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Show Summary
In this episode of the Real Estate Pros podcast, host Michelle Kesil interviews Jacob Harbin, a property manager and buy-and-hold investor based in Alabama. Jacob shares his journey into real estate, emphasizing the importance of long-term investment strategies and the benefits of property management. He discusses the challenges and successes he has faced in managing properties, the significance of treating tenants well, and his future goals for expanding his business. Jacob also provides insights into finding properties and the creative financing solutions he has utilized throughout his career.
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JACOB HARBIN (00:00)
Well, I think if you’re going to sell, then it’s okay if you do it in a 1031 exchange, of course, and keep that equity that you have, basically move it to another property. But basically everything, whether it’s in the area here, maybe the area in our way, and kind of the shoals where we started to invest, that they’re all going to go up in value over time eventually, and it’s going to just keep going up. I’ve never heard anybody say, really wish I would have sold that property five years ago. you hear everybody say, I wish I would have kept that property, or I wish I…would have bought that property when I had the chance to.
Michelle Kesil (02:02)
Hey everybody, welcome to the Real Estate Pros podcast. I’m your host, Michelle Kesil And today I’m joined by someone I’m looking forward to chatting with, Jacob Harbin, who is a property manager as well as a buy and hold investor and real estate agent in the Alabama area. So excited to have you on the show today, Jacob.JACOB HARBIN (02:23)
Thank you, Michelle. I’m excited to be here.Michelle Kesil (02:25)
Awesome, I think our listeners are really going to take something away from how you’re approaching owning and managing all of your properties. So let’s dive in.JACOB HARBIN (02:35)
Okay, great.Michelle Kesil (02:35)
First off, for those who are not familiar with you and your world, can you share what your main focus is?JACOB HARBIN (02:40)
Yeah, so our main focus is long-term buy and hold property management, residential specifically. I’ve been investing probably about the last five or six years in buy and hold properties myself. And then in the past year or in the past 12 months, we opened up a property management company to help serve our clients as well. And I’ve been a real estate agent and we are in the North Alabama, Huntsville, Athens, Madison area all the way to the Scholls area.Michelle Kesil (03:06)
Awesome. How did you get started as an investor?JACOB HARBIN (03:09)
So, yeah, that’s a good question. Before that, I didn’t really exactly know what I wanted to do. I really didn’t care about school too much. And so I was in college and I had found some books that I started reading about buying and holding properties about just long-term investments in real estate. And so I thought I would try to get into at least selling properties. So I became a rental or I a real estate agent. And thenAfter a couple years, I also thought about that I have no retirement as a real estate agent, that I really didn’t know what I would do. I just had to keep selling basically for the rest of my life if I wanted to with no retirement. And so I went and I bought my first rental property and it didn’t go super well. We ended up selling that one before we did anything with it. We were supposed to flip it and then rent it. But after that, we settled in and that was a mistake to even sell it. But we bought more and held them.
And we’ve been buying and holding ever since. we don’t ever plan to sell anything. We only have the idea to sell anything, but we’ve been doing that ever since 2019.
Michelle Kesil (04:14)
So why do you believe that selling it is a bad idea and why do you prefer the buy and hold strategy?JACOB HARBIN (05:09)
Well, I think if you’re going to sell, then it’s okay if you do it in a 1031 exchange, of course, and keep that equity that you have, basically move it to another property. But basically everything, whether it’s in the area here, maybe the area in our way, and kind of the shoals where we started to invest, that they’re all going to go up in value over time eventually, and it’s going to just keep going up. I’ve never heard anybody say, really wish I would have sold that property five years ago. you hear everybody say, I wish I would have kept that property, or I wish I…would have bought that property when I had the chance to.
so there’s ways to pull the money out without selling. You can refinance it. That’s the easiest way. You can get a lot of credit on property. And so there’s ways to access the capital, which are much more tax efficient as well, other than selling. And so I don’t really see a great reason to sell unless you’re doing a 1031 exchange.
Michelle Kesil (05:57)
Yeah, that makes sense. So what are some things that you feel have made the biggest difference in allowing your business to be able to grow and to run smoothly?JACOB HARBIN (06:10)
Well, I think as far as property management, it’s been able to run pretty smoothly because we’ve already been, I’ve already been managing properties for the past six years before I started up. I took a lot of time to try to learn as I was investing in properties. I took a lot of time to learn as I was going through it. And now we, we have some systems in place and, but that experience has helped a lot. We’re able to, I really liked the aspect of dealing with people and we deal with people.really well, think we treat them very fairly. And so they’ll want to stay in the properties longer. They’ll accept rent raises when you treat them well, because so many of the property management companies, ⁓ their clients and their tenants get fed up with them because they don’t treat them well, they don’t treat them like people. And when you do, it just makes it that much easier. And that’s really what a lot of people just really want to have.
Michelle Kesil (07:00)
Yeah, absolutely. Have you had like many experiences in the management world that have, I don’t know, been a more challenging?JACOB HARBIN (07:10)
I don’t know about more challenging necessarily, but it did more work. There are properties that, you know, it’s kind of like the 80-20 rule, 20 % of the properties will give you 80 % of the trouble. And that’s really true, or even maybe like 10-90. But some of the properties can, depending on how the properties are set up, if the owners don’t want to put as much money into them, and so we’re, you know, having to try to rent them the way they are when they’re not as nice of a condition.And to put those out there to rent those out, those will just have more and more issues as they go. Not that they’re bad properties, but they will have stuff breaking down sooner and more often when it’s not permanently fixed, for example, when it’s just kind of kicking the can down the road for some repairs, that those will require multiple trips out there a month or every week sometimes. And so it’s just a little more work there, but not necessarily more difficult, no.
Michelle Kesil (08:02)
Yeah, definitely. And when it comes to your own investments, what type of investment strategy have you found and have had success in?JACOB HARBIN (08:14)
Yeah, so when we started out, I didn’t have hardly any money. So we would just look for basically properties that were really cheap in North Alabama. You can find some that are not necessarily find them now, but I mean, we we found some that were thirty five thousand or fifty or sixty thousand a lot of times. And so being able to buy those, we would just get as much money enough to get it and then you buy it and then just hold it until we could get the next one. I was a real estate agent as well, so we would just.take that commission and try to buy the next property and just keep moving forward that way. But really it was kind of whatever we could get our hands on that we thought was a good deal. We did owner financing for a couple properties, a couple of multifamily properties, and that’s worked out pretty well. But really it was whatever we could get our hands on with a minimal down payment. Our first property that we owned, my wife and I together.
We moved into it, we lived in there for about a year, a year and a half, and then we moved out into another one. And then we did that again, moved out after a year or a year and a half to the second property just because another opportunity came up and we were able to get two really nice rental properties for very little down just because of that. And so just kind of finding the best deals, doing what we can with what we had, I feel like.
Michelle Kesil (09:31)
Yeah, definitely. And when it comes to financing, like, were there any creative solutions that you came up with or, yeah, how did that process look like for you?JACOB HARBIN (10:20)
Well, I mentioned about how the property managers, some of them are, some of their clients are so fed up with them and their tenants are so fed up with them. We ⁓ had a good friend who had bought a property, was an apartment building, about five units, and he didn’t want to manage it himself anymore, so he hired a property manager to do it.And after a few months, he was so fed up with his property manager because they would charge him a service fee every single time they went out there. And I think the last straw that broke the camel’s back was that he had five service fees on his last statement that was five separate fees for putting out five filters. But it was just one trip out there. The person took five HVAC filters.
and replaced them all, but they gave him five different charges, like a $25 charge for each unit or something like that. And so he was so frustrated just because it was only one trip. And so he said he just wants to sell them. So we were able to do that. And we wanted to finance that with him for 0 % down and for a certain period of time before we did a balloon payment. So looking for any opportunities that we can to get something with a low down payment to where we can go ahead and get control of it.
and then refinance it later. Those are great, I think, in my opinion.
Michelle Kesil (11:36)
Yeah, definitely. Those are some good tips.JACOB HARBIN (11:41)
Oh, I’m sorry. Go ahead.Michelle Kesil (11:41)
So what are you?⁓ did you hear me? ⁓ yeah, no worries. What are you most focusing on solving or scaling to next in your business? ⁓
JACOB HARBIN (11:44)
Yeah, I didn’t hear the last part. I’m sorry. I had it muted by accident.Well, that’s a good question. So we’re bringing somebody else on and we’re bringing somebody to kind of act as an operations person to put in systems that has had experience for a while in property management. And we think it’ll help a ton. We are trying to just put systems in place to where we can really systematize everything. I mean, we have it now where there’s a lot of
We like having the personal touch with our tenants because we think that they really like it. But we also want to put it in place where they’re able to get their maintenance requests done really quick and they know exactly who to call. They know what numbers to call. They’re not calling different people ⁓ asking the same thing or different people aren’t reaching out to them asking if something was done already to confirm it. We are trying to streamline everything and that’s the biggest, the biggest challenge, but that’s the biggest opportunity for us. think too that getting those things knocked out.
Michelle Kesil (12:49)
Yeah, absolutely. What are some things that you’ve learned as a property manager that maybe you can share for people that are looking to work with one?JACOB HARBIN (12:58)
Yeah, I think some of the biggest things is that, ⁓ you know, think a lot of, I think it’s always a kind of some tension as property managers don’t think that tenants are going to care for the property or take care of it and that they are just going to trash the place or they’re not going to pay rent or they do all these things. And then all the tenants think that the property managers don’t care about them and they just care about getting the rent and they want to charge super high late fees and they want to try to evict them as soon as possible.But of course, none of those things are true. The property managers just want to make sure they do a good job for their client. And if their client is the one who owns the property and they’re the landlord, they want to make sure that they get the rent. But usually they want to provide a nice house too. I’ve seen a lot of owners who will overdo it on their properties and they’ll put in things that are a little too nice for tenants usually. But they just want to make sure it’s a nice place for them. And then I’ve seen tenants who will go out of their way to make sure the property is in really good shape. They’ll
do random repairs on their own that we don’t even find out about until later. And they’ll just say, yeah, this started leaking, but we just fixed it, so it’s no big deal. And I think if you treat tenants really well and treat them as if they are going to be really good tenants, as long as you, of course, vet them really well, then they will take care of the property. And you treat them like it’s their home, not their house, but their home for the time being, because it is. And they usually will treat the property.
really well I think. think that’s something that ⁓ people especially if they don’t know about property, or if they don’t know about renting out property or anything like that, then they would just assume well you’re just gonna get calls in the middle of the night, every night and it’s gonna be a terrible time, but I really don’t think it’s the case if you treat people well.
Michelle Kesil (15:17)
Yeah, absolutely. Relationships are everything in this space.JACOB HARBIN (15:21)
Mm-hmm.Yeah, yeah for sure.
Michelle Kesil (15:23)
Are you looking to expand in your investment business as well?JACOB HARBIN (15:29)
We are, we have bought a few properties this year, if I remember right, and we had a couple others, or we had one more that was in a contract that the seller ended up wanting to walk away from, but, until we let him, but yeah, we are still trying to expand that as well. We are looking to try to buy more single family properties and all that, four units ideally, ideally would be a duplex to a quadplex, but.Yeah, just in the North Alabama area, we think there’s still a lot of opportunity. The prices are a lot lower here still. And in the Shoals area, they’re even lower, but they’re still really good cash flow areas. There’s areas that are better for appreciation and areas that are better for cash flow. And it’s usually good to have a mix of both, but.
We like the cash flow properties a lot because they are usually the ones that are, when they’re cheaper, they’re usually better for cash flow. And depending the area, if they’re more expensive, they’re better for appreciation possibly. But I feel like when you just start out, you need to lean towards the cash flow because if you don’t, then you just won’t have any money. The appreciation overall is much, much better. But if you wait till you can buy properties that are only good in appreciation, then you’re going to wait a long time. And then to buy your next one, you’re going to wait a long time too. And so by the time you
finally get around to two or three, you might have could have bought six or seven cashflow properties that I’ll also appreciate, it’s not as high.
Michelle Kesil (16:53)
Yeah, definitely. I think that’s important advice for people to note.What are your goals for where your business is heading?
JACOB HARBIN (17:01)
So currently we have just about 100 doors under management for our property management business. It’s done really well and we’re really excited about the future. think that our goal for next year is to have about 250 doors under management. We also want to do that by trying to get our average rent up to about, it’s around a thousand now, but we want to get the average rent up to around 1200 at least or possibly 1500.To get around 250 doors is our main goal for the next year coming up. So we’d have to get a lot more business, the rate that it is going, I think it’s very reasonable.
Michelle Kesil (17:40)
Yeah, that’s an exciting goal.JACOB HARBIN (17:42)
Yeah, we were really excited.Michelle Kesil (17:43)
How are you finding the houses to manage?JACOB HARBIN (17:46)
HmmSo I am a real estate agent still, and that’s helped a lot. I know a lot of realtors and they will refer their clients out to me. I’ve had people refer clients out to me who they’ve tried to sell their house for a while and they said, well, hey, they don’t want to have it listed anymore. They just want to try to rent it. And so we will just list it for rent and get it rented out. And so that’s great. Those are the people that are, again, they just have one or two properties and they just want to rent them out. And that’s really good.
And then aside from that, when I were being a real estate agent, when I was really focused on that more so, we would call for sale by owners lot. We would do a lot of work for the sale by owners, call them and go see them. And we did that with for rental by owners. I don’t really think much people are doing that, but we will do it all the time. And, you you build really good rapport with them. You try to help them out however you can, even if they don’t end up going with you. You just try to give them value of some sort and.
We’ve been able to get a lot of those and a lot of those people do need help too. Cause like I said, they just moved out of their house. They don’t really know exactly what they’re doing. They know they want to rent it, but they, they don’t have a lease. They don’t have an application or they’re relying on Zillow for an application, which is, I don’t know if that’s the best idea. And so they could really use help. And so we’re really able to provide a lot of help there. ⁓ Especially for somebody who doesn’t really know exactly what’s going on.
you know, all the laws and the policies that you need to make sure you implement. And so we’re able to help them out. And so that’s a big part of it. Both of those referrals and for rental by owners and referrals from current clients as well.
Michelle Kesil (19:23)
Yeah, absolutely amazing.JACOB HARBIN (19:23)
CoughThanks.
Michelle Kesil (19:26)
So before we wrap up here, if somebody wants to reach out to you, connect, collaborate, learn more, where can people find you and connect to you?JACOB HARBIN (19:35)
Yeah, so on Instagram, it’s propertymgmtconsultants and property management consultants on Facebook. And I’d love for anybody to reach out if they had any questions or anything like that.Michelle Kesil (19:47)
Perfect. Well, I really appreciate your time, your story, your perspective. Thank you so much for being here.JACOB HARBIN (19:54)
Yeah, thank you, Michelle. It was a pleasure.Michelle Kesil (19:56)
And for the listeners that are tuning into the show, if you got value from this, make sure that you’ve subscribed. We’ve got more conversations with operators like Jacob who are building real businesses and we’ll see you on the next episode.
