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Hi Guys
I felt that this post should go in here because it is about investing in the USA.
Some of you have met Quiggles and will be able to appreciate what he is talking about.
Late last year Quiggles started investing in the USA.
He posted on the Somersoft forum about his trials and tribulations from investing in the States. Most of his posts can be found elsewhere in the Propertytalk archives.
Below is his latest post on Somersoft. Those of you who have been following his story will be able to appreciate where he is coming from.
Regards
I felt that this post should go in here because it is about investing in the USA.
Some of you have met Quiggles and will be able to appreciate what he is talking about.
Late last year Quiggles started investing in the USA.
He posted on the Somersoft forum about his trials and tribulations from investing in the States. Most of his posts can be found elsewhere in the Propertytalk archives.
Below is his latest post on Somersoft. Those of you who have been following his story will be able to appreciate where he is coming from.
A bit of an update, and some timely warnings.
In a nutshell, my property manager was not professional. He's been sacked and replaced and it's cost me dearly.
Error number 1: (PM's error) I was happy to take welfare clients and he put some in, but Uncle Sam was slow in approving and hadn't paid the back rent on the one who was eventually approved. I later found out that Sam does pay back rent, as my PM had promised. I'd felt pretty secure over this debt as it was from the Government. Not so - until the tenant and the house are approved, government meets no bills and pays nothing retroactively. Anywhere up to $5000 down the drain thanks to his letting unapproved tenants in, and these tenants are going to find it hard to pay the back rent he allowed them to build up.
Error No 2: (PM's error) Allowed one tenant to build up a $2000 backrent bill despite my explicit instructions. I doubt I'll see that again.
Error no 3: (PM's error) I got tough, told him to issue eviction notices on all rent defaulters - this is a normal way of making them pay up. He told me that he had "booted" four tenants, although he got not a cent in back rent. Later found out that they had walked, hadn't been served with anything, and he had just let them go.
Error no. 4: (My error) went over there earlier this year intending to sort things out, but got distracted and spent more time shopping than inspecting my current properties. If I had, could've saved myself some trouble and perhaps another $2000).
Errors 5 and 6: (My errors) didn't set matters up well - I didn't have a backup option for PM so I was stuck with what I had. I also accepted excuses too easily, didn't control finances well enough and essentially didn't manage the manager.
After this litany of failures what I did do right was interview property managers when I was last over there and came up with one decent one. We were actually looking to hand the new PM half the properties so that no PM had our whole finances. However, in sacking the old PM, I've had to give all of them to the new PM.
I have confidence in the approach being taken (the PM has taken time to chew me out for letting things slip so badly!) and that we'll be on track. The fired property manager was about to put tenants into the vacancies he had helped create, but decided not to when I sacked him, even though he'd been paid for the month. Not impressed.
The properties (old and new) are half to two thirds rented, but are being put back on track. I'll be showing a real loss for last financial year (as opposed to the tax loss I was expecting) but I'm certain that the worst is over. I expect positive cashflow for August and profitability for September onwards.
Valuable lessons learnt: The least sign of discomfort with a remote manager is a bad signal. Spending hours per week managing your PM is a real problem. Focus on your business, listen to the figures and not the excuses. You occasionally need to play hardball.
The above sounds terrible, but it's actually quite good. We now feel we're properly on track. We will go back later this year to check everything out and not shop. Well, not unless more funds come through (which is looking increasingly likely)
Hope this answers questions asked above, and thanks for the comments.
In a nutshell, my property manager was not professional. He's been sacked and replaced and it's cost me dearly.
Error number 1: (PM's error) I was happy to take welfare clients and he put some in, but Uncle Sam was slow in approving and hadn't paid the back rent on the one who was eventually approved. I later found out that Sam does pay back rent, as my PM had promised. I'd felt pretty secure over this debt as it was from the Government. Not so - until the tenant and the house are approved, government meets no bills and pays nothing retroactively. Anywhere up to $5000 down the drain thanks to his letting unapproved tenants in, and these tenants are going to find it hard to pay the back rent he allowed them to build up.
Error No 2: (PM's error) Allowed one tenant to build up a $2000 backrent bill despite my explicit instructions. I doubt I'll see that again.
Error no 3: (PM's error) I got tough, told him to issue eviction notices on all rent defaulters - this is a normal way of making them pay up. He told me that he had "booted" four tenants, although he got not a cent in back rent. Later found out that they had walked, hadn't been served with anything, and he had just let them go.
Error no. 4: (My error) went over there earlier this year intending to sort things out, but got distracted and spent more time shopping than inspecting my current properties. If I had, could've saved myself some trouble and perhaps another $2000).
Errors 5 and 6: (My errors) didn't set matters up well - I didn't have a backup option for PM so I was stuck with what I had. I also accepted excuses too easily, didn't control finances well enough and essentially didn't manage the manager.
After this litany of failures what I did do right was interview property managers when I was last over there and came up with one decent one. We were actually looking to hand the new PM half the properties so that no PM had our whole finances. However, in sacking the old PM, I've had to give all of them to the new PM.
I have confidence in the approach being taken (the PM has taken time to chew me out for letting things slip so badly!) and that we'll be on track. The fired property manager was about to put tenants into the vacancies he had helped create, but decided not to when I sacked him, even though he'd been paid for the month. Not impressed.
The properties (old and new) are half to two thirds rented, but are being put back on track. I'll be showing a real loss for last financial year (as opposed to the tax loss I was expecting) but I'm certain that the worst is over. I expect positive cashflow for August and profitability for September onwards.
Valuable lessons learnt: The least sign of discomfort with a remote manager is a bad signal. Spending hours per week managing your PM is a real problem. Focus on your business, listen to the figures and not the excuses. You occasionally need to play hardball.
The above sounds terrible, but it's actually quite good. We now feel we're properly on track. We will go back later this year to check everything out and not shop. Well, not unless more funds come through (which is looking increasingly likely)
Hope this answers questions asked above, and thanks for the comments.
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