Property Management Secrets: Residential vs. Commercial Investing with Odest Riley

Odest Riley (00:00)
I’m big on fire and clients. always felt like when I’m still helping somebody buy a cell, house or a building, I feel like we’re partners. I don’t feel like as an agent, I work for you. Now I’m going to go put in the work to make sure we hit our goal, but I’ve always had the philosophy, like sometimes you got a fire and a because I’m not going to, you know, this is a, I don’t get paid unless you close this deal.

Kristen Knapp (00:18)
Yeah.

Welcome back to the Real Estate Pros Podcast. I’m Kristen and I’m here with Odest Riley, is the founder of 24-7 Property Management and SoCal Premier Property Management. So thank you for being here, Odest

Odest Riley (02:04)
Hey, thanks for having me, Kristen.

Kristen Knapp (02:06)
Wonderful. Well, let’s get into how you got into this industry in the first place. I you have a finance background.

Odest Riley (02:11)
So for me, we got into real estate on accident. I had went to school, I was in school in Chicago and the young lady I was dating was like, why don’t you buy something instead of renting? And so we ended up buying a condo in the High Park area of Chicago. then instead of buying one expensive condo, we had to buy two. In the same building, they needed a ton of work. I lived in one, which

crappy little 600 square foot condo and then rehab the other one. Took way too long because I didn’t know I was doing. But I was making almost as much money from that rental as I was making from my job at the time. So it ended up spurring me into that. I ended up graduating from Columbia, Chicago and starting a job at Northwestern Mutual Financial and just getting a better understanding of finance and like how people who are wealthy or rich, would say.

always had a lot of insurance and always had a lot of real estate no matter what they were doing. Those are the two biggest things they did. Taxes, insurance, and real estate, all they cared about.

Kristen Knapp (03:14)
Yeah, so that’ll get you into real estate, saying all of that. And when did you actually make the transition from the finance side of it to the property management?

Odest Riley (03:23)
So I

did not like the… I felt like I was just moving numbers from one side of the screen to the other. And I was in Chicago. was too cold. I ended up moving back home to Ingo, California in 2007, right before the financial crash. Having to get a job after 2008 because everything did crash. Me and my business partner started a lending business. We were doing hard money loans, auto title loans.

And we were chasing people around looking for their cars. And we’re like, this sucks. And he was like, why don’t we just do real estate loans? And so we up getting our mortgage licenses. We started a mortgage company and we did pretty well with that for while. But I just didn’t like all the laws and rules that were just coming into finance and started doing real estate on the side. That was 2015 and I’ve been doing real estate ever since.

Kristen Knapp (03:55)
Thank

Odest Riley (04:16)
And then right before the pandemic in 2019, know, doing good on the real estate side, but I was just tired of always having to chase the deal. You’re looking for a redfin lead, you’re looking for a Zillow. Every buyer calls you and they know everything about real estate and they’re smarter than you. And they just want you to turn the keys and shut up. And so I was like, I’m over this. I started, I bought a couple of properties for myself and I was managing those and people would ask me to manage and I was like, no,

Kristen Knapp (04:36)
you

Odest Riley (04:43)
I hope you lease it up. for just literally as helping a friend out who was moving, I said, you know what? I should start doing some of this property management myself. It’s more like an annuity, you know, once you have a couple of them coming in, it sucks. But once you start to hit scale, it’s a really good business. You have money coming in every month, built the infrastructure out in 2019, pandemic hit in 2020, and real estate was booming.

So I kind of put the property management to the side. So a lot of houses, 2020, 2021, and was letting people know I was doing the property management. Some people were like, oh, okay, I’m buying this as an investor, can you manage it? And so we were picking up a few units like that. And then as you probably know, the interest rates went crazy right around the middle of 2022 and nobody was buying anything.

And we went full-scale property management, started picking up more doors. Hey, you got to eat in this business. That same time, my business partners for SoCal Premier Property Managing, we met up for a lunch. We got pitched the same commercial deal and everybody would do it. We’re all African-American, we’re in a small community and people would always shop us. Like they would call Alicia, call me and call James and ask the same questions.

Kristen Knapp (06:24)
Yeah.

Yeah.

Odest Riley (06:48)
And so we had lunch one day, like, why don’t we just start our own company? Alicia, you have an asset management background. James, you’re like one of the top brokers. I have all this understanding of the community and everything through all the boards and council’s asset on. Why don’t we just do it that way? And with that, we’ve been able to pick up almost a half a million square feet of commercial properties, shopping centers, retail.

office and some industrial.

Kristen Knapp (07:15)
Wow, you have such an interesting background. I I feel like that’s a really important part of figuring out what you want to do in an industry is figuring out what you don’t want to do, too. That’s a huge part of it.

Odest Riley (07:27)
I’m big on fire and clients. always felt like when I’m still helping somebody buy a cell, house or a building, I feel like we’re partners. I don’t feel like as an agent, I work for you. Now I’m going to go put in the work to make sure we hit our goal, but I’ve always had the philosophy, like sometimes you got a fire and a because I’m not going to, you know, this is a, I don’t get paid unless you close this deal.

Kristen Knapp (07:45)
Yeah.

Odest Riley (07:50)
So don’t talk to me crazy because I’m not getting paid hours.

Kristen Knapp (07:52)
And how do you approach that? How do you fire a client?

Odest Riley (07:55)
I’ll let them know a lot of times because in my opinion, if you feel a relationship going bad in any type of sales and you keep having to close a client over over and over, it’s going to go bad and they’re going to tell people you suck. So for me, if they’re going to end up telling people I suck, whether they bought the house or not, I might as well just, Hey, you know what, Kristen, it’s been really great. know, I think you’re an amazing person. I think our style.

is a little different. So while we still have a good relationship, I think we should possibly be working with a different agent. I have a few people I can refer. If you don’t want someone I’m referring, I’m pretty sure another one of our friends or family has somebody that they would probably want to refer you to.

Kristen Knapp (08:37)
And then

more often than not, do you find that it’s mutual? Like they’re kind of like, okay, yeah, I agree with you.

Odest Riley (08:45)
Usually,

it’s a first as to like, what? Like it’s a shock because nobody expects the person on the sales side to be giving up money. But then once they kind of take it in their head, you can see the wheels running and they say, yeah, you know what, it has been a little off. You know, I really didn’t want to say anything. I just felt like the energy wasn’t right. And I’m like, yeah, you know what, I want you to be happy. I want you to get into a house and just be excited. I want you to buy this building for your business and be…

exuberant. I don’t want you to feel some type of way about me or your property after it closes. So let’s just find, you know, let’s just go our separate ways and then everybody can move in a better direction.

Kristen Knapp (09:25)
Yeah, I think that’s the best way to handle it, because as you said, I mean, you don’t want to create all these negative reviews about yourself when you know something just really isn’t working.

Odest Riley (09:32)
No.

I went to Columbia, Chicago for marketing and PR. And one of the things I know is you can spend a million dollars on advertising and marketing and PR. And all you need is a few people who think you suck. All the money you spend doesn’t matter. This person went on their Facebook and said, Jess Riley is the worst agent in the world that goes viral. And doesn’t matter how good you are.

Kristen Knapp (09:46)
Yeah.

Yeah.

Yeah, that’s so true. mean, it’s good to put into perspective. And then, you know, on the other end with the clients that you have a great relationship with, I imagine, you know, you can get some really repeat business in this industry.

Odest Riley (10:44)
get a lot of referrals, most of my business is referrals. I know how to market a little bit, but I’m really big on referrals. They come in, you’re able to take care of them. They’re going off of past history and what they know about you. I try to always make sure, good or bad, because every deal isn’t going go good, that there’s an understanding of where things went wrong. I’ll call somebody back who doesn’t want to work with us anymore and say, hey, know, how could we’ve done better? What is it that you would have been happier with?

you know what? You guys just aren’t a big enough company. Okay, well, there’s nothing I can do about that. ⁓ I don’t feel like you gave enough hands on. That’s something I’ve been getting as we start to scale. People want to talk to me every time. And I’m like, I have Monica here who does leasing and Tatiana does all the finance. So when you call me, you’re just going to get to them. So it might be better for you to just talk to them in the first place.

Kristen Knapp (11:15)
Yeah.

Mmm.

Yeah, I mean, I think that’s a big challenge when you’re a growing company, kind of maintaining that service to people where they feel really involved in the process. But I can see both sides of it, how some people like working with a bigger company. But what are sort of the benefits of not working with a bigger company?

Odest Riley (11:57)
I’ll get up right now when you like right now this for us to meet. just had this hell so my hey, I’ll be there in 30 minutes because they asked if something specific was going on in their property. One of my units, I just got a tenant. They just said one of the doors kicked in. I said Monica, I have to hop on this call, but I need you to call the police right now. File a criminal trespass. As soon as I have the truck ready, as soon as I’m off of this, we’re going to go over to the property. A bigger company.

the boss isn’t going to go see that.

Kristen Knapp (12:26)
Right. And you can just be more agile in general. You can just react quicker. So as you’re building, you’re building a business in the residential side and the commercial side. I’m curious about the commercial side of property management because I don’t hear, I don’t have a ton of conversations with people who are in that side of it. How does that differ from the residential?

Odest Riley (12:29)
Correct. Correct.

Just like buying and selling on the commercial side is more investor, more business owner and more numbers. So when you’re doing the commercial, you have to understand things like cam these, which are the common area maintenance. it’s okay, you have your Chipotle here and there’s the Starbucks and then there is a mom and pops nail salon. Everybody has to pay a percentage to keeping the parking lot clean. There’s no graffiti.

⁓ you have to understand tenant improvement. Somebody wants to lease up a unit. They’re going to ask you for a hundred thousand dollars of tenant improvement, which is, Hey, I need to build this out before I can open up and make money. If you can take this away from the lease and allow us to do this, we can build it out. You’re going to have a nicer unit. We’ll make more money. You’ll be able to charge us for that. you have to do things in scale. mean, they’re generally not graffiti on houses. They’re generally not.

Having to have a porter clean the parking lot all day. Office building, you have to deal with security guards walking the floors, making sure you don’t have people staying in the stairwells. An industrial property, you get a call, there’s a coyote in the back of the building. You know, there’s all these things that are not… Whereas with residential, you’re dealing with specific set rules a lot of times. This is what the county says. This is what…

Culver City says the municipality has this rule, you have to follow within these rules. Commercial is, hey, you didn’t pay your rent, you have X amount of time to have your stuff out. And we hope you do better in your next endeavor.

Kristen Knapp (14:14)
Right.

No, that’s interesting because I would have said maybe there’s less issues in a commercial property, like less wear and tear, but it’s just different issues.

Odest Riley (14:28)
different issues.

You’re dealing more with, the sprinklers went off and destroyed all of my materials. Or we have a downtown, we have retail storefronts in downtown LA. One of the gentlemen, we knew he was doing something shady because he came in, it was a barber shop that never had any people in. So he turned it into a legal marijuana dispensary. Somehow somebody broke into his barber shop.

cut a hole in the roof, cut through the other wall so that he could get out. So he ended up destroying two units to get out because he had fortified it. And no, it’s a barber shop. Sure, people rob barber shops because they have so much money.

Kristen Knapp (15:48)
Yeah, so on the commercial side, do you feel like you work with like crazier stories than the residential?

Odest Riley (15:55)
No, the commercial side you deal with more. No. So one of our retail offices, a sophisticated criminal spoofed the company that we manage their portfolio, their emails. So the CFO was sending us emails and it was regular. would email us regularly. We got an email asking to wire over $200,000, which is a

regular thing, one of their disbursements. It was a little early, but he’s the CFO. It’s his email. Everything lines up. We send the money. It was spoof. They had broken in and taken over all the emails for all the executives for that company. Because we have a good relationship with our bank, we have a small regional bank. We were able to recover it. But I will tell you, me and my partners thought we were fired. We definitely were knots in our stomachs for about three days.

before we were able to get everything back. On the residential side, we have LA, we have squatters. We have, I don’t need to pay my rent. I’m a socialist and I read this on chat GPT and it told me because you didn’t knock three times, twist the doorknob and whistle that I do not have to leave until I want to.

Kristen Knapp (16:54)
Yeah.

Yeah, I think that’s probably a big uphill battle of it. I think that there’s so much information being shared on social media and AI and stuff like that. People think that they’re experts in areas that maybe they’re not.

Odest Riley (17:20)
They’re not. And then they come to have a come to Jesus conversation with somebody who I spent a lot of time knowing the rules. That’s my job, knowing the rules as the broker of records. And the call I got that I’m going to go to when we get off of this, she said, I let somebody stay with me and they won’t leave now. And they kicked the door in. I said, so you either have a tenant or you have a criminal trespass. Which one is it? they’re not a tenant.

Kristen Knapp (17:22)
You

Odest Riley (17:45)
I’m like, then it’s a criminal trespass. No, there’s somebody I let stay with me for a few days. There’s only one of the two options.

Kristen Knapp (17:51)
That’s what you’re going to after this? wow, what do do in that situation? Do you talk to the person?

Odest Riley (17:55)
I’m gonna go, I’m

gonna knock on the door. I’m gonna make sure we have somebody recording so that anything that we have to go to court about is recorded. I’m gonna let them know there’s the options, the police are here. I don’t know who you are. You’ve been reported as breaking and entering into this unit. You can get your stuff and leave or we can go about this the legal way and that might not go so well for you.

Kristen Knapp (18:17)
So that’s a part of it that I probably wouldn’t think about, that you have to have all of this infrastructure in place with legal teams and stuff like that to fall back on. What does that look like, your businesses?

Odest Riley (18:27)
Yeah. So that’s

the biggest part of starting a property management company. You have to have a broker in California. You have to have trust accounts set up because you have to zero out accounts every month to make sure that there’s no embezzling or any funny stuff going on with other people’s money because it’s not yours. You’re just a pass through entity. You need to make sure you have the right errors and omissions insurance, the right general liability, right bonds. You have to have a property maintenance person.

or vendors who can do your maintenance. You need to have a CPA or a bookkeeper to help you keep all people’s money in order because there’s money going into your hands all day, every day. I need a doorknob change. a key broke. the toilet. So you’re always moving other people’s money. You need to have the ability to get a plumber out anytime. You need to have the ability to serve paperwork, whether that’s a three day notice, whether it’s a 15 day notice.

an inspection, you have to have those things set up so that you can easily get them done. And a lot of people think you can just kind of run around. Once you have anything over probably more than 10 properties, you need to have some type of infrastructure.

Kristen Knapp (19:35)
Yeah, wow, that’s a huge team you have to create. Yeah, that’s a lot to think about. With this industry, you must love solving problems. What’s your favorite part about being in property management?

Odest Riley (19:46)
I am, that’s funny, I’m like ⁓ Charlie Munger and like Warren Buffett, love them. Cause they always created membership businesses or annuity businesses. And what I like about property management is I can do two things. I can help families who might have to sell a house because the families are not getting along or a business, help of a business owner manage their own building so that they can make more money. But it’s really the helping people long-term plan when you’re doing property management.

It’s like these houses are these apartment buildings aren’t just like cash flow for them. It’s like, I bought this six unit so that my daughter can go to college. So I invested in this, it pays off this much. When she starts school, I’m going to either to sell it or reposition or refinance it so can pay for school and make sure it’s not just destroyed by deferred maintenance. Because a lot of owners when left to their own devices, their parents were good landlords.

30 years ago, they went to college and they got property and they just don’t have the skill set to deal with people to keep these assets. So we’re there to just supplement their skill and make sure that, you know, the hard work their parents did or their grandparents did is able to stay in their family.

Kristen Knapp (20:56)
Yeah, I mean that’s a great part of it for sure. And what’s next for you and your two businesses?

Odest Riley (21:02)
So for me, I’m

trying to get to a million square feet on the commercial side. And on the residential side, I would probably like to be around 500 doors. I don’t know if I want to get any bigger than that. That allows for me to start having conversations with my owners about first rights of refusal on properties. They decide to sell or wind down their portfolio. I have the ability to step in, either buy it from them or help them sell it. I can start to build my own portfolio.

My long-term goal is to be more of a multi-family office where I help my owners and manage their real estate, make sure they have the right insurance products, make sure their assets are all cash flowing so as they move into their future, everything is just turnkey for them.

Kristen Knapp (21:48)
And then how do you go about expanding your portfolio?

Odest Riley (21:51)
So like right now I just have a gentleman who wants to give me three buildings. He was referred. He said he might sell one of them. So he wants to go over that. And I just kind of let everybody know what I do. The reason I’m willing to hop on podcasts or do anything is I want, I’m not a secret agent as we used to say about sales agents. Like I’m letting you know what I do. I have a marketing company that does some, ⁓

SEO and some Facebook and Instagram stuff for us. And I also go to do any speaking engagements and any boards or anything that I sit on and make sure everybody knows.

Kristen Knapp (22:26)
Amazing. Well, awesome. Where can people find you?

Odest Riley (22:30)
You can

find me on Instagram as O-D-E-S-T. You can see some of the Crazy Squadder stories, or me selling houses. Our website are managed, M-A-N-A-G-E-D-B-Y, the number 247.com. So that’s managed by.

dot com managed by 247.com or SoCal Premier Property Management which is Socal ppm.com and always give me a call 310-905-7420 I always pick up the phone.

Kristen Knapp (23:00)
Amazing. Well, thank you so much for doing this, Odest.

Odest Riley (23:03)
Thank you.

It’s really amazing. I appreciate you having me on. I really want to check out some more of your stuff, kind of see what you’re doing, because it seems like you got a pretty good product.

Kristen Knapp (23:12)
Yeah, amazing. Well, thank you so much and everybody, thank you for listening and we will see you back next time. Bye.

Odest Riley (23:17)
All right, thanks, you have a wonderful day.