All Forum Posts by: David Cas

Hi, this is in California.

Per our lease, the tenants were supposed to leave the property in the same condition it was found (minus wear and tear). 

We agreed to let the tenants hire a company for deep cleaning and carpet cleaning. 

The cleaning company used the wrong chemicals to clean dirty spots and have damaged the carpet in several places (seems like permanent damage). I have tried to reach out to this company several times to fix the mess but they are not answering.

Am I wrong to assume the tenants are on the hook for this? They have asked me to pursue resolution with the company directly, and to return security deposits. I plan on withholding security deposits until they fix it.

Thank you.

Thank you for all the helpful comments, we will be pursuing this.

We acquired a 40+ unit building earlier this year and have since then gone through 2 different management companies. We've also had to update leases to reflect changes in utilities / internet+cable. Obviously this has created disruption and as expected some tenants have started to leave.  

We are considering having the new management company deliver letters to each unit that acknowledge the recent changes, projects we are working on to better their quality of life and a $15-$20 gift card for their understanding.

Part of me understands we are running a business and giving stuff away might set the wrong expectations.  However, if we can keep just one tenant who would otherwise have left it would make this small investment worth it.

Thoughts?

Thanks.

@Pat G. The syndicator is putting the whole deal together end to end. Finding deal, working with brokers, lawyers, banks, day to day operation, etc - all the items Brian mentioned. The operating agreement is fairly simple and our only responsibilities as investors are expenses. Say you have 10% equity then you are responsible for 10% of expenses. The syndicator, as 80% owner, has responsibility for 80% of the expenses. I think this is the main difference and mostly applies to expenses that go beyond gross income (say we have an unexpected $10k expense after income, the syndicator is responsible for coming up with the $8k) - Curious to know how this works in other syndicated deals.

@Nathan Gesner Thanks Nathan but I posted here for a reason. Google or NARPM will not give me actual experiences or networking opportunities with people such as Mike. Unlike standard searches, BP can be extremely valuable in filtering out noise.

Hello.

We have recently purchased a 22 unit property in Johnson City and are looking for a management company in the area. 

Wondering if someone who has dealt with some of them could point us in the right direction.

Thanks.

David.

Hello.

We have a 10 unit property in Denver, NC and are looking for a new management company. We are just not satisfied with the work the current one has done over the past year.

Denver is ~40 minutes away from Charlotte and we are looking for a company a bit closer to us. 

Thanks in advance.

David.

@Brian Burke Thanks for the feedback again. Regarding the financing that's how it's being set up, I just worded it poorly. On lack of experience, our sponsor has been doing deals like these for the past 7 years, closed dozens of deals (200+ units) across a few states. Although I am fairly new, this is not a case of the blind leading the blind. 

On the ownership %, I agree and it's the main reason that prompted me to post here.

I'd like to thank everyone for the feedback, it's time for me to negotiate better terms.

Thanks for the feedback, really helpful.

@Daniel Chang Regarding expenses, when there is positive cashflow to pay everyone it's a non issue. In case of net loss, the amount is deducted from the owners for that month in proportion to ownership %. Anything in between is distributed among investors in proportion to ownership %, up to that 12%. The sponsors return is the preferred amount minus their responsibility on expenses. So with big unexpected expenses, the sponsor takes on the bulk of the burden.

@Brian Burke The LLC does own the property. The difference here is within the entity, ownership is split 80% towards the sponsor and the remaining 20% among investors. Reasoning being the sponsor is the one on the mortgage, investors are not.

On future deals, the sponsor is willing to take a minor (10-15 %) ownership to oversee operations as long as we, partners, take responsibility for financing it through a bank. As of right now, we do not qualify for financing these large deals so it is a way for us to build assets/credit history. 

Does this make sense?

Hi -

I'm an investor & new partner working on a $1M+ deal with a syndicator / sponsor. Here's how the deal is being put together:

- Property ownership: Syndicator ~80%, rest split among investors depending on amount invested. ($100k investment would get 10% ownership on a $1M deal)

- Cashflows: Investors receive up to 12% annual return on their investment paid monthly. Investors get paid if NOI is positive for the month. Syndicator has preferred return for first $500, any free cashflow beyond 12% goes to syndicator. Expenses split according to ownership stake (in this deal, syndicator has responsibility for paying 80% of expenses)

- Additional details: Mortgage under syndicator. Syndicator put the deal together end-to-end (finds deal, negotiates, closes, sets up LLC, works with lawyers/banks/accountants/management companies, etc)

I have a good relationship with the sponsor and am simply looking for an opinion as this doesn't seem to fit your traditional syndicated deal structure.

Thanks!!