Introducing Julia Sheehan

Introducing Julia Sheehan, your coach and one of the sharpest women in commercial real estate. In this one on one interview, you’ll see how Julia became a commercial real estate expert and one of our most popular coaches at Commercial Property Advisors.

Julia Sheehan Interview

Peter: Julia, welcome. Just so everyone knows, I have worked with Julia on a daily basis for many years. She started off as a student and then became a coach many years ago and she’s the sharpest mind when it comes to operations of a commercial property. Thank you for joining us today Julia.

Julia: Thank you for having me, Peter.

Peter: Alright Julia, we’re going to jump right into it.  Please share with us a little bit about yourself.

Julia: Absolutely. So, a little bit about me and my background growing up. My parents were W2 employees, which was great. They did well for themselves and did a little bit of investing here and there, and some in real estate, but they never saw it as a means to full-time income. So commercial real estate wasn’t really in my DNA. But many of my parents’ friends owned commercial real estate; they owned strip malls, plazas, things like that. And I could see at a young age how these investments gave them freedom and time to be with their kids. So I recognized that.

Fast forward to college, I didn’t know what I wanted to do but I did know I wanted to do something in real estate. I didn’t want to be an agent; I think I just didn’t like the inconsistent income that it brought. It was back to my background of my parents with their W2 and just having a steady flow. Again, not in my DNA. So, in college, I majored in business and marketing and it brought me to a job fair.

At that job fair, I came across a real estate company that specialized in development, management, and acquisition. That’s what I was looking for and I applied alongside 8 to 10 other people. I was worried I wasn’t going to get the job, but luckily, I did. The company was family owned and nationwide. They owned about 3,500 units in my state alone, prior to me leaving, and it was mostly multifamily. That was their specialty.

Julia’s Expertise: Value Add Management of Commercial Real Estate

Julia: What I loved about working there was that they only promote within. So, you had to start at the bottom. Now when I say the bottom, that means leasing the apartments, going there on the weekends, making sure you’re showing the apartments. I would argue that’s probably the most important job of all. You start there and then work your way up. And that’s exactly what I did. And as I worked my way up, I discovered how important it was to learn every aspect of multifamily investing.

As I grew in my career within that company, I finally got to a position that I wanted to be in which was overseeing the property’s financials. This was when I realized that I loved the numbers. I was looking at the cashflow month to month, seeing how we could optimize cashflow, ultimately increasing the NOI.

Basically, we made our bonuses by increasing the NOI, which I thought was so smart on their part. So anytime that I was able to increase the NOI, I got a bonus. And we were looking at this month by month. I mean, a lot of times in real estate you hear year over year looking at your NOI, but no, we were focusing month to month, doing reports, and analyzing every single detail. So it brought me a ton of knowledge. I learned so much seeing the numbers, analyzing, being so focused, and I found that that was my niche. That’s what I loved to do, was increasing the cashflow for other people. So that’s my background in the real estate side of things.

Peter: And that is perfect, because that’s exactly what you bring to our company and to our students. They close on the property, they meet with me first, and I hand them over to you and you get to optimize the cashflow. It’s just a beautiful system we have here. And we’re prospering because of you, and that’s why we have you on here, Julia. So, all that knowledge of 3,500 units of management under your belt, and now you can use it to help our students make more money.

Julia: Right, exactly.

From Property Manager to Full Time Investor

Peter: So how did you make the transition from working in that company, managing all those units into your own investments?

Julia: So, a backstory on this is that I thought owning commercial real estate meant that you had to be a millionaire. I thought that that was the only way you get into it. And I think a lot of people tend to think that. When I was working at this company, I started to realize that these large properties, anywhere from 200 units to 500 units, were owned by an investment pool. Essentially syndication. I started to recognize that there’s not just one person owning these, but a lot of investors owning these properties. So that made me start to think, how can I do this for me? How do I make this kind of life for myself? And not to their fault, they weren’t going to be my mentors in this. They had successfully built this amazing company and they weren’t in the position to be mentors.

So, I ended up finding you, someone to mentor me and help me to learn what I didn’t know. I didn’t know how to find the deals or how to get them under contract. I knew how to analyze numbers, but not from the perspective of buying the deal. So that was something I needed to learn as well. I joined the Protege Program, went through all the training, purchased my first property, thanks to you, Peter, and ended up leaving my job to pursue investing full-time.

Student Becomes Mentor

Peter: Awesome. And then you blessed us by joining our team as a mentor. So talk to us about that. How did you make that transition?

Julia: I joined the team as a mentor because I love to help people. And I think that we needed somebody who could essentially be a overseer of the closed deals. I don’t want to put words in your mouth, but I think you were looking for that and I fit the bill to some extent. So, joining the team, I was able to help when students closed on their deals and start them from the ground up. Because when these students close their deals, they really aren’t sure what to do day one.

Did we change the utilities into our name? Have we hired a property manager? Did we send out notices that there’s new ownership? Little things like that and so much more. Just making sure that these little details are taken care of from the start and keeping with those students along the way. So again, I just love helping people and seeing the students come into the program and then get to the point of buying the property. I get a lot of joy out of getting to that point, it’s the best feeling.

Peter: Yes, and we love having you as a coach and mentor, and our students do as well. And now we’re really looking forward to you producing your own material.

3 Asset Management Factors New Investors Overlook

Peter:  So, a question here, I kind of know the answer, but I think you should share this with the audience because it is so true. The question is, out of managing your over 3,000 apartment units plus your own investments, are there a few things that new investors miss operational wise that you can talk about?

1. Underestimating Expenses

Julia: There’s quite a few things that come to mind. But the first one would be the due diligence periods. Before even buying the property, a lot of people underestimate the expenses. They take the expenses that they’re provided at face value, and a lot of the time they’re underestimated. So, when students come to the program, I make sure to meet with them in order to tell them in their specific state what things should cost so that they know and they’re not going in blind. That’s step one. So as soon as we start analyzing the deal, we need to know where that is. If we miss or underestimate expenses, the entire deal can be thrown off. You could be negative cashflow from day one. That’s a scary thought.

Peter: It is a scary thought. That’s important because, when a student receives a deal from a seller or an agent, they tend to believe what’s given to them in terms of income and expenses. You and I know it’s a hundred percent incorrect, and your job as a coach is to rerun the numbers and give it back so that the NOI is more accurate. And most times, unfortunately, once we add everything up for them, the cashflow drops to zero and we either get rid of the deal or we need to renegotiate it for better terms. Right?

Julia: Exactly. And they end up with a better deal. And that’s exactly where my strong suit is. I’m so detail oriented, and I will question students until the end of time to make sure that they’re making the right decision on the deal. Questions that they may be asking themselves when they’re laying in bed and wondering, should I buy this deal? Is it just an emotional purchase? I’m there to ask them upfront, is this emotional? Are you just excited because it’s the first one? Let’s look at the real facts here. Let’s look at the numbers together and you tell me what you see and I’ll tell you what I see.

Peter: Yeah, you are the epitome of falling in love with the numbers and not the property and it is crucial to have that mentality as a coach. Okay, so that’s one of them. Do you have any more?

2. Hiring Property Managers

Julia: Yes, I do; hiring property managers. So, when students close a deal, they don’t know exactly what to look for in a good manager. And a lot of people don’t know. I feel that a lot of people just hire a manager based on Google reviews, which is important, absolutely. But really understanding what you need from that manager in order to make your property function and operate the best that it can. So that one’s a really big one.

Peter: And more on the property management side, that’s your strong suit, that’s where you came from working with investors, owners, looking at properties, looking at numbers and everything. And our students get a deal under contract and we share it. We tell them, okay, now let’s go out and hire a proper manager to help us with the inspection, due diligence, and eventual managing of the property. So what are a couple of things that you would say they miss out on if they hire the wrong manager? Or what would you say what a good manager will look like?

Qualities of a Good Property Manager

Julia: A good manager in my mind would be someone who communicates often. There’s no such thing as overcommunication when it comes to a property manager.

Also, it’s important to know what kind of software they’re using to track your income and expenses. Although they are doing it for you, it’s still your dollars going in and out and you need to be on top of that. An Excel spreadsheet just isn’t going to cut it these days. I don’t even know how you would do it. I’ve seen it unfortunately. But no, that’s a big no-no, in my mind.

Then of course, negotiating the management agreement and what it entails. So, knowing exactly what I’m looking for in the agreement, what our maintenance minimum should be, what the actual percentage should be for the management fee, and what’s right for the size of the property and the location.

Peter: That is so important, Julia, because when a student signs an agreement, it’s usually a one-year agreement with their property manager. And what if they’re horrible managers? By month four, you’re stuck with them for the rest of the eight months, it’s going to be miserable. And if you try to get them out, they may sue you. So it’s really important to have a person like yourself go through the management agreement before you start doing business with them.

Julia: Exactly. Terms can be missed so easily in those agreements. They’re long and there’s a lot of information. It’s hard to decipher some of it sometimes. So yes, it’s very important for it to have a second set of eyes on it.

Peter: The first thing you mentioned was communication. One of the best qualities of a good proper manager is communication. So basically what you’re saying is when you’re looking for a proper manager and you find one and you’re interviewing them, but they don’t get back to you quickly at all, that’s the first sign of they’re not a good property manager. Right?

Julia: That’s a big red flag.

Peter: And that happens quite a bit. I would say a property manager that does not call you back probably has too many properties under his or her belt and won’t be able to help you out with your property. It starts there. I like those three points. Do you have another one?

3. Accounting

Julia: Last one I can think of would be the accounting, the accounting side of things is the most overlooked. And again, I think that a lot of people aren’t sure what they’re looking at when it comes to the accounting on their properties or not sure what to focus on. Again, that’s how things can get missed. That’s how you hear horror stories, unfortunately, of property managers taking money from owners. It happens.

Peter: You know what? That is understandable, right? Because our typical student is someone who works at the post office, or they are a doctor, a truck driver, nurse, or housewife, and they don’t have a background in accounting. They may never have seen a profit and loss statement; they may never have used QuickBooks, so to speak. So what do you do to help them get up to speed in accounting?

Julia: We use software to help track everything, income and expense-wise for the properties. It’s part of being partners with us. Once a month I meet with the students and go through all the income and expenses on the property. We look at them line by line once a month. It’s not a big deal, it’s the easiest thing you can do for your property. Making sure that everything makes sense and that there’s no miscellaneous expenses for $20 here, $40 there. We need to know where every dime’s going. We teach students exactly what to look for, how to look at a cashflow statement, and how to check their own NOI.

It’s back to that whole idea of just changing your mindset. Like me, when I started out, I knew how to analyze the properties because they were operating already, but I had to change my mindset to learning now from the buying perspective of what I’m looking for. So it’s the same thing. We teach our students how to analyze the deal upfront. We teach them how to look at the profit and loss statement, but now you own it. Now it’s yours. And you need to know exactly what you’re looking at for your property. Again, these are your dollars that are going in and out of this property. We need to understand it.

Peter: Julia, I think we really hit it on the head in terms of if someone wanted to learn from this how to do it. I totally agree with you, they must do a really good job of due diligence to buy their best property. Number two, they must hire their right property manager and thirdly, the accounting, which I believe is the most overlooked, important aspect of commercial real estate. This is why we brought you here. We need this talent in our company and our students need you.

Julia’s Most Memorable Deals

Peter: Let’s move on to some fun things. Let’s talk about deals that you were involved in. Are there any deals that stand out to you, where you went in and you coached them, you helped them, and now they’re a success story?

Jacob’s Deal: 90-Unit No Money Down

Julia: Absolutely. I have a few that come to mind. The first one would be Jacob’s deal. Jacob purchased a 90-unit property, no money down. You can watch Jacob’s interview here: Waiter Buys 90-Unit No Money Down. He used our marketing techniques to find the property. And with using those marketing techniques, it actually impressed the investors that he ended up using for the deal. So, his marketing ended up in the hands of the investors and they contacted him. They were so impressed with how he marketed, and they knew that he knew what he was doing. They knew that he had us in the background helping, and they trusted us and trusted him.

So, they purchased the deal with him. He did not have to put any money down because he brought the deal to them and he ended up closing on the deal. They had to do some value add. I helped them with setting up the accounting upfront. That was a big hurdle that they had to deal with.

Peter: And you were helping their property management company get up to speed too?

Julia: Exactly. I was helping their property manager get everything organized. We had a lot of calls regarding that. Also, just making sure that they were doing proper tenant screenings so that the tenants that they were getting into the apartments were going to be long-term tenants.

Peter: I recall meeting with Jacob after he closed, and the big issue was the number of evictions they were going through. And then you decided, okay, the evictions are occurring because you’re putting in the wrong people.

Julia: Not screening them. And when I say screening them, I mean looking at the credit and criminal background checks, looking at income qualifications. It sounds so silly, but you have to make sure they can afford the apartment. Looking at all those details is so important. Now Jacob is at a point where he has basically stabilized the property and it’s producing a steady income for him. He’s collecting about $3,000/month which has allowed him to leave his job as a waiter. So he’s doing big things. He is really excited.

Peter: That is awesome! So that’s the first deal. Do you have any others?

Dave’s $5.5 Million Multifamily Portfolio

Julia: I do. Another one that comes to mind would be Dave, a full-time truck driver who closed on seven properties in, I want to say it’s like a three-year time span, which is very quick. His portfolio now consists of, I believe, 45 units. And what we did there was we made sure to stabilize each property before going and buying the next one. Smart purchases and stable purchases. That was the route that he took, and his portfolio is probably worth about $5.5 million now. He went from owning no investment properties to owning a $5.5 million portfolio. And I think he’s close to doing this full-time too. You interviewed him as well Peter, so if people would like to know how he scaled so quickly, they can watch that as well: How to Build a Multifamily Portfolio Part Time from Scratch

Peter: That’s great. And his wife is a real estate professional, so now he gets to write off everything even though he’s still driving a truck. Do you have one more to share?

Dean’s Self-Storage Portfolio

Julia: The last one is Dean who did very well in purchasing storage facilities. It was his niche and his video Building a Self-Storage Business in Today’s Market details how he achieved that success. In the beginning he was disorganized, he’ll admit that himself. What we did with him was, again, back to the importance of accounting, we organized his accounting. We helped him understand exactly what he was looking at as far as his cash flow and his properties, his NOI. And this all became so important because he’s now looking to list one of those properties and he had to make sure that his financials were in order to do so. We organized all of that, made sure those financials were ready to go, and he is now on his way to making about a $2 million profit. That’s our route.

Peter: That’s awesome. Now with Dean, I think the most important thing that you helped them with was, commercial property is only worth what is in NOI is right? And with sloppy or poor accounting, you can’t show the public your new NOI because you don’t have your stuff together accounting wise. So if it weren’t for you, he wouldn’t be able to print out his property manager statement from your software to show that he has an NOI that pretty much doubled in about a year and a half. So both of you have been working your behinds off, making this property worth a whole lot more.

Julia: Yeah, we’re excited about it. I know he’s excited.

Julia Sheehan: Mentor and Teacher

Peter: That’s awesome. So Julia, these three deals, I could honestly say they would not have the success that they’re having without your coaching. They just wouldn’t be where they are, I can honestly say that. I want to thank you for that and I’m sure the students thank you for that as well. Now, the next step for you is to start producing your own content and we’re looking forward to that!

Julia: I am too.

Peter: As I mentioned before, Julia is a coach of ours and we’ve had her in the background coaching our students and now we’re ready to release her to the world. Along with me, she will begin sharing all her expertise with you on YouTube and elsewhere so you can see exactly what she does for our protégé students. So, look out for her videos everyone! Julia, thank you so much for taking your time, we appreciate your time and your dedication.

Julia: Thank you, Peter. Thanks for having me.

Every Successful Commercial Real Estate Investor Has a Mentor

Every successful commercial real estate investor has a mentor. Get your mentor here:  Commercial Property Advisors Protege Program