April 2021: Going, going .. almost gone

April was generally our quietest month on record. The two big topics this month were vacating tenants and obtaining a fire inspection certificate to close out the escrow situation. 

Regarding planned vacancies, the 2nd floor and 3rd floor tenants had shared their intention to vacate this month. 2nd floor tenants did in fact leave mid month which was positive, however, because of this we only saw a partial month collection of rents. Once vacated there were large piles of debris in the yard and common areas. This has since been cleaned up, however, there is some residual damage from the move such as interior stair railings have been removed. Initial unit estimates for cleaning, repairs and upgrades to place back on market were favorable in the $2,500 range. 

3rd floor tenant did not leave. They have shared there intention vacating in May.  They continue to provide no rent payments are rapidly approaching the eviction process as they will be showing 90 day late on initial delinquencies.

Maintenance performed inspection on fire and smoke detection and alarm systems. Numerous repairs and updates were necessary to bring the system to code. At time of the sale, there was $2000 placed in escrow for the purposes of obtaining a fire inspection permit. About $1,200 dollars was spent to repair these systems. Final invoices, bills and receipts have not yet come through. When they do, they will be passed over to the legal firm to be reimbursed. The legal firm will then return any remaining balance to the sellers.

Working with our legal team an entity (LLC) was setup for this property. Partnership papers were executed to reflect investment partnership. Business checking account was created for the entity as well as book keeping / accounting. Most importantly, the documents needed to transfer the deed into the property entity have been completed but submitted end of month. The mortgage company response was favorable indicating that appropriate notice is required, however, it is unlikely to require a financial event (e.g. refinance) unless the property will be changing hands (in the future). Deed registration and mortgage notice should be finalized in May.

The property insurance company completed the fire and casualty inspection. This resulted in cancellation of coverage. A formal response was drafted with a reasonable story. The major items included the poor roof condition, the extremely old boiler, the condition of the third floor porch and unknown condition of the fire detections systems. The formal response reads favorably as we have remediated 3 out of those 4 items. Additionally, we have acknowledged the smaller items and have committed to repair. Property inspection report, findings and formal response are available for those interested. Please let us know and we will share. We have since activated RPM to obtain estimates for outstanding items.

Tenant Update

• First floor: $1,100 collected
• Second Floor: $500 collected (partial in line with tenancy)
• Third floor: $300 unpaid, $300 unpaid

Major Costs Summary

• Pest Control (2 of 2): ($225)
• Fire Inspection / Remediation (@ $400)(partial)

Activities / Milestones

• Fire Inspection Certification Obtained
• Entity LLC formed
• Partnership Addendum Complete
• Business checking and book keeping established
• 2nd Floor Vacant

Next / Todo

• Record deed with Entity LLC
• Update Unit 2 Internal for Next Tenant