All Forum Posts by: Ann Howell

 This is great advice.  Our situation would have been worse if we did not hire a fully independent inspector who visited the property twice.

 Thanks, Greg.  We will do that. We are planning to file a complaint with the Attorney General, but we did not think about the Real Estate Commission.

 That is great advice.

 Thanks for your post.  We spent a lot of time with the seller and the broker trying to work this out and we got nowhere. In last last few weeks, we have had multiple BP folks reach out to us who were in the same situation.  It was time to make this public.  I saw a post in the last few days that Maverick is having a Webinar for investors to learn about the Birmingham market.  Not sure if it is the same sellers or not, but others should know this history.

 I can see why turnkey does not work well for many of the hard core RE investors here on BP. We won't get the same kind of great deals and returns that many of you achieve.  But it works for us right now.  I work an intense corporate job, have kids at home and have ailing parents.  I have money but not time.  I realize that I pay a premium for the properties - that is how the turnkey company makes money - but as long as the property meets our financial expectations, I am okay with that. Over time, we are likely to start doing more on our own.

 We hope to invest in Houston at some point.  Right now, our main goal is cash flow.  We found that the Houston market seems overpriced relative to rents.  Also, the property taxes and flood insurance take a big chunk.  We will need to do some serious hunting and rehab to get a good cashflowing property in Houston.  Right now, turnkey fits our needs better.

 One mistake we made is that we spent more time checking out the broker, Maverick, than the actual seller.  We tried to to due diligence during the rehab process, but it is hard to do if there is fraud involved.

 We have been talking with several other BP folks who are in the same situation, so we will see.

 Yes.  We should have listened to our gut during the rehab and walked away from the deal. At the time of close, we had been working on the deal for 5 months.  And the appraisal came back for a good value, so we moved forward.  In the future, we expect integrity through every step of the process!

In March 2015, we worked through Maverick Investor Group to purchase a property in Birmingham, Alabama. The Seller was Birmingham Income Properties - owned by Brad Lewis and Bryan Conwill. Property Management would be done by their other company, Arbor Trace Real Estate.

There were many difficulties during the rehab and purchase process. Most importantly, about two months after closing on the purchase, we discovered there was not a tenant in the property.

According to our contract, the house would be fully rehabbed with new plumbing, electrical and appliances and have a tenant in place before closing. We were also promised a paying tenant in the house at closing; a specific rental amount; a specific cap rate; and told that if the rental rate was not met, the sales price for the house would be lowered to maintain the cap rate. All of these stipulations were promised jointly by Mr. Lewis and Maverick during a webinar in March.

Problems started during the rehab process. Timelines kept getting missed. The Seller claimed work was done that wasn’t and frequently lied about issues. Fortunately we hired an independent inspector who helped us hold them accountable for doing the promised work. The inspector pointed out an old water heater that the Seller claimed was new, among many other issues. We often discussed these issues with Maverick; their response was to praise our due diligence and repeat the promises we had been given.

The Seller told us a tenant was lined up, but at a lower rental rate than promised. We mentioned up the rent guarantee. The Seller refused to lower the sales price, and eventually told us the tenant had agreed to the original rent amount. Shortly before closing the Seller sent us a copy of a signed lease. We closed on the purchase in July, and hired Arbor Trace for property management.

Almost two months passed and we did not receive any rent or owner’s statements. We contacted Arbor Trace to ask about the situation; we discovered the companies were collapsing in dramatic fashion. One staff member told us the house we had bought was not occupied. We called the electric company and verified that there was no power at the house. The lease we had been shown in order to get us to close at the agreed price was a fraudulent lease!

At that point, we reached out to another PM group in Birmingham. They helped us secure the house (which was empty) and get the lawn cut (there was a city citation on the door about the overgrown lawn).

We are not convinced that this drama is over yet. But so far, we have:

• Bought a house that will cash flow for $200 less a month than promised
• Dealt with a fraudulent lease
• Had to find a new PM company
• Had to spend at least $1000 to get the house rent ready
• Paid a $500 bill to the electrical company to cover an unpaid bill
• Been sent one check by the Seller to cover some costs – the check bounced (twice)
• Received no substantive support from Maverick – they completely failed on their due diligence

Knowing how BP folks feel about turnkey properties in general, I want to say that we are not against the approach – we are in the process of closing two other turnkey properties with two different companies.

Our warning – stay away from the groups and people mentioned here and always do your due diligence!