Flipping to Holding to Property Management

John Harcar (00:00.972)
All right, hey guys, welcome back to the show. Guys, today we’re here with Brad Mastina. And what we’re gonna talk about is starting and flipping, going into holding properties and then eventually into property management. Remember guys, here at Investor Fuel, we help real estate investors, service providers, really all real estate entrepreneurs, two to five X their business. And we do that by providing the tools and the resources to build the business they wanna build and then live the lives that they always dreamed of.

Brad, welcome to the show. Yeah, I’m excited to talk about your journey here and, you know, and kind of get into the weeds of things. But before we do all that, why don’t you kind of let our audience in a little bit about who you are, what got you into Burla State, what got you here?

Brad Mistina, PMI NWI (00:32.159)
Thank you, thanks for having me.

Brad Mistina, PMI NWI (00:46.517)
Sure. So as I said, name is Brad Mistina. I’m the managing partner of Property Management Inc. in Northwest Indiana. I’ve been an investor since 1997. bought my first rental property, my wife and I did.

Came up through a way a lot of investors do. Flipped houses, did lease options, subject to, wholesale, did a bunch of that, flipped a bunch of houses in the early 2000s, and then sort of settled into building my own portfolio and building portfolios for other people and managing those assets for them.

John Harcar (01:27.422)
Awesome. Okay, so back in 2000s, that’s where you said 97, you got your first rental. Did you buy that just to you as kind of like you’re just testing the water into real estate? Or did you know that real estate was going to be the vehicle for you?

Brad Mistina, PMI NWI (01:31.933)
Yeah.

Brad Mistina, PMI NWI (01:44.133)
No, I wouldn’t say that. I actually had zero and you know, I never went and looked for it. I was in the military. I was in construction. In the military, I was about to get out and I came home.

John Harcar (01:57.593)
Thank you for your service.

Brad Mistina, PMI NWI (01:59.605)
No problem. And I came home to visit my family and my mom, of all people, who’s a teacher, signed up for some seminar. I think it was Russ Whitney. And didn’t want to go by herself and my dad wouldn’t go with her. And I was home, I’m like, yeah, I’ll go with you, mom, no problem.

John Harcar (02:11.726)
Okay.

Brad Mistina, PMI NWI (02:18.868)
And I found it intriguing, you know, so I, we signed up to do some stuff with them, took a few courses, thought it was pretty cool. And I’m like, well, I’m in construction. can, you know, fix up houses and stuff. So we lived out West and, just outside Boise, Idaho and, really? Yeah. So I was stationed at, I was stationed at Mountain Home Air Force Base. yeah. So we had.

John Harcar (02:37.228)
That’s where I’m at right now. I live in Boise, yeah, CJ Strike. I love fishing down there anytime I get a chance.

Brad Mistina, PMI NWI (02:47.252)
Yeah, yeah. So we loved it out there. I was so sad that we left. But yeah, so we ended up, you know, buying our house and then we bought a duplex as well out there. And I had to do a bunch of work to it and remodeled it and just sort of kept growing it from there. Bought a couple of places out there, got out of the military, moved back to Chicago, got a real job for a few years and

John Harcar (03:01.102)
Hmm?

Brad Mistina, PMI NWI (03:15.7)
still did real estate, but it was a little bit more on the side. And was it when my oldest daughter was born, so that was 2002, I left my job and went full time into real estate. So and never looked back. So you know, did a bunch of different things.

John Harcar (03:34.124)
Were you doing flips back then? Were you just buying more holds? What were you doing?

Brad Mistina, PMI NWI (03:37.909)
Yeah, it was a lot of flipping at that point. So we were flipping houses. came up with this website. It was 250 down.com and we basically, you know, we’re buying inventory and selling it people, you know, a hundred percent financing. They said, dude, $250 down because we did zero down for a while and we had people not show up to closing. So we had to put some skit in the game for him because we’d pay. Yeah. We had paid for all their closing costs. It’d be a hundred.

John Harcar (03:48.942)
Hmm.

John Harcar (04:03.704)
Some skin in the game, yeah.

Brad Mistina, PMI NWI (04:07.862)
financing you know the good old days where you know anybody that had a heartbeat could get a mortgage so yeah we did that for years and I don’t know how many we flipped maybe 300 in probably from 2001 to 2000

John Harcar (04:14.033)
Yeah, right.

Brad Mistina, PMI NWI (04:28.468)
2008 pretty much and we started downsizing Before 2008 still got caught with about 27 in inventory during that time, but Yeah, so You know we we saw the crash coming. I mean it wasn’t a big secret. They’re writing books about it

John Harcar (04:37.838)
All right.

John Harcar (04:49.538)
Right.

Brad Mistina, PMI NWI (04:50.194)
We didn’t know it was going to be as severe as it was, as quick as it was, you know, all that. So we were trying to stockpile cash to, I had it all figured out. You know, it was going to crash. I was going to come in and when everything was cheap, buy up everything. didn’t quite work out that way, but we survived. We didn’t have to claim bankruptcy, you know, but we did by this, you know, we survived by the skin of our teeth.

John Harcar (04:52.525)
That’s

John Harcar (05:03.522)
Mm-hmm. Mm. No.

John Harcar (05:14.796)
So when that crash happened, what did you pivot to or what were you doing to kind of rebuild or stay on top of things?

Brad Mistina, PMI NWI (05:21.916)
Yeah. So for like the first year I said, I pretty much sat around twiddled my thumbs doing my own maintenance because all the money dried up. My banks, you know, wouldn’t give me a dime. We burned through so much cash refinancing our inventory. I mean, it was insane. You know, my bank literally called me up and said, Brad, we’re not doing anything else. I was in the middle of a couple of deals. They said, we’re not funding them. We’re not doing anything. They’re like, you can refi what you have out. We’ll do that. And

John Harcar (05:29.07)
Mm.

John Harcar (05:46.914)
No.

Brad Mistina, PMI NWI (05:51.783)
you know that was about it and but the way they refied me was insane you know the one property I always use as an example I think I had 80,000 into it was probably worth 140 150 they hit me at an appraisal at like I can’t remember like 85,000 and then they would only do like 65 % you know so I mean I was coming through the

John Harcar (06:04.174)
Mm-hmm.

John Harcar (06:14.542)
like 45 grand, like that.

Brad Mistina, PMI NWI (06:16.412)
Yeah, I was coming to the table with from 20 to $50,000 on every refi just to get out of, you know, the the hard money, private lending, you know, credit line, whatever it was into permanent financing. So we burned through almost a million dollars in cash, you know, getting our refis all done. So, yeah, so we sat around, I was doing maintenance basically, managing my own.

John Harcar (06:21.888)
Cheers!

John Harcar (06:28.216)
Mm-hmm.

Brad Mistina, PMI NWI (06:42.746)
I think I had 25 to 30 units at that time and managing my own and doing my own maintenance and and then some of my backers called me that

John Harcar (06:45.933)
Mm-hmm.

Brad Mistina, PMI NWI (06:52.696)
in Chicago, they were traders and they knew I wasn’t really doing too much in that world. They said, well, come down and learn how to trade. So I did for a while and did that for a little while. I was still doing real estate on the side. I’d buy something here and there when I had some extra cash. And then a group of them came to me and said, hey, you know what? This was probably 2010.

John Harcar (07:12.62)
Bye.

Brad Mistina, PMI NWI (07:20.668)
So a couple years after the crash and said, hey, we want to start building some portfolios. You want to partner up to do some stuff. So I did. And so we started buying a bunch of stuff when it was cheap and had big construction crew, brought on a couple other groups, some small hedge funds, family offices, that type of client. And

John Harcar (07:26.83)
Awesome.

Brad Mistina, PMI NWI (07:45.567)
brought them on and just kept building portfolios. And the one thing I didn’t want to do was manage it. I managed for quite a while myself, didn’t like it. But tried finding some property managers that would work the way I wanted things to work and couldn’t really find what I was looking for. So I’m like, you know what, I’m going to dive in head first on this.

John Harcar (08:07.416)
Right.

Brad Mistina, PMI NWI (08:14.836)
took the property management to another level and grew it for years.

just kept growing that out. think, I don’t know what the most we managed was because we’d get these groups that would get to about 300 to 500 properties and then pull them back and try to, you know, at a certain point it’s more efficient for them to manage in-house and so we’d lose big chunks of property at a time. And while this was going on, I was the…

John Harcar (08:32.27)
Mm-hmm.

Brad Mistina, PMI NWI (08:46.718)
of founding members of a local investors group and had a lot of relationship with local investors and I’d have small investors that would come to me and ask to manage and I really didn’t want to manage for the onesy-twosy people.

John Harcar (08:52.91)
Cool.

Brad Mistina, PMI NWI (09:00.764)
It’s just logistic nightmare. These guys basically cut me checks or, you know, I had an account that I can draw on and I’d go, I’d buy it. I’d do all the construction. They were not involved at all other than send me a, you know, quarterly statement. And as long as I was making money, they were happy, you know, you know, but it was my way or sort of the highway kind of deal. Nobody else really had. I liked not having, you know, all these different chefs in the kitchen and kind of.

John Harcar (09:17.556)
Right, right.

John Harcar (09:29.358)
Yeah. Yeah.

Brad Mistina, PMI NWI (09:29.94)
So, but, you know, after losing some big groups and stuff, it’d be like, you know, it’d be nice to diversify with some other owners. And I’m like, you know, so short version is in 2021, we ended up, I ended up trying to figure out how to handle the logistics of dealing with a bunch of different clients and, know, from smaller investors. So we ended up buying a franchise, property management franchise. So

John Harcar (09:55.411)
okay.

Brad Mistina, PMI NWI (09:58.271)
They brought a lot of cool things to the table, some different products that weren’t available to the public, some logistics as far as dealing with a bunch of smaller investors. So we sort of broke off one company to start this, started with about, about a hundred properties and under that umbrella, we would take clients all the way down to, you know, one property. And

John Harcar (10:24.13)
Mmm.

Brad Mistina, PMI NWI (10:26.042)
sort of built that out and now we’re just under a thousand units under management and I don’t know hundreds of different clients, thousands of different tenants and 35 employees and so it’s grown quite a bit in the last four years so.

John Harcar (10:41.779)
okay.

Yeah, it sounds like it. the franchise does all your marketing, all that type of stuff for you? Or is that something that you still have to do?

Brad Mistina, PMI NWI (10:51.348)
Yeah, you know, it’s not a McDonald’s franchise, you know what I mean? It’s not a turnkey, you know, thing. But it gave me a pretty good network of franchisees. There’s 450 offices, six different countries. I believe that’s right. Multiple countries. I think it’s six. So, and a lot of different resources, things of that nature.

John Harcar (10:55.426)
Well, of course not.

Brad Mistina, PMI NWI (11:14.366)
which is it introduced me to some different organizations like NARPOM, which is the National Association of Residential Property Managers, which is not in the Midwest. So I think the closest, I’m just outside Chicago and the closest chapter to me is Nashville. So there’s nothing in the Midwest. But I know they’re big out by you in the West. I think they even have a Boise Chapter, don’t they?

John Harcar (11:19.202)
Mm-hmm.

John Harcar (11:31.726)
Mmm.

John Harcar (11:39.744)
Right. I believe so.

Brad Mistina, PMI NWI (11:42.557)
Yeah, so, but, yeah, so, you know, we sort of grew it that way. And, you know, I had to do it sort of for selfish reasons. you know, I ran this company, my wife had her own career, did her own thing, wasn’t involved in real estate at all. You know, we had quite a large portfolio ourselves and my wife couldn’t name a single address of a property we owned, you know, and it sort of freaked me out a little bit. like, you know,

John Harcar (12:07.094)
Right, right.

Brad Mistina, PMI NWI (12:11.572)
If I disappeared or died or was incapacitated or something, she would be in trouble. So I built a company around that to run that if something ever happened to me.

John Harcar (12:20.899)
Yeah.

Brad Mistina, PMI NWI (12:28.724)
you know, should be taken care of. And so therefore it sort of benefited our owners too. You know, lot of management companies are, you you got a property manager and they sort of run everything. They do everything. We take a little different approach to it. So we’re very departmentalized, very specialized. So like I have one person that just processes applications, you know, eight hours and I have, you know, leasing people and collections people. And those are all different people. They’re very different personalities.

John Harcar (12:50.347)
Okay

Brad Mistina, PMI NWI (12:59.156)
and so we developed into, you know, staff of 35 people that are very specialized in their field. It gives a little bit more seamless transition, so if we ever have any…

John Harcar (13:11.796)
Yeah, it makes things more efficient.

Brad Mistina, PMI NWI (13:13.716)
Yeah. And if we ever have everybody like leave the company, it’s not somebody has to, you know, completely get to know your portfolio and, know, change all this stuff. And, and, uh, you know, it’s, there’s a very small speed bump instead of a big one, you know, to have that replaced. lot of times. Yeah. A lot of times our owners don’t even know that somebody left the company. So it just, you know, service stays at that same level, you know, throughout that. So it’s a little different approach, I think, than some property managers have.

John Harcar (13:29.794)
more singular focus.

Brad Mistina, PMI NWI (13:43.67)
And I think that’s makes us a little bit unique.

John Harcar (13:47.488)
What are some of the challenges that you’ve had in developing this property management company or maybe any type of real estate investing?

Brad Mistina, PMI NWI (13:58.121)
man, it’s just a grind. You know, that’s the thing. I love property management. I love rental real estate and passive income, but it’s not sexy. You know, it’s a grind. And it could be, it’s a brutal business. I tell people, you know, I’ve been in this 28 years and I’ve quit 28 times, you know, so, cause it’s, it’s, it is, it’s, know, nobody’s ever calling you to tell you, you did a good job. You know, every interaction is somebody’s teed off. Somebody’s upset. Somebody doesn’t like somebody.

John Harcar (14:07.288)
Hmm.

John Harcar (14:16.376)
Ha ha ha ha.

it.

Right.

Brad Mistina, PMI NWI (14:28.054)
something, you know, you’re dealing with hundreds if not thousands of different personalities of different people, different way of handling things. So it’s, it could be a very tiring, wary business. But I don’t know of a better way of building wealth. And

think it’s I hate starting at zero. And, know, before the podcast, you and I were chatting a little bit about this where, you know, that’s why I gave up flipping. I hated constantly having to find the next deal because it was feast or famine either deals. Yeah. And, you know, if you went through a, you know, a down

John Harcar (14:49.134)
Mm-hmm.

John Harcar (14:58.508)
Yeah. You’re only as good as your next deal.

Brad Mistina, PMI NWI (15:09.492)
or whatever you want to call it, know, or business was slow, you could start losing crews, you could start losing contractors, you know, it just, it was very, very difficult to keep that going. Or what a lot of guys do is they start reaching, you know, they start taking smaller and smaller margins just to keep crews alive and, you know, keep guys busy and it’s just not a model that I liked, especially as I got older, you know, so.

John Harcar (15:39.586)
Being someone that’s self-managed right now that someone owns a property management company, what are the pros and cons of both? What are the pros and cons of managing yourself versus paying someone to do it for you?

Brad Mistina, PMI NWI (15:54.089)
Yeah, I mean, that’s a great question. I say, you know, it really depends on the person. So in what your goals are. But in here’s the thing, you can’t be good at everything. So most investors are very good at something, you know, maybe they’re good at sales, or maybe they’re good at the construction or managing construction jobs or whatever.

We’re here to be supportive to our investors. So we want them to do what makes them the most money. Property management usually is not it. And property management is very hard to do on a small scale. mean, there’s assets and tools that we have access to that cost us tens of thousands of dollars a year. It’s not efficient for a…

John Harcar (16:26.126)
Yeah

Brad Mistina, PMI NWI (16:39.38)
an individual, you know, with a small 10, 20, 30 unit portfolio to be able to do and have those kind of resources to them. So, you know, we that’s what’s unique with us. I have a separate construction company that does all our maintenance and turns and things like that. And it’s really unique because, you know, we’re a partner more with our owners than we are, you know, a client.

John Harcar (16:55.928)
Mm-hmm.

Brad Mistina, PMI NWI (17:06.226)
relationship because a lot of my clients have been with me for years, you know, and, know, we have to keep their costs down. We have to do that. It’s not, you know, make as much money as we can. It’s we’re all sort of in this together. So that’s the way I look at it is, you know, everything we make money on is only when the investor makes money. So, you know, there’s your place goes vacant. I don’t make any money, you know. So, you know, there’s things like that. So we take a little different

John Harcar (17:07.516)
Right, yeah.

John Harcar (17:31.81)
Yep.

Brad Mistina, PMI NWI (17:36.15)
approach to it and it’s a little unique business model when it comes to the relationships with the investors.

John Harcar (17:44.783)
Okay, so if someone wanted to get into like property management or anything like get into it to buy and hold, like what are some words of advice that you would give them if they want to look out for maybe a look for a property manager, things to look out for, questions to ask. I mean, how do we vet these folks if we decide to go that route?

Brad Mistina, PMI NWI (18:05.349)
Yeah, so a lot of people there’s a couple things that this is just my personal opinion so if I upset anybody out there sorry but it’s just my personal opinion. One, I would never work with a property manager that doesn’t have rental properties themselves.

So otherwise they’re learning on your dime. So how it works in my company is anytime we roll out any new product, new program, you know, like right now we’re testing a deferred maintenance program or preventive maintenance program and it all gets tested on my portfolio. So we work out all the bugs on my portfolio, you know, see how it works, do all that. And then we roll it out to our clients. Well, guess what?

John Harcar (18:46.872)
awesome.

Brad Mistina, PMI NWI (18:52.406)
If they don’t have access to stuff like that, then you’re the test dummy. Or you’re their training and learning and things of that nature. our lease has been developed over 28 years. Every year we review and add to our lease. Anytime we end up in court, we ever don’t get the judgment we want, it’s very rare that we lose.

John Harcar (19:09.422)
Mm-hmm.

Brad Mistina, PMI NWI (19:18.164)
But if we ever not get the judgment we want because of how something was worded in the lease or anything, we make those adjustments. So you’re looking for somebody that you can tap into that has been around the block. The way that most people learn how to property manage is trial and error. That’s a horrible way to learn anything. because it costs, trust me, it costs hundreds of thousands of dollars to learn that way.

John Harcar (19:32.078)
Yeah.

John Harcar (19:38.318)
You

A lot. But yeah, it could cost a lot more.

Brad Mistina, PMI NWI (19:46.101)
Yeah, exactly. If not, if not a lot more, you know, luckily a lot of our mistakes have been small over the years and I say small as you know, maybe 10,000, 20,000 something like that.

You know, so you want to be able to tap into somebody that has that kind of knowledge that can take that burden off of you and tap into their systems. If you come into our program, we don’t, it’s our program. So if I thought there was a better way of managing, I’d be doing it for my own properties. So, and it’s not for everybody, you know, and I get that. And some, there’s some clients we have that aren’t, you know, matches or that we’ve had in the past and, know, we’re respectively parted ways and, you know, and that’s fine.

John Harcar (20:08.271)
huh.

John Harcar (20:18.164)
Sure, yeah, yeah.

Brad Mistina, PMI NWI (20:30.806)
But this is the way I run my properties. My properties run right next to your properties. It’s just the way it works.

John Harcar (20:36.798)
It makes sense.

Brad Mistina, PMI NWI (20:37.812)
The other thing is I’m not a huge fan of the property manager concept and what I mean by that is you have one person doing a whole bunch of things because all you’re doing is pushing that off to you know, you are the one person doing everything now another person is you know, so if that system or that person leads or decides not to you know Be a property manager more anymore

John Harcar (20:55.395)
Yep.

Brad Mistina, PMI NWI (21:04.774)
Now what? Now you’re starting all over again. Even if they hire somebody new, it’s a whole new person doing, you know, you got to learn how they do things. I’m not a big fan. We’re very structured, very systematized, have a lot of processes in place. So those things, you know, stay the same no matter what. So that’s what I would look for.

John Harcar (21:13.006)
John Harcar (21:24.536)
bright.

Brad Mistina, PMI NWI (21:26.706)
you know, in a manager and not all property management, Inc franchises run the way we do. So we’re all independently owned and operated and there’s unfortunately property managers within our network that I would not hire, but there’s some fantastic ones as well. So.

John Harcar (21:44.142)
What would you say in a quick nutshell, puts you or sets you above everybody else, other people out there? Like what makes you more unique? You talked a little bit about it, but what makes you different outside of those other things? Why would someone go to you?

Brad Mistina, PMI NWI (21:58.397)
Yeah, I think what a lot of people like is I’ve done it. So I’ve been there. I’ve been where these people are. I’ve been where I’ve bought a property wrong and trying to make up. I’ve had problem properties with tenants not paying. It’s not a theory to me. I’ve done it. I’ve been there as an owner that

John Harcar (22:15.042)
now.

Brad Mistina, PMI NWI (22:25.778)
you know, ahead these problems, you know, these challenges that people are going through. I get it. And, you know, I think it gives a little unique perspective instead of…

John Harcar (22:31.085)
now.

Brad Mistina, PMI NWI (22:35.828)
You know, right now, real estate sucks, you know, for agents. And so we have all these property managers popping up right now and, they’re managing for, you know, five or six clients. And, you know, I just think that’s a disaster waiting to happen, you know, and they’re no cheaper than I am. So, you know, yeah, sometimes they’re more expensive. So.

John Harcar (22:50.976)
Yeah. Experience is huge.

Yeah, sometimes more.

Yeah, and they experience and I’d much rather pay a little bit more for someone with the experience from this someone who just, you know, got into this managing really small ones. So Brad, man, I thank you for joining us today. I learned a lot. You know, I hope everybody else that that’s listening did as well. If folks want to get a hold of you, maybe they have a property in the area that you service that they might need a manager for. How do they reach out?

Brad Mistina, PMI NWI (23:20.798)
Sure.

Brad Mistina, PMI NWI (23:26.196)
Sure, probably the easiest way is our website which is PMINWI as in Property Management Inc. Northwest Indiana PMINWI.com or you can give us a call at area code 219-318-1244.

John Harcar (23:41.999)
And then guys we’ll put all that information in the show notes so that way if you guys want to get a hold of them you can. Once again Brad thank you very much for your time guys I hope you enjoyed this episode as much as I did and you know we’ll see you on the next one. Cheers!

Brad Mistina, PMI NWI (23:55.049)
Thanks, man.