Subscribe via:
Show Summary
The conversation delves into the complexities of legal representation in Homeowners Associations (HOAs), highlighting the differences between attorneys and resolution-focused professionals. It emphasizes the misalignment of interests between attorneys and associations, particularly in foreclosure actions, and discusses the financial implications of engaging legal services.
Resources and Links from this show:
-
-
- Investor Fuel Real Estate Mastermind
- Investor Machine Real Estate Lead Generation
- Mike on Facebook
- Mike on Instagram
- Mike on LinkedIn
- Mitchell Drimmer’s Website
- Mitchell Drimmer on LinkedIn
- Mitchell Drimmer’s Phone no.: (786) 832-9849
Listen to the Audio Version of this Episode
Investor Fuel Show Transcript:
Mitchell Drimmer (00:00)
And I do want to tell your investors out there that for every dollar that you add on to the bottom line,Dylan Silver (00:02)
youYep.
Mitchell Drimmer (00:07)
There’s a valuation multiplier. So if somebody walks out of your condo or your apartment or your house and they owe you $5,000, the multiplier in your industry might be up to 10. That could be $40,000 of valuation on your company. It’s not 4,000 I’m chasing. I’m chasing $40,000 worth of your valuation.Dylan Silver (02:06)
Hey folks, welcome back to the show. Today’s guest, Mitchell Drimmer, is in the condo collections and rental recovery space modernizing Community Association collections with Axela. Mitch, welcome to the show.Mitchell Drimmer (02:22)
Thankyou for holding me on the show, Douglas. was a pleasure to be here today.
Dylan Silver (02:27)
I always like to start off at the top of these shows by asking guests how they got into the space that they’re in. How’d you get into the collection space?Mitchell Drimmer (02:38)
Interesting question. For 38 years, from the time I was ⁓ 12 years old till the time I was ⁓ 53 or something like that, lived in New York all my life. I was in the garment center. I was a manufacturer. I was a shipper. was in logistics. The garment business went the way of the dodo in the United States.And so it was time for me to move on. So I moved to Florida. If I’m not gonna have a business, at least let me be someplace where it’s warm. And then they told my wife, I’m 53 and retiring. She says, no, you’re not retiring. I’m not gonna be making lunch for you for the next 60 years. So what did I do? I went to, have schools here in Florida called Gold Coast.
and the real estate schools where you could get in Florida, you could become a community association manager. That’s one of the courses. And you could become a real estate broker or real estate sales associate or realtor if you join the, you know, the realtors association. So I went to the school and I got myself a whole bunch of education and it was 2008 and I saw
that the whole world was melting down and crashing and I didn’t own any real estate, I didn’t have any dog in that fight. So when you see a crisis like that, that is nothing more than opportunity condensed. To make a long story shorter, I met some folks, some young fellows your age in their 30s, and they decided they came up with a business opportunity
where for community associations, HOAs and condos, that we would, instead of doing the collections, we would fund them the money. We would actually do their accounts receivable servicing. And when ⁓ the time of the month is where they would receive all of their money, we would give them exactly what they were budgeted for. We were replicating a
perfect cash flow scenario for community associations.
After a couple of years, and we were very successful in that because ⁓ it was a good business model, but the guys began to get a little predatory. All right? And I had a crisis of conscience. And I went and I opened up my own company with a partner. Well, he opened up the company. He brought me in.
Dylan Silver (05:55)
youAll right. Yep.
Mitchell Drimmer (06:16)
I was the founding employee, employee number one. And I learned from the other company what not to do and how to do collections, not funding people. Because I’m not going to fund somebody who made mistakes, didn’t have adequate budgets. But we’re going to fund them. We’re going to do collections for them because in HOAs and condos, the only collections that get done are lawyers foreclosing on people’s homes. And that’s wrong. That’s fundamentally wrong.unless it’s needed and desperate. It should be the last desperate attempt to collect in HOAs and condos. And it’s been eight years now since we started this company. We’ve got a tremendous valuation and we’re so successful that a lot of management companies also have multifamily and rental. So we have like a 98 % success rate, but it’s secure debt. So, you know, I’m not that great of a hero.
Dylan Silver (06:55)
Right.Mitchell Drimmer (07:16)
But they said, if you’re so good at this, why can’t you use your technology? Because Accela is a technology company and we have a collection side to our business. Why not use it for rental? And so that’s how I got involved in recovery, asset recovery for rentals, post eviction and post skips, and for condos when people are delinquent on their assessments. That’s my story and I’m sticking to it, Dylan.Dylan Silver (07:44)
Soin the evictions space, I wasn’t aware that ⁓ investors, know, apartment complexes can recoup their funds. Is that common? Is that uncommon? Are they able to secure or are they able to recoup some of their funds post eviction?
Mitchell Drimmer (07:51)
Yes.Absolutely, they have a written contract, have a lease, they have a legal obligation and as a matter of fact, investors tend to poo poo it thinking just like you, look you’re on a real estate podcast and you know the industry and this is the first you’re hearing of it so again, I must be in demand.
Dylan Silver (08:26)
Yeah. ⁓Mitchell Drimmer (08:30)
But what we do is remember it’s not secure debt, it’s unsecured debt. So we have to trace them down, we have to call them, we have to be ⁓ very, very insistent on getting paid. And do we have this success rate that we have with HOAs and condos? Absolutely not. But we do have a success rate.And I do want to tell your investors out there that for every dollar that you add on to the bottom line,
Dylan Silver (08:54)
youYep.
Mitchell Drimmer (08:59)
There’s a valuation multiplier. So if somebody walks out of your condo or your apartment or your house and they owe you $5,000, the multiplier in your industry might be up to 10. That could be $40,000 of valuation on your company. It’s not 4,000 I’m chasing. I’m chasing $40,000 worth of your valuation.And so, you know,
I would like people who are in the rental business, who are in the multifamily or residential business, and if you got any HOAs, send them over to me too. But my rent recovery is very helpful. And again, I’ll tell you, lot of people ask me, what’s your success rate? And I says, well, if you don’t put anything into collections, it’s greater than zero. And that’s all I could tell you right now. It’s greater than zero.
Dylan Silver (09:54)
That’s right.Mitchell Drimmer (09:57)
And why not? There’s no cost. No cost. Carry on,Dylan Silver (09:58)
when we talk.When we talk about HOA versus ⁓ rental recovery, when I think about rental recovery, thinking, gosh, that’s got to be tricky because these people are effectively not tied to the property in any way any longer unless they’re being…
Mitchell Drimmer (10:48)
of life.Dylan Silver (10:50)
Told hey, this is gonna hurt your chancesMitchell Drimmer (10:50)
⁓Dylan Silver (10:53)
more than it already has to secure another apartment or some other Course of action that would get them or motivate them to start making some type of payment HLA is different though because HLA they’re living there now So if they don’t start paying their fees, they’re going to be out What’s your approach and what makes the Axela different on the HLA side?Mitchell Drimmer (11:12)
youWell, on the HOA side, what we do not do is what the attorneys do. We do not go straight to lean in foreclosure. What we do is we do an underwriting, we ascertain the fact pattern, we find out how much equity is in the unit. And that’s an important number to know. Because when our callers call people, they’re not saying, oh, you owe $3,000. They’re saying,
You have $100,000 worth of equity in your home. You owe $3,000. The association has the right to do a civil seizure and foreclose and sell your house to recoup that $3,000, but you’re going to be out $100,000 worth of equity. Let’s do something to get you stood up. Let’s do something to protect the equity in your home, your condo, or co-op, whatever it may be. So again,
We bring reason. People do not know where they stand financially in many cases. People don’t know how much their own personal worth is. I know how much my apartment is worth, the equity in my apartment, down to the last dime. All right? But a lot of people don’t.
Dylan Silver (12:29)
When we talk about HOA collections, how often does it come to people having to get removed because they’re not paying HOA fees? Is that common? Is that uncommon?Mitchell Drimmer (12:40)
Well, if you use my company, it’ll only happen less than 1 % of the time. But if your HOA or condo engages an attorney, then the attorney will look to move forward with a foreclosure action. Attorneys get paid by the hour. They don’t get paid by the resolution. I get paid by the resolution. I don’t recover my money, my costs, my profit, my fees.unless the association is paid. But an attorney, win, lose, or draw, they’re going to send you a bill. And they like to prolong things. Every time you call them, it’s a $75 phone call. Every time you ask for a report, there’s money. Their interests are not aligned with the association. My interests are aligned.
Dylan Silver (13:16)
That’s right.Mitchell Drimmer (13:33)
I’m not contingency based, I’m merit based. I charge fees that are passed through to the delinquent owner. I don’t take a percentage, but if I can’t collect the fees, my fees from the delinquent owner, then the association doesn’t have to pay me. So again, it’s a winner.Dylan Silver (13:48)
I want toI want to pivot a bit here and ask you about HOA fees in general. I’m a Texas licensed realtor. I know that fees will vary depending on where you at, but I know that HOA fees can be nominal to substantial. Do you see more delinquencies in the substantial area when it may be multiple hundreds of dollars a month in HOA fees or do you see more when it’s maybe a smaller amount and people may be struggling to make their payments in general?
Mitchell Drimmer (13:56)
Thanks a lot.Of course.
Correct.
That’s a great question because you want to know something? I see delinquencies. People call me up. say, well, especially in Texas, a lot in Texas, because you have HOAs that don’t have front gates. They don’t have pools. They don’t have clubhouses. So what’s the common fees for landscaping maybe or some electrical lights or something like that? So they’re HOA dues and they’re large scale associations, 3000 units. So all they need is a hundred dollars a year.
And I get many people who will not pay that $100 a year. You can’t get a Happy Meal at McDonald’s for $100 a year. And again, you don’t want to foreclose on something. Remember, there’s a statute of limitations. So if the statute of limitations is six years, I’m not taking somebody’s home for $600. But I am calling them, I am texting them, I’m putting an encumbrance on their home, I’m putting the lien on their home.
Dylan Silver (15:35)
Yeah.Mitchell Drimmer (15:56)
If it’s $600 or under it, I’m not going to. For two reasons. Number one, it’s wrong. It’s ethically elastic. Number two, if you walk into a court, even though legally you have a right to ⁓ your security interest, the HOA, a judge is going to look at this. Instead of ruling in law, they may rule in equity. How are you taking somebody’s home away for $800?Dylan Silver (15:56)
Yeah.Mitchell Drimmer (16:23)
You know, and that’s why there’s so many HOA haters out there. If you go through every few months in the newspaper, every few weeks, there’s always a story, HOA evicts Iraqi veteran for $800 or something like that, and they get a bad rap for that. And so what we do is we engage people. We call them. We’re allowed to call them according to the FDCPA attempts seven times every seven days, and we will exhaust that.Dylan Silver (16:24)
Yeah.and that’ll make everybody pretty pleased.
Mitchell Drimmer (16:52)
with text messages, with emails, with phone calls, filing a lien. We will even report them to a Fannie Mae, to their bank. Because when you do not pay your assessments in an HOA, you’re in breach of your mortgage agreement and you’re gonna hear from your bank. And sometimes the banks will pay. That’s HOAs and condos. Co-ops, it’s a different thing. And of course rental, well, rental is just likeYou just send me into the room, I throw a lot of spaghetti on the wall, whatever sticks, I return back to you and you make your money. But again, a lot of people who are in the HOA space, they’ll use some software like Buildium. I’m sure you’re familiar with Buildium. There’s Buildium and there’s Apfolio that does HOA and it does ⁓ condo stuff.
Dylan Silver (17:40)
haven’t heard about it, but I can imagine,yeah.
Mitchell Drimmer (17:49)
So a lot of these people will, a lot of management companies, real estate offices that do multifamily and residential will also do property management for HOAs and condos. And ⁓ we service them and that’s how they learn about us. And that’s why we were kind of like, we were forced into this, into doing ⁓ rental recovery. And it’s been pretty successful. ⁓Dylan Silver (18:19)
And not easy.Mitchell Drimmer (18:19)
I have a, it’snot easy, but I have a success rate so far. I don’t have a great sample size because we just rolled it out about six months or nine months ago, but we got a success rate of about 8%, which is pretty darn good. That’s 8 % of money and not just goes to the bottom line, but gets multiplied and goes to the valuation of the corporation.
Dylan Silver (18:34)
Yeah, people not living there, that’s impressive. ⁓Mitchell Drimmer (18:48)
of the management company. But one of the most important things I tell managers, property managers and real estate people is that you rented somebody out a unit, you underwrote them and then they screwed or excuse my language, then they did not pay your owner, your investor. And guess who’s in trouble? You’re in trouble. You’re being blamed for it. So if I even can’t get the money, the fact that you would take itGive it to a collection agency. Get multiple reports, daily reports on activity and trying. You’re showing that you care. You’re showing your investor that you care. You’re showing your client, yes, I made a mistake, but penitence is part of forgiveness. And the penitence is trying to collect that money. So again, it serves two purposes. Maybe I’ll get the money, but the second purpose is…
Dylan Silver (19:37)
I’m trying.Mitchell Drimmer (19:46)
You as the property manager, as a real estate broker, are trying to do the best for your customer.Dylan Silver (19:53)
I want to ask you a question about HOAs. We are coming up on time, but this is a question that I haven’t had someone to ask because I didn’t have a guest that had enough experience with such a sample size. you’ve done HOA collections all over the country. I’m originally from…Mitchell Drimmer (20:09)
As a matter ofI even wrote a book in it, The Art of Collections for HOAs by Mitchell Drimmer. It’s a real book, okay? To tell you the truth, I had to plug my book, sorry.
Dylan Silver (20:17)
There we go.No, no, it’s okay. We’ll have you plug it again when we’re wrapping up here. But when we talk about HOAs, am licensed in Texas. HOAs are all over the place in new subdivisions and established throughout Texas. But I’m from northern New Jersey, about 31 miles outside of New York City. There’s really no HOAs or very sparse ⁓ HOAs that I’m aware of. The whole idea behind HOAs is that you can keep the area clean. You’re eliminating
Mitchell Drimmer (20:33)
They’re going in.Thank
Correct.
Dylan Silver (20:50)
⁓ you know potential signs of distress that would deflate the value of real estate which seems to be a good thing but on the flip side I can say you know the area that I’m from in northern New Jersey there is no HOA fees but simply because of proximity to a major metro the properties appreciate and value like crazy what’s your general opinion of how effective HOAs are in maintaining and appreciating property values?Mitchell Drimmer (20:58)
Thank you.Thank you.
Well, the investment in HLA is a blessing indeed. They rules and regulations. You have recourse. If you have a beautiful home that you’re paying $750,000 and right next door to you there’s some guy who’s got a pickup truck on some cinder blocks and you have a wedding, your daughter’s wedding. How’s that look? All right?
For quality of life, for improving your property and protecting your property values, nothing beats an HOA. Nothing beats a well-run HOA. Let me put it that way. A well-run HOA protects your property values, keeps your neighborhood clean, provides security, provides amenities. It’s a great way to live, not just for people my age, but even for people your age, people starting with families.
Dylan Silver (22:15)
Yeah.Mitchell Drimmer (22:15)
So I’mvery high on HOAs and condos and I think that it’s a good way to live. There’s a lot of HOA haters out there, but that’s because they didn’t obey the rules and they got in trouble and they stubbed their toe in the HOA and something happened. But let me tell you, that’s it. So I want to give a shout out to Community Association Industry, the industry that supports HOAs and does all of our legal advocacy.
Dylan Silver (22:31)
They got on the wrong side of the HOA. ⁓Mitchell Drimmer (22:45)
And I want to promote HOAs because I think it’s a great way to live.Dylan Silver (22:49)
We are coming up on time here, Mitch. Where can folks go to learn more about Axela, to reach out to you, ⁓ the book, right? How can folks get in contact with you and find more about what you’re doing?Mitchell Drimmer (23:04)
Axela.com. And here’s something, my cell phone number, I’m glad to talk to anybody at a reasonable time, 786-832-9849. We serve all 51 states and the District of Columbia. And it’s no cost, no risk.and very effective and we get your money upfront. Axela Technologies, we have a collections ⁓ entity and it’s transparency. You know what’s happening. ⁓ again, highly recommend it. Very, very successful and we’d love to serve your community associations.
Dylan Silver (23:55)
Mitch, thank you so much for coming on the show today. -
