All Forum Posts by: Mark S.

@Forrest Faulconer, thanks.  I called the utility company about the Pump Station on the lot and they said they pay for and maintain all their equipment.  They just need a 20’ clearance for service road for pickup truck and Mack truck (in emergency) and they need the access 24/7.  He was able to send me a map of the subdivision which shows the service road and pump station and he said it’s been filed with the city.  

I am considering buying a lot in my subdivision to build a house with a basement on.  One of the larger lots has a service road that the local utility company uses almost daily.  The builder with the lot said that it is part of the lot and they (local utility company) simply has a right of passage.  

If we set the house back enough, shouldn’t be an issue.  I’m pretty sure they just go down there to read/monitor the meters.  I’m wondering what other questions I should be asking/things I should be considering before potentially buying this lot.  

Do I have any sort of additional liability by buying this lot?  Just trying to figure out if it’s worth it to pursue this lot or to purchase another, less desirable (steep, not on cul-de-sac, etc.) instead to avoid any potential issues.  I guess I don’t know what I don’t know and am wondering what questions I should be asking.  

Thanks, @Colleen F.  I am still waiting to hear back from the PM.  I'm giving them until the end of the week.  I will certainly explore my options with them.  In this particular case, we're talking about 1 month's rent (November).  He is supposed to be moving out anyway, so as long as he is actually out of there, we really don't have to evict (assuming we can even do that with the eviction moratoriums out there - haven't been following that closely; that's what my PM is for!).  Anyway, we'll see what happens.  Right now, I'm owed about $900 for November.  If he somehow doesn't/hasn't moved out and becomes a squatter, then we'll likely have to go down that road.  For now, I'm under the assumption that I will miss out on 1 month's rent of $900.  As long as he doesn't trash the place (he's losing his $500 security deposit regardless for breaking the lease early), it'll be a tough call.  Part of me wants to have the PM go after him regardless to "teach him a lesson," but I might end up becoming the student in this one.  Time will tell.

Tenant in Memphis, TN is supposed to be moving out.  Hasn’t paid rent for November (despite telling PM he would pay by a particular date).  PM states they’ve been trying to collect November rent all month and when they recently called him, phone is disconnected.  My guess is tenant used money that should have been paid to us for November rent to get a new place.  PM knows where he works (assuming he is still there).

 Can we/the PM legally garnish wages for unpaid rent?  Is there any other recourse other than him forfeiting his security deposit?  This is my first experience with this and trying to figure out 1.) What legal actions we have available and 2.) Whether or not it is even worth PM pursuing or if we just chalk it up to loss as a cost of doing business.  

I am waiting to hear back from PM as they stated the posted a notice on the door and were supposed to be sending someone out yesterday to check occupancy to see whether or not he still appears to be living there (or just fled).

This is in Memphis, TN.  Any feedback or insight would be greatly appreciated.  Thanks.  

@David M., did I say I got screwed?  The turnkey providers generally use current property taxes rates based on current figures, not based on sales price to investor.  

@Keith Stempel, base it on the purchase price.  It may take a while to catch up, but it will. If you don’t calculate it this way, you will likely get burned.  Happened to me a couple times in Memphis, even though they supposedly only reassess every 4 years 

@Ryan Planchon, I agree with @Steve K.. I bought a property from them in May 2019 when they went under a different name and when they still outsourced property management.  I’ve had over $1K in HVAC repairs in the first 9 months of ownership.  Other than that, normal little things.  I had a vacancy and had to turn the unit.  I use 8% for vacancy myself, which covers actual rent loss from vacancy, turnover costs, lease up and lease renewal fees, etc.  Even 8% could be a little low.  I also use 5% maintenance and also 5% capex, so 18% reserves total plus PM fee (which is 8% for the 3rd party PM they put me with and that PM also charges a bs $65/every 6 month maintenance charge - ie profit center, so it’s really closer to 10%).  

My purchase was also $73,000.  Target rent was $850 at the time, but we actually got $900 with Section 8 (which I wasn’t told about until much later in the process).  When it turned, we were able to get $900 from market paying tenant who has been great so far.  

With all that said, the “reserve account” for this particular property - funded by the 18% of gross rents number - is sitting around $1K (I start them all at $0 and let the reserves build th up).  If anything major happens right now, I will have to dip into the operating account.  If I can get some tenant stability and things continue smooth sailing from here for a bit, I should be able to build it back up fairly easily.  With these assumptions and figures being used, my cash flow on this investment is just north of $200/month.  I’m actually pleased with that figure for turnkey.  I locked in at 5.00%, 30 year fixed, with 20% down back when I bought it (and interest rates were higher).

I currently have 5 turnkey SFRs.  Started a few years back.  This is how I run reserves for all of them.  I’m constantly evaluating whether or not I need to change my reserve numbers, but it seems okay so far (some reserve accounts have several thousand at this point, 100% tenant funded).  Just my $.02.  I don’t think your true free cash flow will be as high as you’re stating, especially with 0% capex and only 4% vacancy.  Maybe mine isn’t either, who knows?

I'm in early discussions with CAVA Turnkey out of Richmond,VA. They specialize in mostly Section 8 rental properties. Frank Cava (founder/owner) was on a relatively recent Get Rich Education podcast; I think he's also been on other podcasts, like Norada (haven't listened to those yet).

Does anyone have any feedback, positive or negative, in working with CAVA Turnkey?  If so, please share.  

I’m looking to diversify into another market (other than Memphis, TN) for strong buy-and-hold turnkey properties with reputable providers that have their own in-house property management.  Properties meeting/exceeding 1% rule are ideal, although seem to be tougher to find in this environment.  Primarily looking to stay in the Midwest/Southeast but open to other markets if they make sense. 

@Patti Robertson, it's been a while, but things are finally sorted out.  I really appreciate you responding to my thread so I definitely wanted to provide an update.

The PM really stepped up to the plate on this one, although I had to keep following up consistently to make sure they knew I was watching, on top of it, and expected an answer.  The PM had to provide MHA everything from the lease, the paperwork that previously was sent to MHA (that MHA should have had), tenant's notice to vacate, etc.  MHA admitted their mistake and ultimately sent the funds back.  It took until just now to get April 2020 rent back from them, but we finally got it.  I'm so glad I questioned the charge on my PM statement or it probably would have gone unnoticed.  This is a perfect example of "managing the manager" in my opinion.  I also had the PM refund two months of PM fees (April and May) for the charged back funds.  When we got April's funds just now, they went ahead and charged the PM fee at that time.  PM said they had a really hard time getting anyone on the phone at MHA and that they're supposedly operating on some sort of reduced COVID hours still.  They finally got a manager over there involved and since they were supposed to pay April's rent back last month in September and never did, they sent it mid-month in October (either that or the PM fronted the money because they're tired of me following up with them and they'll collect it on the backend).  Glad that it's all over with.  MHA took back the money that they legitimately overpaid and they refunded the money that they stole from me.  All is well.  In the meantime, the new tenant has been paying on time like clockwork since...well, she paid on the 2nd this month, but close enough!

@Mark F., contact investor relations and ask.  I’m assuming I’m just on their email list and automatically get it.  I do know someone else who is investing with them and they didn’t get it either.