All Forum Posts by: Scott B.

@Stephen Williams - Sadly Kenny Shaw and his team continue along this path. We purchased a property with them with a light 45-day rehab and after 40 days all communication ceased. We've had zero phone calls answered or returned, multiple promises or calls "tomorrow" to talk through issues unmet

At this point we've hired another PM (Sadly MidSouth Homebuyers, whom we have other properties with and have had nothing but excellent experience, wouldn't manage this location) who is now going through re-keying the property and assessing the state of the rehab.

This was a test property for us, so we learned what we wanted to learn on this transaction. Sometimes even with referrals and trying to vet an operator they still fall flat when it comes to execution.

We've recently gone through a very similar experience with Kenny Shaw and MidSouth Turnkey. We purchased a property, signed contract for a 45-day SoW (cosmetic rehab, add AC) and after about 30 days it's been radio silence.

We have been pretty patient and now at 60-days past closing we've engaged another local PM who is going to be re-keying, assessing rehab status and taking over from here.

I think similar to OP there's nothing particularly nefarious or shady going on here, but the follow-through and ability to land a deal is significantly lacking with this team. Multiple times we've asked for updates or status only to hear after a couple weeks that Kenny Shaw will call us, never to hear from him or his team. Calls to his cell, WhatsApp, the Project Managers cell none of which even go to VM.

Seems they're just overwhelmed but definitely not an outfit we'll be doing business with again.

We just tried to do this (on a commercial loan, so I assume slightly different) and we got a hard no from Title and lender. Basically they refused to allow both parties to walk away with a check.

We ended up running it as an agreement in the PSA where we did a normal closing and then they provided a wire post-closing.

So two suggestions:

1) Don’t do it. Use a professional property manager who is trained and liable for these decisions. Do not be involved in tenant selection unless you’re a professional who is willing and capable of taking on the liability. If you do this, you have literally no liability and nothing to worry about.

2) Ignoring #1, you need to set fair/legal criteria (understand if you can screen on felonies in your jurisdiction, for example) and apply them evenly. That means you offer housing to the first applicant who meets your pre-defined criteria. Check with an in-state/in-market attorney like Julie Anderson in KC.

Yes, what you're hitting on is the difference between recourse and non-recourse debt. Generally, non-recourse is when you get into agency debt (through Fannie or Freddie loan programs) and those have a slightly different underwriting and valuation method; a large part of that being that you have a proven track record of successfully executing a Fannie/Freddie backed business plan. (You can get an agency loan if you've previously done an agency loan... This is why people partner with a sponsor or partner who has this experience, to get the experience themselves)

You can get non-recourse debt without going the agency route, but that requires a community bank who has a really good track record with you and is slightly crazy. But as Todd said, it doesn't effect your credit or DTI, though lenders will look at them when making other commercial loans.

We use University National Bank in Lawrence. They do commercial lending to our LLC, though recourse, and will cover the entire KC Metro.

Thanks! The property I’m looking at has an informal PM arrangement of some form that I’ll probably want to move away from after we stabilize.

Originally posted by @Mary lou L.:

@Scott B. Hi! I live in Wichita Falls...I can ask around and give you some names!

Thanks!

Looking at a property in Wichita Falls and this kind of fell into my lap so I don't have a PM already lined up and vetted. Does anyone have a rec for an all-start PM company?

10+ 1br C+ units

Thanks!

Curious but how is the Series structure turning them off? We're doing something similar (CA investor, so Delaware Trust with essentially Series LLCs under it) but the only LLC the bank ever sees is the single operating LLC. Our bank and main lender is a local CU who didn't seem to bat an eye. We're mainly on the KS side today, just FYI.