated fast. That's why TrustArt Realty is offering a free rental analysis or management advice session to all of our listeners. Whether you need a second set of eyes on your current rental rates or if you're looking for a better way to handle your portfolio, we've got you covered to claim your free session. Just email us at trustartrealty@phillylandlordguy.com or go to trustartrealty.com and schedule a time. now back to the show. So Jonah, I know that when you started. You had QuickBooks Desktop to account for all of your real estate income and expenses. Then I know that you moved to QuickBooks online at some point, and now you are switching to an AI driven software. So what is, what? Why did you do that? And why do you think that? Excel spreadsheet and just a box of receipts. It's just a death sentence for a growing landlord.

Speaker 2 11:54

I could definitely give more context on that, but first there's something that you brought to mind that I wanna call out. So the one thing that, that you triggered in my mind memory real quick though. Like when you mentioned about that property last year that we tried to sell is I think it's important real estate to test right, to ab test. Try different strategies, see what works best for you, and to not get discouraged if a deal doesn't work. Maybe you get a bad deal that has unknown problems that ends up being costly or it doesn't cash flow in the way you want, or you end up having to exit quickly. Or you try, flipping something and realize I impacts your capital gains in a way that doesn't work for you. I think it's important to just take it in stride and don't take that as a moment of oh, I have to stop investing in real estate, but maybe, try a different approach or a different tact and learn from it. Yeah, definitely something I would just call out there. 'cause I so many times people who. I have one bad property or one bad tenant, right? And it takes them like forever to evict and then they never invest again. 'cause they're like the capacity to have to deal with that negative thing. They're like, oh, I don't wanna do it again. But there's so much potential if you just use it as a learning opportunity and kind of calibrate and adjust. But moving on to accounting. As you said I tried a bunch of different journeys in accounting. I've done Excel, I've done QuickBooks Desktop online. Now I'm doing ai and really, I think, just the goal is access, efficiency, automation and analysis for me. So I want to be able to. Have books that I can access from anywhere, right? That I can manage from anywhere. So QuickBooks Desktop, you end up with this like situation where I can only use it on the computer. I have it installed on, right? Or I have to set up like remote desktop situation, which is like clunky and slow and can be complicated to configure, right? And then, QuickBooks online can be great as well, depending on your use case. And mine, because I'm an investor, but I don't. Do a lot of like payroll or invoicing or whatever else. It's like there wasn't a great product fit for someone who needed like property classes and to do real estate centric stuff without all the other fluff. You a whole package for something that only delivers minimal value for what you need. So part of it is like access. So let's have a platform that I can access anywhere. And then the other piece is like efficiency and automation. If I can have a platform that can recognize my common transactions, it can understand. Like my business and like my unique books and learn from it and adapt. Then all that means is I end up having to spend less time doing accounting on my own, or bookkeepers have to do less on their end, which saves me operational cost but also drives accuracy. 'Cause the worst thing can happen, one, it's like that old school thing of having all your books in the spreadsheet and it not really representing. Your financial situation, right? It's just paper. I think with some of these more modern platforms where you can integrate you can get a more real time view of what's the health of your business and your cash flow, and are there any things that I should be mindful of or adjust my strategy for. And I think that kind of leans into the last piece of analysis. It's like having. A robust like platform that can integrate well and automate transactions. Just gives me a good real time picture that then when I walk into my tax planning session, I can have a really good view of like how I'm trending and I can have a very productive conversation about how we need to adjust throughout the year to make sure I'm implementing the best tax strategy. And then. It has other benefits of being able to streamline deals or understand like how I'm performing on my investments. So definitely love loving the new AI approach and just the time savings and cost savings that, it can drive.

Speaker 15:46

All of that sounds pretty complicated. So for a regular person here in Philadelphia who does not really understand accounting too much or maybe not a great bookkeeper, what would you say it would take and how much does it cost to actually have some kind of software like AI software that you're using or maybe QuickBooks online? And is it really better than just having a spreadsheet?

Speaker 2 16:12

Yeah. I think, the price really varies situation and like how you organize your books. So there's a lot of free tools out there that do fine, that I think are still better than spreadsheets. So it doesn't have to be a paid solution. QuickBooks for me, I found expensive over time just because I need it for such a narrow scope. To get all the features I need. It's a higher price point, but there are a lot of other AI tools out there that could be, anywhere from free to 50 bucks, a hundred bucks a month. But it depends on how you set it up. Are you setting up a different workspace per property or doing one and using classes? But it does sound complicated. I think leveraging experts help. So what I know today is very different than what I knew when I first started accounting, and I certainly made lots of mistakes that I had to correct along the way or do adjustments the next year as I realized like there's a better way to do things or, improve how I do books. So I think it's a journey like you learn as you go lean on experts while you're Phillying in that knowledge gap. And a lot of the software is, do come with a lot of resources too to help guide you. One, they're gonna be set up to where it's not gonna allow you to, set up something in a way that you shouldn't be. Like it's gonna have some, controls in place to make sure you're doing things the way you need to. But it doesn't have to be complicated, I think is the moral of the story, even though it sounds complex. And I definitely just leverage like external resources to like and experts to help you learn and grow.

Speaker 17:40

Yeah, and I think the more properties you get, the more complicated it gets. But when you have one or two properties, it's very easy. You can get just as you mentioned, some free software like Wave or bunch of other bookkeeping softwares that you can use for free, for simple things. But I think the great advantage, what you get is clarity of your. Numbers 'cause I used to have it in just spreadsheets, Excel spreadsheets over 10 years ago. And it's okay when you have one property maybe, and it's easy and if it's in your personal name. So it doesn't matter which bank account you use, all of them connected to your personal. But when you start growing your portfolio and you have this LLC. That LLC, then you have different properties in different companies, and then maybe you still have some properties in your name and you want to make sure that all the funds are not commingled, so you're not using one LLC account to pay for another LLC account. And that's virtually impossible to do in a spreadsheet unless if you. Really have three hat and can remember every single time what cards you swipe or what bank account you're using to pay for some expense. I think that's where the power of bookkeeping coming from to have that clarity. And also, you cannot really track your expenses if you have mortgages. So all of those PT payments property access insurance, payments that you pay for when you pay your mortgage, you don't see that on your spreadsheet. Even if you put just a single number as a mortgage payment, you do not allocate that into escrow account. You do not know how much actually is going to the taxes, how much going to the insurance, and how much going to pay for the interest on that loan and how much is actually paying down the loan. And when you have some kind of software, you can see that. Okay, maybe you're not making a lot of cashflow on your property, but that there is a decent amount of money that going towards paying down your loan, which is still money that you earn. And it definitely helps when you go to file your taxes. But besides that, do you think having clean real time books actually help you get your next conventional loan or DSCR.

Speaker 2 19:59

Yeah, I, so the reality is anytime you do business with a bank, especially when it comes to a bus, like an MBL, like a business loan or a conventional loan or, DSCR, any of that, they're gonna really wanna know your whole financial picture, which honestly can be annoying as an investor. 'cause it's just so much information to provide. And I think having it in a clean space that's like well organized. Consistent. I think the challenge with spreadsheets is like getting this in a consistent format and that makes sense to everyone, right? Not just you in a way, the way that's like industry recognized, understood across different verticals or different kind of people. And I think some of these softwares help you with that, but given you a real time picture. So banks are often gonna wanna see not just last year not just your taxes, but they're gonna want like your balance sheet in your p and l for maybe the last couple years. And I think the really important thing with that that I didn't know when I started out is that's super important for like conventional loans where they're looking at your debt because, like banks aren't even gonna count the revenue from rental properties for the first couple years. So having good reporting where you can cleanly show like rental revenue over a couple years can help ensure that they include that revenue. Into that DTI calculation, so you're not like on paper looking like you're not making money because you have all these expenses and a mortgage and no income for it. So I think having those clear books helps ensure that you get more lending options and better rates so you don't end up with like really unfavorable options or maybe just declined outright.

Speaker 21:37

And since you work in an AI company, and this is such a hot topic now, and I know by, probably by the time this piece hits the market or hits YouTube, it's already going to change 'cause it changes every day and we have new tools every day and it's improved and things that you can do with ai. But for a regular Philadelphia landlord who isn't. Tech savvy. What are the two, three free ways that they can use AI like Cha G pt or Clot or maybe Gemini or whatever AI they use right now to save some time? A few hours a week, maybe.

Speaker 2 22:19

Yeah. That's a great question and one that particularly resonates with me being in the AI industry. But I think for me, like the biggest advantages of ai are one to validate information. And then the second is to compare. And then finally to drive efficiency. So I think what I think the scary thing or the thing that can be dangerous is when people try to use AI to replace a professional's advice or guidance, right? It should never replace a lawyer or a property manager or someone like who is licensed and understands that local and legal, like theme and what needs to happen, but it can be really helpful for driving efficiency and analyzing and comparing things. So for instance while I wouldn't use it to generate or create a cashflow analysis for a property, I could use it to compare to, right? Maybe I'm looking at a couple properties that I put one together for and I just wanted to look at two different analyses and say what are some gaps that maybe I missed or I'm not seeing there, or compare these two and tell me what's the best offer based on these criteria that I care about the most. Comparison is really valuable in my opinion. Validating. So if you put something together, have it look at it to see if there's any gaps. Are there any risk I didn't think about or that I might have missed? Or things that I should include or clarify on to put me in a better position. So just recently, I put in an offer to an agent and while I put in like the specific things that I was looking for in that offer, I use AI to find to just evaluate what are the things that I may not be aware of for this region or that I could have missed, or that I should think about or include? I, at the end of the day, I still handed that to an agent and a lawyer to, put together in a formal way and to cover all of our bases, from a risk and legal perspective. But it helped streamline that process by understanding like that context. What I'm looking for and making sure that I wasn't missing anything with the way I frame things. So definitely, comparing, validating identifying any red flags or gaps and then efficiency. There's so many times in the past where let's say you're given a list of just like bad data. It's poorly put together, it's not formatted well. The historical way that you would deal with that is like painstakingly put together a manual spreadsheet and now it just be like. Put this data into a format that's easier to digest, to read, to deal with, to work with, right? So it's that efficiency play of I don't wanna spend the time to do this manual simple task that this tool can do for me for free, right? So just put this list data, or this information that is poorly framed or formatted into something that's a more digestible, easier to use format.

Speaker 25:04

Yeah. And I also would say that for ai, right now, that saying trust but verify goes very well. You definitely want to verify whatever AI gives you. It can have glitches, it can have responses that it creates out of thin air without any. Specific knowledge or background for that. But at the same time, we are seeing in our business, we're seeing so many people starting using AI just to send a generic message to us. So we see how tenants communication changes over time. A lot of tenants starting using AI instead of se sending some kind of anger message to us that the shower isn't working or there is no hot water. We're receiving some. Weird message that you can tell that it was not written by a person with a lot of different wording that the regular tenant would not use. And also they are starting using AI to fight with us or create some legal problems for us or trying to create legal problems because they ask AI to act as an attorney. And they trying to say that. We'll sue you or whatever they wanna say. And I'm sure that landlords will face that as well. And I think AI is not the best defense, but that may be used as a front or first line of defense. You can use AI to analyze the. Text or message or email or whatever that source of information that tenant sent you to analyze that and give you at least some pointers how to react to that or how to respond to that. And not a few things that I can say that you can save a lot of time just whenever you make your property available for rent. Just create a listing. You don't need to create all of that. Description yourself anymore, you can just drop it in ai, tell it what it is, tell it where it is, and it'll give you beautiful description for your listing. The same thing, you can take pictures and for some people it's not that easy. Even though our cell phones are doing great pictures right now, you do not need to have professional photos. You can just go with a regular cell phone and then just drop it in ai. If they don't look too great. Ask it to not change the physical picture, but to adjust it to be presentable for a listing and you'll get great results. So your listing will look better and just get some market analysis, maybe in some market idea. Again, do not completely trust ai. What it. Tells you, because they all get different databases who are pulling from different sources. Those sources may not be validated or may not be true. We're getting information or we're getting this, a response from our clients as well that, Hey, I think my property should be rented for X amount of dollar because AI says, or Chad g PT told me but first, your Chad G PT doesn't have most reliable data and it's over a year old. And then Chad G doesn't have local knowledge in Philadelphia or in specific sub area or sub. Neighborhood of Philly, we do. We have access to that information. We know how much properties are rented for, and if charge B tells you that it should be $2,000, it's not specifically the case, but you can use it to get general knowledge or general idea and then check with somebody else who actually have that specific knowledge.

Speaker 2 28:47

Yeah, I think that's a great point, is just I think it's a helpful tool to just highlight maybe the experts you need as well, right? So it's let's identify some possible gaps and opportunities in this, and then it better informs who should I bring in to help me with this last stage of this process or a problem.

Speaker 29:05

And also this is just the basics that you can do with ai. Again, it's forward. Not tech savvy person, but if you are tax savvy, the. Sky is the limit. There are so many applications that you can do. Right now I'm working on clot cowork. I'm trying to teach it how to do my bookkeeping for me. So it actually will be using my computer. It will be controlling the mouse and my keyboard. It'll open Q QuickBooks and it'll put the transactions based on the receipts that I provide. Or based on the bank accounts, it can log into my bank account and get all the information that it needs. It's a little bit more advanced, but the potential of having that and having set up the right way, the way how you want to have it, will save you a lot of time and money. Otherwise you will have to spend. So I'm excited about the opportunity that comes with AI and I'm one of those people who is embracing that instead of running away from it. So I think every single landlord in field should try it, at least if you do not know how to use it, try to use it, try how it can help you in your. Day-to-day operations of your property. That brings me to my next question to you. Even though we are partners and we buy properties together, but at the same time you are technically a client of TrustArt Realty we manage your properties. What is the hardest part about letting go and letting a property manager handle all of your day-to-day operations?

Speaker 2 30:47

I think for me the couple challenges is one, just finding a property management company you can trust, right? I think that's huge. And then one that knows the market you're investing in. And for me, one that provides full service because I don't do well with. Half engagement. So I'm either gonna be in, in the weeds with all the details, trying to understand like, why was this repair done this way? Should it have been replaced instead of rebuilt or this or that. So I'm either gonna be completely involved in all the details about how that prop that property is operationally being ran, or I want it to be full service with someone I can trust where I can. Not be engaged. So I think that's the challenge is if it is finding a place that you can like let go and understand that you can trust that you're gonna understand what's happened happening, gonna be informed about things and it's gonna be done right. 'Cause without that then I can't do just a little bit of engagement. I'll go all in and I'll end up spending ton of, tons of time. That's not scalable. You can't do that for every property. It's just not, it's not tenable. So I think it's yeah, for me it's all about just trust and full service. 'cause there's a lot of property management companies out there that will do some pieces of it and then want you to do other things that like, even if you're like having to get quotes for every single repair, that's time consuming. Like also maybe you don't have a ready book of people who can do all the work you need done. So it's like having an agency who, or a company who has like a bunch of contacts that they trust that they've worked with, that they know will respond and do a good job is really valuable. So like when you're managing it yourself, you're having to not only navigate. All those conversations and the tenant problems and all that. But it's Phillying in those gaps of the relationships of getting stuff done in a good way. And then, the, just the, I think the landscape around regulations and requirements to, it's just a lot to keep up on. And I think if you're trying to do even part of that yourself, you're just opening yourself up more to risk. Or doing things incorrectly and then setting yourself up for liability. I don't know, for me it's just have someone you can trust to fully let go. 'cause I can't do half. I'm either gonna be in it and bothering everyone all the time and making sure that things are done a certain way or like step back and let it be managed.

Speaker 33:11

Okay. And what would you say a good monthly report look like to you? What should every landlord demand or should get from their property manager every month?

Speaker 2 33:21

So I think for me, some of the key things that I would say is just clear expectations around any risk and financial impact, right? So if there's pending rents that haven't been paid or. Upcoming financial risk, whether it's market changes or like with specific properties or tenants updates on timelines, right? So if there's any evictions in process or legal proceedings or mediations, like just understanding what's happening with that. So I'm not surprised. I think to me, the biggest thing that. I don't want is surprises avoidable surprises, right? So if something is known or could be updated on, or I could have visibility into it, it just would, it's good to have a heads up about what's down the line, if a bunch of funds are gonna be held for a pending repair that's upcoming, like knowing that ahead of a distribution is helpful. So related, it's all for me, it's about financial risk and just general update about. Any things that are really top of mind or that could be impactful? I think it's also helpful when it comes up for the renewal strategy. So understanding, what's the market at, if this renewal is happening, should I be asking for an increase to match like that, inflation or or should we hold off because the market's really slow right now and it's taking forever to run places. So all that kind of stuff is really helpful.

Speaker 34:41

That's actually an interesting conversation. It's probably for a whole separate podcast, but what are you seeing right now, or what are you doing right now with your renewals coming up? Are you increasing, are you keeping the same or increasing just a little bit? What do you do?

Speaker 2 34:59

Yeah, that's a good question. I think it's very neighborhood and property specific. So one model doesn't fit. For everywhere. So I would say the market is, there are, we are having longer vacancies and turnaround times for places. So that does lend to like the situation of maybe I do a smaller increase this year or agree to keep rent the same this year with the tenant. If they just agreed to sign and maybe a couple rare cases even, decrease it by 20 bucks. Generally I speaking, I think you want it to increase year over year to match like inflation and all the other costs. 'cause the reality is like my insurance cost have went up. My taxes have went up. So people usually don't think about that, but the operational cost of renting the place can actually increase year over year as the market responds to what's happening. Sometimes people just see rent increase and oh, my, a landlord is trying to like, get more money outta me, but their cost could have went up tenfold from that, and you don't even realize it. So I, I think it is property by property. But I am seeing a lot of situations where maybe we hold the same rent if it results in like the tenant agreeing to sign for another year or maybe doing a smaller increase. So

Speaker 36:13

Okay. And for the DIY landlords listening to us who is tired of the 2:00 AM call toilet is clogged. When is the moment when they should stop managing themselves and hire a professional?

Speaker 2 36:29

Yesterday. Yeah, that's my answer. Just should have done it yesterday. Do it as soon as possible. For me I don't know about everyone else, but time is probably one of the things I value the most and I feel the most pressed. There's so many priorities and things pulling on my time that, if I can outsource something, whether it's an automation in your accounting software or property management or bookkeeping, if I can outsource something reliably with, decent results, then why not? As long as it operationally makes sense or financially makes sense. So why deal with the headaches? You're one, you could set yourself up for risk if you don't understand the laws or like the legal implications of a certain situation. You setting yourself up for a lot of stress for sure. Time loss. Yeah, yesterday.

Speaker 37:18

Yeah, and I agree with that. We even have a property in a different market and me being a professional property manager, I do not manage that property myself. In our market where we work, different market, it's a different set of rules. It's different tenants, different vendors. There are so many different things that I may not know, and I quite honestly, I don't wanna have that headache. We have an hour headache in our market. So I would rather give my property to another property manager who knows what they doing in that local market and do not have any headaches. And I don't even look at that property. I know that it's taken care of. I have it. I enjoy it when I need to, but other than that it's taken care of by somebody else. Jonah, knowing what you know now about AI and the current Philly market. Would you rather buy a turnkey property in Mayfair or a full gut rehab in Frankford today?

Speaker 2 38:18

Yeah. I would say the full gut rehab. It always just depends on the math of this specific property and the condition it's in. In my experience, there's no such state thing as a turnkey real estate property. It doesn't matter if it was just renovated yesterday, it. Two weeks down the line, a month down the line, once people start using it, there's gonna be things that break or that are wrong or that need to be done before people even move in. So the idea of something being perfect the day you buy it I think is just a false reality. So be prepared to still do some things and be prepared for some unknown problem to occur in the first month or two, because until you have people living in it and experiencing what it is to be in there full time. You just don't know. So I think for me, like doing a gut rehab one, it helps ensure that you understand the quality of work being done because the challenge with getting something that's turnkey. Is you don't know if they cut corners or what's behind the walls or what was done properly or not or what maybe was skipped. So just because it aesthetically looks like it's in good condition doesn't mean that functionally or structurally or like the bones or like infrastructure wise it is. So for me, I'd rather just understand what that looks like upfront. And then from a math perspective especially in this market I think it depends on each area too, but I think your turn turnkey properties are gonna be harder to have a decent cash in cash or like cash flow outcome right now. If it were a different market I think maybe my answer might be a little different. But right now yeah, I think it, it's just hard to get your investment, back. And a relatively short time period for the turnkey option.

Speaker 40:02

If I had only one question for you, what would be one piece of advice for a landlord here in Philly who feels overwhelmed by the business side of real estate?

Speaker 2 40:14

I would say one, don't get discouraged and two, just. Find areas or communities that you can get engaged with. So whether, I think earlier on it was like, what addicted to real estate and then BiggerPockets and then podcasts like this and events. But it's just like getting out there to other events that investors are attending. Is the best way to learn and just doing it. So one, just don't be afraid to do it. Two, engage in the community. What I found is, generally speaking, this community is really good about sharing what they've learned and their experiences. And there's not like a of ego in that, oh, I have, it's your first property. I don't want to talk to you. I have a hundred whatever. It's like people, it doesn't matter if they have one or 10 or 50. Are like generally willing to share their experience and just give you some good insight about different platforms and different things that could come up that could be really valuable for you. And as much as like reading about it or doing podcasts can help. I think also just engaging in community wherever you can. It really helps. I think it'll decrease some of that stress, give you a little more confidence, and help you also learn that people starting out also might have made the same mistakes if you made a mistake, right? They may have made the same bad choice or decision or didn't realize this one thing or another thing or just realizing something 10 years down the line. So I think it's helpful to have that perspective of we're all figuring it out and have different experience to share and learn from.

Speaker 41:46

Thank you. That's a good advice. Jonah is there something that I didn't ask you about but you really wanted to share with everybody?

Speaker 2 41:54

I think the first property is the cheapest financially. Maybe not from a learning perspective or opportunity cost but generally speaking, I think it's just good to know, like there's so many first time home buyer programs out there. So if you can find like a multi-family or don't be scared or think you have to be like super wealthy for the first property, like generally speaking, for the first one, you can get like lower. Amount of money out of pocket. You often, like different regions, will cooperate with banks to even give you money towards closing on your first property. So there's a lot of resources out there to decrease the barriers to owning. And once you do that first one, I think it's really transformative. Once you start seeing like the impact year over year, like not just on your taxes, but on like wealth and growth, wealth accumulation over time. So I think, getting into the first deal is huge and just it, it doesn't have to be a ton of money to do which I think generally when people here, real estate investor, they think, oh my gosh, you have to be like, have so much money in the bank or whatever. And it's it doesn't have to be that wild of a thing.

Speaker 43:06

Jonah, thank you for joining us and thank you for all of your experience and insight that you shared with everyone. Greatly appreciate that.

Speaker 2 43:14

Yeah, thanks for the time. Appreciate the opportunity.

Speaker 43:18

That wraps up another piece that I want to thank Jonah for, comment on and sharing the owner's perspective on technology and property management. The big takeaway today is that you cannot run a modern era real estate business with an old school mindset. Whether it's utilizing a free AI tool to handle tenant communication, or finally getting your bookkeeping off of a note. Pad into a system. These are the moves that will allow you to scale here and Philly it without burning out. If you're a landlord looking for that free rental analysis we mentioned, do not forget to go to trustartrealty.com and schedule your session. If you found this a piece that's helpful, please subscribe share. Leave us a review in your favorite podcast app and follow us on Instagram at Philly Landlord Show. We'll go back next time with another neighborhood Deep dive and more news you can actually use. Until then, keep your properties compliant and your systems tight. I'll catch you in the next one.