Review of TexasCashFlow operation

[Jonathan Fox]

Background

I’ve been investing in real-estate for about two years now, mostly with crowd-investing and private-lending.  I wanted to add traditional rental or owner finance type investments to my portfolio. My aim was to use a turn-key provider as I expected to invest in properties out of state. I worked with John Majalca over the course of 12 months as a partner to do this.

Details

I started researching turn-key rental operators for in 2018. I came across the website TexasCashFlow.com along with several others. The TexasCashFlow intrigued me though, because it advocated owner financing instead of renting as the final step. I reviewed the website, ran financial simulations to confirm the ROI's, talked to John Majalca the business owner on the phone personally, contacted three references he provided which gave him validating reviews, and checked on BiggerPockets to see if there were any reviews here – but there were not.

It all checked out so I pushed forward with an initial investment on a home in Fall 2018. John Majalca select an undervalued property in San Antonio where he operates which I purchased. Then we went to start the rehab. At this point John disclosed there the home was not vacant, but actually tenant inhabited. Not necessarily bad itself, but this was poor communication which is very bad. Surprise #1.

John rehabbed the home exterior and I got a month’s rent. Then the tenant abandoned the home in a poor state. I paid to clean it out and then had John rehab the interior also, as was originally planned. Rehab costs came in higher than projected, but I understand that sometimes you find additional needs when you get into a project, so I went with it. But that was surprise #2.

We put the house on the market in October and waited. I followed about every two weeks asking for a short update. Surprise #3, John Majalca is very unresponsive to communication. He mostly ignored my emails, calls, and texts, or would respond briefly, “I’ve got someone interested, it will be sold by end of the month”. Four months later it still wasn’t sold and he’d dropped the price to almost the cost of purchase + rehab. Surprise #4, his insight on the market of repaired homes was not correct in this case.

Finally John informed me he’d found and already placed a rental tenant in the home -surprise #5. That was never what I’d asked for nor agreed to. I sent a deluge of questions about it and got no answers. I waited a week and sent fewer questions and got a short reply and copy of the rental agreement. He assured me this was a good tenant that was interested in renting to own and would likely buy it after 6 months.

I was sent an initial rental payment and then nothing for almost three months. I repeatedly called, emailed, and texted to no response. At this point I felt I could no longer put my trust in John; I found another property manager to take over. I sent notice of termination to John and a call for all balances due from the last 3 months. At this point he disclosed the tenant had actually not paid rent the last two months and I should start the evict process. Surprise #6. Turns out the tenant had abandoned the property a month prior, and not moved out cleanly.

I am now with another PM and have cleaned up the home and put it back on the market. Even though the market is pretty active, the home won’t sell for what I have invested in it.

Summary

My partnering with TexasCashFlow cost me time, frustration, and money. None of the things John represented he could do, did he actually do. The home he found wasn’t vacant and ready for full rehab; the tenants he screened were terrible; the rehab costs came in higher than forecast; he couldn’t sell the home as an owner-finance in over five months; he didn’t remit what few payments there were to me in a timely fashion. He didn’t adequately supervise the home while rented. And accompanying it all he rarely communicated even vital information.

If you are considering using TexasCashFlow.com to invest in real-estate, please be forewarned and prepared to deal with these same outcomes.

At the start, I came to BiggerPockets looking for insight on TexasCashFlow’s operation but didn’t find anything to help me. I hope this information will assist others in the community that coming looking for it.