Stop Bad Tenant Placements: Why Small Decisions Are Destroying Rental Property Profits

Christopher Benedict (00:00)
I don’t want to go through evictions. I think going through evictions is the worst part of this business. I think it’s a benefit to tell someone they’re not qualified. I’m sorry, I’m protecting you. You’re too close to the edge. I’d rather not mess your credit up for seven to ten years when you can’t afford this place in six months. So understanding that and really like taking the time to learn like how can we save people money?

One bad tenant placement because you’re worried about the mortgage payment coming up can easily equal six months of rent losses. And we did. We have a client right now who refused to agree with us. We placed the tenant. We told him it was a bad idea. We finally got this tenant evicted. And it’s cost in between lost rent, legal fees, our fees, about $15,000. Because he didn’t want to wait one or two more months of vacancy. So to save $1,500, he lost $15,000.

Joseph Crooms (00:49)
Mm-hmm.

everyone, welcome to My Podcast. My name is Joseph Crooms. I’m your host. ⁓ and today I’m joined by someone who’s been looking forward to chatting with you. ⁓ my guest name is Christopher Benedict.

who’s been making some serious moves in the industry. I’m gonna let him tell you about it. So we’re gonna continue moving on and ⁓ we will take it from there.

Christopher Benedict (02:51)
good morning, Joseph. Thank you for having me on. I appreciate it.

Joseph Crooms (02:55)
Great, great.

I think our listeners are gonna take something away from how you’re approaching this, ⁓ Chris. So let’s dive in. So first of all, people who may not be filming with your world, give us the short versions, what’s your main focus these days and what market are you operating in? Let’s start there.

Christopher Benedict (03:13)
Sure. Thank you. My name is Chris Benedict. Thank you for ⁓ having me on this. I’ve been in real estate for about 30 years. I’ve been involved in investment real estate for the last two decades. ⁓ my big pivot was after the 08 market meltdown. I switched from a real estate sales ⁓ business model to a investment management, a property management model. ⁓ the reason I like doing that was it gave me steady, predictable income and it allowed me to build a book of business.

of clients. So fast forward now 15 years later, ⁓ we have a successful book of business. We work with the clients that we want to work with. We’re very selective. ⁓ and we’ve created a profitable ⁓ cash cow that you know fulfills all my my basic needs so our next ⁓ our next big pivot will be now taking these skill sets and ⁓ turning it more towards the asset and acquisition ⁓ end of it more of a fund.

Joseph Crooms (04:10)
gonna talk about that more. What caught my attention about what you ⁓ about you the way you’ve been doing things is how you’ve been ⁓ taking those assets and and I want you to share with our audience some real life experiences and some real business experiences. That’s ⁓ so can you go there? Absolutely

Christopher Benedict (04:28)
Absolutely.

I think people get caught up in the vision of what they want to do, not realizing that when you get down into the into the meat of it, so to speak, that’s where the work is. So so let’s say we’re talking about multifamily housing as an investment, whether it’s a triplex or a 30 unit apartment building. ⁓ they have a lot of things in common. They’re housing residential units, ⁓ but ⁓ the work involved is really up front.

Making sure the property meets the standards of the rental market, making sure you’re screening your tenants properly, making sure you have a good management team in place, unless you’re self-managing, which we don’t recommend. these are things that actually set you up for success. People think it’s simply the acquisition is really where the success is. No, getting the property, getting the investment’s the easy part, making sure it’s managed properly. And so we learned that, and it took years.

I just completed a five year cycle with Andreana. She’s my lead PM up in Pennsylvania. And it took me five years to really train her in all the knowledge of the things that we learned that made us successful in the property management game.

Joseph Crooms (06:25)
So let’s back up on that. So what what things do you want them to sort of know when you said that, you know, that’s not the way to do it? So can you elaborate a little bit more on that?

Christopher Benedict (06:37)
Absolutely.

I have a saying I’ve been using for 20 years. A lot of times investors, there’s a you know, there’s a pennywise pound foolish, but I’ll make it the way I like to say it, which is I see investors who will step over dollars to pick up dimes. In other words, they focus on little monies here and there that they think they’re somehow winning in the long term, but they’re they’re losing in the sh in I’m sorry, they’re winning in the short term in their mind, but they lose in the long term. And I’ll explain what I mean by that.

We have a very strict criteria. We want to make sure that if we place a tenant in the property, they’re going to be successful living there.

I don’t want to go through evictions. I think going through evictions is the worst part of this business. I think it’s a benefit to tell someone they’re not qualified. I’m sorry, I’m protecting you. You’re too close to the edge. I’d rather not mess your credit up for seven to ten years when you can’t afford this place in six months. So understanding that and really like taking the time to learn like how can we save people money?

One bad tenant placement because you’re worried about the mortgage payment coming up can easily equal six months of rent losses. And we did. We have a client right now who refused to agree with us. We placed the tenant. We told him it was a bad idea. We finally got this tenant evicted. And it’s cost in between lost rent, legal fees, our fees, about $15,000. Because he didn’t want to wait one or two more months of vacancy. So to save $1,500, he lost $15,000.

Joseph Crooms (08:01)
Mm-hmm.

That’s not easy, especially in this climate. What’s been keeping your machine running smoothly? You sorta touched on it then, but can you ⁓ give a few more specifics on what’s been keeping your your business machine running smoothly?

Christopher Benedict (08:23)
Absolutely. There’s a saying in golf, right? I think it’s what’s it ⁓ you you hit to go and you put to show or you hit to go show and you putt to go. Like in other words, like it’s great that you can drive, you know, five hundred yards, but if you can’t make a six foot putt, you’re not the then you’re a terrible golfer. That’s and I think we’re we’re the same way. ⁓ a lot of people in the real estate investment game want to show a big game. Fancy cars, office buildings, things like that.

No, we hide in the shadows. I want to run super lean. So our profit margins are actually pretty high because we run super lean. I put the right team in place. I pay them what they’re worth. We have unlimited pay time off. I do not micromanage my people. The my emphasis on it is if the job gets done, I’ll leave you alone. That’s it. And by giving my my small team free reign to do their job and make mistakes.

By the way, that’s my key thing here. You want to be a great human being and a great investor. If you make a mistake, own it. I do not like when people give me excuses. If you make a mistake, just tell me what the mistake was and what you plan on doing to fix it. Otherwise, you’ll never learn. I don’t need a scared employee who’s afraid to make a decision. ⁓ so what I did was I found the right people. And my father taught me this in management find the right people, put them in the right positions, and then get the hell out of their way.

Joseph Crooms (10:26)
Not every operator know ⁓ know has a moment where things just get real. Maybe a deal that went sideways or time that they had to pivot fast. Do you mind sharing one of those moments? ⁓

Christopher Benedict (10:41)
You know, it’s as an operator, I’ve had less problems when I’m in control of a crisis management problem because I’m usually more prepared mentally. I am not a pessimistic guy, but I do prepare for the worst, hope for the best. And when it comes to real estate investing, I don’t think there’s any other way to be. ⁓ you can be very optimistic all you want, but you better be prepared for a market downturn or something like that. ⁓ the the biggest issue.

For operators, if they are struggling or they’re watching their properties fail, is an overabundance of optimism and a failure to plan for an emergency. So when we look at a let’s say a 200-unit apartment building as an asset to manage, ⁓ we will treat that much like a homeowners association and making sure do we have reserve set? So if I’m doing a fundraise for a property.

I’m definitely putting at least 10% of the property value in reserves because I don’t want to do capital calls. I’m also going to be super conservative on my estimates of like, will it grow? What kind of expectations? So I’ll look at it more like, what if we don’t increase rents for five years? What if we don’t make these changes? Can this property survive with minor changes and a reduction expenses expenses? And if the answer is no, then then it’s a pass. Because we’re not here to hit home runs on every deal.

And I think a a lot of operators, they want to look like heroes. Man, I just want my I just want my clients to know when they go to bed at night their money’s protected.

Joseph Crooms (12:17)
That’s kind of stuff that people don’t talk about enough. And honestly, it’s what separates the folks who just dabble from the ones who stay in the long term. Let me ask you this. What are you most focused on solving or scaling next? What’s your next real goal for you?

Christopher Benedict (12:35)
My my next real goal, and again, I’m not looking for everybody, but what I really want to share with a lot of people is the difficulty in trying to go it alone. America was founded on this sort of Wild West frontier mentality of like every man, woman, and child for themselves. It’s really true. We kind of have that here. In a lot of other cultures, they rely on the family money. You don’t go to a bank for a loan, you go to your uncle, or you know, you keep the investments in the family.

You don’t see that as much in America. You see with a lot more immigrant families now doing it in America, but America as a culture is not usually used. That’s like, I had to work hard, good luck, son. Now it’s your turn, best of luck. So what I’m saying is that everyone has to hike their own hike, as they say on the Appalachian Trail. Your journey of real estate investment will be up to you what you want to see happen for you and your life. But what I’m saying for most people.

The low-hanging fruit of buying a single here or using an FHA to get a duplex or those are all well-meaning, but scaling is almost impossible. Two, you will run out of friends and family money real quick. Three, it’s residential, multifamily, not commercial. Therefore, it’s very hard for refinancing. So my idea is like, hey, you know what? You want to invest, you want to invest. Why don’t we just pull all you guys together and get involved in the kinds of properties that you’re not going to be able to access individually?

And that’s the only difference. It’s the same idea, but it’s like, guys, it’s pooled resources. Because if you want to do it alone, you can come to me like most of the people who come to me after 25, 30 years. I own 10 or 15 single family homes. I don’t know what to do because if I sell them individually, tax gains are going to kill me. If I 10 31 exchange them, I gotta give a huge discount for someone to buy this portfolio. It’s a no-win. You can do it if that’s what you want. But if you really want to be an investor real estate.

And you want to have 50, 100, 200 units someday in your portfolio. I’m not a fan of buying singles. I’m just not. I’m be honest. I’m not a bad fan of flipping. I’m not a fan of because those are jobs. They’re just jobs wrapped up in the idea of investment real estate.

Joseph Crooms (15:25)
That’s big, especially when you’ve already got ⁓ teams in place that you ⁓ that next move can either compound things or create chaos depending on how you play it. That thinks what I have to hear. Now I know a lot of people listening are either in their journey or looking to level up and I think they’re benefit hearing this. When it comes to building relationships

Chris, and growing your network, what’s been the biggest difference to you? What’s made the the biggest difference to you?

Christopher Benedict (15:57)
⁓ you have to be a giver. You know, if you want to network, people can smell takers from a mile away. They join networking groups and you can tell they’re just there to see what they can pull out of a group. ⁓ if you want to make a network successful, my thing is you should listen more than you talk. ⁓ worry less about trying to impress anyone because in the end, unless you’re Elon Musk, we’re all lower on the total pole. everyone’s struggling, no matter what their net worth.

⁓ so I would say get in there and find out how you can contribute. What can you give? ⁓ and then you can you learn from it. Because the givers, you you’ll find each other. The right network always finds each other. but those who are just coming in looking straight for like, what can I get out of something? Those networks will never work. And then they turn around and say, the network didn’t work. No, the work, the network works if you work the network. Does that make sense?

Joseph Crooms (16:46)
Yeah.

Let me ask you this quiz. How do you identify quickly the takers or or those that are sincere and and sharing their life and being transparent? How do you identify?

Christopher Benedict (16:58)
You know,

as I’ve gotten older, my tolerance, I’m noticing it must be something about when you get in your 50s, your tolerance for BS starts to go down. I think what it what it is is there’s a genuine, you know, you you know who the talkers are, the people who volunteer and say they’ll do stuff and they don’t show up, or they talk a big game. ⁓ or you know, they there’s always this idea of like if you’re showing something, you really realize you’re not really sharing. Like, like if I’m pitching something, I don’t really use the word pitch.

If I’m sharing an opportunity with someone, that’s all I’m doing is sharing it. If it sounds like it’s interesting, great. If it doesn’t, I do not sell anything anymore in my life. I even say that to my clients who I bring on board. I’m like, listen, it this has to be a win-win for both of us, or we’re not doing it. I want you to work with me as much as you want. You know, we want to work together. ⁓ but in the networkings, you just you always have that sense of the conversations being pushed towards a goal that they have, either to get you into a conversation about money.

Or something they want to do, and it’s not it’s not genuine. And people recognize when it’s not. We all know when the mask is being worn. We can all sense it. When someone’s being genuinely interested versus just nodding and smiling, and and then as soon as the conversation tips, it’s like back to whatever it is they really want to push on you.

Joseph Crooms (18:17)
I I think that’s ⁓ key. So you can’t fake that. Relationships are everything in this space. All right, before we wrap this up, if someone wanted to reach out to you, connect with you, maybe collaborate or even learn more about what you’re doing, what’s the best way to reach you, Chris?

Christopher Benedict (18:34)
So I go by the moniker, Ask the Big Guy. So you can find me at ask the bigguy.com. that is my main website that you can find me. If you just Google Ask the Big Guy, ⁓ I I’m pretty sure that I will show up. you can also find me on Amazon for my book that I wrote during COVID, You Suck, Now Own It, which is a humorous take on self-help. ⁓ because I I think I think life, we need more humor. I think there’s a lot of people out there that

want to be very braggadocious about what they’ve done. But in the end, guys, we’re we’re all going back in the box at the end of the game. So all the pieces go back in the box at the end of the game. So no reason to take ourselves so seriously.

Joseph Crooms (19:14)
So Chris, let’s just run that back one more time. Let’s tell him one more time. I really enjoyed you. I think you were ⁓ super. You were smooth on this this podcast. I thank you for being here. Let’s tell him one more time how to get in touch with you. Run it over.

Christopher Benedict (19:28)
So yeah, so thank you very thank you very much. If you’re trying to find me, if you’re trying to find me on the web, the fastest way to find me is ask the bigguy.com. that will take you to my main website with all my links for social media and things like that. And I always love I do love talking to people, so feel free to to please reach out.

Joseph Crooms (19:47)
Good, perfect. Well, listen, I appreciate your time, your story, your perspective. We need more people in this space who are doing the right thing. Thanks again for being here.