Why Self-Managing Rental Properties Costs More Than Hiring a Property Manager

Christy Lewis (00:00)
I think a biggest component is just be who you are. Right. If you don’t try to be flamboyant if you’re not that all out there, I’m gonna go be a public speaker. If that’s not who you are, don’t be that. If you’re quiet, but you think, “Man, I love interacting with people and building a network and it’s just not— doesn’t look like, you know, this person over here,” that’s okay. Right. I started out as kind of a battering ram. Like I— so my mentor, I was super fortunate to have a gentleman come alongside me. Like he would write my emails and then he’d be like, “Read this and send it off.” Right. So I had that ability to have a mentor.

Issa Hanna (02:05)
Welcome back to another episode of the Real Estate Pros Show. I’m your host, Issa Hanna, and today I have a property management legend, a bona fide stud in the rental game. Ladies and gentlemen, with Root Management, Christy Lewis. Christy, welcome to the show.

Christy Lewis (02:20)
Thanks for having me, Issa. I’m happy to be on and chat with you this morning.

Issa Hanna (02:24)
I’m so glad to have you. And we— we had a little talk before and the type of knowledge you could bring to our show, I am super excited to get started. So with that, Christy, why don’t you tell our viewers a little about about what your day-to-day operations are look like.

Christy Lewis (02:39)
Yeah, absolutely. So we are in South Bend, Indiana, more known for Notre Dame. And so we’re in a wonderful location. Here is our home base. And day to day we manage about 500 conventional single-family rentals and 950 student housing beds. And so today, if you ask me, it’s a whole lot of logistics and doing student turn. We’ve got students who moved out at the end of May, and we’ve got to prep them and be ready from any time to a couple weeks ago to here and now. But so those are impacts that we’re making. We also are getting into short-term rentals and homeowners’ associations and just adding that to our day-to-day portfolio and expertise that we have for people.

Issa Hanna (03:20)
That’s beautiful. And that’s actually was gonna be my next question is the short-term rentals, the unconventional way. A lot of people do single families, a lot of people do multifamilies. You’re over here doing student housing, you’re a native of— of South Bend, where the Fighting Irish are from. Tell us more about this— this Go Irish, the Irish Gold Management and what you’re doing with the student housing. Definitely interested to hear a little bit more about that.

Christy Lewis (03:46)
Yeah, Irish Gold Management started in 2022 and it was a legacy portfolio of houses that just really were low end. You know, I remember seeing a work order that was like, “Can you just make the— the snow stop coming in my bedroom? I need a space heater.” And so we came in, we partnered with alumni from Notre Dame who were students of this portfolio that we have. One lived in the apartments back— I think, I don’t want to date him. I’ll save that. I might get in trouble. And then another alumni in one of the houses, and they really wanted to come in and partner with a local team who could change the name and the brand that was there. So we invested an insane amount of capital on these single-family rentals— new roofs, new flooring, new kitchens, adding a second fridge, right? If you’ve got a lot of people living in your home, you don’t want to have to share shelves and have the intermix. And so really spent a lot of time and energy shifting what students expected, shifting the brand that was out there. And now we’re certainly the premier off-campus student housing location at Irish Gold Management where students can come, have a great time, be well taken care of because we know how to take care of them, because our, you know, partners on the portfolio were students and can have that impact. And so we’re really changing the game there. Student first— how can we impact them and give the best experience they can for their final senior year off campus?

Issa Hanna (05:06)
Wow, and that’s so refreshing to hear because you hear nightmare stories about, you know, off-campus housing with college students. So you being a native and then your partner also going to the school and being an alum, putting a student-first focus on that and caring about the people that are— that live in your community in your backyard, I definitely applaud that. We were also talking earlier, and it struck me how you’ve been able yourself to build this management company, and you started off as the receptionist. So please tell our viewers your origin story because it’s super cool.

Christy Lewis (06:30)
Yeah, so 2007 I had just gotten married, worked for a local supermarket chain and— and knew I could move up. I was in lots of different departments, but I said, “We want to have a family. Do I want to work every night and weekend as a rule, right? Every holiday, and impact that.” Funny I say that, right, and I got in property management. But so knew of somebody locally in the area. It was Homeworks. He needed a receptionist, and I was kind of like, “Hey, I’ll take the gig if it’s, you know, Monday through Friday. This seems like a great impact.” And so at that time, they had only managed about 75 lease option houses. And so this is certainly an educated group here that knows in 2007 that was a terrible time to have lease options. All of those programs crashed. They also did wholesale flipping. And so they completely had to change their business model. And so they had to get into the property management business because they still wanted to buy houses. They had cash for that. They still wanted to rehab them. They had the resources and the means. And then they wanted to sell them off and be done, but the investors they were selling to said, “Well, wait a minute, you’re the local people we know. We don’t want to go to another company to manage it.” And so we really had to expand and understand what we were doing in that mix. And so I, as the receptionist, was kind of like, “I’m— I’m a little bored. What— what am I doing here? You know, I need more stuff to do.” And so started taking on, you know, delinquency accounts and managing that, handling the investor funding and making sure that got accounted for and sent out, and really then just continued to dive in, continued to build processes and— and get excited and learn. So then by 2018, we had a thousand units under management that was third-party managed. And, you know, things were— were awesome, right? We were able to really build a brand and a niche here in South Bend to— to provide quality houses and quality service to the people here in the area.

Issa Hanna (08:18)
And I love that you keep saying quality and speaking of the people in the area. And— and I keep going back to it— when you’re a native of someplace and you love where you grew up and— and you love the culture and everything like that, you care, you know. So somebody that runs so many doors, that actually cares and— and doesn’t look at it as getting paid or— or, you know, they look at it as how can I improve the quality of life of my tenants, is very refreshing to hear. You don’t see a lot of property management people, let alone the owner of the company, constantly saying it. So once again, I want to applaud you for that one. Every real estate investor, landlord, even lenders, everybody has a real estate nightmare. And I find it super fun to— to hear everybody, you know, especially a seasoned person like you, give me your— your real estate nightmare that sticks out in your career that happened to you.

Christy Lewis (09:16)
So I’ll— I’ll share this one. So we had a property that we managed for an owner and she had lived there a really long time. And so for a while, you know, rents were fine. I think she even predated when we took over management of the property. And so then all of a sudden— she was a nurse, things were great— but then something happened and she couldn’t pay her rent anymore. And so we, you know, tried to work with her. We try to work with everybody, right? We understand times are hard. Give me a story I can believe, follow through, and then we can be friends and we can figure it out, right? And so it gone through, but unfortunately, you know, she couldn’t pay, she couldn’t get a payment arrangement. And so ended up moving out of the house. Walking through the house was a nightmare. Not only was she a hoarder, which, you know, is unfortunate, people struggle with that, but she also had big dogs in the property. And so as you walked up to the attic area and on the steps, there was about this, you know, like probably a, you know, a foot of feces on the steps that you had to kind of walk through and navigate. It smelled terrible. It was disgusting. The owner gutted the whole thing after she moved out, reinvested. Unfortunately, the home still smells to this day. On a hot day, right? You know how that works. Hot day, right? Breeze and wind, you can still smell just the terrible amount of feces and animal smell that was in the house forever. And so that one was a tough one. It was offline for a while, owner had to put tons of money into it, and just walking through it was traumatizing.

Issa Hanna (11:22)
Definitely. And I’ve heard a lot of landlords with similar stories and that smell, it— yeah, it’s super hard to get out. You can gut the whole house and it’ll still linger. And like you said, it’s— it hits at the certain times and the wind has to be hitting a certain way. So I can definitely relate to that as a fellow landlord. So I wanted to ask you because this we didn’t talk about, but I actually did a little bit of snooping and, you know, on your website. And I seen that you mentioned on your website Root that self-managers— so people who self-manage their properties— a lot of times there’s hidden costs or it’s— it’s more expensive for them to self-manage as opposed to using a professional management company like yours. So can you— can you shed some light on that for me?

Christy Lewis (12:14)
Sure. I think the— the low-hanging fruit there answer is just maintenance, right? Unless you can do the maintenance or you’ve got, you know, somebody that’s a trusted friend that’s reliable. And I say just reliable from— are you the last person on their list? Or can you get in the mix? And I say, you know, so we have on site, on staff, vendors that can go in, right? We hire them or we use them all the time. And so from an availability standpoint, from a cost standpoint, we’re getting a discount because we’re using them often and they know work is available. And so we have that benefit. For you, if it’s you that’s doing the maintenance and you think, “This is great, I’m saving so much money,” what is your time worth? Are you really taking the time to say, “Hey, I’m worth— like, I would like to believe I’m worth $750 an hour.” I’d mentioned we run on EOS. That’s how much our EOS implementer charges to run a session day. I’m like, I’m as smart as he is. I bring as much value as he does. And so striving to look at that. So how you see your time— could you be finding the next deal? Should you— could you be improving the company you own or work for that would bring more value to you than the $50 repair you could have paid a management company? And so I think there’s a lot of, you know, maintenance costs that you think you’re saving, but what are you trading your time for? Do you want that call at midnight that their furnace went out and they need you to come out and take care of it? Right? Do you want to have to be making delinquency phone calls? How do you value your time in the midst of that? And so I think that’s certainly a hidden cost in the mix. Depending on how seasoned and experienced you are, right? Are you knowing how to appeal your property taxes when those come through? Because we know they’re gonna keep, you know, sending that higher until you notice and you try to appeal it and get it lower, right? Insurance relationships— do you have just a couple properties, right? And so you don’t have the benefit of a group policy that could impact your premium and bring that down on that front. So lots of hidden costs that volume really does get you a better deal. It sees— you know, I say that to you, but also if you love doing maintenance stuff and you feel like that’s a great use of your time, hey, I’m here for it, right? Do what you love. But oftentimes, right, it— it starts out okay, but as you continue to build and expand your portfolio or, you know, “Hey, I had these, you know, residents in here, they were great, they were phenomenal”— hey, if you’ve got to do a turnover, doesn’t mean you’re gonna have the same story the next time around and now you’re scrambling and potentially losing revenue or losing time, you know, your freedom of time by having to deal with that situation. So certainly, you know, management company— I own rentals. I say management company, take care of it because my time’s more valuable either adding value to my business or being with my family, you know, impacting my community. Those are things that I want to spend time on.

Issa Hanna (14:58)
Definitely. And if— if you guys have tried or— or do self-manage your rentals right now, you’ve gotten that phone call at midnight or probably later. And you know, a lot of times it’s like something you can’t fix that night. So is the stress worth the headache? Call Christy because she’ll take the headache on for you and she’ll actually care about the tenants and getting it resolved. So Christy, what is the future holds? What kind of opportunities are we looking for in the future?

Christy Lewis (16:07)
Yeah, absolutely. We’re Jim Collins people around here. We want to fire bullets and then cannonballs. And so we’ve got some bullets, some advertising down in the Fort Wayne, Indiana area, second largest city in Indiana, and see lots of opportunity for quality management down there and ability to make an impact in a splash. One of our partners, she was from the Fort Wayne area, she has family down there, and so she understands the nuance of that. So we’re trying to add homeowners’ associations down there, short-term rentals down there so that we can learn the market better before we make an impact and a splash in a big way. We’re looking to expand up into Michigan. For us here in South Bend, it’s about a 20-minute drive to get to Niles. So Michigan’s almost like, you know, almost our home state, even though we’re anti, you know, “Go Notre Dame, no Michigan” on that front. But we’ve got twenty-two units on a multifamily that we’re looking to take over once the investor closes here in a couple of weeks. And then all right, hey, how do we expand and look at that area, make an impact on there? And then the— the probably the biggest opportunity, because it’s the furthest away, is Tampa, Florida. One of my partners up here on the equity side, he’s got some units down in Tampa and needed our help. He needed to— he fired his third-party manager because he had a terrible experience and he’s trying to do it himself. And he was like, “Man, I’m— I’m struggling, I’m at a crossroads, I need to hire somebody else.” And so one of our other partners who wants to live down there here in the next 12 to 18 months, I said, “Hey, let’s go down. We’ll— we’ll work with John, stabilize his assets.” I think in one week she rented eight units and she’s increased their occupancy, I think, about five percent in just the— the two months she’s been down there. And so she’s making a splash, learning the market, learning vendors, and so that in 12 to 18 months we’re really ready to fire that cannonball and invest pretty deeply into Tampa.

Issa Hanna (17:51)
Wow, how inspiring. A company from the Midwest. I’m a Midwest guy myself, so I got a soft spot in the heart for the Midwest. Expanding to a national company, so from regional to national. And it’s not like, “Hey, this is a plan for the future.” It’s happening. So wow, it’s a— definitely I applaud you for all this. I applaud you for being able to build a business by starting as a receptionist. And with that, I wanted to ask you because you seem to be a very personable person, and you started as a receptionist and built this huge strong company that’s going national now. For people just starting out that— that are watching this and like, “Man, hey, she’s super inspirational,” what advice do you have them or for them on fostering their business relationships, growing their networks? That way maybe they could expand nationally one day.

Christy Lewis (18:43)
Yeah, so I think a biggest component is just be who you are. Right. If you don’t try to be flamboyant if you’re not that all out there, “I’m gonna go be a public speaker”— if that’s not who you are, don’t be that. If you’re quiet, but you think, “Man, I love interacting with people and building a network,” and it’s just not— doesn’t look like, you know, “this person over here,” that’s okay. Right. I started out as kind of a battering ram. Like I— so my mentor, I was super fortunate to have a gentleman come alongside me. Like he would write my emails and then he’d be like, “Read this and send it off.” Right. So I had that ability to have a mentor or somebody to impact me and really invest and see me who— for who I was. But at the end of the day, I also had to respond, had to be willing to take that feedback, had to be willing to do hard things and be okay with the hard things. One quote that we use a lot is: “A good plan executed violently is better than a perfect plan next week.” And so be willing to take risks, make decisions, and you’ve got to run with it. You got to own it. Then you got to own the result, right? Did it work out well? Great. How can we do that again? If it didn’t work out well, what can we learn from this so that we can keep pushing forward? And so that for me has been a big game changer of not have been afraid to take risks, not been afraid to make a decision and own that decision, but also knowing I have to be me, which means people are going to learn me, know me, know that I love people and gonna invest in them. And then— then you can just build and expand from there. So that’s what I would say to those that are— they’re looking to see this venture: get a mentor, be willing to take risk and make decisions, and be okay with the results because you can always learn from what you’re doing, regardless of the outcome.

Issa Hanna (20:28)
Great advice, great advice. And in our business, you can’t be afraid to ask questions. And absolutely, when you ask questions, that’s usually where you find your mentor in the game. And every successful person in the real estate industry has somebody that’s kind of coached them when they first started off. So I’m a hundred percent in agreement with your advice, Christy. With your experience, why would I argue, right? So if people are hearing this and they’re getting excited and they’re in the South Bend area, maybe they’re in the area of Michigan you’ve expanded to, or even in Tampa, and they want to get a hold of Root and have you manage their properties, where could they get a hold of you at?

Christy Lewis (21:04)
Yeah, absolutely. Our website is thatsRoot.com. And so we’ve got a lot of information, insight in there. Our website— the people who helped us build it, Jointly Studios, I’ll plug them as well— they won an award for our website and for the work that we all put into that and building that out. So thatsRoot.com is— in the upper right-hand corner, you can see the drop-down of our different brands and the markets that we’re in and get information, or just reach out to me directly. You know, my cell phone 574-876-3065 or [email protected]. And we’d love to take care of you, hear your needs, see what you’re struggling with, and just walk you through how we can be a benefit in your investment journey for the better, right? We, you know, if you’re invested in your community or want to know that your properties that you’ve invested in, if you’re out of town— there are people there who are trying to make an impact and care about the people, about the community and about your investment long term. Cause remember, if the community goes downhill, your investment’s gonna go downhill. And so all of that is a grand impact. Reach out to us and then we can chat and see how we can make a difference.

Issa Hanna (22:07)
Definitely. And Christy, it was super refreshing talking to you, picking your brain about your extensive knowledge on not just property management, but how to scale to such a large level. You’re very meticulous, you’re very analytical, and very, very personable. So it was a very refreshing conversation. I appreciate having you on the Real Estate Pro Show. I would like to invite you back again at a later date if you’re interested.

Christy Lewis (22:30)
Yeah, Issa, I’d love it. It’s fantastic.

Issa Hanna (22:32)
Definitely. I really enjoyed our conversation. And to our viewers, if you enjoyed me and Christy’s conversation and want to see more just like this, make sure to like and subscribe. I talk to people every day that could bring us different knowledge on every aspect of the industry we all know and love, real estate. Until then, the real estate pros are out.