Hard Money Loan #14 Paid Off

The property behind hard money loan #14 was sold and closed escrow on December 30 and I received my final payment today. The loan lasted about 6 months. My principle is sitting with my partner, waiting for the next opportunity.

In other news, my wife and I are starting a remodel of a couple rooms in our house. We're paying for this using our HELOC, which I had previously been using for investing. Actually, I'll still be able to use my funds from that for investing and the remodel will be paid for from the unused portion of the HELOC, which will now be maxed out. The HELOC payments are interest only and the payments I receive from my investments will still cover the entire HELOC payment, even including the funds I use for the remodel, plus a little more. So my remodel costs will be paid for by the investments. My HELOC is at 3.25% and I'm investing at between 9% and 10% and pocketing the difference. Although, since it's not my money I am investing, my ROI technically is infinite.

Of course, as I feel compelled to say every time I bring this up, this is not without risks and I don't recommend everyone do this. If interest rates go up, I could end up losing money. But I don't think rates will rise anytime within the next year and the investments I make are for one year or less, so I could get my money back and pay down the line of credit rather quickly if I have to. There is also a pretty large spread between what I am being charged and what my investments are earning, so rates would have to jump by a large amount before I start losing money. Also, I opened this line of credit during the real estate bubble, so the maxed out HELOC plus my outstanding mortgage balance total more than the home is currently worth - meaning I would not be able to sell the home, should I have to. But that's not something we are planning on anyway. And again, my investments are pretty short term, so I could pay down the HELOC in fairly short order if I did need to sell for some reason. And, in the worst case scenario, I could still make the HELOC payments should all my investments go belly up.

Still, it's exciting to think that my passive income will pay for our remodel! The real estate investments I've made over the past two and a half years have also been paying for the loss I took on Rental #1. That loss has been just over 50% recovered. It's been slow going, especially since the apartment investment payments have been suspended for almost a year. (If they hadn't been suspended, my loss would be about 80% recovered.) But still, it's nice to know that all these things are being paid for from investment income and not from any money out of my pocket. (Yes, you could argue it is money out of my pocket since I don't get to keep my investment returns, but you know what I mean. I'm not writing a check to pay them.)

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.

Many Updates

The big news in the real estate market this weekend, of course, is the government takeover of Fannie Mae and Freddie Mac. I'm not sure what to make of this, other than the fact that I think they waited too long. If they were going to do something, I think it should have been done long ago and maybe some of the damage to the housing market could have been avoided. I think we'll have to wait to see how things play out before we know if this is a good move or bad move or even if it was a good move made too late. The stock market loves the news, but that doesn't really mean anything as the market tends to focus on the short term view.

I received my second payment from Hard Money loan #3. Glad to see that the borrower is paying on time, although only two payments do not constitute a trend. But it's only a one year loan, so it's already 1/6 over.

I am expecting a monthly statement from the operations at Multi #1 any day now. This month should also include the first profit distribution.

And finally, Rental #1, the property in Tulsa that I sold for a loss recently, is still not quite wrapped up. I spoke with the property manager on the phone early last week and was told everything was paid and the remainder of my deposit was being sent to me. Last Thursday, I received an email from the PMs that included scans of all the receipts for repairs and a scan of the refund check. None of it has actually shown up in the mail yet though, so I'll wait to write about that until I actually get it. Back in May, I sent them a $3,000 deposit. Their estimate of the repair work was $1,500. Figuring that plus the $100 a month management fee they charged (although they only had it for 1 or 2 months before it was sold), I was expecting a refund of somewhere close to $1,500. The email showed the check to be just over $500, so obviously there were more expenses or they did not estimate the needed repairs very well. I'll go over it it more detail when the hard copies arrive in the mail.

Loose End That Just won't Get Tied

Three weeks ago, I requested the return of my deposit from the management company. On July 19, I was told they were waiting on final bills for utilities to arrive before they sent me a refund. Keep in mind, escrow closed on this property on July 14. We are now one month and a half months passed the sale date. All monthly utility bills should have come in long ago. After a couple of unanswered emails, I called the property managers today to see what the holdup was. I was told they received the final bill on Friday and would pay it and get my refund mailed out tomorrow. I also asked for a copy of all invoices. It will be interesting to compare the billing dates on the statements with the dates the property managers told me they received the bills.

Loose Ends (Updated)

Just trying to wrap up the loose ends on the sale of Rental #1. I canceled the home insurance last week and the refund check for the unused portion of the policy arrived today. The only thing left is the return of my funds from the last property managers. On July 19, they said they were waiting to make sure all the final bills have been paid. I'll give them another week and if I don't get anything from them by then, I'll give them a call.

Update: One more thing left: I am also still waiting for the mortgage company to return the monies in my escrow account.

Rental #1 Has Been Sold

Well, in a rather depressing turn of events, Rental #1 closed escrow last Monday and I sold it for a loss. I haven't run the exact numbers yet, but it looks like I lost about $30,000 on the deal. As always, the last day of escrow was not without its drama. This time, I got a call saying the escrow company had not received my funds that I had to wire to them to make up the difference between what was owed and what I sold it for. Those funds were wired the previous Friday. At the time, I was in Las Vegas, so I had none of my paperwork with me. I called my bank and was told the wire did indeed go out on Friday. I then called the escrow company back and before I could give them my news, they told me they did in fact, have my funds. I guess the escrow officer who was handling my case was gone that day, so someone else had to step in.

Some final items still remain to be taken care of: I called my insurance agent today and told him I sold the property. My insurance coverage will be canceled effective last Monday and I'll be getting a refund of the unused premium. I also contacted my management company. To date, I have not received any kind of statement or receipts for charges incurred. I sent them $3,000 to handle some repairs and management fees two months ago. I asked them for an accounting of all expenses and a refund of the unused funds. They said they are working on that and need to wait to make sure all the bills are paid. Truthfully, I should have been asking for this after the first month, but I knew I was selling the place soon, so I let it slide for a month.

So, what lessons did I learn from all this? Several.

1. The adage is true: Real estate is all about location, location, location. I did not make a trip out to visit this property before I bought it. I relied on another person's opinion and since that person was the seller, there was an obvious bias. Because she got it rented quickly, I assumed I would be able to do the same when it came time for the next tenant. I did not know the property was in gang territory and would be difficult to rent.
2. I assumed the seller, who rehabbed this property and several others, worked the same way I worked - namely, that she had a professional inspection performed in order to see what needed to be repaired. This is what I have done on all the properties I rehabbed. I looked back through all the documentation the seller provided to me and I did not get an inspection report. Nor did I have one performed before or after I bought the place. Shame on me. Again, I assumed the seller did this and her rehab would have fixed whatever turned up on the report, especially since her husband is a contractor. The problem with the roof would have either been fixed or at least brought to my attention had this been the case. I did find the seller's disclosure statement and she indicated she knew of no problems with the roof and no repairs to it had been done under her ownership.
3. Property management companies are a mixed blessing. On the one hand, they free up your time by managing your property for you. On the other hand, they won't do anywhere near as good a job as you would. Obviously, each company is different, but it seems property management companies don't work too hard to find tenants for your property, especially if you only have one single family home listed with them. Nor do they seem to care about the condition of your property. Of course, I am sure there are exceptions to these trends, but they are probably hard companies to find.
4. The declining real estate market hurt the resale value. While the property location is likely the main cause for my loss, the collapse of the real estate market did not help me when I needed to sell quickly.
   

I think this will be my last investment in single family homes. Not because I lost money - if you invest enough, that's bound to happen at some time. Several months ago, I decided that multi-units are the way to go with REI. You don't have to worry about the income dropping to zero when a tenant moves out. You'll get better service from a property management company. You can get into bigger deals if you partner with others and can leverage their experience and learn from it. The benefits of multi-units are too great to overlook. And in related news, I just got the first month's financials from my investment in Multi #1. More details on that later.

But just to end things on a positive note, while I was in Las Vegas, I did do some winning. About 15 minutes after I sat down on my first day, I got this:




The rest of the day, I kept getting screens like this:



At the end of the first day, I was up about $1,600. Of course, I gave it all back, but it sure was fun!

Approval Obtained!

Just heard from the escrow officer that her attorney has agreed with waive the requirements for closing and we can move forward. Docs are being emailed to me tonight. I'll sign them and overnight them back tomorrow and we should close on Friday.

It still seems like whatever title problems there are are still not fixed. We're just overlooking them now, just like we did when I bought the place. But it won't be my problem any more...

Title Issues Still Not Resolved

Title issues are still delaying the closing of the Rental #1 sale. My title company has contacted the president of the title company I used when I bought (and when I later refinanced) the property. Turns out, he had waived some requirements when I bought the place, presumably to allow escrow to close. I'm sure the intention was to then go back and fix the title issues (even though I was told they were all resolved). That apparently never got done. So now the president is supposed to give my current title company an indemnity letter so we can close. But the current title company's attorney has to approve it before that can happen. We are also checking to see if the attorney will waive the requirements also so that we can close.

It seems recording titles in Oklahoma is just one big shell game and it doesn't really matter what is recorded on the actual title says, since escrow companies can just waive requirements at will. If this is not resolved quickly, I will start threatening lawsuits and will start trying to get the original escrow company's license revoked.

Title Issues Delay Closing

Does anyone in Oklahoma know what they are doing? I just heard from my title agent that there are two issues with the title to Rental #1:

1. There is a previous mortgage listed in the names of some people I've never heard of. Why is this being discovered now? This should have been discovered when I first bought the property or again when I refinanced the property - two previous occasions when title work was performed on this property.
   
2. The private mortgage that one of my companies made to another is showing up as a second mortgage. Not only is this incorrect, that mortgage was paid off through a refinance about a year ago.
   

I hate incompetence.

Sale Of Rental #1 Moving Forward

My agent and the buyer's agent all got quotes for repairing the roof - I think I've seen about 6 different quotes. All are around the $7,000 to $8,000 range. The roof is not damaged enough for insurance to cover it, so that's out. The buyer and I have renegotiated and we are now back to their original offer price of $50,000. That $5,000 less than the original contract price, but it's still less than what it would cost me to repair the roof, so I'm coming out a bit ahead there. (I won't be coming out ahead on the entire property though.)

We are still going to try for our original close of escrow date of July 2 - which is Wednesday. Not sure this can happen, but the title company is going to try. They are unable to locate the abstract of the property, so I've given them the name and company of the title agent I worked with when I bought the place. There were potential title issues then and they had to do some work to clear it up. To my knowledge, it was cleared up, but I guess they didn't return the abstract or something.

The title company is also going to fax me all the paperwork to sign and I will need to overnight it back so they have it on Wednesday. I just realized my wife's name is on the paperwork too. This will be a bit of a hassle since our signatures will need to be notarized. There is a notary in my office, so getting mine done is no problem, but getting hers will require some running around. And, of course, I will need to wire the title company some funds. I did find out that the buyer already has all the paperwork and their funds at the title company.

Roof Problems

The roof on Rental #1 is quickly becoming a big problem. Got this email from my agent today:

Termite damage under the house to the supporting rafters. Around $2600 to repair/replace, buyer has enough to do this himself. Roof has 3 layers on it. Original layer is wood shingles, two are composition shingles.

Inspector did notice some shingles missing on one side of house, suggested we try to get insurance claim as you know. He informed the buyer that he should get a bid on roof due to fact this could create some problems in future and insurance coverage could be one of those problems. We have sent two roofing companies we use out to get estimates, both have come back with the comments that the roof is not showing any leakage nor missing enough shingles and their thoughts are the insurance will probably reject any claim. The roof is still a problem. It does have some areas that are caving due to the weight of the layers and the fact that wood shingles are attached to the rafters, not to deckboard, so adding the age of original roof and the 2 layers of composition shingles, this is why the sagging is occurring.

This is creating a new problem for the buyer. He will have trouble getting insured and he does not have enough money to cover the problems underneath the house and the roof, which is going to run around $7,000-$8,000 to tear out completely and replace properly. He was told this by a roofer he called out and was confirmed by our two roofers.

I do want to get out of this house and now I am facing the prospect that insurance may not cover the repairs. Looks like the buyer and I will be going back to the negotiating table soon.

Pointless Contract Verbiage

The buyers for my Rental #1 had the inspection done and they found a couple of things. There is some roof damage that appears to have been caused by the storms on June 4. Some floor joists are rotten and need to be replaced and there are some other minor issues. The buyer is willing to do all the repairs except for the roof. My agent suggests that I file a claim with my insurance to get the roof repaired.

Now, you may recall this offer was as-is. My agent said the buyer was still within their inspection window and could back out of the contract based on the inspection results. So I asked my agent, if the buyer can still request I make repairs and can still back out of the contract and get their deposit back if I don't make the repairs, what exactly does as-is mean? She had no satisfactory answer. I don't feel I really have the standing to fight this. The contract did state that, even though it was an as-is offer, the buyer still had the right to inspect the property. When I read this, I thought it meant they still had the right to enter the property before the close of escrow to inspect it. Apparently, other parties feel it means they still have the right to cancel based on the inspection results. In other words, the words as-is in the offer are meaningless. It ambiguous enough that I don't want to bother fighting it.

My insurance deductible is $1,000. We're going to call the insurance agent and have them send someone out to look at the roof and see if it warrants filing a claim. If it does, we are going to ask the buyers to split my deductible with me.

Looks like we definitely will not make our July 2 close of escrow date. I hope we can close before July 15 though, so I don't have to make another mortgage payment.

Offer Received On Rental #1 (Updated)

I received an offer today on rental #1. I'm not going to list the details until we get a signed contract (or until we walk away from negotiations). This is simply because I know there are people who read this blog that know where this property is located and I don't want to give away too much during the negotiating period. I will say however, that the offer was for below my asking price, but it was for as-is condition. That's a big plus for me, given that the property isn't in the best neighborhood and seems to have a habit of falling into disrepair rather quickly. Still, their offer price was too long for me to consider, so I'm going to counter-offer. My counter-offer is still below the max amount the buyers are approved for. Another plus is that they want to close in less than a month. The as-is clause and less than a month till close makes me believe this is an investor making the offer, not someone who will live in the place.

Update: I got a fax of the offer this evening (I just had an email from the agent before) and, if I read it correctly, it looks like they accepted my counter-offer of $55,000. Strangely, the agent never faxed me the full contract for the offer. All I have is the addendum page and the page with the price, which was changed to show $55,000 and which I initialed. I'll get all the pages before I sign anything.

One very important fact the agent did not tell me: this is an all-cash offer! When the agent told me the buyer was approved to $57,000, she was incorrect. The letter from the bank, which I got a copy of, actually says the buyer has $57,000 on deposit with them. The contract addendum states this is a cash sale, the sale is as-is although the buyer can still inspect the property before close of escrow, and that I will pay property taxes through the close of escrow date. Note sure why the agent didn't think to tell me this was a cash sale. It's obviously a big plus for the buyer. Escrow is to close on July 2.

I'm Back ... But Only For A Short Time

I've returned from my cruise and am trying to get caught up on everything. Unfortunately, my mother-in-law is critically ill and probably will be passing any day, so I expect to be taking off again sometime soon for her funeral.

The cruise was fantastic! We went to several cities in Italy, Barcelona, Monaco, and Tunisia. This was my first cruise and now that is the only way I want to vacation! It's awesome! Fantastic food, relaxing accommodations. I couldn't ask for anything else.

Of course, being interested in real estate, I quizzed some of our tour guides about local real estate prices in the various countries we visited. In Monaco and Monte Carlo, housing prices start at 30,000 Euro per square meter. At exchange rates as of this writing, that works out to about $500,000 per square foot. But the good news is, if you make Monaco your residence, you won't have to pay income tax or inheritance tax, so if you have a high income (and if you are looking to live in Monaco, you do have a high income), you'll recoup your investment pretty quickly. We were in Monte Carlo a week after the Formula One Grand Prix, so we got to see the grandstands and pit garages, which were still set up, and drove on part of the course. In Rome, prices for buying an apartment in the city run around 1.5 to 2 million Euro. On the Isle of Capri, prices are even higher. (On a side note, we saw the Capri residence of Italian designer Versace. The house itself is modest, but the location makes it worth a fortune. It's the white house directly above the orange cactus flower in the picture. Click to enlarge.)



We also visited the Coliseum, the Vatican, the Sistine Chapel, St. Peter's Basilica, Sorrento, Carthage, Florence, the Blue Grotto, saw Michelangelo's David, went to the Uffizi Gallery (where we saw works of art by all of the Ninja Turtles), Barcelona, and so much more. I took over 800 pictures! (Thank goodness for digital cameras!) There is so much more to talk about from the cruise, but this is a real estate blog, so I will try to refrain.

Back here at home, things are moving along. Rental #1 has had the repairs completed and is now listed for sale. It's listed at $58,000, which is much less than I paid for it, but this is what my agent thinks it can sell for.

Multi #1 finally closed escrow at the end of May. The previous owner had started the process of raising rents and we will continue that process as lease come up for renewal. The capital improvements we planned are now starting to be implemented. The initial focus will be on touching up the paint, changing the sign (we had to change the name of the complex as a term of the sale), and installing a water feature. I look forward to seeing the first financial statement at the end of the month.

Update On Everything

I've been remiss in posting the details of what's been going on with my real estate investments, so here's a catch-up post.

I've decided to sell Rental #1, since it seems no one wants to rent it and it's in a bad part of town. My new PM company figures it needs about $1,500 worth of work to get it ready to sell. The new company is set up to accept payments over the internet using PaymentServiceNetwork.com. That service really seems to be geared more towards tenants paying rent than owners getting funds to managers, but I was willing to give it a shot. Unfortunately, the managers need to set up the people who they accept payments from before you can make a payment and they have not set me up yet. Since I wanted to get the repairs going as soon as possible on the property, I just mailed the PMs a cashier's check for $3,000. That should be enough to cover the repair costs and the $100 a month management fee they are charging me.

I've signed a management agreement but have yet to sign a listing agreement. The PM company has requested the last two appraisals I had on the property to assist them in setting the price. I will almost surely have to sell this property at a loss and it will most likely be to another investor. The neighborhood is 63% absentee owner. 80% of the rentals have rents under $499. Given that I had the place rented at $750, I do have some doubts about the validity of this data, however.

My first multi-unit investment is once again on track to close at the end of this month. After missing a couple of earlier escrow closing dates because they didn't have enough money raised, the prinicples finally have all the funds needed. Our loan interest rate has been locked in at 6.15%, which is higher than the 6% the original proposal used. During the extended escrow period, we have been getting copies of the financial statements each month to monitor the performance and the property is showing gains. The principles feel the pro forma goals can still be met, even with the slightly higher interest rate.

And finally, the last week of this month and the first week of next month, I will be out of the country on a two week European cruise! Woo-hoo!

Old PM Company Still Causing Problems

Bryan Properties, the property management company that I fired last month, is still causing me problems. I checked my P.O. Box today and found they had forwarded a bill to me from the City Of Tulsa - the electric bill. The due date on the bill is April 21, so it is now overdue. Let's look at the timeline:

The bill was printed on March 28. I fired Bryan Properties on April 4. That's just one week after the bill was printed. OK, it's possible they didn't get the bill before I fired them. So when did they forward the bill to me? The postmark on their letter is May 1. They sat on the bill for a full month. To make matters worse, they had a $250 maintenance deposit from me. I just received that refund today as well and the date on the refund check is April 28. So they could have paid the bill using my own money, but they didn't even do that.

On the other hand, if they had been receiving monthly electric bills the whole time the property was empty, they were paying them with their own money. The bill was only about $20, but the place was empty for over 5 months, so that's over a hundred dollars they did not charge me. I got my full deposit back. So I get hit with a 1% late fee, which amounts to about 20 cents and I saved over $100. Sometimes their ineptitude works in my favor. This is all assuming they were being billed, that is.

What Part Of Property Management Don't They Understand?

I've been trading email all day with the property management company I was going to hire. Basically, after speaking to some other PM companies and getting more details from this PM, I've decided to just sell the property. I asked the company that turned me down for managing it yesterday if they would be willing to list the property for sale. Here is their response:

I am sorry . We would not be interested in listing this property. It needs to managed and the management company would need to have about $1500 to maintain the yard and the property. I think it is going to need constant maintenance while it is for sale. It has been spray painted with graffiti the weeds are very high the utilities are cut off and the place needs to be cleaned. The back sill plate under the porch on the NW corner is rotted and disintegrated which will cause the porch to fall and some structural damage. We have people that provide these services for us but we would require a monthly management fee of $100 plus the operational funds necessary to maintain this property without getting citations for code violations. Without the management fee and operational funds I believe that it is more than we care to handle.

So I've agreed to sign on with them and pay $100 a month, rented or not, plus the costs of repairs that are needed to get the place in salable shape. But what really gets me mad is the fact that the old management company allowed the property to get into this shape in the first place. They obviously never visited the place in the five or six months they were supposedly trying to rent it. Yet another reason to avoid Bryan Properties.

Oh yeah...and I'll probably have to sell this property for less than I paid for it. So it's been an expensive education. More details on that when this is all over. But, the bright spot of all this is that I am now in a position where problems can be solved by just throwing money at them. Not the best spot to be in, but it is much better than being in limbo with no management company, no tenants, and no idea what is going on out there. After all, money is a renewable resource.

Now I'm Pissed

After two weeks not returning my calls, I received email from the property management company I was going to hire saying they cannot manage my property after all. This after they already drove by the house and the woman spent 30 minutes on the phone with me telling me how she was going to market it. Furthermore, the email was from someone I have never spoken to and whose name I did not recognize. The email did not have the name of their company either, so I only knew it was them by calling again.

I'm calling other management companies now, but if I can't find one soon, the place will be going up for sale.

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.