November 15, 2021

JF2631: How to Vet Property Managers for Optimal Returns with Chris & Ashton Levarek


When Chris and Ashton Levarek got started in real estate in 2018, they quickly realized the benefits of scaling. But, they also quickly got burned by a property management company. Today, Chris and Ashton are giving their insight on vetting property managers and what questions to ask, what their biggest mistake was when hiring their first property manager, and how to become educated on a new asset and do your research before outsourcing.


Ashton & Chris Levarek Real Estate Background:

  • Chris, Owner & Operations Manager and Ashton, Sales, Marketing and Acquisitions Manager of Valkere Investment Group
  • Syndicators with experience in operations syndications, apartment ownership, assisted living, and 716 units in their portfolio
  • Based in Phoenix, Arizona
  • Say hi to them at:


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Joe Fairless: Best Ever listeners, how are you doing? Welcome to the Best Real Estate Investing Advice Ever Show. I’m Joe Fairless. This is the world’s longest-running daily real estate investing podcast, where we only talk about the best advice ever. We don’t get into any of the fluffy stuff. With us today, Ashton and Chris Levarek. How are you two doing?

Ashton Levarek: Doing great. Thank you for having us, Joe.

Chris Levarek: Good to be here. Thank you.

Joe Fairless: Yeah, well, it’s my pleasure. And a fun fact – Chris, congrats on the new arrival, and I’m sure you have lots of sleep and are well-rested, so I appreciate you being on the show with us.

Chris Levarek: Hey, thank you. Yeah, second son born yesterday. I appreciate it.

Joe Fairless: Chris is the owner and Operations Manager, and Ashton as a Sales Marketing Acquisitions Manager of Valkere Investment Group. They are syndicators with experience in operations, apartment ownership, assisted living, and they have 716 units in their portfolio. Based in Phoenix, Arizona.

With that being said, do you two want to give the Best Ever listeners a little bit more about your background and your current focus?

Ashton Levarek: Yeah, that was a great intro. Thank you, Joe. We’re both veterans; Chris spent four years in the military, I did 21. And we decided we wanted to create some more passive income, so we started investing in real estate back in 2018. I quickly realized the benefits of scaling up, the economies of scale. And we got into—well, with every deal we did, we were partnering with people already, so it just kind of made sense to get into syndication. So from there, we kind of skyrocketed as far as growth, but always learning, always growing, always working with professionals, trying to increase and perfect this business.

Joe Fairless: Well, first off, I’ve got a tremendous amount of respect for you both for serving in the military… So a sincere thank you for what you and your colleagues did during your time.

And let’s talk specifics about your 716 units. Now, when I introduced you two, I mentioned — because it was in your bio, assisted living and apartment ownership… How does that break down, the 716 units in terms of assisted living, apartments and whatever else you’re doing?

Chris Levarek: We are closing the assisted living this year, so it’s going to be in our portfolio. We threw it in there, but it’s—

Joe Fairless: How many units?

Chris Levarek: 89 units for assisted living.

Joe Fairless: Okay.

Chris Levarek: So the rest is multifamily Our early properties were duplexes. We have a five-unit, we have a 13-unit, and then our first syndication was a 16-unit. We have an 84-unit apartment, a 374—

Ashton Levarek: 384.

Chris Levarek: 384, sorry. And a 120-unit as well. So altogether, that’s about 716, yeah.

Joe Fairless: Wow. And what was your first indication? How big was it?

Chris Levarek: 16 units. Some people would say that’s not a good first way to do it.

Joe Fairless: What would you say to that?

Chris Levarek: I talk a lot in BiggerPockets about this, too. If the deal makes sense, and you’re going to make a profit, and the margins are there, then so what if it costs $15,000 for an attorney or to raise the money? For us, it was a great learning experience, and that’s what I’d look at it. If it’s helping your business grow, then it really doesn’t matter if it’s a million-dollar deal, in my opinion.

Joe Fairless: Did I hear you correctly? You started out with a 5-unit?

Chris Levarek: We started out with duplexes.

Joe Fairless: Duplexes. Okay.

Chris Levarek: So our first purchase was two duplexes. So it was a quad kind of but it was two duplexes at the same time.

Joe Fairless: Got it. Two duplexes, and that was with your own money, and then you go to—

Chris Levarek: One correction, we partnered with one partner on that. Yeah.

Joe Fairless: Ah, okay. How did you structure it?

Chris Levarek: Actually, it was a great one; we did just the private lending. They lent 70%, we funded cash 30% plus renovations, purchased it all cash and renovated and did a BRRRR on both those duplexes.

Joe Fairless: Why not continue to do that?

Chris Levarek: We’re still doing that, actually. We do that on the side. So we do, I guess you would call that short-term loans, 12-month promissory note loans; some people like that, and we found great interest. Also, I didn’t mention, we did short-term rental that we just are taking live here on the 13th. So really shortly here. And that one was completely funded with short-term debt. So 12-month loans; we raised about $250,000 that way.

Joe Fairless: What are the terms that you give the lenders?

Chris Levarek: 12 months, 10% interest, simple interest, and then at 12 months, they can roll it into on a continued basis, keep it in there, or we just find another short-term private lender to backfill that position. And the way short-term rentals are done today – there’s a lot of cash flow that makes that work, where it wouldn’t work in other deals like that.

Joe Fairless: So you’ve got the smaller properties that you’re doing on the side, and then you’re doing larger deals. I mean, the 384 is massive. Were you the lead sponsor on that 384 deal?

Ashton Levarek: No, we were co-GPs on that one.

Joe Fairless: Okay. And then what about the 120-unit or the 84-unit?

Ashton Levarek: Those are all partnered with the other operators, people we continue to work with, actually. So we found a lot of momentum, a lot of progress just working with other professionals. And really, that comes back to stick to what you’re good at.

Joe Fairless: What are you two especially good at?

Chris Levarek: We’re really good at building the network, and interfacing with other investors with building the team. I’ve got 21 years in special operations. And that’s what it’s all about. It’s about managing and putting a team together to execute on a specific task or mission. So that’s what we focus on now. We focus on educating our network, we focus on helping our network understand how to get into this business, and then how to Excel, and then we bring together the operators that can execute the boots on the ground, and make the business plan work.

Joe Fairless: So the assisted living – I assume that’s a co-GP deal. Correct?

Ashton Levarek: It is. Correct.

Joe Fairless: Okay. How did you two become educated on assisting living nuances, compared to traditional apartments?

Ashton Levarek: That’s a good question. So that is a little bit out of our area, if you want to call it that, just because it’s something we haven’t done before. But the reality is, it’s not that different. If you take somebody that’s going to buy an apartment complex, he’s not going to manage it all by himself; he’s going to get a property manager that’s been doing it for 10, 20, 30 years, or something that can execute on it, that can turn it around, add value, force the appreciation, and make it work in that market, right?

So really, what we did was we partnered with the right people to be able to do it. So we’re working with a group that’s considered one of the top in the nation, that brings in the right personnel to manage it, that hires and fires, that can help us raise the value and make it a profitable investment.

But then, really, from there, it was just educating ourselves on why; why would we invest in assisted living, right? It is a different strategy for us, but it makes sense. When you start looking at how many people are retiring, the baby boomers… It’s like 23 million Americans over the age of 75. In 2031, the oldest boomer will turn 85, which is going to open the floodgates for senior housing investments. There’s a lack of senior housing out there right now. So we’re filling a demand, because there’s a lack in supply.

Break: [07:31] to [09:05]

Joe Fairless: Is this operator that you’re partnering with someone you’ve partnered with before?

Ashton Levarek: It is. Yes. Vetting partners is a tough one, right? It’s not just people that you know, and like, and trust; they have to have some type of track record behind, fill a need that you have, basically. So that’s a big part of our business, is making sure we’re partnering with the right people, because we have been burned before, and that was fun, being burned.

Joe Fairless: It’s all learning experience… I mean, you know from your military background, that challenges come up and you just have to improvise and make it happen. What took place when you got burned?

Ashton Levarek: So you partner with a property management company or property management that came highly recommended, and then they put the wrong tenants in there, the rehab schedule gets behind, maybe you end up becoming six months behind, cash flow starts to slow down, you’re behind on your projections, and then of course, you have to answer to all your partners and investors.

So without going too much into detail, that’s kind of how it happened. And then they get bad tenants in there, and that’s a 12-month pain, right? That’s a 12-month loss. So that’s kind of how it went. And then of course, in the height of COVID – that didn’t help at all. Chris, you want to weigh in on that?

Chris Levarek: Yeah, it’s a difficult conversation, I think, when you offer an 8% pref or something like that, and then all of a sudden, you’re delivering 4%, or something like that. And then why is that going on, and you have to talk with other partners that you’d like to keep a long relationship with, and it’s suffering because you failed at your development of the operational partnership side.

And I think you see syndicators do this a lot – they rush in, they form a group, and they call it done and the property closes, and everybody’s happy, and they promised 20% IRR, everybody’s excited. But what they fail to realize is to deliver on that, you need the experience.

When we did our 16-unit ourselves, we were the lead sponsor, we realized really early, we could keep doing this, or we can find people, like our current partner, 40 years experience, over 1 billion in assets, who are experts on that side, and we can learn from them, we can grow, we can move our company in that direction if you want to, but we don’t have to. Those are all choices you now have when you partner with experience, versus just trying to slap a deal together.

Joe Fairless: I hear you. Yeah, I had a similar challenge right out of the gate. I assume the deal with the property management company that didn’t go according to plan is the 16-unit?

Ashton Levarek: It was actually a 13-unit, and then I think it was an 84-unit after that. Yeah. So we had two incidents, and they kind of coincided at the same time or overlapped.

Joe Fairless: Fun. Even better.

Ashton Levarek: Yeah.

Joe Fairless: Well, you know, it’s probably better than they’re happening at same time, versus one, and then it’s completed, and then you’ve got another train wreck after that.

Joe Fairless: Well, then it would show we didn’t learn anything, right?

Ashton Levarek: Right, exactly. So help me with the timeline here. You did the smaller deals, and then you did a 16-unit syndication on your own, and then you did a 13-unit and a 84-unit?

Ashton Levarek: Actually, it kind of went like this… So we did two duplexes, another duplex, another duplex, a five unit, then the 13-unit. And when we did that 13-unit — because we were doing these probably 1-2 months apart at the beginning there, pretty quick. And then we started doing one a quarter as they got bigger. And then we did the 16-unit. So we had put the property management in place for the 13-unit, but sometimes you don’t realize what’s going on, how it’s performing right away, or how bad they’re executing on what you want them to do. You don’t realize that right away. So then we did the 16-unit. I think six months passed, and we’re like, “How come they’re not raising rents? How come the rehab plan’s behind? What’s going on with this?”

Joe Fairless: On the 13-unit?

Ashton Levarek: On the 13. Yeah. And then we closed on an 84-unit later that year. And we were in partnership with another property management company at that time. And that’s kind of when it started snowballing. We’re like, “Wait a minute, we need to reevaluate how we’re doing this.”

Chris Levarek: We need to manage the asset.

Ashton Levarek: Manage the asset.

Joe Fairless: And was it the same property management company on the 13, 16 and 84?

Chris Levarek: Interesting enough, the 16-unit we had great success, mainly because we leveraged other partners that we knew were operating the area with a good property manager, and we used that relationship. The 16-unit did very well. And actually, we switched the 13-unit property management company to the company we were using for the 16-unit because of that. But then the 84 was in another state; it was a first-time partner group that we are partnering up with, and the sponsor group was good. It’s just the property management team wasn’t fully invested into it, and we saw that. And it was kind of a rundown area that we had to take an entry deal into to get into.

Ashton Levarek: It was a bigger town.

Joe Fairless: What cities, 16, 13, and 84?

Chris Levarek: The 16 and 13 unit were in Fayetteville, North Carolina, next to Fort Bragg. And then the 84 unit was in Columbus, Ohio.

Joe Fairless: Got it. So you have some thoughts on how to vet property management companies, I imagine, and what to look for… So clearly, the referral – that went along way on the 16-unit, and then you switched over. So I heard you when you said that. But besides referrals, what questions — even with a referral, you’d ask certain questions now that perhaps you didn’t know to ask prior to these two experiences on the 13, 84. So what questions would you ask now that perhaps you didn’t ask before or didn’t know to ask before?

Chris Levarek: That is a good question. So I think the first thing people look at when they look at a property management company is probably the price, if they’re not directly partnering with the person. And that was our first mistake. I think we took a cheaper property management company for the 13-unit and that was the first mistake we did. It was just 2% cheaper at the time, and it came recommended by somebody else; but we didn’t look into their experience, their background, why they’re doing, what they’re doing, how they handle leasing up, how they handle rehab, all that stuff. So that kind of bit us in the butt there.

But the questions to ask I think would be, how did they handle lease-ups during COVID? That was a big one for us. We were working with a property management company now that they were able to continue leasing up the 384-unit we closed on. They’re able to continue leasing up during COVID, because they were marketing to central personnel. So police officers, nurses, people like that. And then they were also doing the paperwork for their tenants to make sure that they can secure—I forget what it was called, but—

Ashton Levarek: [Inaudible [15:31]

Joe Fairless: We do the same thing. We fill it out for them, and then they just look at it, review, sign.

Ashton Levarek: Exactly.

Chris Levarek: Yeah, much easier.

Ashton Levarek: Yeah. So I think that would be a great place to start, especially where we are as a nation right now, with COVID, and everything.

Joe Fairless: Okay. Hypothetically, congratulations, you just got another 120-unit in a new market. And you asked this potential property management company, “How did you do during COVID? How was your lease-ups?” I mean, come on, they’re going to give you whatever answers you want to hear. So how do you go beyond that, and really get to make sure that they’re not trying to pull one over on you?

Chris Levarek: Yeah, I think a big problem with the 13-unit is we looked at unit count and not unit type that was in the unit count. Someone can boost up their unit count in a lot different ways, they can become partners in certain deals, and all of a sudden their unit count goes through the roof.

But if you’re going to be talking to that property management company, and that’s part of your strategy, is to depend on that partner for that type of work, then you want to see other types of properties that they’ve managed through certain parts of the year, a couple years or multiple years, that demonstrate that kind of experience. And then you want to check how those properties are valuing now, what were they valued a couple years ago, what is the occupancy… If they can provide you with that kind of information, that’d be super helpful. You can judge for yourself based on numbers they give you from other properties in the area. And how strong are they in that local market? Are they holding 20 properties in the local market, or are they not at all there, and they’re just starting out? Maybe they’re based out of another state. You can kind of ask, “Okay, well, what is your strength in this market with this asset? And how long have you been doing it?” Versus just saying, “What’s your unit count? And what’s your price?” Which I think a lot of people do.

Break: [17:09] to [20:03]

Joe Fairless: Ashton, I know you mentioned you would look at their leasing process and rehabs. Will you elaborate on what in particular you’d look at with leasing up and rehabs?

Ashton Levarek: Yeah, so I’m sure all your listeners — or maybe not all of them, but most understand how apartments are valued. They’re valued by the net operating income, right? So a huge part in that is making sure it’s, you know, over a certain percent occupancy rate to hit that cash flow. And then, of course, increasing the rents, rental bumps, by increasing or improving the property, or decreasing expenses. All that stuff is trackable.

So when you talk to a property management company, you can see that. And if they’re in the business for longer than five years, which is the typical cycle of an apartment complex, they can easily show you those kinds of numbers. “Yeah, we managed this property from 2010 to 2015, and then we raised the value, sold it.” If they can show all that, and the lease-ups itself, I think you’d be able to find all that stuff; they’d be able to show you all that stuff. I’m sorry, I kind of got long-winded. Did I miss your question on that one?

Joe Fairless: No, no, no, I just want to know more about the lease-ups and the rehabs and what you would look for when speaking to a property management company.

Ashton Levarek: Another good one is, how do they plan on doing that? They should have a systematized way of doing that. They should have experience doing that, obviously, and you want to see that, but they should have a plan. You should have your own plan, but I want to see what they come up with. What is their plan? How are we going to be able to turn all these units? If we have 120 units, you’re not going to turn them all at once… Otherwise, your cash flow stops right away, right? So how are we going to waterfall those turns to keep the cash flow going and increasing as we do it, as well as keeping the tenants happy? And how do they manage all that? And they should have a process for that.

Chris Levarek: That’s why we failed with the 13-unit in that regard, is the property management team wasn’t used to having a schedule like that, and we weren’t either. Up to that point, we bought things for cash, flipped them in a couple months, and then rented them out. So we ate the cost for three months or two months or whatever they were. But when you go bigger past a certain size, you can’t just empty a property; it costs way too much. So you have to have a schedule. And you can talk to an asset management team, property management team, if you need to outsource that type of work and see how they’ve done those kinds of turns in the past. What kind of rent bumps have they done? Do they match what your underwriting did for the property? Is that realistic?

A lot of times, people do these massive underwriting. “Well, we’ll flip it, and in six months everyone will be at these $150 rent bumps.” Is that realistically attainable by emptying out a 120-unit? Can you even do that? Typically, it’s going to take you 2-3 years. And so you can see those schedules from previous ownership that this property management team might have, and let them walk you through how it went, how they did what they ran into what issues they had, that kind of thing.

Joe Fairless: Have you sold the 13 or 84?

Chris Levarek: Actually, we’re selling it right now, the 13-unit.

Joe Fairless: Oh.

Chris Levarek: Yeah.

Joe Fairless: What did you buy it for? And is it under contract?

Chris Levarek: It’s being listed, but according to our broker, it’s going to go fast.

Joe Fairless: Got it. Are you going to make money?

Chris Levarek: Yes, actually.

Joe Fairless: So all is well, that ends well.

Chris Levarek: All is well that ends well. Yeah. Probably double the price we bought it bought at, which is really cool. Two years later.

Joe Fairless: Good. And I know you said earlier that you switched property management companies on that 13-unit to the one that successfully managed a 16 unit. So I’m glad that ended up working out and they’re able to deliver.

Last question on this… What, from an asset management standpoint, do you do better or differently? Or do you actually do that you weren’t doing before, now that you know what you know? One thing for each of you, if that’s all right.

Ashton Levarek: I think it’d be investor relations. And there’s so many people doing stuff like this, but once you close on the deal, that doesn’t mean you stop talking to all your partners, all your investors. We have set in place a good process for keeping all our investors and all our partners updated through emails and webinars each year, and I think that’s very important. You’re building a relationship, and it’s a five-year relationship essentially, right? It could go longer, it could go shorter, but that’s very important.

Joe Fairless: Okay.

Chris Levarek: Yeah. For me, I’m more on the operations side. So the 84-unit struggled specifically because we didn’t have timely reports. So we are keyed now on having shared storage where we get those monthly reports, that way we can regurgitate that back out to investors in a nice, more simplified, friendly format, but also we’re aware of what is going on as it’s happening… And that’s really important, having that monthly communication; weekly even.

Joe Fairless: What’s your best real estate investing advice ever?

Ashton Levarek: Partner.

Chris Levarek: Yeah, I think partner.

Joe Fairless: Yep.

Ashton Levarek: We’re big on that.

Joe Fairless: I hear that. I can count on one hand how many real estate investors have not partnered with people.

Ashton Levarek: Yeah.

Joe Fairless: It seems like everyone does it, myself included, and… Why not? Yeah, you accomplish goals faster with more people, and help more people along the way. We’re going to do a lightning round. Are you two ready for the Best Ever lightning round?

Ashton Levarek: Let’s do it.

Chris Levarek: Let’s do it.

Joe Fairless: We talked a lot about lessons learned on stuff, so I’m going to give you the opposite question. What deal have you made the most amount of money on?

Ashton Levarek: That’s a very good question. 16-unit, I think, so far.

Chris Levarek: Yeah.

Joe Fairless: How much did you make on it?

Chris Levarek: That one we’re selling, too. So I think that will be — it’s almost 2.5 times what we bought it. So about a million, right?

Ashton Levarek: We’re not going to, but—

Chris Levarek: Well, yeah. In profit. Yeah. Yeah.

Joe Fairless: How much will you two make from that?

Chris Levarek: About $200,000.

Joe Fairless: Nice.

Chris Levarek: Yeah.

Joe Fairless: And you held that over what period of time?

Chris Levarek: Just under two years.

Ashton Levarek: Under two years.

Joe Fairless: That was a good market.

Chris Levarek:  A good market right now.

Joe Fairless: Yes. Absolutely. And it’s amazing that that’s one of the smallest deals. So there’s more to come in. And I heard earlier that you’re in partnerships with 384, but still, it’s probably just not even scratching the surface. Have you lost money on any deal to date?

Chris Levarek: Yeah.

Joe Fairless: What’s the deal you lost the most amount of money on?

Chris Levarek: We’ve been fortunate, we buy really conservative, we’re very conservative, but we lost about 10 grand on a recent short-term rental we went under contract for.

Joe Fairless: And knowing what you know now, what would you do differently, if presented the same opportunity?

Chris Levarek: If the market’s hot, don’t waive your appraisal contingency. [laughter] Just wait, yeah.

Ashton Levarek: Yeah.

Joe Fairless: It didn’t appraise?

Chris Levarek: It appraised $160,000 under.

Joe Fairless: Oh, wow. So you said, “No, thank you”, and you just kept the money that you had into it.

Chris Levarek: Actually, we went into a settlement, and at least got some of it back. But yeah.

Joe Fairless: What’s the best ever way you like to give back to the community?

Ashton Levarek: We donate 10% of our profits to Big Sky Bravery and Unbound. Big Sky Bravery is a nonprofit for Special Operations veterans, and an Unbound fights human trafficking.

Joe Fairless: How can the Best Ever listeners learn more about what you’re doing?

Chris Levarek: Visit our website,, best way.

Joe Fairless: Truly a pleasure speaking with both of you, grateful that you shared your lessons learned regarding property management, and also how you got to this point with partnerships, well-vetted partnerships, and how you went through that vetting process, things that you would do differently knowing what you know now, on certain deals from a management side and asset management side.

So truly, thank you so much for being on show, both of you. Again, I respect your military backgrounds, and it’s been a pleasure. So I hope you have a best ever day and talk to you again soon.

Ashton Levarek: Thanks so much, Joe. Appreciate it.

Chris Levarek: Thanks, Joe. Appreciate it.

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