Owning Rental Out of State - Challanges Cleveland OHIO
Hi BPers
I have been on this site around a year, and had great help from lots of members here.
What i noticed many ppl post their success stories how they started, how the bought their 1st property and then grew a nice size of units. I have yet to see some one talk about the challenges he / she went thru to own or manage the property he owns.
So here is my story. It may be bit different than many BPers here. I currently own 6 units , 9 units and a Duplex in Cleveland Ohio. I started March 2016 and looking to expand on my next one in the next 60-90 days to add 30-40 units to my portfolio.
I tell you, its looks rosy a guy started a year ago with none and a year or so later my have 50+ units. Owning comes with its challenges. I am here to voice out the challenges not the success in getting the 50+ units.
Having a Strategy on managing is crucial, I had to learn the hard way. I am happy to have been exposed to it. My properties did not make any money this year but also I did not put out my pocket additional moneies to keep it sustaining. the properties were bought that it they ROI around 25%-29%
My Partner and I purchased the 6 units, have a partner who owned 6-7 duplexes before me. He asked to manage it. He did. 3-4 month in to it, I found out that the renters did not pay on time, some missed payments, some pay what ever they wanted and shorted the rent money. The only action at that point my partner did is calling and reminding the tenants, it went to Deaf ears. We realized we needed actual local presence. So we talked to a Local Real Estate Agent paid him $15/door to be present when needed. We will do all the Financials all we need him is to be avilable for show, 3day notice, knock on a door and pass every other week to check on the condition of the property.
The Agent is a great guy I have done 3 deals with him and will continue to work with him.
This worked for 3 months, he helped us in posting 3 day notices when needed, talked to tenants when needed. We evicted the bad tenants and prepared the units to be rented and he started helping.
while this is happening, we acquired the 9 units and similar thing happened. I had 2 bad tenants from the get go. they left with in 60 days.
Now i have 15 units with 7 units empty. I am at 50% Vacancy. it remained like this for a period of 4 months. I dug in the the issue and found out that the agent did not place a vacancy sign on the property, also did not post any online ads, I was the one who placed an add on Apartment.com and found that he schedules all shows on a Sat regardless when the prospect tenant wants to view. I understand you cannot open your day to go show the unit daily however this strategy did not work. Feedback i got was not a lot of calls, missed showings, no one came etc.... I understand his priorities are not managing a property but to sell them there is not much money in managing a property for him and his time is not inline with the showings time which is between 4-6 pm. I needed to change the strategy ASAP.
I took over the entire Renting operation. Mind you I live in Florida and Own in Cleveland OH. I took over, talked to 2 tenants one from each building I had good relationship with and asked them for help to open the door when for a showing. I agreed to give them $100 for each lease signed.
Here is when the magic started. I posted on Criaglist, Apartment.com and placed a sign on the properties with my contact info. the phone went off the hook, ringing from 9 am to 10 pm 7 days of the week. I took every call and set up 3-4 showings daily. I had days with 10-15 calls asking me about the apartment. Vetted them callers on phone, showed the apartments and then ran Background checks and leased. I was able to rent 6 out of the 7 empty in period of 3 weeks. now i have a building 100% Occupied and another is 90% occupied. The tenants that helped me made a buck and they were happy.
Some ppl wil tell me that this will happen when you do not have a property manager hired. I understand, in my pursue to acquire properties, i have yet to meet an owner that said he had a good property manager. they all noted you as owner need to be involved and cannot be hands off. That does not mean that there isnt good managers out there. But I noticed each has his priorities and it does not align with mine. Property managers are usually brokers and real estate agents also. They will take a call and act for a sale rather than a maintenance call or showing.
I do not mind jumping and getting myself involved, which i recommend to all owners to do so. I learned so much this past year and I got involved in maintenance, emergencies, rentals and many other things that i am not afraid to jump to double or triple the size of my portfolio without hesitation.
I hope this post will give some tips to some challenged owners and it helps them. All I am saying, watch for your priorities and your manager. Jump in when needed do not be afraid. you will be surprised with the results.
Excuse my long post ! :)
Any Owners with other Challenges to Share ?