Company Description
This property is a 6-unit Multi-family property with 12 bedrooms and 6 bathrooms and is located in Cleveland, Ohio.
Each unit has 2 bedrooms, 1 bathroom, and is 650 sqft. Apartments 3, 4, 5, and 6 were all renovated in 2021.
Refer to the "Documents" tab above to view the following information:
Rent rolls for all 6 units
Inspection report notes
Renovations and updates
Sales Comps
Updates:
Update 7/25/2022: Unit 1: The tenant owes rent for the current month and has a past due balance that is more than 1 month's rent. Based on the recent governance survey on how to handle tenant delinquencies, the Property Manager will be filing an eviction. A 3-day notice has been sent to the tenant, but before an eviction can be filed, a Lead Safe Certificate must be obtained for this property. The tenant has not been responsive, and the PM will be sending the tenant two 48-hour notices. If the tenant fails to provide access after receiving both notices, the courts make an exemption to start the eviction process and have a hearing. Lofty is providing a full rental credit for this unit until a new lease is signed. This is due to a communication error in our Property Management onboarding process which resulted in a delay between when the closing wire was sent & when the Property Manager officially took over this property. This delay caused a few additional issues which are mentioned below. We take full responsibility for these issues and will be making up for them via full rental credits for all affected units. There are several updates to our onboarding process to prevent this issue from occurring again in the future. This unit is under market-rent, and the PM will look to increase the rent for the next lease. Unit 2: The tenant signed a 1 year lease renewal at $700/month. This is a $100 increase, or 16.7%, from their previous lease. The lease terms are from 8/1/2022 - 7/31/2023. This new lease increases the CoC Return of this property from 8.32% to 8.55% starting on 8/1. Unit 3: The tenant has broken their lease and moved out. They told the PM that they wanted to move to a larger home. This tenant is EDEN (Section 8) and EDEN has paid for July rent & will likely continue to pay for August & September rent, since the tenant's lease was set to expire on 9/30/2022 – we are awaiting final confirmation from the Housing Authority on this. If the Housing Authority does not continue to pay rent for this unit, Lofty will provide a full rental credit until a new lease is signed. The PM will get an update on unit turnover estimates and the unit will be refreshed and likely put to market by the end of next week. Unit 4: This unit was vacant at launch and the seller was providing a rental credit of $1,500. Due to the communication error mentioned previously, the Property Manager was not aware that this unit should be listed for rent. Lofty has provided a rental credit for this unit because of this error and will continue to provide one until a new lease is signed. The unit will be refreshed and put on the market for rent by the end of the week. Unit 5: The tenant was behind on renewing their contract with EDEN (Section 8) and their contract is now expired. The Property Manager has assisted the tenant in the renewal process and there will be an inspection with the Housing Authority on 8/27. The PM will proactively send a vendor to the unit prior to the inspection to button up repairs as needed to pass. EDEN will hold rent in escrow until the unit has passed the inspection. Once the unit has passed inspection, EDEN will release the rent for this unit. Lofty will be providing a full rental credit during this time until the funds arrive. Unit 6: The tenant vacated the property on 7/15 without notice. They feared for their safety because of a domestic issue, which resulted in a break-in of the unit causing damage to the door along with a few other items. The Property Manager will be providing an estimate on turnover costs within a week. Lofty will be providing a full rental credit for this property until a new lease begins. This unit is under market-rent, and the PM will look to increase the rent for the next lease.
Update 7/28/2022: The Property Manager has provided a repair invoice for the turn of Unit 6. The repairs required for the make ready include replacing two entry doors, replacing one interior door, replacing windows, hauling trash, and removing items left behind. Additionally, the unit requires heavy cleaning to remove rotten food and pet damages. The total cost of repairs is $4,694.88. There is a security deposit of $850 on hand which will be applied towards the repairs. We are waiting to confirm with the PM on additional rental obligations from the tenant as well as the new target rent for this unit.
Update 7/29/2022: The vendor has completed a full inspection of Unit 5 and made the necessary repairs to meet EDEN's (Section 8) compliance guidelines. The vendor replaced the CO and smoke detectors in the unit. The tenant also had a plumbing work order and the vendor completed this at the same time. The plumbing work order required snaking the sink and replacing broken pipes under the sink. The total repair cost is $859.63 which will be taken from the maintenance reserve. The PM has scheduled the inspection with EDEN today. After EDEN passes the unit inspection, the housing voucher payments will be re-established for August moving forward. The PM will also appeal for rent arrears after the unit passes the inspection.
Update 7/29/2022: The Property Manager has hired a vendor to do a full clean of Unit 4 before it can be marketed for rent. The total cost of the full clean is $462.88. The target rent for a new tenant will be $700/month. Lofty will be providing a full rental credit for this unit until a new tenant is found.
Update 8/1/2022: Update 1: The tenant in Unit 2 signed a 1 year lease renewal at $700/month which started yesterday, 7/31. You will be receiving rent back-pay for the missing rental income from yesterday shortly. This is a $100 increase (16.7%) from the previous lease of $600/month and increases the Cash on Cash return of your property from 8.32% to 8.55%. Update 2: The window was recently replaced in Unit 2. The drywall around the new windows must be patched and the vendor will need to go over the patch with two coats to match the existing paint color. The total cost of repairs is $529 which will be taken out of the maintenance reserve.
Update 8/8/2022: Unit 5: This unit has passed the compliance inspection with EDEN (Section 8). EDEN has confirmed that rent payments will now be paid out in full from August moving forward.
Update 8/11/2022: Tenants have reported pest control issues and the Property Manager also identified pest control issues in the vacant units while working on the turn. Pest control is required to cure the issue for all the units in the building. The total cost of pest control is $1,289.44 for all 6 units and will be taken care of immediately. The vendor has a warranty for call backs.
Update 8/12/2022: The Property Manager has started working on getting a rent increase approval with the Housing Authority program for Unit 5. The target rent is $1,000, a $125 increase (14%) from the current rent of $875.
Update 8/12/2022: Unit 1: (Lofty is providing full rental credit for this unit) The Property Manager recommends to hold off on the lead inspection repairs as the tenant has applied for rental assistance. The program may award the tenant with 10 months of past due rent and 3 months of future rent. The PM is confident that the rental assistance will be approved for the tenant. The approval process is 30-45 days and the PM has recommended to revisit the eviction if the program does not approve the rental assistance application. Unit 3: (EDEN [Section 8] paying for August & September rent) The cleaning and lock change have been completed and the Property Manager will be getting the unit ready to market for rent. The target rent for new tenant placement will be $800, a $46 increase (6%) from the previous lease of $754. Unit 4: (Lofty is providing full rental credit for this unit) The repairs have been completed and the Property Manager will be getting the unit ready to market for rent. The target rent for new tenant placement will be $700. This unit was vacant at launch, so there is no previous rent comparison available. Unit 6: (Lofty is providing full rental credit for this unit) The repairs have been completed and the Property Manager will be getting the unit ready to market for rent. The target rent for new tenant placement will be $890, a $40 increase (4.7%) from the previous lease of $850.
Update 8/18/2022: The rental voucher program approved the rent increase of $920/month. This is a $45 increase (5%) from the current rent of $875/month. The rent increase will take effect on 10/01/2022.
Update 8/29/2022: An insurance claim for vandalism damages was filed because the door damages in Unit 6 were the result of a conflict between the previous tenant and their guest. The insurance plan has approved a payout of $1,133.73, which will be added to the Maintenance Reserve of this property. Unit 6 is currently on the market for rent at $890/month, a 4.7% increase from the previous lease. A full rental credit for this unit is currently being provided until a new lease begins.
Update 9/22/2022: *Lofty is currently providing a full rent credit for these units. Units 3, 4, and 6 are currently being marketed for rent. The leasing team has not received interest for Unit 4 and 6. An application for Unit 3 was not approved and leasing activity for this property has been stagnant. The PM recommends to lower the target rent as below to increase traffic for the units. Unit 3: Change from $800 to $725. Unit 4: Change from $700 to $600. Unit 6: The target rent was initially posted at $890 and then dropped to $800. The PM recommends to change the target rent to $725. Unit 5: The Housing Voucher program has pushed back the effective date of the rent increase from 10/1 to 11/1. The program is backed up and had delays in processing the rent increase. The new rent will be $920. The program will pay $820 and the tenant is responsible for $100 monthly. This is an 8% increase over the previous rent of $850.
Update 10/1/2022: Unit 5: The tenant's lease renewal begins today at $920/month. This is a $45 increase (5%) from the previous rent.
Update 10/6/2022: Unit 5: The tenant has been awarded $8,273.13 in rental assistance. The award will cover all the back rent and future rent through December 2022. Awards can take 3-4 weeks to be distributed.
Update 10/14/2022: The lead cleaning and inspection repairs have been completed. The vendor will now submit samples for lead testing and apply for the Lead Safe Certificate with the City. The lead repairs and clearance were approved by the Property Manager to limit the owners liability for health claims. The cost of the Lead Clearance testing is $3,450. These funds will be deducted from the Maintenance Reserve which will be replenished via 10% of the cash flow until it is full again. Unit 1: The first hearing for the eviction case has been scheduled for 11/3 at 9am EST.
Update 10/20/2022: Unit 4: A new tenant was placed and signed an 11-month lease at $775. This is a $175 (29%) increase from the previous target rent of $600. The tenant moved in on 10/15 and the lease will expire on 9/30/2023. You have been receiving rental income at the previous lease rate of $754. You will receive rent back-pay at this increased rate of $775 from 10/15 - 10/19 shortly, and your daily rental income will increase starting today. The tenant paid a deposit of $1,150 and also provided their own stove, saving owners an expense of $603.75 to install a new stove.
