Karen Hanover made her new property presentation the other night. The property presentation dealt with Willlow Lakes (again) and a new property Ravenwood Apartments in Jacksonville, FL. She is still trying to push Willow Lakes on to Fast Trackers. However this time, it looks like she is trying to buy it at $6,500,000 and wants to dump on Fast Trackers for $8,500,000+ You can download the infopak following: WillowLakesInfoPack
My thoughts are that Karen is double dipping! Raping Fastrackers twice if she can pull it together.. once with the $30k then putting them in a worth less property for $8, 500,000!! No Morals what so ever! If any one buys into this BS I hate to say they are stupid.
Notice the new name on the Willow Lakes presentation! Dan Goatee is a broker based in LasVegas. Whatever scam Karen is doing to / or Dan Goatee is unknown as of now.. But I would not touch any thing if it was served on a gold platter with Dan Goattes name as a broker involved.
There are many wannabe’s commercial brokers in Vegas and he would fall into that category. Google his name and you have tons of info on him.
Isn’t this the same guy who used to sell “Knives” ? From what I read about him when you Google is name, it sounds like he has no clue about commercial real estate, and he simply puts thing together as a package.
So, no one was allowed to ask questions.. She did not respond to ANY chat messages. It was just her blasting through a property slide show, blah blah blah. What a joke.
So lets take a look at the property in more details because if Karen Hanover thinks this is great asset, she is blowing smoke.
This property is on the decline from 09-10. The owner is checking out and just doing what needs to be done to get the property off his back. This is a solid C property. It will never be anything but a C property. You are not buying it for appreciation because that “ain’t gonna happen”. You are buying it for cash flow but if you use the current financials to calculate your purchase price you will definitely over pay. The seller is playing a bunch of games with the numbers and it is very clear. Here’s just a brief thumbnail :
1. The 2010 financials are for only nine months and they end in June. Why don’t we have more current numbers? Are they hiding something? The property is sliding, so the most recent numbers will show that slide and not look that great.
2. They are advertising it as 15% vacancy but the numbers are showing 22% vacancy. The rent roll, which does not give an “as of” date is showing a physical vacancy of 16%. The financials are showing a vacancy/collections percentage of 22%. That translates into an economic vacancy of 6%. Kind of does not bode well for the type of clientele they have in there now. I can tell you, that a new owner will see that vacancy drop significantly in the first year as they begin to clean house from all these deadbeats. This is not a job for the faint of heart or someone who has never done this before. Also, investors should not expect cash flow for 12-24 months as they get these tenants out, turn their units and then relet the units. It’s a big job.
3. Last year they spent $4,700 on exterminators. This year $0. Either that’s one helluva good exterminator or that property is now crawling with cockroaches. My experience says the latter.
4. Their mortgage payments are very low which tells me the owner probably has owned the property for quite a while. They should have a lot of room to negotiate the purchase price.
5. THEY DID NOT SPEND A DIME ON CAPITAL IMPROVEMENTS THIS ENTIRE YEAR. That is definitely an owner looking to check out and keep as much cash as he possibly can. It’s interesting to note that the lender does not require any capital reserves to be spent on the property.
6. This year they have spent $27,000 in sewer and last year they spent $117,000. I figure this means one of two things. (1) they had some significant sewer work done on the property and it should have been categorized as a capital improvement (not likely) or (2) the fact that the income statement is only for nine months is not showing the three months of the year when the sewer bill comes due. My taxes are billed twice a month. If I show you an 11 month income statement with that one tax month left out, it will look really good.
7. They are now self-managing and not taking a management fee. Karen had better add in 4-6% in her numbers or her analysis will be off.
8. There is almost $100,000 less in maintenance staff this year than last year. This is on a property that has not spent a dime in capital improvements in a year. That makes for an awful lot of unhappy residents and tons of unfinished work orders. That type of reputation spreads like wildfire. I would not want to live there nor would I want to be the new owners having to face those people. In addition, all those work orders cost money that needs to be calculated into the “going in” money when you buy the property. It will quickly become your problem.
9. Last year they received $5,300 on cleaning and damage fees. This year – nada. That means that the residents are leaving and there are no security deposits to collect from or the management has just totally checked out and they don’t even care anymore.
10. Last year $3500 in uniforms. This year – nada. They have definitely checked out.
Isn’t accounting fun? It really becomes an eye-opener for everyone when they see it like this.
This is the type of analysis will be taught at an upcoming ” Multi-Family Investing Academy over two days. I would recommend that you attend. For only $197 for everyone that lost money with Karen.. this is a gift price to you. All others will pay $ 397.
Check it out now www.MultiFamilyInvestingAcademy.com
This is not a “no money down deal” deal. There are 54 vacant units. They haven’t spent a dime on capital improvements all year. How many of those units are in move in condition? My guess, very few. That’s big money!