All Forum Posts by: Axel Meierhoefer

@JJ Espinoza You are welcome. I hope it was an entry error as that could turn the deal more positive

One aspect I think you should take into consideration: If you look or listen to the stories of the last downturn in the economy and the last real estate bubble, you will find that those who had negative cash flow or mortgages that were much higher than value got into trouble. You are starting with negative cash flow on this deal and I predict (not alone) that we have reached a peak in 2018 for the long-term cycle. That's good for the rent, but if your property is only 70% of current value in a few years from now, you run the risk of your mortgage being called or you have to put in more money if you can't retain current rent level. You also can't know how people react when more properties come on the market for rent in a coming downturn. The best way to protect yourself is to only buy properties that have positive cash flow from the start with a rent and expense calculation that is as conservative as possible. 

Finally, I think there might be a mistake in your report. I compared to my calculator reports and your tax info shows very high for a property of about $85K. Check if you accidentally put the annual fee as monthly. That could make a huge difference. Tax rate is normally not $306/month on a property of this price. If the numbers shown in the report are all correct, I would not do this deal, same as Dean.

I can recommend speaking to "Tinkerbell" at Memphis invest and let her give you an overview of what they do. I have never heard of Homeunion. Before you engage with them, maybe you read the audiobook "Turnkey Revolution". You can get it on Amazon and it tells you pretty much everything you need to look out for when considering turnkey. IN case you don't want to do that, be aware if Homeunion really does all the things they state themselves or if they outsource everything. If you end up working with local agents, local property managers, local lenders, etc., you will quickly get into a "he said - she said" game.

@Account Closed I hear you and I don't want to generalize. Mother nature is why we have insurance. Repairs of electrical panels, floors, windows, etc. are signs of a lack of quality control. When a vendor provides work it is checked before payment. if not done well, it's not paid until fixed. In two cases/properties I have PM companies that have their own crews. I negotiated with the PM company that the work their crew does is falling under a new guarantee period of at least 1 year. Guess what, since then not once was there any complaint or re-repair needed - isn't that interesting.

I am an investor but my main occupation is organizational management. Based on that I can say that scale is not an excuse. Yes, the picture can get skewed when people only write about the bad and not mention the good things. On the other hand, larger scale means that quality control has to grow with volume to make sure that all properties have the same quality level. It has always escaped me that some TK providers argue about quality based on a classification of a property (A,B,C,D). If a property gets renovated, the quality of the work should always be the same. The fixtures and materials might be different but in our modern market, there is no material that should ever go, even in a D-property, that falls apart with some use.

I am not saying USREEB does not follow these principles - I don't know the company well enough. I am describing my view because I believe for all of the TK investors on BP we should be able to expect and select that from the providers we decide to invest and work with.

Chris Clothier has a whole section in his book "Turnkey Revolution" about quality and how to demand it, even if a TK provider has grown to a massive scale.

@Account Closed I am reading up on USREEB here in BP in support of my decision process to potentially invest. Naturally one always finds people happy with a provider and some that are not. What appears to be a thread across many postings is the cost of repairs for properties. My other turnkey properties come with similar guarantees like USREEB but they basically never need them. The providers basically renovate everything that could conceivably break. Yes, there is possible the off in and out, but it amounts to almost nothing. In the postings regarding USREEB I see a lot of things mentioned that appear like minor stuff or even sloppy execution. It is ok that USREEB covers it, but for a potential new client, I am very worried that these repairs are necessary in the first place. I can't be in KC or OH and would want to depend on work quality, mainly during the renovation phase, so there is close to nothing to repair the first few years or only stuff the tenants may have broken and gets charged to them. Kevin's case might be extreme but if I imagine the properties were financed he would have had a lot fo additional out of pocket costs. That compares pretty unfavorably to all my current investments - not to forget that I am interested in the passive income. If that is eaten away by repair costs from the get-go, the model collapses. I also wonder how other clients are coping with this or if any reach they positive cash flow goals?

@Paul Amegatcher Thank you. I will review the links and totally agree with the inspector. I do that anyway.

I have some interesting offers from USREEB and would love input from the BP community about experience working with them, quality of renovations, customer service, and deals. Thanks in advance for your help

I have seen that we are getting awesome benefits and perks as Pro members. I have my properties under management but would still like to see how they perform, how reserves build, what the ROI and CCR are, etc.

In the list of tools and perks, I see property mgmt tools but I am paying my PM's for their work. Is there any tool (other than my own spreadsheet) that works well to track the performance of the properties from an investor's point of view, that BP members can recommend?

Thanks for your help

Axel

@Patrick M. Exactly That’s a business expense If you hold that privately you are throwing away money

@Mike Cumbie you are totally right Don’t forget the IRS will, at some point begin to question how a company can raise n at the level you describe and not have employees. It’s not the income tax they want but FICA You will be better off to employ yourself than wait till you get audited