Or at least return phone calls and/or emails… It simply amazes me how many people in the business world do just that: not answering emails or phone calls. I do not consider myself a flunky or tire kicker, I own or have interest in several pieces of property… When I ask a question or need something of a realtor, would it not be to their benefit to at least acknowedge I called?

We made an offer on a house and garage apartment that was accepted… due to our interaction with the current owner and his apathy towards having any gutters on the house, we decided to have a formal inspection done on the house. I scheduled an appointment with K&B Pest Control and Home Inspections on Monday (which by the way are top notch, very nice to deal with). I notified our real estate agent that the inspection would be done on Friday… and for him to please acknowledge he recieved my message…. and that we were clear to have the home inspected on Friday.. I called every day and still did not hear from him. Friday comes (today) and the occupants of the house understandably refused to let the inspector in the unit to do his job. He also called our real estate agent along with myself and no answer.

To say the least I am very disappointed…. Everyone knows how important I feel about having a winning team.. We are looking for a competant real esate agent and thought we had one. We were under the impression, in the beginning, he would be an asset to our business endeavors…. Because of his apathy towards our goal of buying this house and garage apartment, he may have just lost out on a signifcant amount of commissions during the lifetime of our business… not to mention “bad blood” that will exist for the unforseeable future… We have 14 days to have the inspection done and the clock keeps ticking.

On a side note, I have been trying unsuccessfully to have the leasing office of Pullman Square contact me about an inquiry…. she has yet to cal me back after repeated attempts… Is the economy so good that one can ignore phone calls and leave emails unanswered….. ?

We are in the process of acquiring two different rental units on the same lot… We based our capitalization on very conservative numbers and static rent that will remain constant for several years. The problem is: The current tenant (who is the owner’s ex-wife) has been there for several years and is not paying market rent. She is actually paying much less than what we estimated is needed for the units to capitalize in seven years.. a number we agreed upon during company inception. The following are the numbers used to analyze this investment:

As you can see, the best case scenerio is to raise the rent to a market rate of $600, which will in turn allow the property to capitalize in 7 years. If we allow the current rent to remain, this property will capitalize in an unacceptable 9 years. We have different views on how this situation should be handled. Personally, I have gone the “tenant loyalty” route and it never pans out… My feeling is that the lady is living there with her son probably in a very linient financial situation. She has no job to speak of….. and I feel that the ex husband is most likely not collecting the rent that is due him. The house is paid for, there are no liens attatched, he does not pay a mortgage. My gut instinct is telling me she is not paying… at least what they are claiming. It is a strange relationship to say the least. They are most definitely not living together.. when we looked the house over a second time, he actually showed up. I’m going on a tangent here, but the house has zero gutters and the current owner has no plans of installing them. This prompted us to do a thorough property inspection before we go into phase 3 of actually purchasing the property..

I digress, I feel we demand income verification to see where the rent would come from for starters, then proceed to raise the rent to market standards. If she does not comply, then we give her 30 days to vacate the premise. The partners seem to disagree, though each have not formally made a statement for or against.

Their stance is the following: We do not “rock the boat” so to speak and mantain status quo…. She continues with her current rent well into the forseeable future.. their thoughts are that if the unit were to remain empty for a couple months, it would eat up any monies gained and we could avoid that by simply keeping the current rent intact. Keep in mind, these are above average properties, we have quality tenants in our other units and actually have a waiting list for two of them…. We do not have problems filling vacancies. Even so, if we were to approach a bank with these numbers (in case we needed to refinance) it would not look nearly as attractive to them. Vacancies are built into our formula, so I feel we should not be near as concerned. In addition, if we needed to unload this property to another investor, we need them to see the maximum this place can rent for… I personally am always concerned about an exit strategy… We have little to gain by keeping her there with no proof of income and the current rent… we are actually losing 3 years of the house’s capitlization…. This is afterall a business, it needs to be treated as such… when we get to the point where we are running a charity the game plan will change, until then, we always need to be aware of how it affects our bottom line. She has been there a long time, Yes, but is it our perogative to reward that and mantain her status quo? Or should we be concerned about our endeavors as a company and raise the rent to what it can be in this economy?

As many are aware, one of the companies I am involved in has 4 main members (owners)…including myself.. we often disagree on the strategies we employ or tactics we use to make the almighty dollar. We are currently involved in a few projects that keep us quite busy.. In the not too distant past we disagreed on everything from the mundane day to day operations of the company to big decisions; which understandably could change the direction we intended on taking. We finally agreed to disagree and decided that one person, within a set boundary, would make the small decisions (under 1K) without interference or questioning of the other members. Of course, everything done would be subject to audit, but for the most part, the one person could run the company without having to get permission on everything and be subject to the barrage of disagreements that so often accompanied our past activities and crippled our progress.

Recently we employed one of the two members mutual friends to help us do some work at one of the company’s properties. It was my personal understanding that we would compensate this person for the time he had put into the project, whether he was actually useful or not (which he was, very much so). I was of the opinion that he was performing a service for something that we intended on making money from in the future and he needed to be justly compensated. In addition, this person gives us a discount and other perks at a store that we frequent and spend a substantial amount of money.

My partner disagreed with my feelings on the matter. His position is he was “doing it as a friend” and was also knowingly engaging in a barter transaction between himself and my partner… because our friend had wanted him to do some computer work, for which my partner is quite knowledgeable. He also bought our mutual friend lunch the 2 or three times he was working with us and paid his bar tab of approximately $15-$20 at a bar the three of us frequent. This was a one time event. I would estimate our friend spent aproximately 10-15 hours working with us on a revenue generating activity we as a company are engaged in. I broke it down to look like this: Our friend spent 10 to 15 hours on a project for 2 value meals and a $20 bar tab.. and the hopes that his computer will be repaired.. Does this seem fair to you? It just does not strike me as being a good idea… I feel our friend has gotten the short end of the stick.

I am almost certain he would much rather have gotten paid $8 to $10 an hour and made the decision himself whether he wanted a value meal or attended a night out on the town.. or even had someone else fix his computer…

My question for the masses is: When is bartering a good idea? Also, how far can you stretch the concept of “being a good friend” to help you out…. I feel in this case someone ended up being the loser.. and it wasn’t my partner. Had our friend been doing something for us personally, such as helping us with our home or another personal endeavor, I would not have near as a problem with the circumstances.. but given he was performing a task for a revenue generating entity, I feel he actually expected to get paid.. though he tells my partner that was not the case. Given the brief commentary at the beginning on our decision making policies, is it best for me to let the 2 of them work it out and not interfere or should I step up to the plate for our friend? It is quite unsettling to me and I would love to hear peoples’ opinions on the matter.