When you are hired to do a job, you do not simply say month after month, “I only completed 33% of my job this month, what do you want me to do?” Unless, of course you are a baseball player than batting .333 makes you a superstar. Guess what? We aren’t talking about baseball today.
12/14 – Email:
Hello Troy. As of now only unit 1 has paid rent. Unit #3 told me he was going to pay last Friday bud did not. Number 4 is trying their best but are still behind. I can serve them 5 day notices to scare both of them and see if they can come up with the money or serve them and then continue to evict them. I want to start marketing number 3 but as you are aware it needs some attention. The market over there is inundated with rentals.
Ok, so this is on the 15th, as all good real estate investors know, rent is due on the 1st, and is late by the 5th. 10 days after the late day, they should be out on the street.
11/09 – Email:
Spoke with Unit #3 today, already paid 300 says he will have the remaining 200 and a 50 late fee on 11/16/12.
10/17 – Email: In Regards to Unit #2
They paid 200 because that is what they believed that they owed. Im serving them a 5 day notice today.
10/10 – Email; in regards to an email saying we were very unhappy about the service:
I have grown significantly over the last couple of months and am in the process of hiring help. As an accountant you know the fine line between being able to afford the help. Stick with me another month and I promise you will see the difference.
We have owned this property since May of this year. We have had two move outs, and 1 unit vacant the entire time that we have owned the property. Every month we get stories:
They haven’t paid
They are waiting for money from the church
They don’t understand how much money they owe
They Promise to pay by xx/xx/xx (and move-out)
It’s fairly simply on the 6th, we send him an email asking if rent is paid, after waiting 2-3 days with no response, we re-send the email. On the 10th we usually get a note about Unit #1, paid. #2/#3/or #4 has a story! When we state, Give them a 5-day! And then we explain that it is unacceptable to have people living in OUR property without paying rent! This property Manager is killing me. I wish I had the time and effort to manage it myself.
I’ve got advice for anyone reading this blog, do not ever turn your keys to the kingdom over to someone you haven’t vetted. And learn how to manage these team members. I have done everything I can do as a manager to get him to follow our guidelines. I’ve set expectations, I’ve had consultations, I’ve offered performance reviews. Next: Termination. As we’ve talked about before we are waiting for Jan. 1st when our Real Estate Agent gets his Property Management License.
Of course the opportunity cost of money. This property is a cash sink. IF we were collecting rent on time we’d be looking at an $800/mo cash flow at 75% occupancy! That’s enough to cover the mortgage on another property: Arlene. We are in need of some rehab on it to get the our Sub-lease done so that we can move onto Zavala, do a rehab, and sub-lease. So we have been hesitant to clean out the problem at Hopkins. That needs to change. We cannot be fearful of having too many vacant units. We have enough of a warchest to cover the mortgages on all three properties for 6 months, or the cost of the Rehab on Arlene, and 2 months mortgages on the three properties. Of course we both make enough money to cover the mortgage costs of the three properties, but we are tired of being out-of-pocket on these properties.
Here’s the kicker, at 100% the property cash flows $1400/mo! That’s 3 months of mortgage payments on one property! It’s the cost of a low rent rehab on another unit. (These are low-rent units!) That’s the cost of not properly managing your managers. Learn how to do it.
Ready for the financial breakdown:
May – December Cash Flow with stories: ~$200/mo / $1400
May – December Cash Flow without stories: ~$800/mo / $3,500
May – December Cash Flow @100% Occup.: ~$1400/mo / $10,200