When Life (And Death) Intervene

It's been a while since I have been able to post here.. I've been very busy at my day job and I was also out of state for four days last week, which created a big backlog of things I had to take care of upon my return.

I finally got the letter I requested from my old property manager stating that she was letting me out of the management agreement early. She claimed she never sent it to me before because she thought I just wanted a letter stating she got my letter, which she doesn't do. The most generous explanation would be that she never read my fax, because I clearly stated what I needed. Someone in the office probably got it and passed along the info incorrectly.

The letter was received last week and as soon as I got it, I called my new PM to tell her she could move forward on getting Rental #1 filled again. One bit of good news - along with the letter, the old PM also faxed me the names and phone numbers of two people who had contacted her about renting the property. I passed those on to my new PM as well.

The bad news is that I have still not been able to speak to my new PM in person yet. I've been calling every day for a week and have also sent email. Her cell phone was not being answered and, after day 3, I was no longer able to leave voice mail because she had no more room in her voice mailbox. The office number was answered by an answering service. Yesterday, I was able to leave voice mail on her cell phone again and today the answering service told me that there had been a death in the family and that was why she wasn't returning calls yet. I figured it had to be something like that. Anyway, I was told I would get a call back today around noon (which has come and gone). Unfortunately, the two parties interested in the property may no longer be interested after all this time has elapsed. Still, once the family issues have settled down for the new PM, I remain hopeful that she will be aggressively looking to get tenants in place for me.

The Houston apartment deal is set to close the end of this month. They still might be a bit short in raising funds and it might get pushed back one more month. I hope not.

I am also working on another 12% hard money loan. The borrower would be someone worth $5 - 10 million who is buying foreclosures at the courthouse. If the guy is willing to put up part of his interest in some North Dakota commercial real estate property (of which he has $5 million invested in property worth about $20 million) or part of his interest in a financial company (the one I was partnering with on the Louisiana deal), then I might do this. I've just had a very brief discussion with Les about this, so I'll have more info later, if it pans out. The 12% hard money deals are getting hard to find because interest rates are so low right now. But I'm not going to accept a deal just to get 12% if there are not substantial assets to back it up if the loan goes into default.

A Property Management Company To Avoid

It's been 2 weeks since I faxed my property management company. Despite my written request and several phone calls, I have not received the written confirmation of the management agreement cancellation that I asked for. I needed this so the new management company could take over. Without it, I have to wait out the 30 day period specified in the contract. Because the current company is not making any money from me when the property is empty, there is really no reason for them not to provide this letter. A simple two sentence letter would work fine:

Mr. Xxxx,

This letter is to confirm the management agreement between us for the property located at ### Xxxx St. in Tulsa is canceled per your request. The keys and deposits are being handled per your instructions.

That's all it would take. About 3 minutes work to type, print and fax. But, according to the woman I spoke to, they "just don't do that." That's the only reason they offered, despite the fact that I explained that they are not losing any money by allowing an early cancellation. The only logical explanation for their refusal to do this is spite. The owner refuses to take my calls, so I am unable to hear her side of the story. One might imagine that they might be making one last push to try to get it rented during the 30 days cancellation period and salvage some money out of the deal. However, the property is no longer listed on their website, so even that excuse doesn't stand up. The only explanation for their behavior that is left is pettiness.

So, if anyone has properties in the Tulsa area and is considering using Bryan Properties to manage them, I suggest you first read about my experiences with them. Then I strongly urge you to consider using a different company.

You Know There Are A Lot Of Foreclosures When...

...people start giving tours of bank owned properties.

On the other hand, this does show some creative thinking from a couple of Realtors who must be looking hard for some ways to drum up business these days.

Potential Windfall For Foreclosure Investors

CNN is reporting that the Senate has passed a bipartisan bill to address the foreclosure crisis. Among the provisions: a tax credit of $7,000 for people buying foreclosed properties! Wow! It's unclear if this will apply to investors or just owner-occupants, but..holy cow.. A $7,000 tax credit! Not a tax deduction mind you, but a tax credit. That will certainly spur a wave of buying from investors if they can claim it!

Of course, this is just the Senate's version of the bill and the House version did not contain that credit... The credit will probably never come to pass, but it would be a nice present.

Changing Management Companies Is A Pain

Last Friday, I fired my property management company and hired a new one. Unfortunately, my contract stated that I have to give 30 days notice that I am canceling the contract. I had hoped that they would not enforce that, since they are not making any money from me. I don't pay them a monthly fee is the property is vacant and it is, so there is really no point in them holding on to the contract - unless they think they can get it rented in the next 30 days and, given that they haven't been able to do that in the prior 5 months, I don't think they can.

So in my fax on Friday, I asked them for written confirmation that they would release me from the contract. I have not received it. I called them on Tuesday and left a message requesting that. I called them again today. The owner is deliberately avoiding my calls now, since she was in but when the receptionist got my name, she was suddenly unavailable. So again, I explained what I wanted. The receptionist said they normally don't put any cancellations in writing and they just have to wait for the 30 day period to be up. I explained it made no sense for them to enforce the 30 day period. The lady said she would again talk to the owner and request written confirmation so that I could hire another property management company. She said even if they did waive the 30 days, they could only give the keys to the new managers. I would still have to wait 30 days for my deposit to be refunded. Sounds like a bunch of bull to me.

Good News For Multi #1

When I first started posting about my potential investment in a multi-unit rental complex in Houston, much of the comments warning me against it mentioned the horrible economy and how the Houston market is deteriorating. Just thought I'd pass along this article that says the opposite.

Rental #1 Under New Management

After five months of sitting vacant, I have fired my property management company and moved to a new one. Hopefully, this one will be able to get some tenants for me.

The contract I had with the old management company specifies I have to give them 30 days notice to terminate the contract, but I think they will waive that since they aren't getting paid anything while it is empty. The new management company is allowing me to just start with a leasing contract with them and I won't have to sign a management contract until they actually get someone in the place. I've instructed the old management to turn over all keys and deposits to the new management.

I must say, I am disappointed in the old management company. I spoke with them almost three weeks ago about lowering the rent to $750 a month, yet when I checked their website today, the rent was still listed at $800. The link to show a map of the property does not work and there are no pictures of the property. I should have fired them three months ago. Anyway...

I did find out some more info about the property, thanks to a fresh set of eyes viewing the property. The new management company sent someone out to look at the house. Their report is a tad disconcerting, but it does perhaps explain the problems faced by the old PM and highlights their shortcomings as well. The property is in gang land. I forget the exact name of the gang, but it is a latino gang. There is no doubt it is in gang land because the gang has spray painted their gang sign on my porch! (Why did the old PM not know about this or tell me?) It's not entirely a bad outlook though. This is just a little island of gang land and there are very nice homes and neighborhoods a few blocks away on either side. The PM thinks if I can hold on to the property for 5 years or so, the good areas will take over the bad and I'll then be in a good position. The question is can I hold out until then?

So the new PM has a marketing plan. The old PM has a sign up in the yard, but that is probably all the advertising they have done, apart from listing it on their website. The new PM is going to place ads in the Latino newspapers and local markets, written in spanish. They are also going to post flyers at the nearby hospital, which employs a large blue collar workforce and is within walking distance. They will advertise that they will not run credit checks or charge applicants an application fee (although they will still run criminal checks). They will also send over their maintenance guy for about 1 hour a day for a couple of days, so he gets some exposure and people see someone is there working on it. Painting over the graffiti could be done in less than a day, but by spreading it out several days, he has more visibility.

If the property is still not rented in 30 to 45 days, it will be put on the market and will most likely have to be sold for a loss.

The new PM is quite a talker, but based on the conversations I've had with her, I think she knows the area much better than the old PM and is much more savvy at marketing properties. I am mildly hopeful the place will rent soon.