All Forum Posts by: Phillip Gainey

Wow, I got a sniveling private message today, obviously in response to my first post above, from the turnkey seller who sold my partner the property with all the problems, and who changed companies and now works for the same company as our new PM. The one recommended by another BP member. Seemed to be insinuating that he is going to some how cause trouble between us and our new PM. At least that is how I read it. Whatever.

Just one more reason to have a partner, with a mutual monetary interest in seeing that the property succeeds as an investment. Deal with people who have a vested interest in the ultimate outcome. Avoid the salesman and the buck passers.

PG

I agree. Have done this in Indiana with good results. You've got to have a local person involved with something to lose. Not some sales person who makes his profit upfront, recommends a pm who screws up, then makes lame excuses for that PM like: "Well, if I recommended him he must have been doing okay up to the point I recommended him!" Pretty lame.

The guy we work with in Indiana, arranged the sale (one subj2, one take over payments) and manages both properties. Can't be any "buck passing".

Also, for out of state investors, realize that in many markets, Memphis for one, the PMs and Turnkey sellers all know each other. So don't get referrals for a PM from people on the sell side Get a referral from ANOTHER OOS INVESTOR. I got the PM mentioned above, Jim West, from another BP investor who has had good results from him after firing two other managers.

Also, focus on the person, not the company. What do I mean? People move from company to company. For example, it just so happens the guy who sold my partner the property above with all the problems, now works for the company the above highly recommended PM works for! Identify the people you should be dealing with, no matter where they happen to be working.

PG

I have learned the hard way that buying properties out of state is not the way to go. Unless you actually like flying cross country to "take names" and "kick arse"!

There are too many people you have to trust. PMs for one. Everyone I've talked to who have bought in Memphis have had to fire at least a couple property managers. They don't screen the tenants properly and are not upfront about what is going on with your property.

We've had to fire two so far. One rented to people with 4 eviction judgments against them. Turned out the roof needed replacing and the tenants weren't paying the rent because the roof was leaking and they wouldn't fix it. We weren't told about the roof at all. So we fired him.

New PM took 5 weeks to get an estimate to replace the roof. Turns out his roof guy was busy on another project, and was UNAVAILABLE. Rather than telling us, he kept us hanging. Oh, and we weren't even informed about needing a new roof during that 5 weeks. Found out by accident. In the meantime, the place is vacant and we are in a position of not being covered with insurance since we were still paying the occupied rate. So we fired him.

Now we are working with a guy that seems to have it together (Jim West, Reedy and Co). Just informed us today that this property is a "total mess". Second PM just mentioned we need a new roof (5 weeks late) and that the garage needed repair. He had full access to the property and never told us the true condition of the property.

What's my point? If were invested locally, we could drive over there and see what the hell was going on, rather than being led along by people! Kept fat, dumb and happy! Until the bill arrives.

PG

He is pretty shrewd. I heard his company benefited handsomely from the bailout money.

http://washingtonexaminer.com/blogs/beltway-confidential/2011/07/warren-buffett-continuing-profit-his-investment-bailout-why-okay

Freaking chronie-capitalist. Gotta be a big fish, though.
PG

Whoops, that was suppose to be in "off topic". Sorry.

The world will end as we own it.

Thousands of property managers place here by ancient aliens will surface from the bowels of the earth. They will infiltrate and already incompetent property manager base to further screw up hundreds of thousands (if not millions) of rental properties. They will rent to "sleeper" zombies (also placed here by aliens) who will commence to eat walls and electric wiring of properties.

Horrified, rental property owners will dump millions of properties onto an already depressed market. However, no security deposits will be forthcoming! To their dismay, owners will discover that these hordes of incompetent, alien placed property managers NEVER COLLECTED ANY!

Rental properties will be TORCHED by owners! This will virtually destroy the rental property base of the country. With no where to live, section 8's and other renter vermin will take over the land. Roaming and pillaging the assets of corporate jet owners, and people making over 200k a year. These "fat cats" will pick up and emigrate to Australia and New Zealand.

How it ends will be anyone's guess. But it won't be pretty! :mrgreen: :mrgreen:

Joel,

No, not getting paid, but he was managing another rental.

My partner is trying to find another PM and someone to fix the roof. I don't care how cheap the guy the PM recommended was. If it takes 5 weeks to provide an estimate and inform us that the roof needs replacing, how long would the guy take to actually replace the roof?!!

PG

I agree, the tenants in Memphis are very challenging. In fact, they suck. And i have found that where tenants suck, most PMs in that area will suck. Good PMs will be worth their weight in gold. They need to be one step ahead of the tenants. In Memphis, the tenants know all the tricks and traps.

One Memphis RE professional confessed to me recently that 9 out of 10 tenants have a lousy credit history, or have at least one court judgement against them. Another told me that if your criteria is NOT to rent to any applicant who has a debt or rent related court judgement against them, you'll have a hard time filling your rentals. If only these RE pros would inform prospects BEFORE they buy. That would be a real service.

Know any roof guys in memphis?

PG

HM lenders require skin in the game so you can't "walk away" if things don't go the way you expect.

Most require points up front.

PG

Nate,

It could be worse. You could have bought a "turnkey" property, and ended up needing to replace an entire roof after a couple years!

The consensus is that it is NOT a good idea to buy properties to hold and rent remotely. Hard enough being a landlord in your own back yard.

PG