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In this conversation, Mike Hajjar, a seasoned real estate investor, shares his insights on navigating the multifamily real estate market in Massachusetts and Rhode Island. He discusses the importance of making informed purchasing decisions, the challenges of property management, and strategies for adding value to underperforming assets. Mike emphasizes the need for hands-on management and the importance of genuinely caring for tenants to ensure long-term investment success. He also highlights current market trends and the opportunities available for investors who are prepared to take action.
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Investor Fuel Show Transcript:
MIKE HAJJAR (00:00)
Yeah, I mean I my my business didn’t change too much I’d be honest to you. I was able to I mean As rates went up, you know cap rates did not ⁓ Go ⁓ up with it. So people just didn’t trade, you know, there wasn’t a lot of things to buy during that period of time I think it just got very dry You know, they weren’t the the people owning these properties brokers, you know friends of mine brokers who aremaking these calls and trying to whistle you know take these deals from you know these old time you know older management you know older owners family you know families that own properties for a long time you know the mismanaged the kind of old-timers not raising rents and just kind of you know cash flowing because they don’t they buy they bought it so cheaply okay
Dylan Silver (02:19)
Hey folks, welcome back to the show. Today’s guest, Mike Hajjar is a real estate investor and operator with over a decade of experience across Massachusetts and Rhode Island. He’s transacted over $44 million worth of real estate and 350 units. He’s also founded Longview Properties, a property management company, and his work centers on uncovering underperforming assets, raising private capital and executing strategic renovations and operational improvements to force appreciation and cashflow.You can find him at lvproperties.com or on LinkedIn. Mike, thanks for taking the time today.
MIKE HAJJAR (02:58)
Thanks Dylan, appreciate you being here.Dylan Silver (03:00)
When we talk about value add multifamily in Massachusetts and Rhode Island, and we were talking about this before hopping on the show here, this is a highly competitive space and you really got to pick your spots in order to be successful. Walk me through getting into this space and then also too, what those first years were like for you in this space.MIKE HAJJAR (03:27)
Yes, you do you do have to pick your spots I mean I it’s they say you you know you make money when you buy right? ⁓ If you’re not buying it right, you know, if you don’t know your numbers, you’re not buying it, right? You’re you’re setting yourself up for failure ⁓ You know, have to know your systems. I mean you have to know a lot of what you’re getting into The early years I would say were slightly easier. I mean their prices were a lot lower. I was buying in 2016 2015I was buying, you know, I was being offered units for like $36,000 to $50,000 a door. Very tough areas, this is in like Woonsock at Rhode Island, Pawtucket, Rhode Island. But something that, you know, I look back and say thank God I did was I basically bought everything that made sense that year. Like, you know, came up, 12 unit, okay, I’ll buy it. A 9 unit.
Dylan Silver (04:02)
Yeah.MIKE HAJJAR (04:25)
You bought it. And so the first year I bought 50 apartments. went from, you know, having my… I lived in a four family that I owned in Quincy, Massachusetts. ⁓ And in 2014 or so and then, you know, you jump right in the business. I think scale too is important. So it’s, you know, I didn’t want to buy one nine unit building. I didn’t want to buy a smaller portfolio. I thought if you’re going to be in the business, you want to be…Dylan Silver (04:47)
Right.MIKE HAJJAR (04:52)
in the business, right? And that means, you know, property management. ⁓ I, my, my good friend, late friend, John, and I, you know, bought those early units. It was a team, you know, I was underwriting the deal, understanding it, getting the, the financing, learning, you know, learning about the financing, how does the financing work? ⁓ How to, how to, how to ⁓ interface with banks? Okay, can you even buy the deal? And then the broker.And then eventually once you bought them, now you’re dealing with these tenants, right? So, know, value add to me is a dance… ⁓ You’re buying occupied buildings, right? This is not new construction. This isn’t a house flip. This is a multifamily flip with people involved. you know, value add is probably ⁓ defined by mismanaged properties.
Dylan Silver (05:26)
Yeah, that’s exactly right.Yeah, you know, when we talk specifically about that aspect of it, and I know you founded a property management company, you know, I’ve heard even, you know, it’s tricky to even replace a poorly performing property management company because just in that turnover, there is going to be more difficulty, right? So it’s almost like, well, do I do I replace the current property management company or do I work with them to try to improve things? Because that’s going to, you know, potentially unsettle things for
maybe a couple of months while people are getting used to it. Now, you also mentioned buying in that time period 2014, 2015, 2016. From what I understand, from what people have told me, this was like the time to buy multifamily real estate. Like you almost couldn’t buy a deal wrong in some spaces, at least in Texas.
MIKE HAJJAR (07:09)
Yeah.It’s still
a scary though. know, every market, it’s you know, every market you think it’s a top. I remember like I can look back at performers that you know, opportunities to buy beautiful 24 unit brick buildings. I mean like I said, I bought a lot of what came to my on my plate and that was my strength. I did not get you know, paralysis by analysis as I say. I kind of jumped and did it and figured it out as I went. ⁓ You know…
But the… you have to look at those… so I’m looking at the rents of these things and you know, at the time these rents were $850 and you know, pro forma was like $1250 or the rents were you know, $700 or $800 and the rent in the pro forma is $1500. I said, geez! You know, I can’t see rents ever being $1400 for a two-family in North Providence or in Attleboro. And then you look back and now, you know, we’ve blown way past it so…
Dylan Silver (08:01)
Whoa, whoa, whoa.MIKE HAJJAR (08:26)
Every market has a, you know, what seems like an expensive price, you have to foresee, you know, down the road. ⁓ I mean, we’re at a point perhaps, in my opinion, I don’t like high rents. I don’t think buying properties with very high rents ⁓ is a good strategy now. And even then, because you know, the middle end market, the C class, the B class is always someone that’s going to fall into your$1,200 rents $1,400 rents $1,600 rents, know, even now 2100 for the right product in the right market is a steal because every new building Of course is being built as you know in Texas in here everywhere They have to Mac they have to go for luxury Do you know and you know, know anybody building affordably? No and
Dylan Silver (09:17)
Yeah, that’sYeah,
when it is, it looks like luxury. They call it affordable, but it looks like luxury. And what I’ve heard, and I’m curious to get your perspective on this because you were very active then, is that there were deals, and most people might have a five-year exit. That’s the plan. But they were exiting in half the time or less. And so people had this almost mania like, hey, we’ve got to buy now. And then that extended into
maybe 2020, 2021 when things switched, right, for everybody. And so really, if you use those same strategies from 2014, 2015, 2016 up until 2021, 2022, you were finding yourself in a tough spot.
MIKE HAJJAR (10:46)
Yeah, I mean I my my business didn’t change too much I’d be honest to you. I was able to I mean As rates went up, you know cap rates did not ⁓ Go ⁓ up with it. So people just didn’t trade, you know, there wasn’t a lot of things to buy during that period of time I think it just got very dry ⁓ You know, they weren’t the the people owning these properties brokers, you know friends of mine brokers who aremaking these calls and trying to whistle you know take these deals from you know these old time you know older management you know older owners ⁓ family you know families that own properties for a long time you know the mismanaged the kind of old-timers not raising rents and just kind of you know cash flowing because they don’t they buy they bought it so cheaply okay
So these guys basically they’re like I’m not gonna reduce the price. I’ll just keep it. I’ve owned it for 30 years Why am I gonna sell into this environment where you know, I have to give a discount because the rate is 8 % ⁓ You know over leveraging yeah, there was some people I’m sure that had to exit Massachusetts or an island. I didn’t see any distressed multifamily at all one I mean, I don’t think anybody has missed the mark yet granted. I mean I exit in
Dylan Silver (11:59)
Hmm.MIKE HAJJAR (12:06)
You know, I’m like a one to three year historically. One is pretty quick. But you know, two to three, four year hold guy. You know, it’s a business plan that we buy. You know, we buy these buildings. What I like to do and what we’ve done is we buy these buildings ⁓ with the business plan of a one year, two year, really two year rent increase rehabilitation. We get a construction loan.We get one year interest only and we go, you know, pretty aggressively renovating. You know, we give something back to, we’re not just raising rents without any return. ⁓ There’s always a big, recently the past three, know, probably 10 deals, we’ve done all construction loans, even if I don’t really need it, I’m doing it. Because the bank likes to see it, we’re adding value, we’re always finding something to do.
And then you can raise the rents, you know. And oftentimes that is very welcome because the last guy granted the rents for 800 bucks but the place is overrun with cockroaches and you know, the electric doesn’t work and nothing works. You know, so to go from 800 to 1250 is not the worst if you you’re not living in squalor.
Dylan Silver (13:18)
That’s right.I want to ask you the property management space because I know you’re vertically integrated. You founded Longview properties. ⁓ Walk me through that. And was that because you were having maybe some level of challenge dealing with other property management companies in these deals?
MIKE HAJJAR (13:45)
I started out property management. didn’t have a property manager for those first 50 units and those were the probably the toughest units. I mean I inherited some really crazy people, some nasty things, okay? And some bad buildings, buildings that were never supposed to be a nine unit building, walls thinner than paper and ⁓ crazy people basically and you know tough to navigate. ⁓Not everyone was crazy, but but there was obviously some interesting interesting characters and you have to navigate that And you know what I found during doing that obviously I learned the systems we had a lot of these are older buildings, right? They never had the investment Required to improve them at all. I mean everything was as original as it gets right and It needed they needed a lot of love ⁓
So, you know, in that process I learned how to treat tenants. I think this goes to our strengths and why I’m very passionate about like moving ahead and you know, raising money, getting more people involved because the competitive advantage of seeing these, you know, successful deals, they’ve all been great, they’ve all done very well. ⁓
You know, seeing the success of these, it’s a competitive advantage to actually care. You have to care about the people. You have to hand hold the project. You know, you can’t hand it over to a property management company. I don’t think there is a value add guy that does well handing it over to a property manager because they’re property managers. They’re not project managers. You know, we are project managers when it comes down to it. That first two years is not a property management. It’s project management.
Dylan Silver (16:12)
That’s right. That’s right.MIKE HAJJAR (16:20)
You told the bank that you were going to do something. You were going to raise rents, you were going to spend the capital, you were going to do whatever. And they are trusting you to go and do it, right? A recent building we had bought in Providence, a 12 unit building, ⁓ didn’t see it coming. Six people left day one, right? Luckily, I wanted most of those people to leave ⁓ and then we actually got almost everybody. ⁓particularly bad managed poorly managed building totally poorly managed building guy had no leases didn’t you know who lived there nasty crazy things basement and ⁓ needles and all the rest so ⁓ we cleaned it up really good ⁓ and yeah so you know that that runway to remove tenants and to work with people the last last two people we got out was probably eight months later you know so it’s a legal process and you have to be human
Dylan Silver (17:11)
Yeah.MIKE HAJJAR (17:19)
You have to convince them that they need to leave. You know, to send a letter and say, hey, you’re, you know, meet us in court. And you have to be human. You know, you have to level with these people and you know, even at the scale. And that’s why it’s a tough, it’s a tough business to scale. I’ll be honest because I, I want to be involved, unfortunately, um, in these processes. The harder the tenant, the more I’m involved, you know, 10 % of the time, you know,Dylan Silver (17:44)
Yeah. Yeah.MIKE HAJJAR (17:47)
Because you don’t want a legal issue, you don’t want… ⁓ you don’t want to fester, I’ve never had a squatter, you know, I’ve never had the issues that people say are why you don’t have apartments. If you respect them, they often respect you back. ⁓ In some regard, they’re not gonna just dig in and totally screw you. ⁓ So that’s where I think, to your question in property management…Dylan Silver (18:09)
Right, right.MIKE HAJJAR (18:17)
And the property management is when the property is performed and it is a cruising altitude. All you’re doing is raising rents 2 % a year or whatever that number is. You know, flipping units. But I would not trust another company or someone outside of my, you know, of us to actually bring real value. Because there’s no money in… there’s no money, you know, there’s no money in buying a 7 cap and just leaving it there. Like no one’s gonna invest with you and no one… buy S &P.Dylan Silver (18:37)
Yeah, I mean…The property management,
to your point, these are the people who are going to be making the changes that are doing the value add when it comes to an operational standpoint. So for anyone who’s buying these deals in that, especially that first year, to entrust someone else and just kind of be hands off, it’s very challenging to do that. You really have to have a high.
MIKE HAJJAR (19:11)
You’d be doing ityourself. Yeah, you’d end up interjecting. I I’ve inherited some property management companies. I bought a 42-unit building. I inherited a property management company. That’s probably the catalyst where I said, you know, we’re doing it ourselves. A, there’s a lot of money to be made. B, you you have to spend all your time auditing their expenditures. You know, they’ll take, ⁓ like, I’m looking at it. Why are you replacing the guts of a toilet three times? Replace the toilet.
I mean, I’m spending $800 on this toilet. More! You know, replace the toilet! Or stop chasing this mouse, you know. So there’s inefficiencies with property management, you know. We’re a property management company. We do third-party property management. That’s something, you know, new that I’ve come around to. More in the Quincy area. You said you lived and worked in Quincy, which is pretty cool. So you know, I mean this area, Boston, Mass… you know.
Dylan Silver (19:44)
Yeah.what’s going on here, yeah.
Yeah.
MIKE HAJJAR (20:09)
Quincy and the South Shore and Greater Boston. You know, there’s some high rents, especially now. I’m interested in third party, third party property managing nicer properties that are pro… they’re not a project, they’re property management. You know, we’ll listen, we’ll pick up the phone, we’ll, you know, people, we, you know, we manage places with a pool, you know, single family with a pool. These are like luxuries that are far cry from, you know, the…Dylan Silver (20:23)
Right, right.MIKE HAJJAR (20:37)
the $330,000 9-unit I bought in Pawtucket.Dylan Silver (20:41)
Yeah, it’s amazing to see the journey, right? Looking back. ⁓ We are coming up on time here though, Mike. Any new projects that you’re working on and then also what’s the best way for folks to get in contact with you or your team?MIKE HAJJAR (20:53)
I mean you could reach us phone I’ll give you the you know you can call us call me anytime you know I like I like education I’m not sure how much time I should be spending on you know what do you where do you go I mean the the best pay dirt is obviously to find these properties that are mismanaged before they all get sold you know eventually they’re all gonna get sold and Quincy is a good example and South Boston is a good example eventuallyThey’re all performed, right? There’s no more game to be had. So, and I have to keep going outside, you you have to keep going further and further. I mean, I am in, you know, a mindset where, you know, we are, you know, I, we established a company, our investment arm called Longview Ventures. We’ve since done, you know, one pretty good syndication deal, 25 units in Fall River. A lot of friends and family join there.
You know, that is really where we’re directing energy. If I had the capital, you know, to… and that wasn’t just my own, it wasn’t just a small group, you know. If we had the bandwidth to go and get everything that was, ⁓ you know, that fits the model right now, in the next three years, the opportunity is here, you know, to actually ⁓ take down some of these… ⁓
properties that have been owned in families for 50 years. Right? And as soon as they trade once, it’s over. Like if you don’t buy them now, it’s over. Well look, I’m looking at 36 units in Providence ⁓ next week. ⁓ You know, these are packages you have to buy. You’re buying them, there’s 30 % more in the race. They’ve been underperforming and it’s right in our wheelhouse and you have to buy them. Right?
Dylan Silver (22:40)
Yeah.MIKE HAJJAR (22:47)
And these things are the ones that turn into 20-30 % annual IRRs returns over time. ⁓ So I think that’s a project we’re most excited about. We are actively raising money. We do have a fund open right now. And that’s, ⁓ you know, something that if anybody wants to talk about, we’d love to discuss further.Dylan Silver (22:56)
Yeah.Mike, thank you so much for coming on the show. Thanks for taking the time today.
MIKE HAJJAR (23:16)
Yeah, thank you, Dylan.
