Justin Fraser: Welcome to A Day in the Life. I'm Justin Fraser,
asset manager for the DeRosa Group. Herve Francois, acquisitions coordinator.
Herve Francois: Good morning, good morning, good morning.
Justin Fraser: Dave Mitro in the back, construction manager.
Dave Mitro: Hey, guys.
Herve Francois: We are walking properties all day.
Dave Mitro: We got music playing. It just gave you a nice
welcoming feel. Inside the units, it's a different story.
Justin Fraser: Some really good stuff happening here at this
property.
Herve Francois: We're checking on four properties.
Justin Fraser: Really nice, clean property, I would say.
Herve Francois: We own the State of North Carolina today.
Justin Fraser: This property just feels like a win to me.
Herve Francois: He was content with the rents that he had
been getting.
Justin Fraser: One thing I want to do every morning before
we start a day like today, get my thoughts together, all the different conversations
we've been having back home in New Jersey. Now I'm here in North Carolina, I have to
keep it straight. Taking notes on my phone. Things that I definitely need to look for,
whether it's CapEx, deferred maintenance, questions that I want to ask the site team,
all of the things we have to do and see while we're here. Make sure you have a spare battery
because we're going to take a lot of video, a lot of photeo, so that we can remember all
the things that we're doing throughout the day.
Justin Fraser: We are onsite here in North Carolina. Herve,
what are we doing today?
Herve Francois: We are walking properties all day. We own
the State of North Carolina today because we're traveling from the east side to the
west side. We're checking out four properties. We are looking at an opportunity here that
we would like to add to our new North Carolina portfolio. And now we're going to check it
out.
Justin Fraser: Dave, what are you looking for today?
Dave Mitro: We have initial analysis from our underwriter.
As construction manager, it's now my job to walk the properties and make some notes, add
to what he put, and really get out the pencil, sharpen it, and see what we're working with
here.
Justin Fraser: We're going to climb all over these properties.
We're going to bring you with us, show you a bunch of the stuff that we're looking at,
so stay tuned. It's going to be a busy day.
Justin Fraser: We just finished up our first property tour.
Really nice, clean property, I would say.
Dave Mitro: The amenities are awesome. They recently got
a playground. The pool's in good shape. That was probably the nicest laundry facility I've
seen at all the properties. They had music playing. It just gave you a nice, welcoming
feel.
Dave Mitro: Inside the units, different story. Very outdated,
cabinets were like an old, '80s, brownish color, carpet throughout, old light fixtures.
Dave Mitro: We feel if we come in and update these units,
the feels already there with the amenities and the clubhouse. Maybe we paint the walls
a nice grayish color. We put in some new flooring. Get rid of those ugly, outdated light fixtures.
We believe we can achieve a much higher rent bump.
Justin Fraser: For me, that means upside, opportunity. We're
not going to spend $10,000 a door. But, $4,000 or $5,000 a door, we're going to be able to
provide a much nicer quality unit and get a modest rent bump in line with market. This
property just feels like a win to me. I'm really excited about it.
Herve Francois: It's in a nice area. Definitely workforce
housing. A lot of industrial, a lot of manufacturing, I think, oh no, man, this is kind of like
a thumbs up.
Justin Fraser: Thumbs up for me.
Herve Francois: Thumbs up here. Thumbs up here.
Justin Fraser: A lot of the crew's over there. We're walking
this property. I just want to show off. We've got some really nice playgrounds here. There's
a really awesome open field, quiet, birds chirping. So far, I've been enjoying this
second property on our tour. Good opportunity for unit renovations. Tenants are happy. Probably
management staff is awesome. Some really good stuff happening here at this property.
Herve Francois: We visited all four properties.
Justin Fraser: Staying organized is absolutely crucial when
you are going to see four properties in a row like we just did.
Herve Francois: Yes, that's the truth.
Justin Fraser: Because there's so many discussions that happened
about tenants, about CapEx needed, about incentive programs, about who's paying for COVID. We
had a great system today, the three of us, to keep all that organized.
Justin Fraser: That's going to really help us when we go
back and put our notes together and we start to talk about fine tuning our offer and our
CapEx plan. A lot of that will be formed by the information that we got out of this trip
today.
Justin Fraser: As far as the results go, we have four properties
that are well-maintained, but they have been left alone for long enough that there's upside.
Work order are low, but the upside is we're going to invest in amenities as we always
do. We're going to invest in the units because right now the units, I would say, across the
portfolio are tired and could use a facelift.
Justin Fraser: And so for me, it's validating a lot of our
CapEx thoughts. It's validating a lot of what the broker told us, and it helps us sort of
fine tune the plan.
Herve Francois: You were taking a plethora of pictures of
the exteriors and the interiors of each of the four sites that we walked today. That's
a good thing because you'd be surprised how quick you tend to just forget about what you
saw and what was told to you after you get back home.
Herve Francois: Dave's a little bit more old school. He was
writing things down on pen and paper as he was walking through. I'm a little bit more
new school. I was just typing directly onto the iPhone as I was walking through. That
means Dave probably has more comprehensive notes than I will.
Herve Francois: But, these were traditional, stable, value-add
properties that we checked out today. There's some that have been left alone. The owner,
he was, I think, real content being a very long-term owner of these properties, of getting
the rent that he has been getting over the years, and not having to do too much to the
interiors. He was content with the rents that he had been getting.
Herve Francois: We definitely have the opportunity to come
in, put in a nice interior renovation package on some of the units, not all of the units,
and take the rents just a little bit higher.
Herve Francois: Justin, now it's a matter of going back to
our desk and sharpening up our numbers so we can go ahead and discuss whether or not
we want to submit [crosstalk 00:05:35].
Justin Fraser: Offers are due Tuesday.
Herve Francois: Offers are due Tuesday.
Justin Fraser: So, we got to get to work.
Herve Francois: Absolutely.
Justin Fraser: We got less than a week to put this together
and finalize it up. This has been A Day in the Life. Thank you for joining us on our
trip here. If you want more content like this, make sure to smash that subscribe button,
check us out, stay tuned for more content. Make sure you subscribe. We will see you next
time.
Justin Fraser: It's got awesome trees.
Herve Francois: You had a lot of thoughts here. I didn't know
it was going to be that many thoughts, but I say this was plenty.
Justin Fraser: It's got awesome trees. I can keep going if
you'd like.
Herve Francois: No, no, no. Nope. [inaudible 00:06:10].
Justin Fraser: Do it, Herve. All right. Do it. Oh, wait.
Oh, I'm sorry.
Justin Fraser: Dave. Don't say so much.
Dave Mitro: You guys talk for 10 minutes.
Justin Fraser: Whoa, wasn't expecting that.