All Forum Posts by: Chris Clothier

 As I read through this thread this is the exact thought that went through my head.  I kept thinking who in their right mind would sell this to an out of state investor and think that leaving that tree was ok?

i appreciate the shout-outs from a few of you on here asking if I was going to comment.  I was about to have to comment to save everyone from @Engelo Rumora and @James Wise, but luckily Amie posted!  It was great to be able to hear directly from our customer and understand her point of view.  

Contrary to popular belief, the customer is not always right.  However, they are always the customer.  I have tried to keep a policy on here of holding comments until I have given our customer the chance to speak with me directly as long as I can verify their comments and point of view are not contrary to the facts.  Then, I may post comments very quickly!  

In this case, I read the customer service notes and email communication and felt we dropped the ball.  We had a lot of communication, which after reading through it was simply not effective.  We also dropped the ball on a few details and it was enough to cause confusion and then the need for more communication.  In my eyes, none of this amounts to a major issue, but that doesn't mean the issues are not valid and it is a great opportunity to try and improve upon the 2%. 

We also dropped the ball by agreeing to operate outside the norms of our processes.  We are managing a $2B portfolio that consists of individual investors.  8,000 properties over two decades.  We have built our processes on the back of experience.  The team should have said no to the original request, but we didn't.  We made an exception and paid a price for it.  It exacerbated a small issue and made it bigger than it needed to be.

In the end, it is a good learning experience for our team.  As for jumping on the line with a client owning one property out of 8,000, I am not able to always jump on a call.  We have a phenomenal team that works with every client and department leaders who are authorized to make those calls.  In this case, I felt we could have done better and wanted to follow through myself and be the one who connected with Amie. 

@Engelo Rumora,

I'll keep my thoughts brief, (if possible) lol!  

You've gotten it out of your system, don't sweat it.  You can never be everything to everybody, but you offer a service that someone, somewhere wants. My philosophy is that I am trying to attract my ideal client.  Along the way, we will say NO to 90% of the people who initially reach out for more information.  Sometimes, the no comes from them not being qualified.  Sometimes, it's from them wanting a city we don't operate it.  Sometimes, it's from them wanting a service we don't provide.

However, a majority are simply looking for something "more".  More return, more service, more of something that we can't give.  And there is nothing wrong with that.  They shouldn't be rude about it, but they get to decide what works for them regardless of how they come to that conclusion.

In every one of these cases, our job is to help every investor get pointed in the right direction.  It is obvious that we are not the right fit and to be very direct, it is in the best interest of everyone that they not buy one of our properties.  Trying to be the "more" that some investors are looking for can be way more painful than simply moving to the next investor and writing this one off by helping them go a different direction.

Of course, I'm preaching to the choir.  You already know of this because you practice it, so I wouldn't let this one get under your skin.  We both know there is another one right around the corner!  Just focus on your ideal clients.

@James Wise

I respect your opinion and love the fact we can disagree with each other respectfully.  You are not wrong on the need to respond and offer clarity.  You and I show that two pretty seasoned people read his responses on here differently, which I think illustrates a reason clean it up.  That'll be for him to decide. 

 Sorry for quoting on this and so many people being tagged.  I wanted to take the opposite view though.  I think Antoine has actually done a pretty good job with responding to actual clients and interested clients here on the forums.  I don't know him personally, but I think I met the father in San Fransisco some years back and I do know the business name and that they have been around for a good bit of time.  Enough time for the negatives to creep out and enter the BP universe and I don't see or hear a lot of negative about them.

I also don't see any discrepancies when you read each of his responses.  It may not be crystal clear, but the way I read it is that at one time they completed 650 deals in a year.  That is a few more than 50 a month.  They made the decision to create a new business packaging their resources at a time when they were doing 20-30 a month.  I read it like that occurred after they had grown to do 50 in a month.  I could be wrong, but that is the way i read his responses and I simply went to his profile and read his exact posts without all the rest of the thread.

For reference since Jay mentioned it, REI at one point was completing 82 properties monthly with a high of 112 closed transactions in one month. Buying, renovating, leasing and selling. So you can find on here where I my have posted that we complete 80, or I may say close to 100 deals in a month. However, right this minute, we are not closing that many a month. We are closing closer to 60 a month and had reduced our footprint when interest rates were at their highest. We will continue to grow back to close to if not greater than 100 a month, but if someone wants to know the size and scale of our company and abilities, I am absolutely letting them know we have closed right at 1,000 properties in a year.

When answering questions in a two-dimensional forum where people are asking questions, business owners try and tell a story that gives as much of a picture as possible and context is sometimes difficult or lost in the way people read the responses.  Antoine is simply a business person who sees an opportunity to create a business.  I tip my hat to him.  He gets to decide what price to charge for his service or product.  The public will decide if its needed or worth it.  And he gets to decide how to convey his history and story as long as he is not making it up out of thin air.  That part, I have no way of knowing.

But, I don't fault the guy for not responding to everyone, especially not anyone that has no real interest in hearing from him or learning about his business.  There are definitely commenters in this thread that could help Antoine and give him advice from their perspectives and expertise, but so far not much has really come across as genuine, in my opinion.  So far, I think he has done a decent job of responding to what needs to be responded to.

As an actual provider, I can't give you advice on experience with any companies although I originally started investing passively back in 2003 in essentially turnkey properties before the marketing of the name really took off. I wrote a book called the Turnkey Revolution in 2017 and based a lot of it on advise I've given here on BP. Here are some questions that I have posted many, many times here on BP that you should be asking any Turnkey company you are going to do business with. I'm happy to give what I think are the best answers to these as well. Again, I made this list based on my own experiences.

Two important things to remember. One, if they don't have time to spend with you and answer your questions in detail and discuss them, in my opinion, move on. Two, a key about asking questions is to ask a mirror question. Many companies have learned how to sell and how to market and certainly how to answer questions like this. Often answers are scripted and your job as an investor is to ask the right questions in the right way to answer for yourself whether you can trust what you are hearing. It is also important to remember that investors like myself always advise meeting who you're going to do business with. That is important because it allows you to see for yourself if the answers you heard match what you see on the ground. A mirror question is where you ask what is the average vacancy rate each month. Write down the answer. Sometime later in the conversation you ask the mirror question of what is your average occupancy each month. Write that answer down.

A high quality company will be on top of their KPI's and their numbers will match. A 3.5% vacancy number will match a 96.5% occupancy number.

Lastly, after you have their numbers research what you were told. I'll never forget a conversation with an investor who was amazed that a turnkey company had a 1.5% vacancy rate and a 98.5% occupancy. It sounded amazing. He asked how many properties they managed and the answer was roughly 1500. He then went onto their website online and researched their property management online and was shocked. Their website listed 198 properties for rent. They had an ad online for prospective tenants advertising 200+ vacant rentals. Their true vacancy rate was roughly 13% not 1.5%. But they felt like they had to market a low rate to "keep up with the Joneses". So ask your questions, get your data and do your research.

Are you an investor?

Do you own in the exact neighborhoods you are selling?

How many investors do you work with?

Do you own all aspects of the operation?

Do you offer rental or maintenance guarantees? If they answer yes, ask them why. Then ask them if they will put the guarantee on year three.

Do you defer maintenance?

How many properties do you manage?

Do you own the properties you sell?

Do you promote other companies and get paid by them when I purchase a property?

How long have you been in the business?

What is your average vacancy rate?

What percentage of expiring leases will renew their lease each month?

What percentage of signed leases fulfill their full term?

What is the average number of days a property is vacant between tenants, move-out to move-in?

What percentage of billed rent do you collect each month?

What is the cost of an average repair bill after move-out?

What are your management fees?

What percentage of collected rent goes to yearly maintenance on average?

What is your average number-of-months occupancy per property?

What is your average occupancy rate?

What programs do you have in place to keep residents happy?

What customer service programs do you have in place?

Will you call me every month with an update on my portfolio?

How many team members are dedicated solely to providing service to your clients?

What has been your biggest mistake as an investor? How do you protect your clients from making the same mistakes?

@Becca F.,

Regardless of the intent of BiggerPockets as an open forum, there should be no sacred statements!  The reality is, your advice is great and 100% accurate - especially the line ..."Sometimes it's just better not to do a deal."

That is the truth and there are some great commentators on here who say it all the time but very few investors want to admit it.  Call it FOMO, lack of patience or lack of good disciplined understanding, but utilizing the word no is very powerful for real estate investors.  Sometimes, the best deals you do are the ones you said no to.  

Thanks for posting this.  Good luck as you keep investing.

@Srini Murthy,

This is absolutely not what the best Turnkey companies in the industry would consider Turnkey.  Inspectors can sometimes use language that makes issues sound worse than they are and I understand your reference to some being minor fixes (assuming you mean they need to fix them), but every issue listed here is a major issue to me.  Forget about credits and future fixes, there is no need for you to negotiate.

It not only points to issues with this particular property, but more importantly points to operational issues.  Many of these issues listed are basic items that any good operating company would never miss like every window should open regardless of condition, gutters should be tight and clean, never missing fascia, siding and soffit should all not only be fixed but in place, smoke alarms and fire extinguishers in every home, etc...  These are operational basics. 

In my opinion, there is not need for further discussion.  This is not a property in any condition that you should purchase, nor a company that you should trust to purchase from.

 Happy to share lender recommendations, but they are not in Memphis.  They are national lenders that specialize in working with investors and especially those that are passive.  If it is ok with you, I will have someone reach out to share those and make sure they are the right fit for you.  If none of them work, feel free to reach back out and I can recommend others.

Best - Chris

I dont use alphabet codes because it is easy to get the wrong idea one way or the other.  I like the area for single family homes.  The townhomes over there may look a little rough but they seem to always stay rented.  So they are in demand.  It is not a new area so maybe c+ to b- based on the way most investors discuss areas.  It is median priced for median income so I think you're safe.

Our management team says newly renovated in that area is 1495 for a 3/2.5 townhome and we would price in $25 to $50 bumps every year to every other year. Not newly renovated may fall as low as $1250 so you have bit of a range depending on condition but I would be comfortable telling an investor that $1350 seems doable if you keep a nice property and rent bumps are certainly part of the plan.  Good luck if you decide to move forward on it!