All Forum Posts by: Dennis Meints

Nailed it. PM's have a very challenging property to get turned around. You laid out the issues very accurately. Thanks for the insights!

However, I will say the East Side of Saint Paul isn't what it was when your uncle lived here. Pockets of it may still be, but on the whole, it's a rising area with many new businesses, restaurants, and even new housing (not my units tho..). In all my interactions with the neighbors to my 4-plex, there is a definite pride of neighborhood and community there. Many have thanked me for my efforts in stabilizing this property as I've heard it's been an issue for over a decade. 

Thanks for giving me some insights on how to help my PM's!

@Drew Sygit - thanks for the screening process tips. I'll definitely be reviewing these with my PM. This was very helpful. Thank you!

They advertised as paying and had the documentation to prove they were "up to date" on rents. The red flags I didn't see: all were on month-to-month leases and the two that ended up being non-paying were essentially brand new to the building when I purchased. I think they had only been there for one or two months at the point I purchased.

They didn't get paid for any of the self-managed rehabs that I performed. They only get the 10% on repairs and upgrades they manage via tenants or my request.

$580/month ($145/unit) + 10% on any repair orders. I am paying them to market and showing the property as well as managing what tenants / tenant issues we have had. Basically, I'm banking on tenant placements and future management.

To be fair to them, they've handled some unsavoriness that was not mentioned that I'm glad to have had the support on. I do watch their marketing efforts and get updates on showings. So I know they are not being idle with my property. They also manage another single family I have and that experience has been fantastic.

Scott! Great question. I added a revision to my post just now. I think the main connection to COVID (and my initial angst) stemmed from the inability to evict due to non-payment through the COVID moretorium. 

Having typed out the larger narrative, it does look like my issues stem well beyond COVID. What advice do you have for me?

I purchased a 4-plex in November of 2020. Class C property in a neighborhood that houses a lot of voucher holders and lower-income families. I inherited three tenants that were advertised as paying and up-to-date with rents. I employed a full-service property management company that has many section-8 rentals in its portfolio to help me navigate this.

Came to find that 2/3 of the inherited tenants were non-paying. The paying tenant left after a month (she was on a month-to-month lease). While receiving no rents, I rehabbed the vacant units (they needed many repairs to pass section-8 standards). Eventually, the 2 non-paying tenants left on their own accord (April/May of 2021). I then rehabbed those units. I've since had 2 new tenants move in, but one broke their lease (unlawful weapons), and the other is wanting to get out of her lease due to not feeling safe in the building (related to the aforementioned issue). 

Admittedly, I could be leaning into my PM's more than I have. Other than doing the rehabs, I've let my property managers handle everything. The fact is, in nearly 10 full months of owning this property I've been sinking money non-stop into the mortgage, insurance, property management fee's, on-site washer/dryer (leased), etc and I can't see this turning around for another 2-3 months (at the earliest).

What should I be doing TODAY to get this property turned around? 

My new strategy for STR's is to buy in locations where people from a primary market, like Minneapolis, drive to for a weekend vacation or family get together. This means, Brainerd Lakes area, the North Shore, or even the Mississippi River Valley. Buying outside the primary market gives me less competition, and knowing these areas are frequented with local tourism (and lower gov' regulation) lends itself to STR success.