Why have you encouraged all your investors to unload their multi family portfolio?
We have been managing multi family properties for the last 5 years and the results have been disappointing. They looked good on paper when we purchased them but the reality is that these buildings are old and prone to major repairs involving plumbing, electrical and air conditioning. All those numbers you see advertised are called “performa” and not real. Our very best property performed at 10%. Most really perfomed at 4% and we had a few major money losers.
Is there a way to figure out which properties will have major repairs in the future?
No. No amount inspections or reports will determine when these will have a catastrophic flood or catch fire. 2 of our buildings caught fire because of tenants or transients. These tenants also have a tendency to completely destroy air conditioners or bathrooms. These properties are also located in rough neighborhoods and vandalism is constant.
Are there any newer multi family buildings?
There are just a handful that are built after 1980. These handful are located in HOAs that have really stiff monthly fees. Once you dig into those, the numbers don’t work. If you can find one, be absolutely certain to confirm the HOA dues.
Are there any multi family properties in A, B or C neighborhoods?
No. On a scale from A-F, the best you can do is get a property in a D neighborhood. The majority of these were built from 1950 – 1970 close to the Strip or Fremont. The older multi family neighborhoods are pretty rough.
Is it practical to purchase one with an FHA or VA loan?
Not really. The only successful case we have is where a young single guy with big balls followed our advice and really did his homework on managing properties. Once a pissed off tenant starts pounding on the door at midnight, the wife busts a move. We have no example of a couple who managed to survive more than a few months.
Why have you decided to stop managing these?
At our peak, we managed about 30 multi family buildings. They constituted 90% of our repairs, rehabs and evictions. The brain damage to our maintenance staff, agents and broker was extensive. The majority of these tenants have substance abuse issues or have a bolt missing. They also represented ALL of our lawsuits. We are currently battling a tenant who sued us for $4k for throwing away his roach infested couch. The $50 per door we have been charging owners imply isn’t worth it.
Do you know of anyone who can manage my property?
Yes. However, not to brag or anything, we simply don’t know anyone better than us at managing these. The reason we managed so many of these is because we were referred by other companies who simply gave up and cried “Uncle.” We have taken completely vacant properties to fully occupied properties because we have lots of experience.
Could you turn one of these into an Airbnb / short term rental?
Maybe. We don’t have any examples and don’t know anyone that has done it. If you want us to try that with you, we are game simply because we would like to see what happens.
Is it easy to evict a tenant?
Yes. Nevada laws are extremely landlord friendly. Unlike most states, a bad tenant will be out on the street within 30 days in most cases. 80% of the tenants come to Jesus on a 5-day notice. The eviction process is easy and most property management companies do this for free. There is no correlation between eviction frequency and neighborhood desirability. Just as many folks in upscale neighborhoods get thrown out as poor families living in the “hood.”