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? 

[Chinmay J.]

@Abhijit Trivedi  - Dude that was awesome ! I was very close to reaching out to Spartan to book property that they recently sent me.. With my demanding 9-5 job, I am unable to do out of state investing w/o support system, and I was under the impression until this point that Spartan provides a superior support system. I have had several calls with Danny Cole, and even got preapproved from their preferred lender..

It seems that Spartan puts lot of restrictions on you like:

a) you have to use their preferred lender or have EMD of $5000 instead of $2500..

b) Absolutely no say in the tenants they place.

c) $500 renewal fee.. Danny Cole told me that most of their tenants renew for 3-4 yrs.. They gave me the impression that tenant turnover should be the least of my worries..

BTW - I am not new to real estate.. I own and self manage 4 properties in Northern VA, and used to be a realtor too. In 2021 I put my license i referral status as my job has become my primary focus. Considering various OOS markets for buy and hold better cash flowing properties, and I thought.. that Spartan fit the bill

*** CJ OUT ****