Opening the Kimono: My Out-of-State REI Experience

[Michael L.]

Back in November (2014) I closed on my first REI property. A 'turnkey' duplex in Chicago. I went with a well-known turnkey provider and posted initial updates in this thread:

http://www.biggerpockets.com/forums/92/topics/1260...

There was a lot of interest and I had several BP folks approach me with questions and my experience with them, so I am dedicating this thread to my journey.  Categorized under 'Success Stories' because I'm optimistic like that :)

[Joe Chin]

Before I post my experience with Elite, I want to say that I've worked with a total of 4 operators. 3 turnkey and 1 broker/rehab/PM company in multiple states. So I have a good benchmark for level of service and product provided. I will only speak of Elite in this thread as I don't want to hijack Mike's thread. PM me if you're interested in the other companies. 

My experience has pretty much mirrored Mike's experience so far. I have a 2 unit flat for a little over a year now. Both are rented to section 8 tenants. One tenant does not pay anything, the other one pays maybe 15%, the rest is covered by CHA. Rent has been received in a timely fashion, though it's hard to tell whether the tenant portion is consistently late as it seems like Elite posts the rent as being received on a set date even though I see late notices marked in the accounting software. 

I had the same issue as OP in that there was no water meter installed. So the yearly bill came out to over $1600 which is definitely on the high side. 

I will spell out the good first. Gut rehab (new electrical, plumbing, etc) and material is to a high rental standard - granite countertops, etc. No issues with getting rent so far. 

Here's a few concening things that have cropped up recently. I received a notice in the mail regarding building violations with the condition of the porch and also  deteriorating window sill/area?? and some other thing I can't recall. This was cited in Sept of last year - and I only heard about it about a week ago through the mail from the city of Chicago. There was a court hearing where Elite attended for resolution. I raised concern over this as I've had the property for less than a year and there were these issues. They said they would fix it at their cost as they were small things. 

I recently was charged $902 for washer/dryer install that included a rodout/cleaning of catch basin. Ive been in conversation with PM over this as 1) I wasn't notified of this charge to get my approval, 2) why this process cost so much. 

On these occasions, I've only found out through other means. PM never contacted me directly. One was the mailer and the other was seeing the charge in the accounting software. Communicating issues to me is poor at best. Though Alex and team is responsive once I do contact them. I should also mention that I've dealt with 3 different customer reps now in over a year. I think 2 are no longer there and one was promoted to manage the finance dept. 

One thing I should mention about the purchase process. When I first bought the prop I had also reserved a few other props of Elite for purchasing when they were rehabbed. The timeline I was given was about 3-6 months out for completion. It's been over a year now and the reserved props have yet to be ready. According to Alex the delays have been due to the city requiring the pulling of permits for ever little thing or something to that effect. Now that might not be his fault, but it doesn't look good to have to continue pushing out a ready date for a client especially when the delay has been close to a year now. Due to the opportunity cost I told Alex that I will only purchase one more from him for the time being as there are other investments available to me. Interestingly he has never communicated to me with an updated ETA on these reserved props unless I specifically contacted him in regards. 

Finally, my expectation is for the tenants to be in place by the time of closing. This is not the case. One unit was occupied at closing only. Another words I did not get rent for about another month after closing for Elite to find a tenant and go through the arduous CHA process. A true turnkey provider should have tenants in place or at least cover the rent until the time a tenant is placed. This has been my experience at other outfits. Full rent from day 1. 

I've tried to be as objective as possible in my posting here. Hopefully this will help others in their decision making process.