When to Sell a Rental Property: Return on Equity, Cash Flow and Smarter Investing

Serena Verma (00:00)
A lot of times as investors, we just hang on to properties. You know, we may not sell because we haven’t done a proper analysis. So, for example, your return on equity on a highly appreciated property might only be four or five percent when you look at the rents and, you know, compare that to the repair cost of aging property. So the goal is to really understand your business with the numbers and make decisions that are logical rather than emotional.

Q Edmonds (02:00)
Hello, everyone. Welcome to the Real Estate Pros Podcast. I am your host, Q Edmonds, and I am excited to be here today. I have another fantastic guest. And this young lady has been investing since 2004, so 2004.

She has bought and sold over 50 properties. She’s done some private lending, some short-term rentals. She has an engineering background. And listen, she has multiple businesses. And so we’re gonna dive into as many of them as she wants us to. And so I’m just excited that we get a chance to peek through her lens, get to know a little bit about her journey. And so I’m super excited to introduce you all to Miss Serena Verma. Miss Serena, how you doing today, ma’am?

Serena Verma (02:47)
Doing great, Quentin. How are you?

Q Edmonds (02:48)
Doing good, doing good. I, I’m glad that we’re here doing this together. And listen, I am the type. I like to dive right in. So I would love to know what is your main focus these days. And then, if you don’t mind, give us a little bit of an origin story, kind of how you got into the spaces that you’re in. And then let us know what markets you’re operating in as well.

Serena Verma (03:09)
Okay, wonderful. So yeah, so these days I’m focused on building a couple of companies. One is called Hostvisors, where we specialize in real estate investors with rental property, especially in the short-term rental space. So we do specialized accounting, and we have tools that we’ve built in-house for our customers to use. And the second initiative is Monterra Tax. So Monterra Tax is a modern occupancy tax platform.

So, as a property manager’s business grows, they have tax nexus in different states where they have property, and they need to file occupancy tax. What makes that tricky, of course, is that it changes quite often. So, for example, you might have the World Cup, and the city decides that any hotels or rentals within a five-mile radius are going to pay more, you know, tax for this certain period of time. So our platform intelligently looks for changes in the tax laws, keeps those up to date, and then we provide occupancy tax returns.

So we calculate the variance of any tax that hasn’t been paid, so on the Airbnb, Vrbo, Booking.com, any of those platforms, and especially for direct bookings. So if somebody’s doing direct bookings and they need to remit tax, it’s not being done by the platform. We calculate that, and we provide flexible program, either we can file it or they can file it. So these are the two initiatives that my team and I are working on right now. Yeah.

Of course, my background is, you know, several decades now and started as a buy-and-hold investor, then was successful with that and moved into private lending. So for about 10 years, you know, all through COVID and just before COVID, we—

We took a pause, but essentially we were doing private lending, and we have—I had about, you know, 20 to 30 investors who were involved with me in that. So we did flips, you know, single-family homes, multifamily buildings. So a pretty big background in lending and finance. So it kind of all led me to this passion for analytics and data, and that’s what accounting does. It’s the, the language of business.

So with my background of, you know, almost 25, 30 years of investing in rental property, doing different business models, short-term rentals, long-term rentals, vacation rentals, rental arbitrage, you know, for short-term rentals, it’s all kind of led up to this Hostvisors, which is our firm for accounting, and then Monterra Tax, which is another outgrowth from that.

Q Edmonds (06:42)
I love it. Thank you so much. Thank you so much for sharing it. And I love how you took us kind of just through the history, the different transitions. Because I often say, Miss Serena, destiny has no wasted moments. Right. Meaning no matter where we are, we are borrowing from each leg of the journey, and it’s reinforcing the people that we are today. So I would love to know, throughout the journey, what has the moments taught you about yourself? Has they taught you discipline, resilience? Like, what has it revealed to you?

Serena Verma (07:09)
Absolutely, all of those things. So every sector of real estate has its own challenges. So, for example, as a landlord, you have, you know, tenants to deal with. You have a lot of repair issues. So really understanding what goes into a property repair. So, for example, I could pay somebody $75 to replace a toilet, or I could pay another company $500, and it would be the same work. So there are retail kind of repair people, and then there are investor repair people.

So you want to really learn, you know, the systems of a home. And when I first started in real estate, I went to the Berkeley Building Institute, took classes on, you know, how homes are constructed. I was a software, medical software engineer before that. So before diving full time into real estate, I equipped myself, you know, and, and taught myself a lot of different aspects of the business before I could become full-time investor.

So yeah, so in addition to learning the foreclosure process of properties, you know, legal aspects, so that all comes into long-term rentals. And then it also played into being a successful private lender because we know the process required to take back a property, right? So if we ever need to do that. So I’ve had to do that in a couple of instances where the, the actual fix-and-flipper couldn’t handle the job or just ran out of funds or whatever it was, and had to take the property back.

So one of the biggest ones I had to do was one in Los Angeles, which is commercial warehouse. And the tenants, you know, were starting, were starting to turn it into a grow house. Right. And so the people who went in to try to fix and flip it were not keeping, you know, really good track of that and managing the property properly.

So essentially they blew out the transformer in the building. And so, and then they decided to abandon the project, right? Because they just—it would take years to get the city of LA to put in a transformer and to redo everything. So I ended up taking that back as a private lender. And because of my engineering background, I was able to size and source the type of power equipment we needed, work with the city, you know, to bring that back. So there’s just so many unexpected things that happen in throughout a person’s career, right. And you kind of use your best smarts and brains and try to figure out this problem. So it’s been a whole lot of leaning on, you know, different aspects of your intelligence, your perseverance to get, get you to the finish line.

Q Edmonds (10:27)
No, thank you. Definitely thank you for sharing. Thank you for that introspective and reflective answer. And you gave me a quick snapshot that obviously you have learned from your experience. And it sounds like you have put some systems into place that’s kind of really helping. And so I would love to know what’s one operational thing you’ve done, let’s say in the last two years, that has really helped you with the biggest difference in the way you do your business.

Serena Verma (10:56)
So I believe that technology has been the key. So in the last, just say, six months, because of AI and all of the changes, we’ve decided to change the way that we operate in the accounting business for short-term and long-term rentals. So we put together a lot more automation with the tax product. We have, you know, agents that go out and help us keep up to date with all the tax changes. And these, these things were not possible even a year ago.

So they really just happened in the last six months where, you know, we could start to trust the AI a lot more than we did before. So we’ve put in, you know, processes that involve AI more and more and that we verify with humans, but still we’re learning that we can, you know, really make a difference in the speed and the quality if we use the AI in the right ways.

Q Edmonds (11:47)
Yeah, love it. Love it. Thank you so much for sharing. Let me ask you, what’s next? Like, what is the next real goal? What are you looking to solve at scale next?

Serena Verma (11:56)
Yeah, so we’re continuing to work on the data analytics, accounting, those kind of, you know, areas to help property managers and individual investors with larger portfolios to understand, you know, how to make right decisions? When is the right time to sell your property management company? What are the acquirers looking for? Right? What KPIs do they—are they most interested in? How can you present your data in the most clear way so that another party from the outside can understand exactly what’s happening in your business?

So we’re planning to continue growth on the, the accounting and data analytics portion, and then also provide the service for the tax, Monterra Tax, for our clients and, you know, kind of enhance the compliance role, as that’s also important when you’re selling a business. You don’t want to sell, you know, long-term liabilities that have been building up that you may not even know about. And either your online settings for collecting tax weren’t proper, or you collected the tax and didn’t remit it. So we, we do audits for, for occupancy tax. So—

Q Edmonds (13:12)
Yeah. I love it. Yeah. So let me talk to you a little bit. Well, you talk to me a little bit about relationships. So how does—how do you view business relationships? Have they served you well? What are some of the relationships that you use that continue to help you grow? And, you know, people who you do business with. Talk to me a little bit about relationships, Miss Serena.

Serena Verma (13:36)
All of our clients are extremely important to us. So we converse with them regularly, ask them what’s working, what’s not working. And surprisingly, so many of them are eager to help us to grow our brand and to give testimonials. So that’s where we need to grow. So we need to grow into more of the awareness and, you know, customer focus, kind of getting our brand out there.

So that’s where I think our relationships will help us the most and where, you know, our clients have been very gracious in, in pushing us to that, and that’s our next frontier, which is why this podcast kind of stood out and was interesting because it’s a great way to get, you know, the word out there.

Q Edmonds (15:08)
Absolutely. No, I love it. Listen, Miss Serena, is there, you know, I’ve asked some questions. Is there anything that I have not brought up that you would like to talk about, talk about? You know, maybe there’s a certain message that you want to get out there. I kind of just want to create space. So if you have a message that you feel like people will benefit from, or even about your business, I want to make sure you land that message. So is there any other message that you, that you can think?

Serena Verma (15:33)
Well, the importance of keeping good records and knowing your path forward. So if—before you purchase a new property or a new acquisition as a property manager, really look at the numbers and what they tell you.

So a lot of times as investors, we just hang on to properties. You know, we may not sell because we haven’t done a proper analysis. So, for example, your return on equity on a highly appreciated property might only be four or five percent when you look at the rents and, you know, compare that to the repair cost of aging property. So the goal is to really understand your business with the numbers and make decisions, you know, that are logical rather than emotional.

So you may be in love with one of your properties, but is it really serving you? Is it really an investment, or, or maybe it’s something you use for your family, right, for a vacation, and that’s a different matter.

But if you’re trying to use it to generate financial freedom and security for yourself, then reallocating the equity or selling off property may be a better move than just holding on to it. And that’s what we can help you do at Hostvisors. So we advise on all aspects of real estate and rental investments.

Q Edmonds (16:52)
Awesome. Thank you so much for sharing. Listen, if someone wanted to reach out to you, connect with you, collaborate with you, learn more about what you’re doing, how can they get in contact with you?

Serena Verma (17:03)
Absolutely. So the easiest way is our websites, which are Hostvisors.com. It’s H-O-S-T Visors, V-I-S-O-R-S. So it’s essentially Host Advisors without the A. So Hostvisors.com. And so I’m just Serena, S-E-R-E-N-A, at Hostvisors.com. So feel free to reach out and/or check our website out. And our other tax product is at Monterra Tax.

So it’s M-O-N-T-E-R-R-A Tax dot com, and we’ll be happy to help.

Q Edmonds (17:39)
Absolutely. Well, listen, let me just say three things to you. One, thank you for your time. You know, I think time is our most precious commodity. So I thank you for spending some time with us today. Secondly, thank you for sharing. Thank you for your story. I believe when we share about our business, about our stories, it’s planting little seeds for people. And we never know when that seed’s gonna take root, but it can at any given time. So I thank you for coming and planting some serious seeds. And lastly, thank you for your mindset.

Thank you for the way you think and bringing that mindset to this platform. I greatly appreciate you coming on today.

Serena Verma (18:11)
Thank you so much. Hope to hear from everyone, and feel free to get in touch.

Q Edmonds (18:13)
Absolutely.

Listen, listen, she—listen, she’s reading my lines for me because I was gonna say definitely make sure you get in contact with Miss Serena. Her information is in the show notes. Please get in contact with her. Let her help your business. Definitely make sure you’re subscribed here. Because I promise you we’re gonna continue to bring up amazing people just like Miss Serena. So, ma’am, I say thank you again. And everyone else, listen, y’all have a fantastic day.