My Background Continued...10

The last twist in the closing.

I have to do some speculation here as it turns out that we had to arrange a double closing. Not in the way a Wholesaler does a deal, one closing, then with the same property resells the rights to another buyer 1hour later. In our case, the Seller had to sell two adjacent properties on the same closing date. From what I think, I was correct that with a single closing, there were not enough funds to pay off all the mortgages, credits, personal IOU, and settlement agreement from the certificate of pending litigation (CPL). I believe that the settlement from the CPL a fairly large sum, had to draw funds from both closings to be able to be satisfied and then removed from title. We only found out that it was a double closing as we were asked to grant a one day extension to the seller, due to the buyer (of the other unit) requesting an extension to complete documents. We of course granted the extension and finally closed on the property on December 3, 2020.

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So if we go back to the beginning of my first real syndication investment which was in 2015 and how I got into Real Estate Investing. You could say I was already investing in Real Estate but sometime in late 2017, I saw that first syndication in Kansas City going downhill. I did what I could to keep the General Partner actively engaged in that property. You could point to many factors for the reasons it went down. All of the ones I could point to were outside myself. The GP's personal relationship ending, his lack of attention to details, signing contracts without reading them!! , poor hiring policies, being stretched too thin and involved in too many projects at the same time, his being over leveraged, being overly optimistic in his expectations for results and returns.. etc.

The only thing I could do was to keep writing emails and pushing him to pay more attention to our property and handle its outstanding issues. I made action lists from our meetings and even recorded emails where I would notate the number of emails that I had sent on the particular issue that were still not resolved. I would invite the GP out for coffee/ or the gym and breakfast (we both went to the same gym) and discuss this property. I would not say the GP was outright depressed, but I could tell that he had lost some of his interest in real estate. Either by a constant list of problems with this property, or by having too much chaos in your personal life, the GP was allowing our investment to slowly go from a +cash flow to -, to - - cash flow.

After sending a particular list SIX times I realized that the problems with the property were beyond the GP and his ability to regain control . He was short on funds to make security fixes and instead of spending to fix the problem, he cut expenses by firing a competent property manager and hiring an unqualified person to replace the company that was doing the job. From then on, there was no accurate record keeping of collections or expenses.

As I am one to really look at my contribution to the problem or how I could fix it, I contemplated taking over the property to see If I could deal with the problems any better. After thinking about it, I realized that I lacked the skills necessary to take it over. I was pretty sure that It would also be tough according to the shareholder's agreement that I signed. So in late 2017, I decided to study up and learn more about physically managing properties.

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On a side note,  I am starting a new job as a licensed Rental Manager tomorrow.  This is part of my long term plan which I will lay out in future posts.