Review 2019: Home Union
Hello BP !
From time to time, I've seen posts asking about a Home Union Review, very few people have actually had any experience, or recent experience using them. I will discuss my (unbiased) experience using them from November 2017 to present day, December 2018. Full disclosure, I am not getting any compensation, I am just a customer of their's and want to share my full unbiased experience from start to finish for other investors to base their own conclusions or decision to use or not use them.
--- Start of Post ---
Ok, so 2017 was the year of knowledge and information learning on real estate. After reading countless books, and reading countless forums, I finally knew that I had to take that first step for my plan and actually try and acquire my first rental property. Unfortunately, I am working oversea's. This presented it's own challenges, especially since at the time I was working in a war zone. (Iraq). Most investors are DIY, live in their neighborhoods they invest in, or have partners.
My initial challenges:
- I'm not physically in the U.S.
- I can only take phone calls and emails, maybe even skype or video calls.
- I can't really 'vet' a team of contractors, property managers, and good luck working with a RE Agent.
- No 'eyes on' the property.
- No 'boots' on the ground.
- I can do research on a property, but I still won't know the area well enough unless I lived there. (Sure it can be done, but trolling through hundreds of pages digging up information isn't feasible for me)
- Numbers, numbers, numbers. Rehab, property tax, insurance, principle, etc, etc. How much money should I actually have?
- Legal? Lol, don't even get me started.
- How can I bid on houses while I'm way out here
- I'm a novice investor, how do I keep track of everything?!
- I don't want to fix toilets, I want to set it and forget it. (passive mentality)
- Pre-Approval process for a mortgage
- and much, much more!
With all these challenges, I was pretty much sure I would just be hoarding cash until one day I went home. Maybe I'd throw it into the stock market, Fundrise? Realty Mogul?
Then I started to read about turnkey rentals.
That led me to learn about several companies that provide that service, but typically, only within their neighborhoods. After reviewing some sites, I didn't feel comfortable, plus reviews from BP steered me away. Roofstock and MorrisInvest were two I had looked at.
In comes Home Union, a turnkey provider for out of state investors. I was skeptical, as Roofstock and MorrisInvest were... meh... I decided to look it over anyways.
After reviewing their site and signing up, I was intrigued by their analytics and data for each of their properties. Having a tech background and understanding the importance of Data Analytics or Business Intelligence, I was very intrigued by how the information was presented. HomeUnion basically took away a huge portion of my challenges of 'research' by providing dashboards for Financials, Comps, Neighborhood and decent summaries for the various areas they invest in, something I found to be a massive value add that others didn't quite provide. Something that you have to pay people for, or dig up and trust the resource, was presented for free. (Skepticism alert: I also figured the data could be wrong, or fake to attract investors. But at the same time, I was willing to accept the risk. Legitimate companies don't want to push BS, and HU seemed like they wanted to be the number 1 resource for turnkey investors by empowering them with big data to allow them to make their own educated decisions)
Ok, so a few challenges were solved.
Now comes the adrenaline piece.
I went through several houses with a solutions manager and using their analytics and financials dashboard to find out what made sense for me. I used the sliders to change the down payments, adjusted the rent, played with the interest rate and seen what my 'profit' would be after everything was paid. (Mortgage, PM, etc). Very useful tool in my opinion. Also seen what the local areas were like, population demographics, etc, etc. Also useful.
The Solutions Manager, Mr. RH, answered tons of questions for me, and was pretty reliable when it came to emails and communications.
But first things first, I had to get pre-approved for a mortgage before I could start bidding, and wouldn't you know it, they offered the service as well! After speaking with their mortgage specialist (i don't recall the title), I was pre-approved for $250,000.
After working with RH, I finally settled on a house. But how could I bid on it being out here? Well, HomeUnion offered a LPOA (Limited Power of Attorney), yes it costs some money, but saved me some work and I decided to pay for the convenience.
I finally settled on a property and placed my first bid. and after a brief back and forth, settled on an agreed price. PAINLESS!!!! They did it all for me.
Priced: $105,000
Cost: $100,500
Downpayment: $25,000
Rehab: $6000
Acquisition Fee: $3500
Closing: $600
Interest: 5.125%
Potential Rent: $1650
Mortgage: $1100
PM Fee: $150
Potential Cash Flow: $400
When I heard we won the bid, I was very ecstatic. My first property was well underway, and I was on my way to being a real estate mogul!
*I'm sure I'll get some flack for the high interest rate, but oh well. Sure I could have shopped around, compared, etc, but in my position, I didn't want to go that route as that would have prolonged the process. I want to be hands off as much as possible.
--- The only easy day was yesterday ---
HomeUnion
Their motto "You invest, we do the rest" holds true.
The next month was spent waiting... and waiting, signing a document here or there... transferring cash, and waiting for the inspection. Did I say we were waiting? It was during this time that I was contacted by HU that the seller had fudged something up, and was trying to exit the deal after papers were already signed. I had already spent money on the inspection, deposited my good faith money and some other items. I was a little upset to say the least.
I asked HU what would happen to the money I already spent, and their reply: "We'll pursue legal actions against them on your behalf". WHOA!!!! I have a legal team too??? Daaannng! I was pretty happy to know that my $1500+ wasn't just a wash. After a week of back and forth, the seller basically agreed to move forward with the sale, or risk going to court. So we moved forward, I was even able to sign closing documents oversea's with a local notary public that the Army had on post at the JAG office. HU worked with me, the bank, the closer, everything, and bought me some time to get the documents signed and mailed over to them. No pain at all, signed and closed while I was overseas.
A service like this is wonderful for someone like me.
--- Rehab! ---
After closing on the house, title in hand, mortgage account online, and almost ready, it was time to rehab. They sent me the documents to wire over the rehab cash to them. Nothing hard about that. After about 3 - 5 weeks, rehab was completed. Nothing too painful to report, or anything that they didn't already discuss with me. Again, as a NON-DIY'er, I had to rely on them and trust that they were doing everything right. I had no way to visually check it, inspect it, or whatever. They did send me a before and after report, all seemed to have checked out and the house was nice and clean. I was excited, the asset was ready for renters!
--- The downhill spiral ---
Now... I was very happy up to this point. Rehab was completed, house fully cleaned, it was my first property, it was ready to start making me money. Full disclosure -- I am writing this as a 100% honest review.
Just like the stock market, I was bullish on this house, up until problems arose.
I understand it can take 30 - 90 days to get a tenant, which I was fully aware and prepared for. I had enough cash reserves that I could take care of the mortgage. Every week, HU would notify me of the current status, it's being marketed, it's on zillow/trulia, we have 4 interested parties, we received 2 applications, etc. It was moving in the right direction... until:
I was hit with a "CHA (Section 8 Housing) holder applied, and under state law we have to accept them". This was around the 90 day mark. "Ok! No problem!" so I thought, as Section 8 is guaranteed income, why not?
This is where HU started to really have customer service issues and transparency was lost and I actually was disappointing in their service.
They said that the renter would be moving in soon.
Then I was told in order for the renter to move in, the management company (HU...?) would have to go through CHA Training, which they said they would.
After about 2 weeks, the training was completed, and I was told the tenant would be moving in soon. Hurray!.... or so I thought. (Full disclosure again: HU was utilizing a local management company that was just awful at communicating. I still don't understand why HU partnered with them, they kept causing trip up after trip up)
Then I was told, by HU, that the house would need about $5000 in additional repairs / certifications to make the home compliant.... What?! I was pretty pissed. I had already paid to have the home rehabbed, why do I need additional repairs or certifications?! There was an obvious miscommunication somewhere, why wasn't this found out sooner? Do I have to pay? HU advised me that I should go in this direction. I was pretty fumed, but I agreed. I didn't know any better, and being out of the country, state, city, left me holding a bag full of dirt in the ocean.
In full: Pay $5000 in repairs and certifications to get a Section 8 tenant.
--- Down, down, down down ---
After 3 weeks of 0 communication, 0 updates, 0 anything, I finally pinged them asking for an update.
I was contacted by HU that they will be moving me off the HU Property Management side and moving me to another property manager. To my surprise, I was absolutely fuming and upset. Everything was going well up to this moment. Their reply: "We are moving towards portfolio management, and moving away from property management. We will move you to a reputable company. This will help streamline communication and pitfalls that customers have been experiencing"..
The whole point of going with HU was to close on houses and to have HU manage them. Finally figured out that they were using property managers in the local area. >:(
They said it would take a month to move me over and I would be contacted shortly after by the new company taking over.
I waited.
While I waited, I still asked for updates on the rehab. They said they are working on it and would update me soon.
--- Down to worse ---
HU moved me off and put me with one of their national partners.
I was pretty upset still, and didn't look forward to this new PM at all, but oh well.
After a brief introduction, the new PM started communicating with me weekly, giving me updates. He said he stopped by the property and the property would need a few new fixtures and some other items.. I was beyond pissed, another $500 down the tube, but at this point, I just wanted the damn property rented!!!!! And I thought HU rehabbed that? I also thought they fixed the fixtures?????? I was beyond pissed.
I inquired about my potential tenant, and how the rehab was going. They said that they aren't sure about a tenant, and that they will be searching for a new tenant. I inquired about the rehab, and they came back that HU wasn't responding to emails or requests for the certifications and documents about the work completed.
It was at this moment I was absolutely pissed at HU for their piss poor service and they probably scammed me of money. I emailed every contact I had ever came into contact with at HU, asking them where is my money, my certifications and why isn't the work completed and whats the deal with my tenant?
I got a reply very fast, explaining they have been in contact with the current PM (a lie..?) and that they are monitoring my situation closely and will work with the current PM.
My Current PM contacted me, saying they had reached the tenant, and all certifications and rehab was completed.
Finally... the light!!!!!!
Nope..... Just kidding. I was told by the PM that the tenant only had a voucher for 2 rooms from CHA, and would only be able to pay $300, totally $1500-ish.... I was going to be barely paying off the mortgage and the PM fee's with almost nothing off the top.
I was really upset that HU / 3rd Party PM, had made me pay $5000 for rehab and certs, for a voucher holder, that didn't even have the correct type of voucher. HU Failed me hard, and they probably didn't even know this was going on. Piss poor communication. I figured, I was in for an inch, I'm in for a mile.
I told the PM that is too low, and I will not accept that. It's either the correct amount ($1650) or we move on. I was willing to wait longer, bleed cash a little longer, in order to get the right tenant. I figured at this point, backs against the wall, nothing really to lose, never using HU again.
--- Finish Strong!!! ---
My current PM got back to me, basically saying that he had reached out to housing and the tenant and explained the situation. By a stroke of luck they gave the tenant the correct voucher, and with all said and done, the house would rent for $1909!!!!! I was blown away!!!! Either it was luck or my persistence paid off and my patience. Either way, I was on top of the world!!!!
My PM moved quickly to get the documents signed, and worked to get the tenants in the house first day of December. About 4 days later, I received news that my house was "Not compliant" with housing and I would need to get further repairs done. I instantly lost all morale. This just wasn't worth it, I was a **** investor, I'm not cut out for this, I was defeated.
The PM contacted me and told me that this has to be some mistake and he is monitoring the situation closely. After about 2 - 3 days, he got back and said the Tenant never made a complaint and she was happy. Apparently the Housing inspection inspector wasn't updated of the repairs or didn't get the documentation. Either way, the case was closed and the tenant was moved in and I'd be getting my first rental check.
Mid December... I received my very first rental check, and even saved the deposit transaction from my bank account. Finally, my money was making me money, after a very long, hard, fought battle.
--- Final Thoughts on HU ---
I had to think long and hard about using Home Union again. I had to really map out the issues and remove my emotion from it all.
I've come to the conclusion that Home Union, up until the tenant part, was fantastic.
I believe this was a case scenario where the worse happened. Home Union changed course / business models, right in the middle of me getting a tenant(growing pains), and in the best interest of their customers, moved us directly onto partner PM's. HU was no longer a middle man for communication, and now I could communicate directly with my property manager, and not wait days or weeks for HU to get back to me (as they were trying to get answers from their partner PM's). This was a value add, and at the time, I didn't see it that way. But my latest experience made me a believer that this was the right move for Home Union and for us as customers.
An obvious worse case study, would be me, where I had paid $6000 for rehab and another $5000 for rehab/certs for a tenant that didn't even have the correct voucher from the start. (Piss poor communication between HU and the 3rd party PM), and luckily, it all worked out in the end, though very painfully.
My new PM fixed all of that, and now communication is streamlined and I am very happy with the new PM.
Now that the Property Management is through partners and not Home Union, I feel like service will be much better.
Home Union still offers a fantastic service, excellent dashboards/data, good area's to invest in, and is the perfect solution for OOS/C (Out of State/Country) investors like myself. They will also still be a huge part of the process, such as rehabbing the property all the way to hand off to the property manager.
I am now looking for a second asset, through HU, and already in talks with their Solutions Manager, Mr. RH, who was nice enough to answer some questions relating to why HU changed directions.
If you plan to use Home Union, understand there will be growing pains, and the service is still growing and improving. I'm happy to use them again, and look forward to closing my second asset. Hopefully... things will go a lot smoother this time.
--- Lessons Learned ---
Some Lessons Learned:
Stay on top of the rehab process, ensure no stone left unturned (paid to rehab the house, clean the carpets. Was told by housing that the carpets had to be replaced... wasted money?) If you can do it cheaper, and yourself... then DIY... ? Why even use HU.
The Solutions Manager is not trying to sell you any asset. They are trying to sell you the right asset. I've been recommended by my Solutions Manager to walk away from deals, something I found pretty cool.
Communicate, communicate, communicate!!! I can't stress this enough, follow up, ask questions. But realize that the customer they want, is the hands off investor, not the micro managing landlord. If you are that type, just DIY and avoid HU all together. If you go with HU, you need to trust them and their team that they have your best interests at heart. (They aren't trying to scam you).
Their dashboards aren't always 100% correct in terms of the financial information, but pretty damn close. You should be prepared financially and use that as a baseline. If it comes up lower, great! if it's spot on, well atleast you have the cash available.
Do your own research on the area's the houses are in. Use Trulia and Zillow to see what the local rents are really going for, and the price of the house. I found HU is pretty close to market standards.
HU does a great job, they deserve to be paid for a premium service. Expect to pay premium rates.
--- TL;DR ---
I used Home Union.
They were awesome until I had to get a tenant.
I got a tenant eventually after much pain.
I am happy now.
I would use them again.