The importance of good record keeping

[Neal Collins]

We just took over a 15-unit multifamily here in Portland that is in a great part of town. We knew that it was 50% occupied, but some of the vacancies were due to unfinished work on the property. No problem, we’d rather place our own tenants anyway in this kind of situation. The property has been managed by a long entrenched property management company in the city. They are old school and definitely not technology savvy, but their paperwork seemed thorough and organized. Maybe it should have been a warning signal when they handed over a wad of unmarked keys. We kind of shrugged it off because this is par for the course at times and we are going to be replacing locks. It wasn’t until we started contacting tenants and plugging in the info from the leases into our system did we realize how chaotic things really are. Tenants that had left months ago are still showing as current and the apartment had never been turned. Other tenants are supposed to be in one unit but actually lived in other units. The $1,000/month on-site manager doesn’t actually live on site. Only one or two rental rates stated in the paperwork are actually accurate. Leasing was getting run off a bad website and Google Ad words and not through other online sites. This just underscores the importance of organization and clear record keeping in buy and hold real estate. The property was bleeding out thousands of dollars a month before. Without having to spend a dime on any physical upgrades we will drastically turn the NOI around. Somebody will be making lemon aid from your sloppy lemons if you don’t.