All Forum Posts by: Rodney Lorenzo

Quote from @Rodney Lorenzo:

@James Hamling: Wow, did you wake up on the wrong side of the bed today? Do you usually take out your monthly mood swings on people you don't know, because you can behind a keyboard? We're all here to help each other out. Not attack and berate one another. You don't know me from adam and I personally would never speak to anyone with the words you used, but like the coward that you are, you do it from behind a keyboard, because I doubt you would say these words to my face. Where are you located exactly?

Lol, said like a true master of assumption with an affinity to completely swear off even the most basic and simple of research and due diligence. 

Where am I located? So looking 3/4 inches to the right of my name here is too difficult a chore? It literally says it right here. Or are you inferring the good-ole playground bully tactic of inferring your gonna "come get me" lol. Be careful what you wish for Rodney, "Oorah". 

I spoke to you as I would any acting in an emotionally unhinged way, seething with self-pity as you did. I didn't attack or berate you, I delivered raw unfiltered truth and honesty, a cold-hard slap of reality across the face. Lol, yeah definently an action of the cowardly, lol. 

If your skin is so thin that here you sit freaking out at some words delivering a sobering truth, wow, your gonna get destroyed dealing with the D-class market you've described. 

You had a choice, to show true colors of being one in a hard place really in desire of help, or being one who's created his own experience and in the saying "getting what one deserves". I think this shows evidence of the later, and with that I bid you adieu. 

Quote from @James Hamling:

@Rodney Lorenzo why are you blowing off @Bob Stevens and not gobbling up every golden nugget he's trying to drop on you here? 

Yeah, I get it Rodney, poor-you, you did exactly the opposite of what all us professionals in REI say to do, what every legitimate writing on the subject directs, and surprise-surprise it's going horribly.

And your response: to Double down and TRIPLE down on doing the exact opposite of ALL sage wisdom and directive's to go "off-market" to try and sell this thing yourself because as you've already proven your qualified at this kind of thing..... But to also just load it up with whatever garbage off the street with a pulse so you can inflate your properties value to dump the flaming mess on an unsuspecting buyer. 

So first off Rodney, what makes you think your going to find someone that completely STUPID, with that kind of money to burn? Off-market. Huh? How are you going to find the idiot with a few hundred K burning a hole in his pocket? Who also know's diddly and squat about MFH, because he's gotta miss every GIANT Red-Flag of the hot-mess your situation is. 

That's the reality Rodney, WE are the potential buyer's, and WE will sniff out every single stupid move a mile away. We will know you loaded it with fluff tenant's. We will know your drowning and without a clue. And you will pizz us off if you lie about it, and if your really pizz off the wrong potential buyer, they may just contact your financing and offer them a deal directly. 

Welcome to MFH Rodney. 

OR.... You could take a breath. Chill the F-out. Close the mouth, open the ears, thank your maker that this guy named Bob who's been there and done that so many times they dang near named the street after him, is willing to dig into this thing with ya and lend you experience and advice you couldn't afford if your mortgaged everything you got, ie IMEASURABLY valuable. 

I feel for ya in a way Rodney but your being disrespectful, overly emotional, and detailing doing more dumb to fix the earlier dumb. Dumb squared does not = smart, it just makes a whole sheet-ton of dumb. 

You got yourself into a sec8 asset, clueless about seeming anything/everything MFH or sec8, so I suggest you get smart, fast, and grab onto such a master when they present themself because fact is oh-boy do you need it, and there ain't that many in sec8 at that level, especially who are willing to lend a helping hand. 

bobs advice is to fill the units with Section 8 or other subsidized tenants  which in those areas is the safest way to go .. but your still dealing with hood rat properties that only have value to someone willing to put up with this kind of tenant base.. Cut and run.. buy nicer stuff is what I would suggest.  these areas are only appropriate for locals who make it their life to run these kind of rentals.  why they do that i have no clue but they do.. values will only track what a local will pay for a given rent.. there is ZERO true appreciation and your cap ex will erode any proforma cap rate that gets talked about.. long run these are not wealth generators unless you can sell to the greater fool theory.

I agree with many responses that the 1st step should be to switch PM's. That could make all the difference. 

If you do decide to sell, going off market does not guarantee you will get more money. In fact, typically it's the opposite. According to the 2022 NAR stats, FSBO homes sold for an average of 35% less than agent-assisted sales (https://www.nar.realtor/research-and-statistics/research-rep...). And, 40% of agent assisted sales resulted in a sale price greater than 100% of the list price, compared to only 13% of homes sold FSBO.

Also, 71% of real estate lawsuits come as a result of 1 party not being represented in the transaction.

Bottom line is this - if you want to net the most money out of the sale to reduce your losses, hire an agent. I realize I am an agent and I'm biased, but the data supports this claim 100%. 

@Rodney Lorenzo why are you blowing off @Bob Stevens and not gobbling up every golden nugget he's trying to drop on you here? 

Yeah, I get it Rodney, poor-you, you did exactly the opposite of what all us professionals in REI say to do, what every legitimate writing on the subject directs, and surprise-surprise it's going horribly.

And your response: to Double down and TRIPLE down on doing the exact opposite of ALL sage wisdom and directive's to go "off-market" to try and sell this thing yourself because as you've already proven your qualified at this kind of thing..... But to also just load it up with whatever garbage off the street with a pulse so you can inflate your properties value to dump the flaming mess on an unsuspecting buyer. 

So first off Rodney, what makes you think your going to find someone that completely STUPID, with that kind of money to burn? Off-market. Huh? How are you going to find the idiot with a few hundred K burning a hole in his pocket? Who also know's diddly and squat about MFH, because he's gotta miss every GIANT Red-Flag of the hot-mess your situation is. 

That's the reality Rodney, WE are the potential buyer's, and WE will sniff out every single stupid move a mile away. We will know you loaded it with fluff tenant's. We will know your drowning and without a clue. And you will pizz us off if you lie about it, and if your really pizz off the wrong potential buyer, they may just contact your financing and offer them a deal directly. 

Welcome to MFH Rodney. 

OR.... You could take a breath. Chill the F-out. Close the mouth, open the ears, thank your maker that this guy named Bob who's been there and done that so many times they dang near named the street after him, is willing to dig into this thing with ya and lend you experience and advice you couldn't afford if your mortgaged everything you got, ie IMEASURABLY valuable. 

I feel for ya in a way Rodney but your being disrespectful, overly emotional, and detailing doing more dumb to fix the earlier dumb. Dumb squared does not = smart, it just makes a whole sheet-ton of dumb. 

You got yourself into a sec8 asset, clueless about seeming anything/everything MFH or sec8, so I suggest you get smart, fast, and grab onto such a master when they present themself because fact is oh-boy do you need it, and there ain't that many in sec8 at that level, especially who are willing to lend a helping hand. 

Quote from @Rodney Lorenzo:

The urge to get into real estate pushed me to invest in a 6 unit building in a neighborhood that I didn't think was that bad. I thought, the cash flow could be good so why not. This was a year ago. Now, my PM is struggling to fill the units from bad tenants that I've had to evict and I can only pay the mortgage out of my own pocket by so much. I'm very worried of defaulting on this property. 

To make matters worse, I have a 5% penalty on the loan if I sell it before 5 years. If I were to sell it, I'd have to not only pay this penalty, but the 6% realtor commission on top of that. What would you do in my case? I'm thinking of selling it off market to avoid the realtor commission and possibly paying someone a 1% finder's fee for bringing me a buyer. I would then pay 6% in total in ridding myself of the property, which is the same amount I would be paying a realtor. 6% is better than 11%. I've learned that bad neighborhoods tend to attract bad tenants, while good attracts good. I may just have to have my PM fill the units with whomever, just to boost the value of the property, which is what the previous owner did, hence, me inheriting his bad tenants. Yes, I'd hate to do this to another investor, but at the end of the day, I don't want to see my first investment go down the toilet. What would you do in my case?

Time to roll up the sleves and start to grind.

You can absolutley find good tenants in a bad area. It is usually a sense of neglect and resignation that leads to a downward spiral. People in this neighborhood have the same desires you have; they may not have the funds you have, but they also want to live in a a nice place and not a ********, thats treated as "just a rental" - it's supposed to be their home!!

The quality of your property will define the quality of your tenants, but you may have to step in personally. Make sure the units are cleaned up, don't smell and everything works. This may require personal attention; a PM or contractor usually lack the drive to finish the job compared to the owner. also clean up the outside, fertilize the lawn, clean up the edges, make sure the garbage area and hallways are spotless. This will attract good people and is commonly known as stabilizing a unit.

And BTW: selling FSBO to save 6% comission is defeating the purpose; why do you think everyone on BP is hunting for an off-market deal? Clean up the property, stabilize it and manage it to it's potential. Then you can decide if you still want to sell it.

PS: we asked three of the largest PM's in Milwaukee which of the portfolios they have managed for many years have performed overall the best for the owners. Without hesitation, all three said portfolios in B+ neighborhoods outperform everything else by a wide margin.

Quote from @Rodney Lorenzo:

The urge to get into real estate pushed me to invest in a 6 unit building in a neighborhood that I didn't think was that bad. I thought, the cash flow could be good so why not. This was a year ago. Now, my PM is struggling to fill the units from bad tenants that I've had to evict and I can only pay the mortgage out of my own pocket by so much. I'm very worried of defaulting on this property. 

To make matters worse, I have a 5% penalty on the loan if I sell it before 5 years. If I were to sell it, I'd have to not only pay this penalty, but the 6% realtor commission on top of that. What would you do in my case? I'm thinking of selling it off market to avoid the realtor commission and possibly paying someone a 1% finder's fee for bringing me a buyer. I would then pay 6% in total in ridding myself of the property, which is the same amount I would be paying a realtor. 6% is better than 11%. I've learned that bad neighborhoods tend to attract bad tenants, while good attracts good. I may just have to have my PM fill the units with whomever, just to boost the value of the property, which is what the previous owner did, hence, me inheriting his bad tenants. Yes, I'd hate to do this to another investor, but at the end of the day, I don't want to see my first investment go down the toilet. What would you do in my case?

Ok so I have been working in the " bad" neighborhoods for 10 years, very few problems. To solve your problem, which your incompetent PM should have done a year ago is put in govt. program tenants. I deal with various programs daily. Its ALL about screening. We PM about 600 doors of which about 400 are on govt programs, they pay like clockwork. I am moving in 4 more VA, SEC 8, and other govt program tenants into my personal 7-unit this month. All will be about 200 more per month then cash tenants. FIRE your PM.

BTW where is this located. 

Good luck 

Quote from @Rodney Lorenzo:

The building is commercial, so the value is based on all units filled. Right now I have 2 out of 6 filled and the previous owner filled them with riff raff so he could get it sold. In wanting to turn it around to a cash flowing status, I've had to evict non-paying tenants because I thought I could flip them. Now I realize it's taking longer than expect because no one wants to live in the neighborhood. I don't see any gentrification reaching that area any time soon. A partner would balk at the idea of partnering with me for obvious reasons

Did you determine the NOI based on a T12 or projecting current month for the year? I suspect you did something closer to the 2nd than the 1st. I would not rely on getting someone else to value the property as you did and I am surprised you found financing.

There are PMs that specialize in these types of properties.  They charge s premium because managing these type of properties require increased level of effort.  Find a PM that specializes in this class of property/tenant and pay them what they demand for their valuable skill set. With a specialized PM you may still lose money, but I suspect it will be less than you are loosing today. Maybe a specialized PM can turn this to where you will start to make a little money.  Regardless they will minimize losses until your prepayment penalty expires. 

Does your prepayment penalty ramp down?  For example does it drop to 3% after 2 years?   

Good luck