All Forum Posts by: Jeff F.

@Jerry W. - lets have coffee if you've got time. 

@Patrick Winstead - Our meetups are monthly and you can find them on meet up.com - 3rd tuesday of the month. 

@Jerry W. - 

They did not invoke such a clause, and if they had, I dont think it would have mattered - They still owe me money because of their poor performance, which I am still trying to negotiate with them. I've been able to stem the losses (they were causing) but now I need them to pay me damages. 

Time for another update. I feel like I can finally see the light at the end of the tunnel. After the debacle with the holdover tenant (See trashed unit pictures above) I finally fired the property manager. They accepted precisely 0 responsibility for this, and basically blamed everything on the old property manager. I am certain the old property manager caused problems, but my main issue was they did absolutely nothing about getting a tenant that had overstayed their 30-day notice out. at the end of the day, I hired them to be the jerk and do stuff like that, and they couldnt be botherd to do it. 

Property management contracts are not easy to get out of. I wrote a long email (to establish a paper trail) with the incidents where I thought they did not perform their job, Looked up a few statues and accused them of a few things that it would have been pretty easy to prove they did, had it come to that and sent it over. For those of you curious about what to include here's what I was told (i am not a lawyer, this is not legal advice)

• name everyone, allege everything
• site state statues
• tell them when to respond by

That was more or less it, and as expected, they basically ignored most of my complaints, and didnt respond by the deadline I gave them. There are still a lot of unanswered questions and I know i'm down a bit of money. Typically I'd just write this off as the cost of doing business, thank whomever I feel is holy that i'm no longer chained to them and get moving. The fact that they accepted NO responsibility "I was trying my best to fix this mess from the old PM" and that they ignored the issues that I brought up that were clearly their fault has annoyed me, and I'm likely going to pursue this further. 

On to the update. 

I am now the manager of this property, and things are going much better. The units that I have had filled by property managers have taken approximately a total of 8 months for 3 units. This is approximately 2500 of lost revenue, and most of them filled for lower than I had hoped/thought they would. 

Because of the way things worked, I had a recently turned unit come open around the same time that 2 leases were coming up. I offered both tenants the option to stay at a raised rate and both declined. Well that just meant that Now I had 3 units in the same building and based on the success of the property manager, I was kind of worried. What if I couldnt fill them? How long could I sit on this (hint: With the rehab costs, not long). So, I decided to raise rents on all the units by $25 per month, based on my limited experience at my other properties and see what happened. I budgeted (very conservatively) for 600/mo for the 1 bedrooms in the building. 

I Put them up on zillow and let my systems start getting people in the door (I use a combo of canned responses in gmail & calendly). Immediately, I Was overwhelmed with calendar appointments & showings. I filled those 3 units, as well as another unit I manage in town in 4 days, at a higher rate than the property manager said I'd be able to get. I do not know what took them so long, but obviously it seems they were not terribly effective. I had someone move in over the weekend, as well as leases in place for 2 that are ending on september 25th. That experience just solidified my desire for not hiring a property manager (caveat: When I first bought it - I needed one) and for systems. 

Everything there is now running smoothly, and the contractor has moved into the final unit of the building and started painting and everything.  That's the last one, and I'll probably put a few things in there (ie a dishwasher) that the other units wont get. Im also thinking (at 13 properties) that im getting big enough to need some 'standby' appliances in case some go bad. Anyone have any thoughts on when to make that happen or what level you need to be at?

I'll report some final numbers later (including costs) but my initial numbers for ARV were 390k - 410k. It looks like it's going to come in at 4700-5000 per month in gross rents, so it looks like my initial numbers were a bit low. Hopefully, this will give me enough cash to pay off all the debt im carrying related to this (it's an f-ton, and it's almost all high interest/credit cards at this point) and walk away with a little extra cash.

refinance paperwork was started today, though they (as usual) need more. 

@Dave Peterson I would find a new PM. 

Hey All - Time for another update:

As for the physical condition of the units, I've got 5 of them turned and are rented. One went for $75/mo higher than I'd budgeted and 2 went for $50 or so lower each, so I'm a bit behind. I'm working on correcting that for one of the tenants, but the other one is a year lease and creating problems, so I may have an opportunity there. I was also able to rent the shed to the coworker for $60/month, so I'm pretty excited to have that extra bit of cashflow for the appraisal (which I hope will be soon).

The unit with all the kitchen/plumbing issues is almost done - it needed floor joist work and a new wall, so that got expensive quick, but they are wrapping up paint and putting the floor on, so hopefully that one will be ready for rent in 2-3 weeks. We are likely going to get into a slow time here in cheyenne, and I'd like to get everything going before that. Hopefully this will be ready and I'll be able to sneak someone in there. I wont go for the appraisal until the entire building is turned & full, but because of the shed Im going to be in a good spot I think. That extra $60 a month wont do much for cash flow but will be huge when the appraiser comes back. 

There should be a new unit getting filled this week. Im a bit curious as to where the property manager is finding these tenants and also what they are doing, because it sat EMPTY all of june and all of july and half of august, after going with the rate they suggested then dropping it twice. Not happy about that, and coupled with other issues, i'm seriously contemplating taking this over myself. 

I mentioned in the last update the tenant was supposed to be out 7/31. Well the property manager sent them a letter, and they were supposed to be out 7/22 instead. these were my LAST inherited tenants from the old owner (ones from the property managers are another story) and i knew what would happen. I called the PM the week before, to make sure they were on top of it. I wanted them out, and they said ok, they'd take care of it. Nothing...call every day the next week....tenants giving them the run-around, and they are eating it up. heard the following from the PM

• tenant wasnt home/didnt answer the door (of course not)
• she'll bring by the keys before 5 tomorrow
• her help stood her up, so she'll be done tomorrow. 
• she's almost finished, will be by later this afternoon.
• your lease non-renewal letter is "not a legal document according to my attorney" (She did not have an attorney and yes it IS a legal document)

those excuses went on for a week, then I told them get her out. They say ok, it's friday and if shes not out we will start eviction on monday....I call, i get "I dont know what's going on there" .... I email, i get no response. This goes on for a week. She obviously didnt remit rent for august (because she wasnt supposed to be there)...im checking with them every day, still getting no answer or 'insert tenant sob story' from the PM. I hired them so I didnt have to be the jerk....and they arent doing it. So....on Aug 8, I get my big boy pants on and walk over to the sheriffs office ($35 dollars, cash, exact change....) and file a 72 hour notice to get them out. They serve it the next day, but because I was doing nothing (ie, expecting the PM to do their job) she doesnt have to be out till monday, 8/13. At this point, she's 9 days away from 1 free month on me and im pissed. My contractor's pissed because somethings leaking in her unit and he cant keep working on the unit underneath until he figures that out. Finally this morning, no sign of her, no activity. 

She's gone, but has moved almost nothing (but the 10+ cats she had). there is trash EVERYWHERE, contractor estimates 1 rollaway. Whatever, at least she's gone. Pictures Below:

For those still following, it was/is clear they had 0 intention of moving, at all, until they got the 72 hour notice. they had almost 2 months to pack and get stuff out of there and didnt. The PM let them, even when I was all over them about it. That was the last straw for the PM (And we are forgetting the fact that because of them, i've gotten 2 insurance cancellations and 4 late fees because they have not paid that bill since they took the property over). They also haven't signed a tenant to a new lease (with 6 weeks notice.........) and he's there month-to-month at the moment, at a lower rate then he should be. This agreement will be terminated for non-performance, and Im hoping I do not have to take it further than that. 

as usual, that's not all...one day I get a call from contractor...'hey there's water everywhere in this basement unit' checks uptairs to recently vacated unit...it's coming from above....knocks on door above... "hey we need to check your sink" 
response: "Oh the sink...yea it was leaking i fixed that".....
The guy took the P TRAP off (For no one knows why - he was clearly on something) and let the water run. That unit has been done < 7 months and apparently it's "Trashed". Just another thing....

So, that's the latest update from this place. I did have a fantastic tenant ask if I have some bigger spaces and I'd love to put them in that disaster pictured above when it's done, so I'm hoping to be able to make that happen.

last thing to do is get the electrical switched over to self pay from the tenants. The part has been ordered but not arrived, and the work should be done soon. 

Numbers for this are still looking good, and I'm hoping to have quite the refi in a few months. I dont want to jinx myself by posting them, but it's CRAZY to think that about 2 years later, i'm finally here. 

@Jonathan Roberts

Welcome - There's quite an active group from cheyenne here. We meet monthly, and have all types of people at the meet-ups. There's even a group that comes up from fort collins to join as well. 

Typically, we have a guest speaker that focuses on a specific area of REI. Examples: A guy with hotels who used business /personal credit cards for free flights, a guy doing private investing/hard money lending, and last month was a guy who told the story of a 12+ property deal spanning 2 states and 1 primary residence of the seller.

Perfect timing, as next meet up is less than a week away. 

details:
Date: Tue Aug 21

time: 530 pm

location: Accomplice Brewing, Cheyenne WY

Topic: Local market discussion. Hope to see you there. 

hi @Tina S. - I Hope you can come to the cheyenne meet up next week. Would love to see you.

As far as sounding like an idiot, dont worry about it. i've found people treat you like you're a demi-god in some sort of position of power (because I guess you are) and will just take it. You'll get better. 

I typically let those go to voice mail (im dont like being on the phone) so I try and get them as much info as I can in the email that they get. 

So when I list on zillow, here's what happened - 

1) they fill out the zillow form. 

2) that emails me, and gmail sends them an auto reply. the auto reply has a whole bunch of my FAQs in it (gathered from showing the place) and then a link to set up an appointment for a showing. The goal is to get them in, show them the place and then have them fill out an application - after they see it - through cozy that will do credit/background checks

3) They apply, I pick the one that meets my criteria, set them up in cozy and consider it done. BP has all the "legal" forms you need 

Im kind of a systems nerd, so DM me or if you can come tuesday, grab me and I'll tell you how it works.

Another update on the property:

The last 2 units I leased 2 months ago would have been better off had I sat on them. The prices were so short compared to what I can get now, im pretty bummed. Such is life. One of them is a 6 month lease, but the other is a year. 

All of the common areas are done (save for one that will be done next week), and that will likely be the last of the things I need to do to the building (yard is another story) that wont provide a direct return. I'd like to do the yard, fence & windows, so that I'll have a higher quality property that will attract higher quality tenants. 

I've just got one more finished and everyone is telling me to market it way higher than I thought (it's way bigger than i remember) and that number alone (Pending i get it) will get me back on track to the appraised value I would like. 

I've also given my final inherited tenant notice that I will not be renewing their lease, so they will be gone 7/31. 

The big news this time is the property manager. I hired them right after I closed and thought we worked together well. go back to my posts in mid-2017 and I had some issues about the speed at which they fixed things, so I fired them as a contractor and kept them as a PM, which i thought they were good at.

At the end of april, I got an email from the broker saying she was resigning because of an investigation and that the next day would be her last day. A few days later, I talk to the owner of the firm (not the same person) and he said he'd transferred all his clients and basically "merged" with another broker in town who can manage these properties. Very confused, I said ok and moved on. 

Then the old property manger called, and it turns out she didnt really get along well with the owner, and they had a major disagreement. She wanted to open her own firm and wanted to know if I was interested in going with her. I was because I thought that everything had gone pretty good since she was managing my property, and told her to call me when she got set up. I didnt hear anything for a bit so I called her. Eventually we got to talking about what she needed to start, and she started listing things like "an office and a phone line" (......) and I asked flat out how much she needed, because I was willing to give her a portion of it. the amount wasnt much, so I told her to send me a business plan and id look at it. 

I was hearing a different story of financial impropriety from the new property manager, and when I called the state real estate comission to figure out if anything was actually being investigated, he gave my typical cop speak and said "i cant speak to that" about 100 times. it was frustrating, because all I wanted to know was 'is this person full of ****'. I didnt get that. They basically just told me I'd know when/if something got forwarded on to the real estate commission or the police. Not super helpful when someone wants cash now and is offering an equity stake for something I feel like I could add value to. 

One thing I realized from this is that I have a LOT of good friends. I had a few phone calls and conversations with good friends about the opportunity of investing in a new business, and what the risks were as well as what I thought could happen. I even had a call with the wonderful @Mindy Jensen who gave me a lot of great things to consider. 

I ended up not investing in the venture because the HINT of financial impropriety (and the new PM saying they need a forensic accountant) was enough to give me pause. 

So I ended up going with the new firm instead of the old broker, and I'm regretting it. Because of BP, I feel like I'm better at managing properties than they are, and so far I've gotten 2 calls about missed payments and they've had my account for 2 months. Both of those calls were today, and that plus an email that has taken 36+ hrs to respond to has really made me regret signing them.