Norada Real Estate Investments -

18 Replies

Marco seems like a great guy to me and I liked the Investment Counselor I was connected with. However, the 3 SFH's I purchased in Kansas City have been a money trap due to constant costly repairs, constant tenant turnovers and thus constant re-leasing fees (1 full month rent each time), non-rent payments, eviction, etc. Rental Projections from the Norada Website were not met on these properties and as a result cash flow margins have been less than expected, leading to negative cash flow overall since purchasing these properties.

You should be aware that Norada hands you over to the local provider and then you are working with that provider going forward. If I could go back in time I would warn myself against the investments I was encouraged to make. Currently trying to figure out how to extricate myself from the situation I find myself in.

I don't think Norada is shady, but I would say be very careful that you don't end up with thin margins and constant heavy expenses like I have.

Updated almost 2 years ago

I must say that I deeply appreciate Marco's openness and true desire to see his investors succeed. He has established communication with me on this situation and we are currently working on strategies. I will continue to update as is appropriate. I would emphasise that my intention here was not to point fingers at either Norada or the local provider... Norada generously provided a goodwill credit (who does that??), and the local provider did also cut some of the re-leasing fees more than once. My intention was simply to highlight the responsibility of the Investor in protecting themselves against unexpected losses that can occur along the way.

Hi Cedric, I appreciate the post but there is a long history to your transactions and the experience you had in Kansas City with them.

In brief, and as I’m sure you recall, many of the issues originated with the property management company.  The tenants placed by Gary at the time were given discounts that should’ve been unacceptable but as you were informed by the owner of you management company the market had softened at the time.

The market rents that were posted on our website were given to us by the same management company by both the owner and Garry the property manager. Those numbers were confirmed at the time you were under contract, however as the tenants moved out and new tenants were placed they were leased at the van market rents, and according to Garry at a discount in order to move tenants in quickly for you.

I took a quick look at the long history of email back-and-forth but figured I would simply paste a copy of the very last one as a reference for you:

I took a quick look at the long history of emails back-and-forth but figured I would simply paste a copy of the last one with your Counselor as a reference here:

“Hello Cedric,

I spoke to Marco and he has agreed to offer you a one-time $1,500 cash credit to help deal with some of these issues you've been experiencing. That should get you back to whole again. We feel for the situation, and you are not alone. Many others are in the same market, and therefore dealing with the same thing. The good news is this is temporary (I won't speculate as to how long). A recent Z-Report from Zeldman predicts 2019 to pick up steam again. Housing and rentals are in a shortage, and the effects of hedge funds in a market can only be short-lived.”

I could go on but that would not be productive in a forum post.

However, as always, my team and I are always happy to discuss the situation as well as anything that can be done to help improve the situation and get your properties stabilized and performing like they should. Outside of market conditions that cannot be controlled, most other factors can.

Feel free to contact me at the office or simply send me a message or email. I’m always happy to discuss any issue.

Hey Marco, thank you for your response to my sentiments and situation stated above. I understand that no-one can control market trends and yes, the market seemed to soften during my buying spree. Dang. I hold nothing against you or Ryan (who was my Investment Counselor), I was treated very well by both of you and have extremely positive sentiments towards your generosity with the Goodwill Credit extended towards me when the initial pinch came along. That was a clear statement of your heart and intent towards me as a newer investor trying to move forward in the quest for passive income. I understand that much is outside of your ability to control (markets, management decisions, repair issues, etc.)

I will be honest/repentant and state that it would probably have been more productive if I had contacted you & Ryan before making the above post from a place of frustration. I will contact you now and see if we can find a strategy to stabilize my portfolio, and update this post accordingly.

The core motivation of my comments was not to cast shade on Norada or the local provider, but rather to point out the need for the investor to make sure that the cash flow margins are big enough to absorb the unexpected.

I am contacting you & Ryan next to see if we can find solutions.

Thanks Marco

@Cedric Van Duyn Those are the same areas I'm looking at.  However, I'am considering Lees Summit, Grain Valley, and/or Blue Springs.  My thinking is higher rents will get me better longer term tenants.  But it seems like the good properties are all getting snapped up quickly.

@Cedric Van Duyn , one other thing, since you purchased all turnkeys, I'd of thought there be minimum repairs if any, especially during the first few years since the provider rehabbed the properties.

@Edwin L. The repair costs were definitely the biggest surprise for me. There has been a difference between theory and reality, and my takeaway would be to go in with bigger cash flow margins that can absorb the unexpected. Also, to save all cash flow until you have a substantial repair budget before using it on anything else, for the same reason. I did not put aside *enough* to cover the unexpected repairs. Turnovers and related repairs & re-leasing fees should also be baked into underwriting, which I did not have a proper handle on.

The local provider did cut me some slack a few times with some of the turnovers by either not charging the re-leasing fee, or cutting the fee in half because of my situation. So this is not meant to be a reflection on Norada or the local provider.

@Cedric Van Duyn , seems like the PM is not selecting quality tenants with all the turnovers.  I think you are to nice.  I hope your investments stabilize and start raining cash-flow!  

Just posting a modification & clarification here in this discussion so as to not leave a wrong impression, and to counter any negative associations my first post may have caused.

I must say that I deeply appreciate Marco's openness and true desire to see his investors succeed. He has established communication with me on this situation and we are currently working on strategies. I will continue to update as is appropriate. I would emphasise that my intention here was not to point fingers at either Norada or the local provider... Norada generously provided a goodwill credit (who does that??), and the local provider did also cut some of the re-leasing fees more than once.

My intention was simply to highlight the responsibility of the Investor in protecting themselves against unexpected losses that can occur along the way.

@Jared Hauf , thanks for checking in... 2 of 3 properties are stable but the 3rd one has been empty now for 2 months, trying to find new Tenants. I understand that Thanksgiving to New Year is the slowest time of year, so hoping to get a solid Tenant in the next week or two. Once I have all 3 properties with Tenants we should be solid for a good while.

So since I changed property managers I have had almost zero issues, all 3 properties are currently stable and cash flowing. The new property manager just raised rent on one of the 3 properties and other tenants just signed lease renewal. Prior to this new PM, one of the 3 houses was vacant for 5 months and there was always a reason why they couldn’t find a tenant.


In short, property management makes all the difference!

Originally posted by @Drew Sygit :

@Cedric Van Duyn Cedric, curious about the price difference between your previous and current PMCs?

I managed to negotiate the same monthly percentage fee @ 7%, but with lower turnover fees ($250 flat fee for lease renewal and 1/2 month's rent for a new lease). The previous PM charged a full month's rent for a new lease - this actually makes a huge difference, especially if you already have a month of vacancy during turnover.