All Forum Posts by: Fred Stevenson

@Dan Dawson . K thanks for heads up.  Is that true even if tenant is responsible for the damage?

@Dana Whicker Yes, the premiums are pretty low.

@Fred Heller Unfortunately, they do not have renter's insurance. It is a section 8 tenant, but PM is saying that he can get tenant to pay me back over time so they don't lose their vouchers.

In this case, there is not a note. The LLC owns it outright.

I have a property in which the tenant had a "cooking accident" that sent flames up to the ceiling, and burnt a whole into the bedroom above.  The work order from my property manager is for $6120.00, and my deductible is $5000.00.  I have five houses total with this same insurance company. 

I don't know if it has any bearing or not, but this property is owned by my LLC, and I have several other properties in which I have done a title transfer into another LLC.

So the question is, am I better of not filing a claim with the insurance company "Affinity", and paying the total amount out of pocket, or should I file the claim to recoup at least the 1120.00. 

I spoke to the insurance company, and they advised me to file a claim, and the agent didn't think it would bump up my premiums at renewal time, but he said another department reviews the claim history so he couldn't make any guarantees.

I live in LA also am down some rentals out of state free and clear. I contacted multiple LA banks and out of state banks to Try and get a HELOC and couldn't find any takers. Some were willing to do a commercial refi but at a higher rate with a variable mortgage.

Atrium also sent a check for section 8 shortfall. So as of today, I am whole through October rents.  Now I am hoping that Decas can quickly fill my vacancy.  I will have to put up with lower than the projected rents going forward, but both properties will still cashflow at around the 1% rule.

Birmingham Income Properties did send me a check to cover the difference between real rents and projected rents through August with a partial payment through September.  Maverick paid the shortfall through October rents based on the projected amounts, rather than, the real amounts.  I'm very thankful to Matt and Maverick for standing by me and their other investors through this ordeal

As mentioned in an earlier post I was introduced to Birmingham Income Properties (BHI) by Maverick and purchased two properties in Bham area. 

To make a long story short, I overpaid for one property and got a huge discount on the other property. Between the two I'm still in a positive equity position. The rehab work was great and BHI fixed everything found in my inspection reports without questions or charges. The initial pro-forma of rents versus purchase price greatly exceeded the 1% rule (these are 75-110k properties)  Unfortunately, the projected rents in the proforma were $200-300 higher than actual market rents, but BHI gave me a written agreement that they would pay the difference. They were good on their promise until Arbor Trace dissolved. I stopped receiving rent checks after July deposits, and then I found out two weeks ago that one of my properties has been vacant since August. 

Now the good news. BHI did finally pay me promised rents and shortfalls through August. I received the check today. However, I still haven't been paid for Sept and Oct rents, but Maverick has stepped in to help. 

In fact, Matt Bowles with Maverick has been in constant communication with me throughout this ordeal and I think they were blindsided along with the investors. However, I'm the buyer so at the end of the day I could have prevented a lot of this mess if I had done the following which is probably a smart idea for anyone buying properties out of area

1) I should have gotten comps on the properties from two independent real estate agents and I should have posted  info about the properties and neighborhoods in BP forums to get real world feedback on market values. 

2) Regarding the projected rents, I should have at least run a rent range report on both properties before purchase to discover how accurate the projected rents were versus real rents,(Maverick told me to do this). 

3) I could have contacted a couple of PM's to get their opinion on rents for these homes.  I didn't do enough due diligence regarding projected rents because of the "guarantee" that I received from BHI that leases would be in place with projected rents before closing. They weren't and I took their word for it: my bad. As I said BHI and Arbor Trace did make good on their guarantee to pay me the difference in projected rents versus actual rents in the short term, but now that arbor trace is dissolved I have to live with the reality of the new lower market rent price. Fortunately, the rents versus purchase price still exceed the 1% rule, but the returns won't quite match the initial proforma which was outstanding. 

While Maverick could've done a better job in vetting these guys and performing a higher level of due diligence, they acknowledge this fact. They are implementing processes to mitigate the likelihood of this happening again in the future. I think they are also in a better position to advise their clients in how to do their own thorough due diligence before closing. Maverick isn't just offering moral support to me. In fact, they have agreed to reimburse me for any outstanding shortfalls that I'm unable to collect.

For that I am grateful. I've purchased other properties from Maverick in other areas and they are performing as expected except for on that had tenant break the lease one month after signing. However I did receive the security deposit and another tenant was placed in that property at the projected rent. 

Also, Amy Conwill and Megan Massa who used to be with Arbor Trace and who are now with Atrium have been very helpful in uncovering the details about the real leasing agreements, rents collected, etc., and they've been very easy to communicate with and very helpful.  They are also helping me with some of the other shortfall that is still owed to me. 

I have since found a new property management company, Decas, who has been Johnny on the spot and is already close to filling my vacancy at a realistic rent in less than a week. 

While I would like to point the finger at BHI, Arbor Trace and Maverick, I'm the one responsible, as its my investment. The lessons I've learned hear are worth the price I've paid, and will make me a more astute real estate investor going forward. I hope it will also help others too.

 I've purchased TK and I've also purchased in my own market.  There are lessons I've learned from my own mistakes and would offer this advice to anyone considering the purchase of turnkey properties. 

1) visit the property and the neighborhood and meet with the turnkey operator before purchase.

2) get the opinion of people from Bigger Pockets about the desirability of that neighborhood before purchase

3) get comps from a realestate agent that is unrelated to the turnkey company to verify that you're paying a fair purchase price. You may have to pay a small fee for this.

4) get an inspection and an upfront gaurantee from the turnkey operator that they will fix whatever is required, and that they will pay for the reinspection

5) go to rent range to verify that projected rents are in range

6) Interview local property management companies to get their opinion of neighborhood and rent projections to verify the pro forma, and to offer opinions on the turnkey operators rehab quality and property management ability

7) Only buy in B neighbhorhoods

8) Ask BP community if they've had any experience good or bad with TK provider before closing the deal

I'm in the same boat. Can someone please recommend a top notch property management company. Just found out today that one of my tenants hasn't been paying and my other property has been vacant for two months and that tenant hadn't paid since May. Bradley says he will pay the amount owed but still waiting for check and now they won't answer any questions. Anyone know how to pursue collections?