Emporia Kansas - Four Plex Horror Story

[Dawson Burton]

My wife and I live in Emporia Kansas and we bought our first fourplex back in March, and I figured I’d share our experience so far to get some advice from people who have been through something similar.

When we bought it, we moved into one of the units and started renovating it ourselves. The other three units came with inherited tenants from the previous owner.

It’s been… interesting.

One tenant turned out to be a convicted fentanyl dealer. Another never paid rent while living here, then disappeared in the middle of the night halfway through their lease because they were apparently running from someone. The third tenant has been fantastic and has given us zero issues.

The problem is that every time we think we’re making progress, something else pops up.

The tenant who left unexpectedly forced us to put our own renovation on hold so we could renovate their unit and get it back on the market. Our apartment still isn’t finished because of it.

Outside, the property needs a ton of work. The backyard is a disaster with old couches and junk everywhere. The pool has cracks in the shell, is full of algae, and has basically become an eyesore. The concrete around the property has several large cracks that need repaired, and the siding has significant wood rot which was actually the only major issue we expected when we bought the place.

On top of that, we’ve dealt with multiple A/C repairs, plumbing issues, and all the normal headaches that seem to come with owning an older property.

We’ve already spent thousands of dollars on repairs and renovations, and honestly, it feels like every time we fix one thing, two more things break. Right now, it’s hard to see the light at the end of the tunnel. We knew buying a value-add property would take work, but we didn’t expect to feel like we were constantly putting out fires.

We’re committed to turning this place around because we really believe it has great potential, but I’d be lying if I said it hasn’t been discouraging at times.

For those of you who have bought value-add multifamily properties, is this pretty normal? Did you tackle everything at once, or did you prioritize getting units cash-flowing first and improve the exterior over time? Looking back, what would you have done differently? I’d really appreciate any advice or perspective from those who’ve been through it.

[Richard F.]

Sorry to say, but you are only 4 months in with all of these issues that were largely unknown? It's great you got into a 4 plex, but clearly not enough time was spent on "due diligence", and  you are paying for that now.

For occupied units, you should require, via the purchase offer, copies of current rental agreements; tenant payment ledger showing at least the past 12 months payments and current balance; and Security Deposit amounts held. 

Even IF all of those are provided and look good, immediately upon closing each tenant should have been required to complete a current rental application and provide proof of income/savings at a minimum. Depending on the remaining term of their agreement, and again, if everything LOOKS ok, I still require a new application prior to the end of current term, in order to decide IF I will renew or Non-renew.

Each unit should have been inspected prior to, or very shortly after closing, and documented for condition, signs of leaks or pests, and general housekeeping. If you have had that many maintenance issues in such a short time, you should have been anticipating some of them as result of inspections pre and post closing. Age and physical condition of AC; what kind of plumbing issues? Sewer line problems should have been discovered by scoping. Leaks or low water pressure should have been noted at any inspections. Traps and exposed lines in poor conditions should have been noted prior. Nothing. Nothing, lasts forever...most household elements and systems do not last 100 years...barely 50, and many won't last 10 without serious, regular, preventative maintenance.

Cleaning up the yard should have been a priority, as appearances have an adverse effect on both current and prospective tenants. It also is very likely a serious hazard...and possibly an "attractive nuisance" that will be a serious problem for you if someone, especially a child, gets injured as result. Similarly, the concrete "cracks", if they are not actually offsets, with one section rising above the other creating a trip hazard, are a serious liability as well. If they are just gaps, they do not pose much hazard, but still should be addressed sooner rather than later to prevent heavy rains to cause the underlying soil to move or wash out.

You need to prioritize preventing further damage/deterioration of the property; attracting the best tenants for your price tier with safe, clean, fully functional, attractive units; and proper screening to ensure you ARE getting the to 10% of the available tenant pool.