Spartan Invest & Alabama Rental Property Mgmt Review

[Abhijit Trivedi]

@SpartanInvest

Bought our first Turnkey Property in June 2019 (after dinner with @Maureen McCann). The property was being rehabbed until September. Really nice job done at rehab, no complaints there. 

Buying a turnkey property with them involves their in-house Property Mgmt (Alabama Rental Property) , which turned out to be a nightmare.

Issue #1 :

They gave a range of rent ($1100-$1300), saying $1300 was still pretty achievable with the rehab. Then came the big radio silence for 3 weeks during marketing, where they didn't communicate ANYTHING.
We proactively reached our multiple times to get the status.. and very casually their manager Amanda Ford replied "yes its been rented at $1099).. and we were like WHEN? Then after talking to us, they say that its a Section 8 tenant.We are not against section 8 (we have other properties where we get "market rate" section 8 rents) but atleast they should have informed us that they had started lowering the marketing amount from $1300 to lowest possible amount, and that too to a Section8 tenant. That instantly was a $200 loss in cash flow.
Plus the lease was supposed to be 2 years.. instead they only got it for 12 months, AND we got to know from their agent this property BEFORE Rehab was already RENTED at $1200 for Section 8.. So you can imagine how pathetic their marketing team is, and how pissed we were.
After spending hours & hours on call & fighting to our wits, we got them understand their error of keeping us in the dark, and they charged 25% lease up fee instead of 50%

Issue #2:

Our property was rented on Nov 22, so were supposed to get pro-rated rent for November. But we never ever got it.. And after repeated emails about it, their property manager Scott replied (after 4 months), that its a Section 8 issue & we cannot do anything..
THAT WAS THE WORSE THING I'VE EVER HEARD.. because Section 8 always pays backdated rent, so it was actually their mistake in paperwork (which took 4 more months to prove) with Section 8, that they put incorrect date (of Dec 1) when renting out the property.. so basically my tenant living for free in Nov :(
Despite their mistake, they never agreed to pay that backdated missed rent

Issue #3:

They placed a horrible tenant, which wasn't maintaining the property as per Section 8 guidelines.. Twice I got letters from County about the property condition, grass, weeds, holes in the ground, etc which despite bringing to PM attention, was not fixed. Also, the tenant had stopped paying their porition since April 2020 (so were also short of $1800 of tenant portion rent)
The horrible manager Scott was replaced by someone more sensible Peter who atleast listened and responded in a timely manner to our queries. He agreed that the tenant deposit of $1099 will be transferred to us at 0% management fee so we can use it for rent this month.(thank you for that)

Issue #4: Later in August 2020, we got to know that the tenant has abandoned the property and trashed the place.
Now we even lost the Section 8 portion of the rent, and got to know today that they had lost their Voucher because of poor maintenance, .and the PM didnt even know they've lost their voucher.
Later we were told that they'll assess damage to the property, and after a week, gave some pics..that it will be a $2800 expense for ONLY trash removal & repainting.
Now, we never approved for this expense since we were debating to send another contractor for quotes. Upon asking for lockbox code after 2 days, so we can send our contractor for bidding, Peter said that they already started the work, and then sent me detailed estimate of $2800 (which also showed mold issues at the property, charging $900 to remediate) .
So here: they took no approval from us on such a big expense. Upon asking that any expense bigger than $500 should have owner consent , but we were told that its only for Maintenance and not for Move out.. Upon asking what's the cutoff for moveout expense where you need owner consent.. He had no response. 

Now our problem is:
During the first year, any decent turnkey company usually provides first year warranty on the house and tenants issue. It's not even ONE full year since the property was rented, they placed a bad tenant, and they are not even taking responsibility of sharing any cost of damages during the first year (for a newly rehabbed property).On top of all this: We explicitly told them that please dont place any new tenants at this property, they still have the 45 day written notice rule (even without any tenants ), which is ridiculous.. if we had a tenant, its understandable. 

I  feel horrified at the way its been managed and the way they shirk responsibility.  

Why should only we bear the burdent of 

(a) $2800 damages  (b) losing $1800 tenant portion (c) losing $200 cash right from start (d) incorrect Section 8 start date


@Maureen McAnn , @Clayton Mobley ,@Lindsay Davis .. care to comment? 

[Jared Friedman]

Sorry you had such a bad experience with Spartan from the get go. That totally sucks. For what its worth I own a bunch of properties with Spartan (9 of them) and they are not perfect, however no rental properties are perfect as you are dealing with tenants who can be great, or they can suck! Just a few things which from my experience with them may or may not give you peace of mind:

Your # 1 issue is that they gave you a rent range of $1100-$1300. They rented it for $1 buck less-$1099. That pretty much with what was in the range they said so I wouldn't say thats an issue at all. You never lost $200 cash flow because you knew that going in it could be closer to the $1100. Secondly- what communication would you want when they are marketing the property during those 3 weeks? When there is nothing to report there is nothing to communicate until its rented. 

Issue # 2) no clue on that.. However if your sending emails and you  got a response  4 months later I would have just picked up the phone and called them.  You should always have your PM's phone # on speed dial. Ive never had any communication issues with them as they are super responsive. You can even request to have monthly calls with your PM.

Issue # 3) The letters from the county regarding the grass, weeds, etc are kinda of common. Ive received those as well every now and then.  Did you have to pay $$ to clean up the yard or did the tenant do that? If you weren't out of pocket than thats no issue.  When your tenants stopped paying and you lost $1800 thats just what happens with a crappy tenant. I always make sure to have a good amount of reserves to handle mortgage payments, repairs, etc.  

Issue #4) Your tenant trashed the place & they lost their section 8 voucher. Totally sucks. Ive had similar issues with $2-4K turnover costs in the past- not just with Spartan but with other rentals as well. Move out costs and rehabbing after a tenant trashes the place are definitely my worst nightmare as well. This is what a crappy tenant can do.

Do you really want to have other contractors give bids to fix your place other than the turnkey provider? Thats the reason to use a turnkey provider as they have the relationships, etc to get the job done quicker and cheaper than an outside vendor. 

I also wouldn't agree that they need to take responsibility of sharing cost for damages during the first year. If it was a maintenance thing like you AC or roof or something then absolutely. But when a tenant does damage to your home thats 100% you the owner to fix (  actually go after the tenant- but good luck). Once you buy it ,its your property and your responsibility. There's zero turnkey providers that will pay to fix willful destruction of a property from a tenant.  I see where your coming from emotionally but logically theres nothing they could have done to prevent that. Just a really crappy tenant! Your beef is with the tenant in this scenario.

I would say you probably experienced the worst case scenario. Ive had rentals with them with the same tenant for 3 + years and most of my Spartan properties have no issues, but they do happen. Your situation is definitely worst case scenario. Once you get a bad tenant or an eviction it definitely stings and that first impression is everything.  I think its probably more of the pool of tenants than the property management. Ive always found them super responsive when theres an issue. I think its all about expectations.  You can never expect things to go perfect and you always will have unexpected things go wrong when owning rentals. You just took it on the chin your with your first property! Hopefully things turn around with your next tenant. Good luck.