Lessons From Renovating & Operating Mid-Size Multifamily Properties

Chris Grenzig (00:00)
Sure. So we bought a Triplex up in Jacksonville, I think it was late 2022. And we moved really quickly on it because the price per unit was very low. We knew it needed a ton of work, but we probably didn’t do as many inspections as we probably should have. But we were doing it with our own money. So we were like, oh, you know, how bad can it really be? So we closed on that pretty quickly. I think we bought it for like 50 a door, give or take.

⁓ which was a great price in the market at the time and even today it was. ⁓ We had about a

40 ish thousand dollar a unit budget to kind of renovate it.

Michelle Kesil (02:07)
Hey everybody, welcome to the Investor Fuel podcast. I’m your host, Michelle Kesil Today I’m joined by someone I’m looking forward to chatting with, Chris Grenzig who’s been making serious moves in the investment and property management space in Florida. So excited to have you here on the show today, Chris.

Chris Grenzig (02:25)
Yeah, thanks for having me.

Michelle Kesil (02:26)
Of course, think our listeners are going to take something away from how you’ve been approaching growing your business and integrating all assets of it, the management, the investment piece. So let’s dive in.

Chris Grenzig (02:41)
Yeah, for sure. Should I start with a little bit of background?

Michelle Kesil (02:43)
Yeah, that would be awesome.

Chris Grenzig (02:45)
Okay, sure. So I got started in real estate in 2016. I worked for a company called Toro Real Estate Partners. We acquired about 3000 units during my time there, about the last three and half out of my four and a half years there. I oversaw everything in Florida. So it was a thousand unit portfolio in Jacksonville, Florida across seven properties. In 2020 decided to

Go off my own when we were buying our first smaller property. I was a 16 unit multifamily in Jacksonville. And at that time decided I was going to move from New York to Jacksonville to kind of oversee the day to day as well. While at Toro, we used to outsource the property management to property management company. And, you know, for some of our larger renovation projects, we would have an owner’s rep as well. Or the property managers would be the ones overseeing it. So this side, was just going to up and move and kind of figure it out and.

moved down Thanksgiving weekend of 2020. We’ve bought since then 150 units. We still own 51 today. You know, we’ve overseen, you know, at least a few million dollars in renovations during that time. And we’ve also opened up our property management side of our business for other owners and clients in early 2024. So we’ve been doing that for almost two years now. And, we manage in the Jacksonville and Orlando area. We own

in the Jacksonville area. ⁓ And we’re just really focused on the 10 to 80 unit space of multifamily in the Jacksonville and Orlando areas. It has been a tough couple of years there. A lot of headwinds in the market as far as where rents have gone, ⁓ insurance premiums, interest rates, construction costs, a lot of different things. So it’s been a difficult market to navigate as of late. ⁓ But that’s why we’ve been more focused on the property management side.

the operational side and growing that out and continuing to make that better and more robust. as opportunities kind of do present themselves again, or as we’re reviewing, it gives us a better ability to analyze them, ⁓ you know, and move quicker than maybe some other groups.

Michelle Kesil (04:48)
Yeah, amazing. Thank you for sharing all of that.

What do you feel is like one of the main keys to keeping this business running smoothly?

Chris Grenzig (05:45)
That’s a good question. Definitely the operational side is a big part of rental properties or multifamily in general. The day to day, month to month, year to year. I think the management side has a good recurring cadence. You kind of have the same things going on every single, 80 % of it recurs every single month. The first week you’re worried about collections, then you’re worried about.

maintenance issues and you’re worried about renewing tenants, signing new leases, leasing. So all these things kind of work in cycles on roughly a monthly basis. So really tightening those processes, ⁓ making them more efficient, making them easier and simpler for the residents we’re dealing with makes us better on our end and then can eventually lead to

better efficiencies for properties we’re evaluating.

Michelle Kesil (06:40)
Yeah, absolutely, that’s so important. So when it comes to like the investment side of your business, how does that kind of work structure wise? Are you guys just looking for properties around Jacksonville that are like good investments to add to your portfolio or yeah, can you expand on that?

Chris Grenzig (06:58)
Yes, so kind of the idea for us is there is a lot of focus on the hundred plus unit space, right? Where you have on site ⁓ property management, maintenance, you have national players, international players, regional players that are really looking for that. ⁓ So there’s a really wide market for people that are looking for those types of properties. Obviously, you can segment that into older properties, newer properties and

You know, even, you know, for reits and stuff, they’ll probably focus on even larger ones. So you can still segment a little further, but there’s still a lot more potential demand in my opinion, in that space. So my goal was to focus below that space. So kind of in the 10 ish unit space to the 80 ish unit space, when you start getting into 60, 70, 80 units in central North Florida, that’s when you start kind of blurring the lines between, you know, the traditional multifamily where you have onsite staff.

versus it being a scattered site type property where you have a central office that’s overseeing all the management. ⁓ And having a central office and being scattered site is definitely less efficient and tougher to do than the traditional onsite model. So with greater challenges, I think can present greater opportunities. But the overall business model is not overly different whether there’s onsite staff or not. So for us, was…

targeting those areas where we can bring in a more sophisticated outlook into assets where similar types of companies and investors aren’t looking or there aren’t nearly as many people looking. So it gives us a greater opportunity to be, you know, the front runner or one of the front runners for that property and give us greater opportunities. So we kind of look in that space, 10 to 80 units ⁓ in Jacksonville ⁓ and Orlando. We haven’t bought anything in Orlando though yet. It’s definitely

less inventory in that space in Orlando than Jacksonville. ⁓ But we usually look for opportunities that have some sort of value add component, which is what everybody says nowadays. But, you know, there’s a lot of properties that have ⁓ deferred maintenance. You used to find lower market rents now. That’s not so much the case anymore, given rents have dropped the past couple of years. ⁓ But deferred maintenance units that use upgrades.

Sometimes there’s some expenses we can maybe cut or do better. A big one we see is ⁓ trash contracts oftentimes are above market because you just kind of fall in the trap of renewing every year and you don’t go out and re-bid it. But you’re not saving a ton of money for a whole property for 10, 20 units. You might save 50 to 250 bucks a month or something like that. So it’s not a huge needle mover, but it can help. ⁓

And really just trying to find opportunities where others might not see it or, you know, longer term owners that, you know, just kind of run the property as is for a while. And there’s some upside that we can capture. Our plan is to come in, you know, renovate and bring the property up to market, kind of soup the nuts, interior, exterior, rents, expenses, you know, in the first three years, give or take, and then try to refine hold for, you know, a longer term vision of, you know, seven to 10 years.

Michelle Kesil (10:43)
Awesome, yeah, sounds like a great strategy. And yeah, I would be curious, like where you see your business heading. Is there something that you’re focused on scaling to next beyond all of this? yeah, kind of like what’s like that next goal for you guys?

Chris Grenzig (11:02)
Yeah, I would say right now it’s very difficult to find opportunities that make sense in that space. know, rents have dropped 10 to 25 percent since late 2022, early 2023. It’s really put a squeeze on a lot of the, you know, NOIs for our own properties as well as other owners. There hasn’t been this big wave of for-sales that a lot of people thought there would be. So a lot of owners are holding on.

because they think their property is worth X or they don’t want to sell it for what buyers want to pay for it right now. So they say, you know, I’ll kind of wait it out and see how it goes. ⁓ But the longer that goes on, you know, the more potential opportunities there are right now, there’s just not a lot of transactions happening. The bid ⁓ ask spread between buyers and sellers is very wide. ⁓ So that’s why we’ve been focused on the property management side of the business for about the past year or so.

⁓ gives us an opportunity to make that side of the business better ⁓ and bigger. And it’s also something that is only going to help us on the acquisition side in the future. Right. The more internal data we have, the more of the market share we have on management and operations, it’s only going to make our underwriting better, tighter, more accurate in the future, as well as the more we can scale, the more team members we can bring in.

the more specialists that we can have. you know, if we can scale and bring in a specific project manager who really understands the market, knows construction costs like the back of their hand, that’s going to make our renovation budgets in the future only that much better. ⁓ So that’s kind of where we’re focused on now is for the next one to two years, kind of seeing where the market goes, keeping a pulse on it, continuing to talk to other owners, brokers, sellers and seeing what’s going on.

And then following the changes that happen and then as those potential opportunities arise, you know, really diving back in and trying to find them.

Michelle Kesil (13:02)
Yeah, absolutely. I love that. That’s so important. So let me ask you this. Every business has moments where things get more real. Maybe a deal goes sideways or you have to make a fast pivot. Would you mind sharing one of those experiences for you and yeah, how you overcame it?

Chris Grenzig (13:20)
Sure. So we bought a Triplex up in Jacksonville, I think it was late 2022. And we moved really quickly on it because the price per unit was very low. We knew it needed a ton of work, but we probably didn’t do as many inspections as we probably should have. But we were doing it with our own money. So we were like, oh, you know, how bad can it really be? So we closed on that pretty quickly. I think we bought it for like 50 a door, give or take.

⁓ which was a great price in the market at the time and even today it was. ⁓ We had about a

40 ish thousand dollar a unit budget to kind of renovate it.

The plan was to do short term rentals on it at the time. I had a good friend of mine who has a short term rental management business in the area who kind of helped us come up with some projections of, you know, daily rates and occupancy and things like that. And I think the two studios at the time were like 100 bucks a night at like 75 percent occupancy. And I think the the small two bedroom was around 150, 200 a night, maybe like 180 a night, I think.

if I remember correctly, at like 70 % occupancy. So we were feeling pretty good about that. The renovation budget turned from 40,000 a unit to 80,000 a unit. So basically doubled. We had to replace basically everything. All new sewer lines, water lines, full rewire, new roofs with a ton of wood rot, replaced, you know, replace about 50 % of the drywall.

new exterior staircase, new windows, new AC, new wall. mean, basically the only thing we didn’t touch was the exterior siding of the building, but we still painted it. ⁓ You know, there were some things we definitely missed ⁓ and some things that kind of as we were doing this, we were like, well, we better do this at the same time before we close it all back up with, you know, new kitchens, new bathrooms, things like that. our budget went much higher than anticipated and it took us about 16 months to do the renovation.

I had to wait for some permits. Some things just took some time, some problems we weren’t expecting, set some things back. And by the time that kind of happened, ⁓ know, Jacksonville had been continuing to build a lot and ⁓ rents or, you know, the daily rates for Airbnb, everything, you know, fell.

So what was 100 bucks a night for the studios fell to about 70 bucks a night and occupancy dropped as well and so on and so forth. So.

Didn’t really make sense to do short-term rentals there anymore. ⁓ We tried to sell it for a small profit and really didn’t get anything. ⁓ I think we had one or two lowball offers from some wholesalers that came in, but really no end buyers that we were looking for. ⁓ So we did end up finishing the project. We did place long-term tenants in it. We still do on it. We refied, but right now if we had to sell it, we’d probably lose.

$20,000 to $50,000 on it, give or take. So it definitely has not been the best short-term project. I’m cautiously optimistic for the long term because we did replace so much. We did renovate so much that hopefully it’ll be a low maintenance project for us in the future. I do think the market is poised to turn around because new construction did fall off a cliff in 2023. So I do see the supply and demand.

dynamics changing in the future. ⁓ But it’s going to take a while for us to kind of hopefully get in the positive. ⁓ that was a tough lesson to learn.

Michelle Kesil (17:25)
Yeah, absolutely. Well, what matters is how you overcome it. And it’s really all about that long term game. So yeah, that’s important that you guys are focusing on what can happen in the future versus what happened in the past.

Chris Grenzig (17:39)
Yeah, and it’s, it is tough. You know, I think we were helped because, know, we did buy it so well despite needing how much work, you know, so basis is always a big thing. You know, because if we had paid, you know, market for what that would have been, you know, we would have been in way more trouble, you know, so we’ve always been focused on basis and, know, even though we’re still hurting short term because of that, it could have been a lot worse.

Michelle Kesil (18:03)
Yeah, definitely. So when it comes to growing your business, your network, creating new relationships, what do you feel has like made the biggest difference for you?

Chris Grenzig (18:17)
I think the biggest thing is finding people and being available to offer help ⁓ or connect other people. a lot of times when I do one-on-one meetings, I like to end with, you know, Hey, what, what is something you’re looking for right now? ⁓ whether I can help or not. ⁓

You know, it might be a certain type of deal. might be a contractor. might be a new employee. It might be, I don’t know, but just by knowing what people are looking for in the moment, it opens up the possibility of me being able to help me, maybe knowing somebody that will help, or maybe I go meet somebody else in a couple of weeks and they can be the answer to that question or the two things they’re looking for actually, you know,

would help one another or they’re looking for the same thing. ⁓ So I’ve found a lot of success asking that question at the end of just knowing what people are looking for and then, you know, trying my best to remember. I don’t always do that, but you know, who’s looking for what, ⁓ you know, and if something comes up, being able to potentially have something for them and now we’re in the future.

Michelle Kesil (19:31)
Yes, absolutely. Relationships are everything in this space. So it’s good to know how we can add value to them and vice versa. always becomes a twofold process. Awesome. So what are some things that you’re looking forward to in your business or in your market in general?

Chris Grenzig (19:43)
Mm-hmm, absolutely.

That’s a good question. would say, I mean, I’m looking forward to the oversupply going away in our markets. You know, we were spoiled in Florida from 2016 through 2022 of year after year of, you know, great or record breaking rent growth of values just going up. You know, it was kind of a humbling and a coming back to earth the past couple of years. So, you know, looking forward to.

whether it’s our own properties or our clients, letting them know like, the rent we got last year is actually below market now. So maybe we can bump it up a little bit. Or if somebody moves out, we can release it for a higher rate. ⁓ Because that’s one of the goals of getting into real estate investing is that outcome. So looking forward to that eventually in the future. ⁓ I think just the process of building out our company and

growing day over day, month over month, year over year. ⁓ you know, a lot of times those things get lost in the weeds, but, you know, seeing where we were and where we are in the future and how we can improve on those things, ⁓ you know, I’m really looking forward to and just continuing to build, you know, the management side of the business that can support, you know, our own properties and our investors as well as, you know, our owner clients that we service as well. just continuing to try to learn every day, make improvements, make things better. ⁓

you know, to service both those sides.

Michelle Kesil (21:16)
Yeah, absolutely. I love that. So before we wrap up here, if someone wants to reach out, connect, learn more from you, where is the best place that they can find you?

Chris Grenzig (21:27)
Yeah, for sure. would say easiest way is probably by email. It’s chris at jag p g dot com. So at J. A. G. P. G. Dot com. ⁓ You can also find me on social media on LinkedIn or Instagram just by searching Chris Grenzig. Also in bigger pockets, too, if anybody wants to reach out to me there for some reason. ⁓ But those are probably the best ways to reach out if anybody is interested in. ⁓

You know, investing with us, our website is jagcapitalpartners.com. If anybody has a property and is interested in management, ⁓ our management website is orlandoproperty.management. You know, it says Orlando Property Management, but we do service Jacksonville and Orlando. So ⁓ you can find out more info there and, or just get in touch with me directly.

Michelle Kesil (22:15)
Perfect. Well, I really appreciate your time, your story and perspective. So thank you for being here.

Chris Grenzig (22:21)
Yeah, thank you so much for having me on. appreciate it.

Michelle Kesil (22:23)
Awesome. And yeah, for the listeners tuning in, if you got value from this, make sure you’ve subscribed. We have more conversations with operators just like Chris, who are building real businesses and we’ll see you all on our next episode.