Offline"American Apartment" the reality show that should be. As most of you have read, we bought a dilapidated apartment building with questionable tenants. Well, we got out the bad and realized that our experience would have made the best reality show on TV. So where do you start with this? We have to go back to before we bought it, back to mid October 2011.
(reference: http://www.deangraziosi.com/real-estate-forums/my-deals/94751/we-just-bo... for the deals)
We knew that the people we were buying from were less than stellar landlords. They weren't paying their bills, pocketing the cash and just all around not good. Tenants were dirty and had pit bulls and just all around scary. The owner pretty much abandoned the place months before we signed contracts and the place had gone to the pits.
A couple of weeks before we closed, we had our property manager (who turned out to be trouble also) over there every day trying to access the situation and get the place under control. We were able to evict a lot of the trouble before we even bought it.
So now it's November 2nd, we get it closed, it's ours. That's when it suddenly becomes evident that we have a huge mess dumped in our laps. Now that the trouble was under control we began getting information on the tenants (the prior owners had NO records of anybody, we had no idea who lived where) and this was a task. Our property manager had to go door to door to find out who these people were. Come to find out... Very little English was spoken throughout the buildings. We had a very nice Spanish speaking family, a dozen or so French speaking families from the Congo (wonderful people by the way!), a Russian speaking bird fanatic, and a psycho Chinese doctor. Not to mention, our mailman is deaf along with part of our new maintenance crew. So far, we have 5 language barriers right off the bat.
I really wish that we began a daily journal on this a month ago because it just gets insane! The kinda stuff the makes for great reality television! There is no way I'm going to be able to cover even 10% of the craziness. Within the first few days, our mower was stolen in the middle of the night. Then, we had the previous owner's son arrested for fighting with his girlfriend who lived there. We evicted people with pit bulls and German shepherds. Then a bird-loving Russian lady flipped out because we ripped out the old landscaping. "Where will the birdies live now?" she cried.
With all of the deferred maintenance issues it was like adopting 60 helpless orphans. Nobody had working HVAC, every sink leaked, one guy had to empty his bath water into the toilet because the drain didn't work. It was constant, every day! None of them had ever lived on their own before apparently and had never even tried to fix their own stuff (probably a good thing too!). The last owner hadn't fixed anything in a year or so.
We thought, in the beginning, that we could stay more or less anonymous. Well, if we had an honest property manager we could have. I'm not going to get into details but, he did shoddy repair work, was rude to everyone, lied constantly, threw away important letters (instead of mailing off our bank payment, credit card payment, power payment,... He threw them away!) and best of all... "borrowed" rent money from tenants who he said "didn't exist."
It wasn't tough at all to figure out this guy was trouble, he did a horrible job covering up his schemes. Still can't figure out if he is crazy, lazy, stupid, or a deadly combination of all 3. Well, he's gone and cleaning up his mess is very time consuming. All tenants are glad to see him gone as he was quite the jerk to them. (we needed him to be a jerk while we got the "negative" people out but he just kept it up.) The majority of our tenants right now are from the Congo, great people! They take care of their apartments and are very polite, respectful, and appreciative. (this building is like the Small World exhibit at Disney, sooo many cultures in one place) Our Congo tenants didn't like the property manager very much because of his impatience and were very happy to see him gone.
So where do we start on construction? The first demo apartment should have been finished 2 weeks ago, the construction crews have... Dropped caulking tubes down flue pipes, dropped nail guns from the 3 floor, through a tenant's glass lawn table and almost onto people, they've been caught taking naps in the closet, it goes on and on... We've already had the general contractor fire one crew for being lazy and mouthy, now we have a better crew going.
So, that's the first month of ownership. I didn't even touch on a portion of what goes on everyday, there is so much more. But I'll just say... It's been an insane month! Slowly picking up sign language and French. Luckily, "there's an app for that!" Our employees that we have working right now are wonderful and very appreciative to have a job. Our new deaf friends are rehabbing some of our units and post Facebook follies everyday of the mishaps that they are experiencing, from breaking toilets to painting bathtubs the wrong color, to forgetting to put a trap under the sink so that water pours into the cabinets when you wash your hands. They are great people and are teaching us a little ASL (sign language) everyday. There's so much more but way too tired from another long day at "American Apartment" to write about it all. Things are looking good though! Just taking up a lot of time...
I haven't covered all of the positives because that doesn't make for good "reality." Things are actually going quite well for us, but it's going to be awhile before we can relax. We've filmed a short video to send to Dean for the "Send me away" contest. It had to be done very quickly because it is so late in the year and the deadline is next week! We've had very little time for other things. I hope it isn't too bad.
Well, that's just a little taste of Land-lording. Welcome to the rental world huh? I believe we took on an extreme case though, it's not usually this insane. Luckily, our other 40 or so new units don't require as much of our time. La Vida Loca? Hopefully this will benefit anyone interested in being a landlord... learn from our mistakes!
Sheila
"If God is for us, who can ever be against us?" Romans 8:31 NLT
Very, very extreme it seems like.
That was just a hilarious read! I'm sure it was also an incredible learning experience though. Now you know what to do next time these problems crop up. Just curious, the rude property manager that you fired, was that the Marine?
You know maybe you should start a "Apartment rehabilitation company". You could come in and get apartment complexes running like they should before handing it off to the investor's prpty manag company for a fee.
RENinja
"Remember, success is a journey, not a destination.
Have faith in your ability."
Bruce Lee
Now we know why James wants to start wholesaling!!
Does it STILL seem like a Deal? That 50k at closing seems like its NOT enough,much less the amount of repairs involved.
Welcome to the Real World of Landlording--it WILL get Better!
Mike
https://tvallc.isrefer.com/go/RehabLite/renvestr/ Free tools
The bank has given us $900k available for rehab on the 60 unit. We knew it was going to be a mess and got many quotes. It may actually be less than the $900k we estimated.
The $50k was for the 46 units that needed only little rehab. They are all in pretty good condition with the exception of 2 empty SFH's that need work. And a new problem of a hot water line breaking below the slab in a duplex, that's going to be fun come Monday! It's relatively small (we think) but will take most of the day to bust through the slab, repair the line, and fix the floor.
And yes, the former Prop mngr was the former Marine. I hold our service personnel in the highest regard but he is full of **** and just can't be trusted. If you want things done right,.....
Luckily we have many people from our church that we can rely on for a hand and don't need to hire a permanent property manager yet.
I just hope our maintenance guy lives a long time. He is worth his weight in silver right now. He can fix anything! The HVAC problems, he was able to fix almost all of them within a few minutes of work. So far, he has only had to order 2 parts. We thought we were going to have to replace 30 furnaces right off the start but we haven't had to replace 1 yet! I ought to take out a million dollar life insurance policy on him in case he croaks, he's saved us thousands! (That's kinda morbid but you get the idea.)
Still a deal, didn't cost us anything more than we expected. Actually less than we expected, so far...
Sheila
"If God is for us, who can ever be against us?" Romans 8:31 NLT
Sounds like you are able to remain calm through the storm though. Best wishes moving forward!!
www.tw4homes.com website
https://tvallc.isrefer.com/go/RehabLite/reigirl/ FREE SOFTWARE FOR WHOLESALERS, REHABBERS AND AGENTS! Present professional looking deals to buyers and lenders as well as run your numbers and get the ROI.
Sheila,
once you're done with this apt. building you will have gained so much experience that you will be able to tackle anything!
Nothing like learning by doing! Kudos for taking charge and having a positive attitude throughout it all!
Valerie
Valerie
“And will you succeed? Yes indeed, yes indeed! Ninety-eight and three-quarters percent guaranteed!” ― Dr. Seuss
"I believe in angels, the kind that heaven sends; I am surrounded by angels, but I call them friends" - Unknown
My journal: http://www.deangraziosi.com/real-estate-forums/investing-journals/59110/...
Very funny! Enjoy all aspects of this deal, its history in the making. Congrats by the way, this one sounds like it'll make you healthy!!
Ross
I LOVE that you are updating us on all this. I hope you will continue sharing!
I will definitely bookmark this new thread so that I do not miss any new episodes.
Karen
"You're never too old to be what you were meant to be!"
www.deangraziosi.com/real-estate-forums/investing-journals/59128/day-for...
"Shining Like a Star & Dancing on Sunshine"
"Shoot for the moon! Even if you fall short, you'll still land among the stars!"
Apparently it's been a weird couple of days at the apartments. Sheila told me that yesterday (Friday) one of the construction workers saw her in the gas station (for the daily dose of caffeine) and went on and on about how much everyone hated the foreman. So she gets to the office and more workers sneak in one by one to gripe about the foreman. We have our own complaints about him but try to grin and bare it. Then the electrician comes in to tell us that the foreman had (blanked)-off the city inspectors and they are threatening to hold up the project. Great!!! This guy's already 2 weeks behind and now could hold us up even longer. Well, she's talked to the owner of the construction company and he comes down to the apartments. He chews some a$$ and everyone is back to work and happy again. Drama!
Speaking of drama... This morning she tells me that the police were on scene this morning because someone was attempting to break into an apartment. Turns out, a drunk tenant thought he was going into his own apartment and was at the wrong door by mistake.
The laundry room is under repair, so this morning we a trying to give directions to the laundromat across town in 4 different languages. I'm sure that one will find it and relay it to the others. I think they got the "it's by McDonnalds" part of the description. I should have just started there.
So tenant "A" is whining because tenant "B" has a satellite dish on his roof and now "A" wants one too! Well, "B" didnt have permission to drill holes in our roof and we're mad enough to sue the installer. Tenant "A" got the point.
And to top it off, Christmas is next week and the previous owners of the 46 units had a tradition of giving gifts to all units at Christmas. A small ham or something. So now, to avoid being "jerks", we too must procure 40 some chunks of meat and do the logistical nightmare of meeting all tenants to deliver their present. It's cool, we're not busy or anything... We have managed to secure about 200 pounds of summer sausage just in time. Now to buy it, store it, and deliver it within the week. I wanted to mail gift cards but that was too impersonal. We'll see how this works.
Still haven't bought a snow plow. No snow in the 10 day forecast but it will come. I can only imagine how much it would cost to pay someone else to plow all of those driveways and parking lots.
Asked our parents what the wanted for Christmas, they humbly said "nothing". They're in luck, that's what I've got them! The bank brought us a Christmas present this year! That's a first for us.
Well, busy, busy! Just trying to update for her because she's got a lot on her plate.
Real estate works...
Hey you two, your stories are awesome and you almost make the headaches you are experiencing sound like FUN!
Although you could probably get a network to produce your adventures, please don't because then it would turn into something like Storage Auction Wars and there would be waaaaaaay too much competition for aspiring investors like myself!
Anyway, I feel like I know you guys even though we've never met and I'm sooooo inspired by you and your stories. I'm routing for you guys big time!!
Merry Christmas to both of you. You're awesome!!!
I fully realize that no wealth or position can long endure, unless built upon truth and justice; therefore, I will engage in no transaction which does not benefit all whom it affects. ~Napolean Hill
ECCLESIASTES 5:19 As for every man to whom God has given riches and wealth, and given him power to eat of it, to receive his heritage and rejoice in his labor –this is the gift of God.
it just gets better and better. right now i'm experiencing things from the tenant's point of view and it's a real journey. great stuff to tell the grandkids about some day as you're putting them in your will to inherit these great properties. can't wait to hear more.
Linda, Army EOD Mom
you can follow my journal at http://www.deangraziosi.com/real-estate-forums/investing-journals/45351/...
IT'S ALL GOOD AND EVERYTHING IS WORKING OUT PERFECTLY FOR ME!
Fear equals:
False
Evidence
Appearing
Real
You've made it this far, I'm sure you'll go even further! Good luck
Real Estate Investor, if you would like the chance to work with me in the US East Coast, send me a PM (Private Message) anytime to see if we are a good fit for each other.
Wishing you abundance,
Ken Siew
Very, very funny you guys. You're right Sheila, the positive stuff just won't make it past the editing room. Makes for wonderful "reality" but boring "TV". I'd watch all of it though.
Steve
"Do something you LOVE and you will never work another day in your life."
"Nothing can ever stop you without your permission."
"So long as you haven't quit, then you haven't lost."