These forums are filled with people looking to find creative ways to make money when it comes to real estate so I thought it would be worth outlining and documenting a strategy/service @Bill Labrecque and I provide for landlords in our area here in CT.
In every market there are out of state or in state owners who are dealing with properties that have, to put it mildly, gotten away from them. These owners are at the point where they just want out, but want to stabilize the property before selling it.
Our typical client for this service is an out of state owner from New Jersey, New York, Massachusetts, or even in state in Connecticut that either made a mistake when hiring a certain management company or super who has essentially took advantage of the owners trust and ran the property into the ground.
This is where we come in. For what amounts to a 4-6 month span (depending on building size and how bad of shape the property is in) we handle the complete stabilization and sale of the property which includes:
- day-to-day management of the property for a fixed monthly fee
- the identification of any deferred maintenance issues that need to be addressed and the coordination of those repairs being completed
- getting vacant units rent ready, advertised, and filled with qualified tenants (we receive a commission for each unit filled)
- coordinating the eviction of any tenant that needs to be evicted
- collection of rents and coordinating payment of vendors that perform work
- handling the sale of the property once the property has been completely stabilized
The appeal to us is the short term commitment (typically 4-6 months) and the fact that there are multiple streams of income to be had if done properly.
In the next post I will detail a specific apartment stabilization we are working on right now...
Now you thinking like an entrepreneur!!!
I would get a news station to be interested in that kind of a story because it's a good story for landlords to see
This particular apartment building stabilization is in New Britain, CT. New Britain has a very strong rental demand, but like any other small to mid size city there are areas that are not as good as others to invest in.
This particular 8-unit apartment is in that zone of the city where I usually recommend that most investors stay away from, especially out of state owners.
The owner, who is out of state, is at the point where he just wants out and we were introduced to him by another out of state landlord we do work for in the city.
Here is the plan we are currently executing at the property:
- going one-by-one into the vacant units, taking care of any of the deferred maintenance, and listing the units for rent.
- 4 of the 8 units were vacant when we took over 25 days ago and now two of them have been turned over and rented. Our thinking is to get the place performing again rent wise so the landlord can get some money coming in
- After the units have been filled we will start to go through and get the common areas to the point where they are cleaned up and in good condition
- While all of this is going on we are dealing with the day-to-day issues that come with managing low income tenants as well.
Keep in mind, this strategy works for us because there is already an infrastructure in place. We have someone who works for us coordinating the filling of the vacant units and the day to day issues that come up. We also have maintenance guys that are handling the repairs that need to be done.
My goal is to update this post almost every day with some insight as to how this process is unfolding through the sale of the property.
Thanks @Brian Gibbons !
Great job @Michael Noto !
Personal note/reference: I met Michael and @Bill Labrecque about a month ago, and while I have not worked with them - they seem very educated in the New Britain market (in addition to all of the content that Michael produces on BP).
Looking forward to following this post and continuing to see your guys' successes!
My wife and I met Mike Noto and Bill Labrecque last week. We toured one of their rehabs in progress which was coming along nicely. We will be doing some joint ventures based on our meeting. Mike and Bill are honest and straight forward and I recommend anyone doing business with them.
Thanks @Jonathan Makovsky ! Jon and his business partner @George Paiva are doing big things in general, including the 16-unit they posted about here on BP up here in New Britain. If you get the chance to meet them at a BP meetup or otherwise, take advantage.
@Greg Wright thanks for the plug! Looking forward to doing business together as well.
Here are some quick updates for our apartment building stabilization in Connecticut
- deposits have been collected for 2 of the 4 vacant units
- 6 showings are set up for the remaining vacant units
- some minor roof repairs were completed
In general, when people in an apartment building that has been neglected gets new management and the tenants see that repairs are actually being done they flood the new manager with requests. We are in the process now of running those requests by the owner to see which should take priority in getting addressed.
One of the tenants for rented units moved in today and the other will be moving in this weekend.
It's good to see people out there being responsible property managers and adding value to a building and community. Keep it up!
Thanks, @Chris L. . Although this is a short term stabilization in preparation for the eventual sale of this property the day-to-day management is key in turning the property around to get it performing again.
This process is something we have gone through several times for investors in this area of Connecticut so we have a good feel for the ins and outs at this point.
Today at the property is was brought to our attention that the super (who we are essentially replacing) was responsible for taking out each unit's trash can for trash removal purposes.
Since he is no longer managing the property he obviously stopped taking out the trash the last 2-3 weeks and of course no one else who lives in one of the units has taken out their trash in the interim.
So we had one of our maintenance guys put out the trash tonight for tomorrow's pickup and sent a note to all of the tenants that they are now responsible for their own trash pickup.
These are the kinds of issues we deal with when we stabilize properties in lower income areas for landlords. We come to expect them now so they are not a big deal, but at the same time, one of the goals of this thread is to bring people through this entire experience.
@Michael Noto outstanding value-add service! Just outstanding. I love it when people find a new and unique way to actually create value other than "taking it off their hands"! Keep us posted!
Update of our apartment building stabilization in New Britain, Connecticut
- All 8 units are now rented and the property is back performing
- From a maintenance perspective we continue to work through some repairs that were flat out ignored by the former super.
The next tenant related issue is how to deal with the former super who is still living at the property, and obviously paying zero dollars in rent every month. I guess I understand that he is not particularly excited about us taking over the management of the property. As a whole the owner wanted to take care of all of the other issues with the property before dealing with the former super. The process of dealing with him should be fun!
As a whole, this property is well on its way to being stabilized and eventually put up for sale.
Hey @Michael Noto !
Any updates on the new britain property?
I'm planning on investing in New Britain but my main market is in West Hartford. Would love to hear your updates and possibly opinions in New Britain.
Hi @Michael Noto , any update on this project? After stabilization do you help to find a reputable local PM, or will you continue to manage?
We stabilized the building, took care of the deferred maintenance and rented all of the units at market rents for the area.
Originally the plan was to sell the building after it was stabilized but one owner ended up buying the other out and decided to keep the place. We found a reputable PM to take over the building and that manager is currently managing the day-to-day.
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