Day 132: Looking forward to some Peace

Between 3 and 4am this morning, my phone rang with complaints from one of the tenants over at the building regarding the tenant who lives directly above her. The people who live above her are people I never in a million years would've thought I'd be renting to. Such is the quality of my tenant pool. Brain damaged, troublesome, loud, addicted - and that's just the dog!

The tenant who called me way too early in the morning is, herself, $1000 behind in her rent. I allowed her to have a cat, which she leaves alone all too often, and consequently her apartment smells like cat pee. The carpets are ruined. I am wondering at what point do I advise everyone to start looking for somewhere else to live.

I picked up the notice yesterday that was tacked to the gate. It is a notice filed by the outfit that's handling the 2nd TD holder's foreclosure sale. The auction is set for the first week in August. The date of the auction cannot get here fast enough. Just one more month and my liability associated with this disastrous investment will be non-existent. I can't figure out why the 2nd TD holder filed foreclosure without working with us - whatever money the building sells for at auction will be given over to the first TD holders before the 2nd TD holder gets anything. If a hardcore investor type wants to buy the property (and I just don't see it), that investor will most likely only come in at 5X gross X10. That's only $330K. Investors who know what they're doing will never come in to a neighborhood like this one at more than 6X gross, and that's assuming that everything else fits the bill. The way our building and the one next door were once one complex with a common courtyard but are now separated by a chainlink fence down the middle and owned by two separate owners will not sit right with those who have experience in this type of thing. I wish I had known that 3 years ago. The first TD is $392K + all back payments + attorney fees. The 2nd TD is for $190K. Something tells me the 2nd TD holder will lose money at the auction OR will end up as owner of his former dump. I guess I can be happy that we didn't pay the Old Goat all cash when we initially bought the place. At least this way, he gets to lose his money too which serves him just, although he was only into it for $200k on paper. That's a lot different from actually parting with real money.

Over 4th of July beers last night, the PIL and I tried to come up with a list of pros and cons with regard to keeping the building in the unlikely event that everyone involved (first and second TD holders and ourselves) can come to some sort of an agreement over what the payments and interest rate should be. We did this pointless exercise because it is hard to accept that $250K, like proverbial spit on the sidewalk, is most likely gone for good.

The Cons:
Bad neighborhood. Make that VERY bad neighborhood
Very real risk of getting shot or injured in an assault
Gangs
Drugs
Prostitution
Low income
Poor landlord involvement on our block
Aging apartment structure built in the 1950s
Going to need extensive rehab work on the roof, plumbing, electrical.
Going to soon need a new sewer line
Needs courtyard work: cement, new planters, new brick dividing wall
Needs drainage to prevent recurring flooding
Needs two new stairways
Needs complete exterior paint
Needs new decking paint and repair
Needs a major facelift in front of the building to remove rotting wooden panels
Needs re-stuccoing and painting after rotten wooden panels are removed
Needs new plants in front
Building next door was part of the same complex but was divided
Building next door faces inward so that the two buildings face each other
Both buildings built on separate parcel numbers allowing for separate sale (BAD IDEA)
Building next door has direct and extreme negative influence on our building
Owner next door allows crack addicts to sleep on the premises in the garages
Owner next door is a slumlord
We constantly lose tenants because of the unsupervised antics at the building next door
No positive cash flow
Building usually operates in the red
We paid too much for the property
Very high tenant turnover causing too many repairs
Phone calls all hours of the day and night


The Pros:
Tax break
Depreciation

After yet another tenant disturbance when we're trying to sleep and after watching crack addicts smoke up in the garages next door yesterday morning, the picture is clearer than ever. This morning, we go to the building and clean out our storage sheds and collect our stuff. We will probably be able to sell a lot of the maintenance supplies to a contractor at a garage sale. I am going to sign over the fridges, stoves and air conditioning window units to each tenant to take with them when they move out. I would rather do that and force the Old Goat to shell out more money for new appliances than pay to put those appliances in the unit for the Old Goat to benefit from. It's time for that greedy shyster to learn a good lesson.