Hello All! I am sorry to hear about your experience Sarah. I have been an investor with ABC Capital since the spring of 2014 and then reinvested with them in the fall of 2016. My first deal with ABC I bought a property in West Philadelphia for roughly 70K and bought it in cash. That 70K included a full brand new renovation. The renovation took a little longer than anticipated but not much longer. As an investor for close to 25 years I know that construction very rarely if ever gets done on time. Experienced investors know this. However, if my memory serves me, I believe the construction only went 1 month over the anticipated time period. Throughout the entire time I received a rental guarantee from ABC during my rehab and guaranteed for up to 1 year. Every single month, i received rent, even when my tenants decided to move out for the last 2 months of the rental guarantee. Today that 70K investment is worth MINIMUM 120K :) as the Philadelphia market has been skyrocketing the past 5 or so years! Whenever I wanted additional information or any updates they always got back to me in a relatively short period of time and they always kept their promises with regards to rental and maintenance guarantees. I wanted to reinvest immediately but wanted to see what would happen after the first year of guarantees. So I gave it another year and in 2016 I reinvested because things went smoothly for me. I had some maintenance repairs that ate in to my return but that is to expected, especially in the lower income areas. The good news is that the repairs were very affordable being that the materials are very affordable. In 2016 I reinvested with ABC and things were pretty similar the first time but there was one thing I noticed. The construction took longer than the first time (3 months delayed instead of 1 month) and it was harder to get in contact with people although they were still definitely responsive. It is always concerning when you want an update and people are not as responsive as they normally are but I realized that this was due to the amount of volume in rehabs ABC was doing and due to the amount of clients they had. Back in 2014, ABC was still a relatively small firm, as the market started to pick up it is very clear that ABC started doing a lot of business and as any business owner knows, it is very difficult to scale a business. Although the communication lapses and construction delays did definitely give me pause, I always got my rental guarantee and maintenance guarantee, the construction always got done and they always kept their word. Their customer service is not like it was in 2014 but it seems to be due to the increase in clients and business, not because of a lack of effort or care.
What I think gets lost that most investors do not know, especially when they are new to the game, is that they always expect things to work perfectly. Things NEVER work perfectly. When you are investing in a high cash flow market where properties are below 100K and returns are in the double digits its foolish to think that there will not be issues along the way. If you are an investor and you want a clean and easy experience, invest in San Francisco or New York City where you will have to pay 1 million dollars, you will yield 3-4%, you will subject yourself to tremendous speculation and unfavorable landlord tenant laws but you will have a clean and easy experience (and even then you would be surprised when you get hit with a 7K maintenance issue which will essentially wipe out your whole return!). It seems like you bought a brand new property for 40K below market value, you received your rent per the guarantee and you are in one of the hottest areas of the entire city! I am sure the experience was very frustrating from what you said and that is definitely a bummer but what is more of an issue from an investment standpoint is if you did not get your returns or the house did not appraise. Both of which you got! Plus knowing the Philadelphia area that house has definitely appreciated since you had it appraised! For all the young investors please realize that if investments are going to be towards the double digits then there will be risk and there will be more likely more problems than an investment that yields only 3%. This is simple economics. If I were you I would use this as a learning experience by managing your expectations. If a terrible experience is buying a brand new property for 40K below market value at the time, in one of the hottest areas of the city, while still getting your returns, and having all the issues you ran into eventually resolved just because it was "a tremendous hassle" then I wish I had a terrible experience too!
My personal opinion is that ABC capital has grown to fast and it has resulted in communication lapses and slow construction timelines. Apparently they moved back their rental guarantee from 3 months post close to 6 months post close on rehab deals and a gentlemen told me that it takes even longer most of the time recently. Obviously this is not ideal but this is part of the business of investing! I always know that ABC has taken care of me and my investments, has always righted their mistakes and most importantly the investments have always performed. I will take performance over convenience everyday! If you want an easier experience, maybe NYC or SF is the right market for you. Hope this calms some of your concerns.
