Husband and Wife Team of Out-of-State Investors

Demographics

Husband/Wife, Out-of-State Investors

Property portfolio

Two quadruplexes, totaling eight units in the Austin area, previously maintained by a property manager

The Problem / The Challenge

A husband-and-wife team of out-of-state investors, were faced with a significant challenge regarding their investment properties. The properties consisted of two quadruplexes with a total of eight rental units. Unfortunately, the properties had been managed by a former property manager who had neglected maintenance for an extended period of time, ranging from 6 to 12 months. This negligence had led to deteriorating property conditions, which in turn caused dissatisfaction among the tenants. As a form of protest, the tenants had stopped paying rent altogether, exacerbating the financial strain on the investors.

The Solution

Recognizing the urgent need for intervention, the wife and husband team engaged the services of 1836 Property Management. The primary goal was to assess the current situation and devise a comprehensive strategy to address the various issues. The options presented by 1836PM included:

Maintenance Restoration: Prioritize the overdue maintenance tasks to bring the properties back to a habitable and desirable state.
Rent Collection and Eviction: Initiate legal proceedings to collect back rent and evict non-paying residents who were contributing to the problem.
Property Sale: Consider placing the properties on the market for sale, potentially recouping some of the investments.

Results

Despite the concerted efforts to rectify the situation, the investors encountered several challenges along the way. The tenants, who were already upset due to the neglect, continued to withhold rent payments, leading to a prolonged and complex legal process. Over the course of 8 months, from November 2022 to June 2023, the following outcomes were observed:

Tenant Evictions: Four out of the eight units required eviction proceedings due to non-payment of rent and breach of lease terms.
Resident Abandonments: Three tenants chose to abandon their units rather than continue with the eviction process.
Eviction Appeal: One eviction led to an appeal process, resulting in the only successful rent collection of the eight units, totaling approximately $8,000 out of the $64,000 owed.
Property Rehabilitation: Estimated rehabilitation costs for each unit were over $28,000, totaling $230,000 for all units.
Property Sale: Ultimately, the owners made the difficult decision to defer maintenance due to the extensive rehabilitation costs and opted to sell each quadruplex under market value.

Conclusion

This case of the wife and husband team serves as a cautionary tale for out-of-state investors who may face challenges when entrusting their properties to negligent property managers. Despite their efforts to rectify the situation, the extensive neglect, tenant non-compliance, and legal complexities led to difficult decisions. 1836 Property Management helped them navigate the complicated situation and ultimately recover their investment capital.

This case underscores the importance of diligent property management, proactive maintenance, and regular communication with tenants to ensure the success of real estate investments.