Anyone have experience with NexGen Invest?

Question

I just had a good discussion with Zach Cormicle at NextGen Invest.

From my notes, here's what they offer:

• Sell non-financeable deals from $65K - $115K in Cleveland, OH - area suburbs
• Deals are sourced from distressed property sources (MLS, HUG, Fannie, Bank-owned (B of A, Chase, etc)
• They charge a flat $79/mo. fee to manage properties
• They're licensed general contractors and manage the rehabs of their deals
• Reno's take 3-5 weeks

They offer bulk purchases with up to a 5% discount depending on volume.

Has anyone had a chance to work with these guys or have any thoughts based on what you see? If so, I'm wondering if you can share your experiences.

Karen I. · Answer

I purchased 2 properties with Nexgen and were happy with the results.  I did not have my own inspection (probably should have), but the Cleveland Heights inspectors were all over everything and they are picky.   I got them quickly rented, initially, but recently, it took almost 5 months to get renters.  For 2 reasons:  One is that I asked for too much rent (management company gave me no assistance on that) and 2ndly, we needed to fix up the house and there were disagreements with former tenants - you see,   I had college boys in it (big mistake - don't do it), and they did alot of damage to the house - which they paid for but that's time off the market - plus the management company was terrible to deal with in renting it.  Zach has a team for renting so I used them and they did get it rented but it took time.  Another house has had a great renter, however, she went away in the winter and the pipes froze - it was quickly contained however, the management company took 1 month to tell me (they were checking with a lawyer - that's their excuse - whether tenant was responsible - I was told "no" it's on my dime).  The management company was TERRIBLE.  Did not return phone calls or emails.  They made me crazy.  I just switched to another management company and we will see how that works out.

The bottom line is I got GREAT deals on the houses - could I have had all the work done cheaper by someone else?  Maybe, but I'm not there - I'm out of state.   And everyone is entitled to make a profit and he did everything quickly and cleanly.  And my houses have definitely gone up in value.   I just think the rents have come down since I bought, but still a great area.  Timing is everything and I really felt Zach was a guy who cared about quality of work and went extra mile many times.  Would I recommend?  Yes, but with some caveats - use a different management company.  I am trying out Hanna Property Management now.  So far, they seem to be on top of things - they return my phone calls and emails promptly - so that's a huge step forward.

Jay Hinrichs · Answer

@Joshua McGinnis

not only a home inspection before you buy.. but when your doing a rehab.. and your remote and trusting others.. then you need a course of construction inspections.. Much can be covered up that you would never know about until you had to fix it down the road.. the out fit doing it can't be there every minute watching the subs...

Jay Hinrichs · Answer

are they sourcing the house that you pay cash for.. then you pay them to rehab?

if so that is something you want to use extreme caution on...

AS a HML when I had properties I could not drive too.. I hired my own inspector.. WE did these at draws.. YOu should have your own inspector do weekly inspections for quality of work and get a scope of work before they start and make sure they do whats on the scope.

Always good to have your inspector that YOU pay for.

Jason A. · Answer

I purchased a house from Zach at NextGen Invest several years ago. The property itself has done fine, however, as I was living overseas at the time, Zach made sure to take advantage of that. I FAR over paid for "renovations" which included new electrical, a paint job and a ghetto bathtub refinishing job which lasted about 6 months. It is all my own fault. I do NOT recommend working with Zach or any contractor/ "turnkey" provider long distance if you don't have an opportunity to inspect the home before, during and after. Years later, when I was finally about to go to the property, I was shocked at some of the work. Zach cut corners at every turn. The work cost around $42K, I would put fair value to something closer $15K to $18K. He's lucky I didn't inspect the home during his sloppy job. Don't work with Zach/ NextGen Invest.

JD Griffin · Answer

@ Ranjith and Karen, can you speak to the 1 year property warranty and 12 month rent guarantee that NexGen is offering? did you have any experience with this?

Troy Malone · Answer

Hey Jay,

Just listened to your podcast and loved it, great info!

I just closed on my first out of state property. I'm working with a construction team for the first time on the rehab process. I will be managing this remotely until the completion. After which I was planning to visit.

Questions: Is a construction inspector the same as a regular property inspector in this case? Or do you recommend I hire a person separate from contractor to oversee this process? Any advice?

Thanks,

Will K. · Answer

As a contractor who did work for him. He does not pay his contractors . I have a list of 6 + other contractors in cle area who have experienced same situation. I can not recommended his company or services

Will

LLC

James F. · Answer

@ Ranjith and Karen, I'm considering purchasing a property from Nexgen Invest and I'm attempting to figure out  any realistic expenses that might not be listed in the property analysis on the company's website. Are the tenants responsible for snow removal and mowing the lawn or do you hire people for that? Also, if you purchased the home with cash, were you able to then refinance the property after the renovation and get most or all of your money back at closing?

Mark Shaffar · Answer

@Ranjith M.thanks for the update. Cool that they were able to make up for some mistakes. Shows character. Might want to leave a review at turnkey-reviews.com

Ranjith M. · Answer

Update to my original post - Although my first property in Maple Heights took 3 months to rent out and at a lower rent than was projected (in fact the team that they use for renting it out were not keeping me informed of even the rent drops they were doing) but enough to get a decent return I decided to give Zach and NexGen another chance because Zach went out of his way to give me a $1600 discount on his fees for the next property and suggested that we move up to a better neighborhood/property. I also realized that getting a good renter at all times in certain neighborhoods may be more difficult from reading various posts here. Since Zach was prompt in getting the paperwork and renovation completed, escrow fees refunded I figured it may be worth giving him another shot. I chose a second property in Bedford Heights for which I wanted financing. Zach helped me connect with a private lender and tie it out easily with a plan to refinance in a years time. The renovation completed on time and we got a tenant at the projected rent to move in within a month of completion. For an out of state investor having a reliable turnkey operator is key and Nexgen definitely keeps up their commitment with Zach reachable easily via email or phone. During that time Zach also informed me of the frozen pipes in my first property and helped take care of it while it was rented and under property management. So like Karen mentioned the property management company they recommend is not on top of things (partly because of management changes/restructuring but even prior to that) and it would be great if Nexgen gives you a choice of property managers or realtor to find a tenant. As the pros on BP say do your own estimate of expenses (including lawn mowing, snow removal), insurance, rent loss from vacancy before jumping in to make sure the returns meet your needs. I chose properties based on Cash flow but if appreciation is important you may also want to investigate the neighborhoods as the Nexgen post renovation projections are not reflected in Trulia estimates for my Maple Heights property (shows lower) but were spot on for the Bedford Heights property.

Anyone have experience with NexGen Invest?

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