Bad experience with Norada - any other recommendations?

Question

Hello, I purchased a property in Kansas City through Norada last year. They are nothing more than a middle man that earns commission by connecting you with flippers in local real estate markets. I did not have a good experience. The property I ended up buying was a townhome and two months after purchase I received a letter from the HOA lawyer stating that there are not allowed to be any rental properties in this complex! No one caught this, Norada did nothing except to say that they had never had this happen before. They have not helped me at all to try and fix this, although they earned commission as the selling agent. I am still trying to work through this mess, and my best option at this point is just to sell the property and lose money. I would never work with them again. They do not stand by their investments. This may have been just a fluke, and I may have been unlucky, but I am warning everyone I know not to do business with them. They have not helped at all or followed up with me.

So, the question is, does anyone know of any other turnkey companies in these markets: Indianapolis, Memphis (besides M.I.P.) or Cleveland that they have first hand experience with? If so, please post a recommendation. Thank you! Looking to invest in one or two properties this year.

Tom Ott · Answer

WOW! That sounds crazy. Nor, does that even sound like a Turnkey. Actions like that give providers a bad name. A True Turnkey Provider should own, renovate, and manage the property all in house. When they sell you the property it should have a tenant and be cash flowing. They should not act as middlemen and push you off on some PM when it is done.

Try looking at:

What to Ask When Working With a Turnkey Provider

and

The Best Types of Markets for Profitable Turnkey Properties

Jay Hinrichs · Answer

Tom this also is a failure / or lack of providing these documents by the title and escrow company.. on the west coast buyers have to sign off on the title commitment IE they have to sign that they read and understand it.. but regardless HOA should have been on the sellers disclosure that they received and signed for with contact person at the HOA.

further more if you have an HOA you are entitled to ask for their financials.. some of these are Broke or very poorly run..

so the knowledgeable local owner occ will pass on them since their Real estate agent will know the good ones from the bad ones and advise them accordingly.  some how a lot of the normal process of buying real estate when its bought without agents in the middle gets lost.  IE no approval of the title commitment no sellers disclosures this buyer was relying on an agent to act as a broker.. so not sure what happened but .. this is a major difference in how closings are handled in different parts of the country.  So many in attorney closings states just rely on a verbal form the attorney  OH title is good.. LOL  not me I want to read it.. I can read my own title reports and I will tell the attorney whats good or not.. that's how it should be done. I bet people take title all the time to exceptions that they have no clue are there. may not mean anything to the closer . but if you never get the commitment to read.. you usually don't realize you have an issue till you go to resell.

Willem Botha · Answer

Hi Jeannie

Regarding the recommendations you asked for: I am an foreign investor (South Africa) making use of Midsouth Homebuyers. My personal experience for the past 2 years are non stop excellence, good and professional service. Closed on my second property in October of last year and will buy more as funds permit.

Chris Clothier · Answer

I'm a little surprised by the advice some of you guys are giving.  The last thing you want to do is intentionally go against an HOA.  It would cost the owner much more money to defend against an HOA than it would to sell the property - hopefully.   And most HOA's are operated by management companies who specialize in managing HOA organizations and they have legal teams ready to go.  It would cost them pennies compares to an owners costs.  Either way, HOA organizations have wide latitude and in most (if not all) states have already won court cases setting precedent.  I don't have any other comments on the she said/he said nature of this, but I would never give advice to just rent it and go against an HOA.  The OP really needs to consult pros in her area.  Lastly, if it is true that the existing management company is already managing in this location - seems odd that out of the blue and without their knowledge, rentals are no longer allowed.

Chris Clothier · Answer

@Jeannie G - First and foremost, do you need help with the KC property or do you have a team you are working with to move the property?  Beyond that, there are many companies pretty active here on BP that would be happy to see if they are a good fit for your needs.  Above all else, take your time and be patient.

Find a company that you feel comfortable working with and one that is not in a hurry to get you under contract.  They do exist!

Jay Hinrichs · Answer

for sure if they are not enforcing the HOA  then just rent the thing.. it would cost money for them to sue.. and maybe they wont do that. if its already rampant in the project although you may have homeowners not to happy..

Marco Santarelli · Answer

Hi @Michael Norris — you make a good point. Suspiciously, this HOA has many other properties in the same community leased to tenants and under management by the same management company.

Michael Norris · Answer

Many HOA's have no teeth to enforce what they are telling you to do. Talk with an attorney about the concept of estoppel and see if there are other rented properties in that HOA. If so your  attorney may be able to send a letter or make a phone call telling them to back off. *I am NOT an attorney NOR should this be considered legal advice*

What ever you decide on - take action ASAP - don't just let it sit there.

Chances are you bought a landlord policy that will not cover the place if a loss occurs while vacant (unoccupied) so you should probably have a chat with your insurance agent to make sure you have proper coverage too.

Good luck!

Jay Hinrichs · Answer

@Tom Ott  so a sharp agent ( like my Wife) when she opens escrow. she always requests Legible copies of CCRS and HOA,s  she reads them then gets with her buyers and goes over them as well.

now granted a lot of CCRS from the turn of the century have no effect of law since there was clauses that precluded certain people form owning. and or certain farm animals which now zoning has taken care off.

But again this is just so basic and I see it totally glossed over or when I request it they say why title fine.. ya right.

James Wise · Answer

As a side note to all reading this it's important to read the by-laws anytime you purchase a condo or any other property that has an HOA. Restrictions on the use of the property are very common. Many condo associations allow long term rentals but not short term rentals. Some even go so far as to ban rentals all together.

My recommendation would be to approach the association with evidence that 24 of the other units in the complex are indeed rentals. If you can get some of the other landlords on board with you you'll stand a better shot at getting the rules changed then if you go at it on your own.

Bad experience with Norada - any other recommendations?

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