All Forum Posts by: John Chapman

I gotta ask @Sagar Parikh, why are you using a separate credit card for each building? And why is each building held in a separate LLC? Are these larger apartment buildings (I get that) or are these 2-4 units? If it's the latter, I'm not understanding why you're structuring things the way you are. Just curious as I see a lot of people on BP overdoing it with LLC and entities and what not.

@Marian Smith, I gotta ask, what's with the surprise inspection?  I'd find that kind of offensive.  I know there's a camp here that insists on it, but that seems kind of overbearing.  If I was renting a house and the landlord wanted to do a surprise inspection, I'd be pretty annoyed.  Also, simply ignoring her request to reschedule doesn't strike me as very professional.

And why are you replacing a furnace filter, which is not an emergency under any circumstances?  You're the landlord.  Give them a box and instruct them to do it.  Have your maintenance person do scheduled inspection and make sure they are changing them.  

Overall, I think you need to take a step back.  Simply, give them a notice of non-renewal when the lease is up.  I wouldn't escalate things, though.  Just going to cause you more grief and expense.

So you're looking to tag them for a securities violation, correct?  What are you looking for?  Rescission? This sounds like something an experienced commercial litigator could handle for you.  (Without knowing more, maybe one with some experience in securities work.)  It's probably in your interest to go with a smaller shop to keep fees down.  You likely don't need someone with the specific experience of suing a syndicator, just someone who has handled sophisticated commercial litigation.  I would start by asking local business people you know who they go to for business disputes.  

@Russell Brazil's question is spot on.  Why do you think you have a lawsuit other than the deal failed and there was poor communication?  Usually those PPM's have a gazillion disclosures, so any failure-to-disclose theory usually doesn't work unless it's something really major and wonky.  Also, you're likely going to have to pay by the hour for this, so there needs to be a pretty decent amount at stake.

@Nico Murillo Why on earth would you come to Texas before absolutely exhausting your opportunities in California or places closer, including places like Arizona?  (I am assuming this is the case, which seems reasonable given the size of CA and range of properties.)   You won't get the benefit of our lack of income tax but you will get the delight of our sky high property taxes and wonky foundation issues.  From everything I see, hear, and read, there are opportunities in CA, you just need to work for them (like pretty much anywhere, including Texas)  Maybe you'll have to go a few hours out from where you live but that's still a lot closer than the Lone Star State.  Not trying to be a downer, but I see California investors come out here and make mistakes all the time, at least in DFW, which is a tough market.

@Joe P. this is a very well written and transparent post.  Everything you describe is very, very typical and, if it hadn't happened this first year, it would have happened in some other year.  I commend you for being honest about your experience as so many others only talk about the upsides of investing.  While I personally would not use a PM if I was local, your reasoning for hiring one is sound and articulate.  It also shows remarkable self awareness of what you're good at and what you want to do.  It sounds like you handled everything correctly in terms of repairs, and I suspect you will enjoy many future years of healthy cash flow.

If it's any consolation, I bought a fourplex that ate my lunch for the first couple of years (repairs, bad tenants, you name it.)  I still have negative feelings about that building it was so traumatic, but once I got past the bumps and learned a few things, it's been far and away my most profitable investment from a cash flow perspective.  I hate the building but love the investment so I can't bring myself to get rid of it.  

@Ethan Wofford it can often be a very thin line between wholesaling and real estate brokering, but I would be very cautious about referring to your role as "marketing the property and selling it for commission."  I feel pretty confident that that type of service counts as real estate brokering in almost every state.  

If you're doing everything you say above (which is probably more transparent than 99% of wholesalers) then why not just get a license and avoid any of the potential for unlicensed activity?  Sure, there are disclosure laws, but I've found them to be not that onerous.  

Why are you typing in all caps?  Makes it hard to read and looks like you're yelling.  Also, curious to hear responses to questions above.

This is your third post where you boast about your investor's (insignificant) return on a completed deal diary thread.  I actually bit on the first thread and posted a nice post in support of you.  The second one made me scratch my head but there was a guy from San Antonio who politely called you out and said it's obvious you're just looking for private money, and this is a not-subtle way to do it.  Assuming your deals are legit, there's no reason to post these types of threads.   Just post honest completed deals, comport yourself with dignity, and you'll develop the relationships you need to tap more private money.  These types of threads aren't helping you, I promise.

@Russell Brazil, man, that's a pretty strong response. Even if everything you say is true, they were still within their contractual rights to do Items 3 and 4. Aggressive and crappy business behavior on their behavior, yes. Fraud, I'm not seeing it. I'm just not seeing how the undisclosed licensure thing ties into the EMD issue or what your damages are from that particular breach of disclosure. I've got a license down here in Texas, and I'm an active litigator as well. (Done tons of breach of contract cases, including real estate ones.) If you feel compelled to report them to regulatory authorities for failing to comply with the ethical rules, that's one thing and you're certainly within your right to do so. Not really sure how your state guarantee fund works so I can't really comment.