I apologize for the novel, I struggle to be concise sometimes. Tl;dr: I currently have three properties with Ohio Cashflow and just requested a fourth because I trust in the team and believe it is a great investment.
I’m supposedly a unique investor for OCF because I actually live in the Toledo area as well. When I moved to the area 6 years ago I was very quickly impressed with the real estate market; especially how I could get an A Class property for ~$130k and easily rent it out for 1%. My initial strategy was to “house hack” (before I even heard of the term) and I bought/lived in one for a few years before moving to another and renting out the previous. I repeated this twice more for three A class rentals total, all financed with conventional 5% down loans.
Around the time we were getting ready to convert our 3rd A Class property into a rental while living in it, I was then married with a soon to be coming son. We were tired of moving so I wanted to purchase a property directly as a rental instead of living in it first. I planned for and saved 20-30% down for an A class property but hesitated to purchase as I was struggling with property management.
For the prior two rentals, I had hired a relatively small property management company (but was tied to a large broker in the area) who worked with an accountant and assistant and probably had around 100 properties. I selected this company because another option seemed to have high costs and fees for everything while most other companies weren’t interested or never even responded to my email/voicemail inquiries. Overall, with the company I selected, I was not impressed with their property marketing, tenant acquisition speed, handling of tenant setup, maintenance/repair response, and turnover response. However, I stuck through it for several years as I figured they were still relatively the best in the area.
For my next property however, I wanted to see if I could purchase turn-key somewhere else with a very good property management company. I did a bunch of research and ended up reading about OCF, which happened to be in my own backyard!!
At first, I did not think we would be a good fit as I planned to finance all my properties instead of paying cash. But I realized that I was already saving 30-40k to down an A Class property so getting ~50k for a turnkey isn’t much of a barrier.
I reached out to OCF and, true to their word, they seemed to work harder to turn me away than take my business. And as I mentioned earlier, they specifically did not want me because I was in the area and their experience with local investors was that they always tried to dictate too many miniscule details. Those investors basically felt that they could do it better themselves, in which case they should just do it themselves. I, however, had no interest in renovations nor property management; which is a big reason why I purchased move-in ready, A Class properties for rentals previously. Luckily, Isaac and Engelo were not unreasonable and asked to meet with me and discuss in detail. I believe they found that I was very reasonable and understanding of both sides and appreciated how I looked for win-win situations.
I put down a $5k deposit and they shared with me their deals. A few that I wanted were snatched up quickly by other investors but I was able to get a hold of one for $55k with 650 in rent. Not the highest but still close to what I was OK with. Besides, for me it was more a trial to see how OCF works than the specific numbers.
The acquisition process went really smoothly, enabling me to quickly turn around and refinance the property. I am fortunate that my local credit union offers HELOCs at prime+2 for rentals at 100%LTV so I was able to get most of the equity back out relatively cheap and painlessly.
The one rub here (and not against OCF specifically) is that the property only appraised for $30k. I knew this was a risk going into the deal as there are still foreclosures and distressed properties in the area; along with the Zestimate being at 29k. As Engelo has mentioned before, appraisers tend to ignore the fact that their properties are move-in ready and valued at the high end of the area; and blindly assume that nearby sales for 20k are representative.
Regardless, I was able to take the $30k out, acquire another $25k and purchase another property with OCF just a few months later. Once again, the property appraised low at $32k so I would only be able to extract $32k out. At this point, I was out of funds to acquire another property. Which was still a positive anyway for at least two reasons: 1) I can wait to see how OCF handles the properties and 2) my cashflow would be higher with less money being financed.
Luckily, (or unluckily depending on how I look at it) I was able to see how OCF manages a turnover about 8 months later. The tenants at my second property broke the lease and decided to move out at in mid-March. Unfortunately, I found out later that they didn’t pay for March rent either. It took OCF about 2 weeks to get the turnover scoped and quoted. The turnover included several items that caught me by surprise because only 3-4 months prior, I received feedback that the property was very well taken care of so I was not expecting to hear that there was 1) trash and debris, 2) two water leaks, 3) missing handrail, 4) detached door, 5) drywall holes, 6) missing door, 7) missing vanity, and 8) needed paint throughout totaling $3900. OCF inherited these tenants from the previous owner and I hope that their own screening process helps minimize future instances like this. They also rehabbed this property with the tenant in place, so I questioned whether several items scoped into the turnover should have been addressed with the rehab; but I did not stress this with OCF. I let this go because I was pleased with the speed at which the turnover was completed. Some rehab experts may scoff at 2 weeks for scoping/quote and 1 week to complete; but I have struggled for 2 months to get a contractor to fix a vinyl gate on a property I manage myself let alone the scope they handled in 3 weeks.
After the turnover, I was then informed that they had acquired a tenant to move in May 2nd, so basically, I was out 2 months’ rent, plus the $3900 for turnover, plus cleaning and maintenance $137, plus utilities $275, less their $700 deposit. Unfortunately, I found out a couple weeks ago that the tenant did not move in and another tenant had moved in on May 23rd; so, I was out a bit more rent. Ideally, I would have loved to have known that the first tenant did not follow through, but OCF focused on the important part of finding a replacement so I am still content. I still wonder whether we can go after the first tenant for lost rent from breaking the lease or the second tenant for not moving in, but I am not holding my breath.
Regarding maintenance between all properties: there have been charges almost every month with at least one property. Which partially implies that I should expect plugged drains, etc. to continue throughout. But to me this is a positive as it looks like OCF is taking care of the situations promptly.
Regarding tenant acquisition: the first property and second property was already tenanted when I purchased it. And I reviewed how I was happy overall with the turnover and tenanting process on the second property. The third property was vacant and ready to be tenanted in January; the middle of winter… With snow storms, we didn’t have an open house until February and had a tenant for March; but ended up giving March for free to entice them to move in. So, rent did not start until April; I lost 2 months’ rent but this went about as good as I expected.
For all the properties, OCF does require a reserve of $1000 per unit. From my research, this is relatively high and rare to have it per unit instead of per investor. Once I hit 4-5 properties, having 1k per unit is unreasonable in my opinion. 4-5k should be more than enough to handle even most major costs/situations. Once I hit this point, I will push for the reserve to be capped; and I believe OCF is willing to do this later too. Otherwise, this would tie a significant amount of capital that could go to funding another property.
Overall, the idealist in me believes that OCF can improve on their communication speed, thoroughness when responding to questions or providing feedback, and attention to detail regarding their management. And it would also be awesome if they sold their properties for less! However, the realist in me knows these are secondary and all the critical items I want in a property management company is present. The team is rightly focused on taking care of the tenants and properties instead. And why would they sell the properties at a huge discount if the have little/no issues selling them at market price!?
Today, with the turnover complete and having acquired enough funds to bridge the gap of the low appraisal, I have reached out to OCF for another property and am excited to see what they may have to offer. I’m hoping this next one appraises better and, since I’m a loyal customer(!), they may even let me do an appraisal before purchase; but even if it doesn’t, I’d still be happy.
Long term, I don’t intend to stay in the area so having a great company manage my properties is a lot more important than finding the best deals or doing all the work myself to save cost.
After a couple years with OCF, I am confident that they are the best property management company in the Toledo area, and likely one of the best in the world as they claim.
