Last Friday, I was driving back from lunch and my co-worker noticed steam and liquid coming out from the front passenger side of my car's hood. A check of the temperature gauge showed my car was close to overheating. Luckily, there was a Toyota dealership nearby, so we pulled in there and dropped it off for repair. Turns out, I need a new radiator and some other repairs. The estimated cost is just over $1,200.
Yesterday, I came home from work and picked up the mail. I had three checks waiting for me - one was the second payment of hard money loan #4 and the other two were from two of the four flipping LLCs in California that I am invested in. The three checks more than cover the amount of my car repair. Nice!
Multi #1 First Payment Arrived
A couple of days ago, I received the monthly investor's accounting report for the apartment complex in Houston via email. About two days later, I received my first quarterly profit distribution. The amount was what I expected - the equivalent of a 9% annual ROI. That was our guaranteed minimum return. The good news is that the occupancy, as predicted, has risen another point to 95%. This is the third month in a row that occupancy has gone up and we've only owned the property for three months. The management team expects occupancy to rise even further due to Hurricane Ike, which did some damage to the complex, but not a whole lot. That might only be a temporary rise though, as people will start moving back into their homes and the hurricane damage is repaired.
Rent concessions were a bit less than double the previous month, coming in at around $10,000, due to market competition, but management has cut them back now and are only offering them on the smaller units. Almost completely offsetting the increase in concessions was an increase in "other income," which includes move-in fees, lease termination fees, pet fees, laundry income, late fees, and tenant screening fees.
Rent concessions were a bit less than double the previous month, coming in at around $10,000, due to market competition, but management has cut them back now and are only offering them on the smaller units. Almost completely offsetting the increase in concessions was an increase in "other income," which includes move-in fees, lease termination fees, pet fees, laundry income, late fees, and tenant screening fees.
More Problems For Those Being Foreclosed On
I wrote two weeks ago about what appears to be a burglary ring that targets people who are losing their homes to foreclosure. Now another scam targeting people in foreclosures is hitting the news. Truth be told, this isn't a new scam and I've heard about it before, but this is the first time I've seen some serious media coverage of the issue. This scam involves stealing the equity out of people's homes. The article details how this is done, but in a nutshell, it involves getting the homeowner to sign over their house to someone and then that person or company gets another loan on the property for the amount of equity. This new loan is never repaid. The previous homeowner usually doesn't know what is going on. They are usually allowed to continue living in the property and often think they did not sell their house or that they can buy it back in 1 or 2 years.
This is very similar to what Live Free Investment Group was doing here in the Phoenix area. I met with them last year to find out more about what they do. Although, and I stress this, I have no reason to believe Live Free Investment is doing anything illegal, immoral, or is involved with the above mentioned type of scams, it was something I was worried about back then. Whenever you take title to a property from someone in foreclosure and allow them to continue to live in the property, I see nothing but trouble. When the person has to move out, there is very little doubt that they are selling the property. But when they can stay, things can get murky in their minds. Even given that companies like Live Free may be 100% legit, the scams that are going on will no doubt bring more regulatory actions down on the entire industry and cause the legal costs, both real and potential, for doing these types of transactions to increase.
This is one of the reasons my step by step guide for buying preforeclosures stresses that the sellers must move out of the property.
This is very similar to what Live Free Investment Group was doing here in the Phoenix area. I met with them last year to find out more about what they do. Although, and I stress this, I have no reason to believe Live Free Investment is doing anything illegal, immoral, or is involved with the above mentioned type of scams, it was something I was worried about back then. Whenever you take title to a property from someone in foreclosure and allow them to continue to live in the property, I see nothing but trouble. When the person has to move out, there is very little doubt that they are selling the property. But when they can stay, things can get murky in their minds. Even given that companies like Live Free may be 100% legit, the scams that are going on will no doubt bring more regulatory actions down on the entire industry and cause the legal costs, both real and potential, for doing these types of transactions to increase.
This is one of the reasons my step by step guide for buying preforeclosures stresses that the sellers must move out of the property.
Hurricane Ike Damages Multi #1
Regular readers may have guessed this, but for those readers that don't also read Kenric's blog Live Learn Invest, I should point out that both he and I have invested in the same apartment complex in Houston. On his blog, it's Houston Apartment #2 and here I called Multi #1. I was out of town for the weekend, so he beat me to the punch on posting pictures of the damage Hurricane Ike did to this property, so I'll just link to them instead of reposting them here.
We have gotten some additional info about the damage:
We were supposed to receive our first profit distribution this month. I'm sure that will be affected to some extent by this, both in the amount and the timing. We do have insurance on the property, so hopefully that will cover most of the costs. Obviously, the management's priority is on helping the residents, so the investor reports will be put on the back burner.
We have gotten some additional info about the damage:
- Approxiamtely 12 trees were knocked down and in the process, the trees roots may have damaged some pipes.
- The gas is turned off on one of three boilers, so units connected to those boilers do not currently have hot water.
- Brick siding fell off two of the buildings and damaged car ports and air conditioner units. It looks like only one A/C unit was damaged badly enough to have to be replaced.
- There appears to be some possible electrical wire damage as well, but no word yet on the extent of that.
- There was some roof damage which led to leaks, which caused drywall and carpets to get wet and require repair or replacement.
- Some patios were damaged by falling trees.
We were supposed to receive our first profit distribution this month. I'm sure that will be affected to some extent by this, both in the amount and the timing. We do have insurance on the property, so hopefully that will cover most of the costs. Obviously, the management's priority is on helping the residents, so the investor reports will be put on the back burner.
Details of Rental #1 Repairs
As I mentioned Monday, I was waiting for the hardcopy paperwork and refund check from the property managers for Rental #1 in Tulsa. Good thing I saved the scanned images they emailed me, because they did not mail me the actual invoices, only a check. Here's the breakdown of what they did to get the property ready for sale. Figures have been rounded to the nearest dollar.
May
Management fee - $75 - This was for a partial month
Maintenance - $30
Lawn Maintenance - $200 - This was only for a partial clean up. More next month.
Cleaning - $75
In looking at the invoice details, I see that they charged me $25 for each trip to the property to meet someone plus mileage charges of between $15 and $20 each trip. This may be standard procedure for property management companies, but my old PM company never charged me. Of course, given the condition the property was in, it's likely they never went out to the property anyway.
June
Management fee - $100
Maintenance - $137
Paint and paint supplies - $255
Lawn maintenance - $625
Cleaning - $238
Doors / windows - $25
Exterminating - $100
The maintenance included replacing the chimney cap, which had blown off during a storm during the month and removing some water that came down the chimney. It also included removing the satellite dish that the storm also blew down.
I should also note that the PM company was the one who did much of the yard work, painting, and other minor maintenance. I was properly billed for their time, of course, although I have my doubts that they are qualified to do some of the repairs they did. Apparently, the garage was full of junk, as they billed me for 8 hours to clean out the garage and haul the trash to the dump. If the garage was full of junk, no wonder the place wouldn't rent for months!
July
Management fee - $100
Maintenance - $70
"Maintenance" this month means they met three contractors to get repair quotes for the roof plus mileage charges.
August
Natural gas bill - $126
Electric bill - $286
I think these are so high because they cover multiple months. Both bills include notices that bills were paid late. I don't see any late charges listed, but it does make me wonder why they weren't paid on time.
May
Management fee - $75 - This was for a partial month
Maintenance - $30
Lawn Maintenance - $200 - This was only for a partial clean up. More next month.
Cleaning - $75
In looking at the invoice details, I see that they charged me $25 for each trip to the property to meet someone plus mileage charges of between $15 and $20 each trip. This may be standard procedure for property management companies, but my old PM company never charged me. Of course, given the condition the property was in, it's likely they never went out to the property anyway.
June
Management fee - $100
Maintenance - $137
Paint and paint supplies - $255
Lawn maintenance - $625
Cleaning - $238
Doors / windows - $25
Exterminating - $100
The maintenance included replacing the chimney cap, which had blown off during a storm during the month and removing some water that came down the chimney. It also included removing the satellite dish that the storm also blew down.
I should also note that the PM company was the one who did much of the yard work, painting, and other minor maintenance. I was properly billed for their time, of course, although I have my doubts that they are qualified to do some of the repairs they did. Apparently, the garage was full of junk, as they billed me for 8 hours to clean out the garage and haul the trash to the dump. If the garage was full of junk, no wonder the place wouldn't rent for months!
July
Management fee - $100
Maintenance - $70
"Maintenance" this month means they met three contractors to get repair quotes for the roof plus mileage charges.
August
Natural gas bill - $126
Electric bill - $286
I think these are so high because they cover multiple months. Both bills include notices that bills were paid late. I don't see any late charges listed, but it does make me wonder why they weren't paid on time.
