All Forum Posts by: Sean L.

@Damaso Bautista I think that’s the move if I’m unable to get this resolved by next week. I just wonder what the best approach is. Do I wait outside the PM office? What if they’re working remotely? Do I show up at the property and wait to meet the tenant and explain to them that they should no longer pay rent through the PM they’ve gotten to know over the past year? 

@Steve Donovan Not deterred! I spent a lot more money on college tuition than I stand to lose here so I'll chalk it up to paying my dues in the market. Looking to make several more acquisitions over the next few months but at this rate will likely go back to the drawing board with respect to who I work with.

Hey All - Seeking some advice on a situation I've found myself in after purchasing my first investment property.

For background, I'm based in NYC and after 1-2 years of sitting on the sidelines I decided that 2020 was going to be the year I acquired my first property. Being in a high COL area, I decided to go the turnkey route and got in touch with a turnkey provider that generally has decent reviews here on Biggerpockets. After reviewing their inventory, I landed on a property in Davenport, IA which was renovated in 2019 and occupied (and supposedly current) when I closed in early November 2020. Of note, the Turnkey provider I used introduced me to a separate property manager who had been managing the asset because they didn't have an in-house PM in IA. All throughout the purchase process, the Turnkey provider and my contact at the PM firm I decided to use were great and no red flags popped up (although I probably wouldn't have been able to spot them anyway!). The PM firm I'm using isn't mentioned much here on BP.

So now I sit here ~3 months after closing on an occupied rental property without receiving an accurate account statement or a disbursement of any of the (supposedly) collected rental income. I have received two account statements, both of which were incorrect/incomplete, and have had minimal uninformative contact with my investor rep at the PM firm. We've exchanged a few emails but nothing has been resolved to-date. I'm booked for a call with them on February 1st, but the last time I booked a call in mid-January we were unable to connect.

Now I understand that I only have one property with the PM firm and I'm not generating a lot of revenue for their business. Plus, the Holidays always slow down turn around on these things and everyone is dealing with COVID. I also understand that something may have happened with the property, maybe the tenant isn't paying, maybe there were other expenses that came up, all of which is fine. However, I'm starting to become frustrated with being kept in the dark and not informed as to what is going on. 

My question is how long do I let this continue before taking action, maybe this is a normal situation when onboarding a new property? And, once I decide to take action, what are my options? Given I'm remote and don't know the tenant I feel like I lack a lot of bargaining power in the situation and have tried to avoid doing anything drastic up until this point. My hope is that this is just a misunderstanding/accounting snafu and we can all move forward but feel like I need to draw the line somewhere. 

Thanks all!

Investment Info:

Single-family residence buy & hold investment in Davenport, IA.

Purchase price: $90,000
Cash invested: ~$20,500

3/1.5 SFR in IA. Expected to Cash Flow ~$200-240/month after all expenses. 

What made you interested in investing in this type of deal?

I wanted to pull the trigger on my first investment in 2020 and a lower-priced, turnkey SFR property seemed to fit the bill for my first acquisition. I'm in a high CoL area so chose to go remote.

How did you find this deal and how did you negotiate it?

I worked with one of the turnkey providers mentioned on BiggerPockets.

How did you finance this deal?

Conventional Mortgage - 20% down

Lessons learned? Challenges?

I probably jumped in a little more quickly than I should have. I underestimated taxes and insurance which will eat into my originally underwritten cash flow projections. I'm also learning what reasonable expectations are for communication timelines from my PM. The property was occupied when I closed in early November 2020 and as of mid-January 2021 I'm still waiting on my first rent checks and statements ect.

I was chatting with a coworker regarding rental properties. He mentioned financing the rental as a second home rather than an investment property would result in better terms from lenders. while this is obviously true and I would prefer those terms, I couldn’t help but feel like there would be some time of fraud risk if I went this route.

Can anyone speak to using a 2nd home or vacation property mortgage on what is intended to be a rental? For context, the property is located near my hometown where I no longer live and is a currently occupied duplex, one lease one M2M. I believe there is a story that could be spun, including using the property as a home base when visiting family and letting the M2M lease roll off, but I don’t know if it’s worth it.

There is also the issue of certain states preventing coronavirus driven evictions.

What tier of sober living facility are you running? Are you managing urine screens and collecting from insurance to do so?

They run the gambit from 10k/month luxury buildings to some of the seedier places that have received bad press over the years.

Any opinions on Santander vs. Wells Fargo?

I was originally attracted to Santander’s IO period but WF has much higher limits.

Earlier in my career I worked for one of the large SFR REITs that emerged in the aftermath of the GFC.

We made acquisitions using a $1bn secured line of credit at ~70% LTC and after reaching enough volume would securitize those homes at ~75% LTV.

The products from CoreVest and other similar lenders will be most similar to that strategy. Alternatively, if your business/portfolio can stand on its own well enough financially a bank might issue you a general unsecured LOC at a higher rate which wouldn't have LTV/LTC constraints.

@Daniel P. Thanks for that. I'll have to take a look into using HM for one of these deals myself. 

That would be great! It would be helpful to connect to hear their thoughts. As a fellow NYC'er, if I can be helpful at all don't hesitate to ask.