Hello everyone again,
I have numerous updates:
1) Lazzini property - sold in June 2016 at breakeven to loan amount
2) Chelsea property - got vandalized again (3 times in 3 years) because boarding up apparently wasn't good enough and having this so-called "honest and reliable" management company that promised to drive by 1x/month and charged me for gardening 2x/month did NOT DO ANYTHING! I had a potential buyer who wanted to see the property and he was the one telling me that the property had been vandalized. I then contact my insurance company and they told me my insurance policy was cancelled about 6 months prior BECAUSE the property was vandalized. So basically, the management company did nothing and just ripped me off and the insurance agent forgot to inform me because she was busy planning a wedding. The claim has still not been resolved after 3 1/2 months because the management company dragged their feet in providing a police report filing (they said they were stood up by police 3x but then I insisted on them just simply going to the police station - duh! - and it still took them 3 weeks to do so) and they had no record whatsoever of going to my property. I found a great contractor now, who almost feels like a concierge service to me, who was referred by a great investor from Bigger Pockets. The contractor has removed the code violations due to the property not being boarded up and trash sitting outside, including a chair from the inside of the property that I had paid for the management to clean out and remove the debris, which they obviously didn't.
I still owe about $43,000 on this property and have now sold another out of state property that I owned outright (even though I lost another $20,000 due to that management company there letting the tenant move out during escrow and the first buyer pulled out), thus, I offered the property in as is condition at $29,500 but no matter what, every time I lowered the price, I got offered another $10,000 less.
Several investors in Memphis finally confirmed that there is a different market for out of state investors than local investors. We are being taken for a ride and pay about 30-50% more on every single transaction: purchase, rehab, repairs, etc. and we are being lied to that work had been done when it wasn't done. Most crooks in Memphis get away with it, even if you have a legal title against them.
Contractor is now helping me fix up the property for $10,000 in total while someone trusted will be living there for free and house sitting and reporting back to us so the property won't get vandalized again until we have found a rent to own tenant. Plan is to get $7,000 minimum down and then covering my PITI plus additional cushion, which will be around market rent in that area. There are 3 other properties nearby that are boarded up, too, but they will be fixed up within a year providing each other higher market value.
3) Kings Arms property - the tenants had paid rent before timely, even though they didn't seem the best candidate. They offered $100/month more but since they paid, I was okay with it, even though it was still below market and what this large property would go for. However, I asked the management company to do a full checkup of the property and provide pictures, which they didn't and I kept pulling teeth asking about the status. Supposedly, a person left and they fell behind on following up. Two months after lease expiration, they just sent me the lease renewal without pictures or information who actually lives at my property. Two months after that, the tenants fell behind on rent. I kept pulling more teeth to find out whether they had paid or not. Then tenants filed Chapter 13 (I am still waiting for any funds to come from the bankruptcy trustee) owing me 2 months rent but were given an automatic stay by the court as long as they paid timely starting the October 2016 rent again. Sure enough, the tenants ended up falling behind again (management company still didn't inform me and I only saw it a month later when I got their reports). Bankruptcy court issued another automatic stay extension due to a reorganization because tenant was supposedly very ill. One month got paid, then they fell behind again, which I found out again a month later from my rent reports instead of management informing me by the 5th of the month. Then I asked the same contractor I am now using to drive by. He found out that there are hood rats living at my property of at least 10 people. Again, when I confronted management, they didn't tell me that they had knowledge of the tenants living with many others and the tenants violate several codes. I was told by management that they "NEVER drive by a property once it is rented!" and "we have over 1,600 properties to manage so we don't have time to drive by each one of them!" What? Hello? I was shocked to hear this. So basically the plan now is to evict the tenants ASAP, if no other criminal/domestic issues happen to get them out immediately (they have stolen tools and almost a cell phone from the management company's plumber, which they also didn't tell me about when it happened). Management company personnel is lame - they don't want to do any work but if there are high repairs, they will do it without your permission and then just send you the bill a week or two later costing you several thousands. Management made over $13,000 on me last year and they made me feel like I had to beg them to do something that is standard!
Plan with this property is to get tenants out, fix up a bit to make it sell better. Hopefully, there is a bit of equity left to do so but again, there are two different markets and it all depends who might be making an offer.
It's all about not getting screwed over by your management company or contractors or even lawyers! Official market is online, which lenders use, but reality in Memphis is that one gets taken for a ride as soon as you know you are out of state! Please be careful!
