Asset Management & Recovery: February 2007

Let me introduce you to "From the Vine" at 8909 S. Old State Rd., Lewis Center OH 43035.  It is a 2500sf wine and specialty beer shop in the Polaris area on the cusp of Lewis Center.  Upon entering you will see the checkout counter which is usually manned by one of the owners, Shawn and Jaimie Meadows.

You can get just about anything you want from the shelves and special order even more.  Wine on the shelves ranges from $5 to $180 per bottle and there is a wide selection of specialty beer both in the cooler and on the shelves.  They will sell you Miller Lite with a smile, but you can get that anywhere.  How about a single bottle of a Tripple Bock that you have never seen before?

If you don't know what you want or have a question about how something will taste, just ask.  One of the cool things about owning a wine shop is that you get to taste everything.  Sometimes there will even be a bottle open on the counter and you can get a taste.

To promote both the wine and the shop, Shawn and Jaimie have a public tasting about once a month, usually on a Saturday night.  Tickets are $5 and you will taste about 15 wines.  The marketing for this event is pretty low tech.  You will get an email invite if you are on their mailing list, or the schedule is posted in the shop.

The place is open every day from 11-8, but Shawn and Jaimie take Monday and Tuesday off.  Jaimie is there from Tuesday - Saturday and makes Shawn pull Sunday duty.  And if you see Jaimie, her dog Argo is probably not far away.

So if you are in the area, stop in and grab some Cab, talk to Jaimie about her recent trip to Aruba and play tug of war with Argo.  You'll be glad you did.

Of the many neighborhoods in Columbus, the one I like the best as an investor is Linden.  There are opportunities to buy and rehab with intentions to sell to a home owner and the same opportunity to provide rental housing opportunities.  Linden has 2 access points to I-71 at both Hudson and Weber Rd.'s granting easy North-South highway access.  The area is about 7 minutes from downtown. 

Properties in the neighborhood range from below $20,000 through $85,000.  Some properties are a little higher, but it is not the norm.

Most rentals in the area are 2 or 3 bedroom single family homes that range from $450-$750/month + utilities.

The neighborhood has it's own website at http://www.greaterlinden.org/

A couple of facts from the Greater Linden Website:

Inception of Neighborhood: The community of Linden has its roots in a federal land grant issued in 1800. President John Adams gave 4000 acres of land to George Stevenson, M.D. of Wilmington, Delaware, in recognition of his military service during the American Revolution. The property was divided among Dr. Stevenson's descendants upon his death, and eventually the land became home to a number of prosperous farms.

Boundries: Greater Linden is bounded by Weber Road on the North, the Conrail right-of-way on both the West and the South (west of I-71 and south of Bonham Avenue respectively), and by Woodland Avenue on the East.

This means that many exciting things, such as the Ohio Exposition Center, the Ohio Historical Center, the Columbus Crew Stadium, the Four Corners Development project, and one of COTA's Vision 2020 rail corridors are all located within Greater Linden!

The Home and Garden Show is back !!

You will find remodeling ideas, vendors for all types of projects, see new and interesting products for the home and much more.  It is a lot of fun just to browse, but you might find a new idea or two.

February 24-March 4, 2007 at the Ohio Expo Center (also known as the State Fairgrounds)  717 E. 17^th Ave., Columbus OH

Here are some links to different websites about the Show

http://columbusoh.about.com/b/a/243422.htm

http://www.dispatchevents.com/home_garden.php

http://consumer.discoverohio.com/searchdetails.aspx?detail=56807

Entry is $8 with children under 12 FREE

Parking is $5

Enjoy....

I can't use my Bluejackets tickets tomorrow night.  Anyone want them for nuttin?  Section 108, Row H, behind the net.  6PM against the MONTREAL CANADIENS.

In exchange, you MUST email me a picture of you in front of the stadium.  This is Columbus Fun at its finest.

Email me at rfk@gryphonusa.com.  Tix can be picked up at my office in Polaris.

It's might not make me any money, but this email made me feel pretty good this morning.  It came from a prominent executive in town and references his cousin hiring my biggest competitor.

R. B. (name hidden) saw me and told me what a disaster R. M. was on his properties and told me that he wished that he had hired you as I had suggested.

Well, Mr. B., if he packs up and leaves now I can still help !!

No I am not giving you legal advice, but this is the way I have done it.

If you want  just a little advice, here it is.  After years and years of mostly dealing with attorneys and legal sales, I can tell you that divorce is the hardest, most messy and most unforgiving.  If you don't want to deal with a headache, don't do divorce.  Here endeth the lesson.

In other types of legal sales such as bankruptcy and receivership (possibly probate also), professionals are engaged by the party responsible for the property.  Sometimes this is by an owner as in a Chapter 13 or Chapter 11 bankruptcy (known as personal or corporate reorganization).  Sometimes this is by the fiduciary as in a Chapter 7 bankruptcy (liquidation) or the Receiver (state court insolvency or dispute).

Following the signing of the listing agreement, a Motion must be filed with the appropriate Court approving both the broker and the transaction.  Following the Motion, a period of time will elapse and during this period of time any party with standing in the case may Object.  If there is an objection, the parties will either negotiate out of court and the objection will be withdrawn or there will be a Hearing.  Following the hearing, the objection may be sustained meaning that your employment has been rejected.  This does not happen often.  Most times the objection period will expire and an Order will be entered finally approving your retention.

In bankruptcy the retention Motion is called an APPLICATION TO EMPLOY BROKER.

In receivership it is called a MOTION TO RETAIN BROKER.

This is how it is typically done here in the Columbus OH area.

Once you obtain a purchaser for the property, another round of Motions and Orders are required.  This is typically in the form of a MOTION TO SELL FREE AND CLEAR.

The same process as before will ensue where parties disputing the sale at the price and terms are afforded the opportunity to object, have a hearing, etc.

Once the final Order is entered, the property can transfer to the purchaser, usually by a Fiduciary Deed.  Sometimes the seller pays for title insurance and sometimes they do not.  It all depends on the contract.

A couple of more items on this....

Should you decide to market the property without being properly retained in the Courts, you may run the risk of not being compensated.

Even if your listing agreement spells out your commission in detail, it can always be changed by the ultimate Court Order.

In bankruptcy, there is also an application for fees and expenses.  It is not uncommon for the trustee to receive all of the funds at closing and require an additional application to the courts for a disbursement of your fees.  This is a Motion that is brought by the Trustee, so my last word of advice here is to bust your butt if working in these situations because your fee is in the hands of others and is not guaranteed, especially if the Trustee feels that value of service was not commensurate with the fee amount.

Gotta Luv It.

February 20, 2007 was interesting to say the least.  If this were a game, I think I would have won.

If you have been following along, I have just taken control of an apartment building.  Yes, the one wrapped in hay.

Let's see if I can properly lay this out. 

1. Braking and entering - I started my day planning to break and enter about 15 units at the "new" complex.  A large knife is used to pry the plastic pieces off of the glass pane near the latch.  Once off, you can unhook the latch and open the window.  The pane is re-inserted and then the plastic is re-attached using the butt end of the knife to repair.  Someone thought installing these windows was a good and safe idea.  I think the window guy is a burglar.
2. Locksmith - Once I was in, the locks needed to be re-keyed.  He had a ponytail and looked like he really wanted to meet my new employee.
3. Rasta Man - This is my new employee.  He was working for the former owner as a maintenance guy until they stopped paying him.  He still lives at the complex.  I found out about him from one of the tenants.  Since I needed help, I hired him on the spot.  At the end of the day, I went over to his unit to talk with him about the next day.  Inside were about 8 guys.  All of them had dreadlocks longer than the other.  Bob Marley posters and Jamaican flags were hung everywhere.  A cursory review of everyone's hand revealed something about 3 inches long, white and smoking.  They were all happy.  The place smelled funny. I didn't investigate further.  I also left before the locksmith did, so I don't know if he finally met Rasta or not.  Please Rasta Man, don't cut your thumb off with the Sawz-All, ok?
4. Humane Society - They arrived unannounced to pick up what had been reported to them as an abandoned pit bull.  I didn't have a key, so the locksmith picked the lock and let them in.  They fed the dog, but didn't take it with them.  Apparently there needs to be a notice posted for at least 24 hours before a removal.  I now have a pit bull that is full of dog food in the apartment where someone may or may not be coming back.  That's going to smell GREAT.
5. PoPo (AKA the Cops, the Po-lice, the MAN) - According to Rasta, the lady renting the unit with the pit bull was wanted by the police.  I figured we could kill 2 birds with one stone here, so I invited the PoPo to the shin-dig.  I was hoping to get rid of everything at once.  I'm not that lucky.  Amazingly, Rasta was not around for this part???
6. Dan - Dan is a tenant that lives next door to the "convict in training" with the pit bull.  Nice guy.  He introduced himself and told me that if I see a short girl, about 20, that was kind of cute and not that fat, that I should say hi to his wife, Sally.  Dan wanted to know two things.  First, he wanted to know what to do since he didn't have a lease.  Second he wanted to know if I was planning to crack down on tenants with exotic pets.  Dan has an alligator.  It, according to him, is about 2 feet long and nicer than any dog he has ever had.  Dan had two questions and so did I.  I wanted to know (a) if Dan paid his rent on time and (b) if he was taking the ‘gator with him when he moved out.
7. Indoor swimming pools - This is what a lovingly call the 2 units that most recently had the pipes burst.  I found them while breaking and entering.  In front of the units is where I met Dan.  Since I am not one to take a risk on the sophistication of my fellow man, I made a point to tell Dan that while this looked like an indoor swimming pool, he needed to keep his ‘gator out of it.  I figured there was no sense in taking the risk that he would decide on his own not to do this.  Good thing I did.  His response..."I was just thinking about that".
8. No Heat - In Franklin County a tenant that is in a dispute with the landlord can pay rent into an escrow account.  If they do, the landlord can not evict for non-payment.  (Side Note Reminder - I am not the owner and did not create these problems.  I am here to fix them.)  If you also pay your gas and electric bills to the escrow, the county figured you are an idiot and overpaid.  They do not bring this up to you and they do not forward the money to the utility companies.  If you now have no gas and your furnace, hot water heater and range do not work this is not my fault.  Pay your bill and they will start to work again.  Problem solved.
9. Snow Removal - The hillbilly snow removal guy plowed the parking lot and put all of the snow ON TOP of the sewer drain.  Everything is melting and the parking lot is...you guessed it....an OUTDOOR swimming pool.  I probably need to have an updated talk with Dan.
10. Explosion - At about 3pm a large BOOM was heard.  It sounded like about 10 shotguns all went off at once.  Dan, Rasta, Locksmith and I were all talking when we heard it.  Nobody flinched.  I don't know if that is a good thing or a bad thing.
11. Giant Cockroaches - Big enough to carry away a baby.  I was thinking of calling an exterminator, but think I need the Marines.
12. Babies & Children - I was there from 11am-4pm on a weekday.  What are all the kids doing at home?  Is this spring break already?  Maybe the adults are using them to bait the roaches.  I did hear a bunch of screaming.  Someone was yelling "I'm not going to let you get away this time."  Maybe I don't need the Marines.

I think I need to just sit down and shake my head for a few minutes.  Whew !

The story you have just heard is true.  None of the names have been changed to protect the innocent.

About 8 days ago I was appointed to take over an apartment complex in Columbus.  The owner had abandoned the place and we soon found out that there were multiple water line ruptures in the vacant units.

The temperature was dropping and the gas company was moving at a snails pace.  Even if we could get gas turned on, which was questionable, I have no idea if we could have gotten the furnaces fired up without a lot of repair or replacements.  Fixing the brusts was not a problem, but keeping the other lines from freezing was about to become an issue.

This was one of those "I learn something new every day", days.

The lender is a community bank that has a lot of rural borrowers.  From what I understand, farmers sometimes insulate their foundations with bales of hay.

Huh?  Say What?

A couple of calls later, I had found the right guy with the right tools (150 bales of hay) and he was on the way to the apartment complex to wrap the building, 1 row high, with bales of hay.

Bales are about 24 inches high and the water lines are about 18 inches from the ground on the exterior walls.

Cost to Repair 1 Emergency Burst = $350 ++ depending on location

Cost of Straw Bale = $3.00 delivered x 150 = $450 to insulate buildings pipes

Other things I learned that day:

•1.      There is a difference between straw and hay, yet I still don't know exactly what it is.

•2.      70 year old hay delivery guy is in better shape than I am.

•3.      If you look up Stupid City Boy in Websters, you will see my picture

•4.      The Code Enforcement Guys do not like bales of hay stacked on buildings

•5.      This actually works.  Whodathunk?

Many of our clients are extremely motivated to sell their property on an expedited timeline due to some type of distressed situation. 

This does not necessarily mean distressed property, but time is a factor.   This translates into opportunity for you and your clients. 

We have single family, multi-family, land and commercial. 

Please see below for a list of what is available right now. 

 This list changes almost daily.  To see updated inventory, keep tuned to our website at www.gryphonusa.com.

For people thinking about getting into residential (or commercial) real estate investing, there is an option of how you want to manage your investment.

On the one hand, you can deal with all of the "field operations" issues yourself.  This means everything from running FOR RENT ads to dealing with evictions and everything in the middle.

If that doesn't sound like your cup of tea, and for some it is not, you can consider utilizing the services of a professional property manager.  Should you decide to go this route in Ohio, the first thing to understand is that, unless you are making the manager an employee, you must utilize a licensed real estate brokerage.  This probably isn't a bad idea anyway since professional property managers do this for a living and Cousin Earl doesn't.

There are a couple of costs when hiring a manager.  Depending on who you hire, you will pay a management fee which is a percentage of all money collected by the manager.   This can include base rent, late fees and utilities.  Each company has their own fee structure and I would be happy to share mine, just call.  Can't post it here due to Federal Regulations.  Keeping legal is important !!

Second, you may be charged for lease renewals and/or new leases that the manager secures for you.  This is not usually too high of a number.

Third, there may be a charge for managing an eviction.  This is also a fairly nominal fee for the manager and there may be an attorney fee in addition.  Attorney fees for eviction can be $250 and up, but they get it done right.  Your manager can also steer you to attorneys that have this down to a science.

Another cost may be the advertising of your properties.  Costs here vary, but are usually just a pass through expense for the manager and you will have them if you self manage too.

Lastly will be any maintenance expenses for materials and contractors.  Some managers have staff members that can do much of the maintenance and some contract all of the work out.  Subcontractors will bill by the job, while staff maintenance guys are charged to the owner at anywhere from $15 - $35 per hour, plus materials.

These costs may not apply in all areas, but seem to be fairly common in Columbus, OH.