I got an e-mail from a friend yesterday asking me what I'm thankful for this year. Aside from the regular blather of being grateful for family and friends, this Thanksgiving is the first in two years without the stress of owning apartments. That is my mantra for the next week: I am thankful that we sold our apartments.
I've had some bad financial years in my life, but the last two, by far, have been the worst. The excitement of owning commercial property waned quickly. However, up until three months before we were in contract, we maintained an optimism (foolish, I admit) that one or both of the properties just might eventually perform close to our projected numbers. If those numbers were on the positive side of the number line, then it never happened. Not even close.
At one point in the winter and spring of this year, our property management statements from Ohio reported a positive cash flow. We were thrilled! This happened for three months. We never received a check because the management contract indicated that payments were made every three months. At the end of that time, I was instant messaging the PM about something else, when I told him that we were reconsidering the sale of the property because his statements showed that we were finally in the black. We had been expecting this for some time and thought that he had a handle on the expenses at last. My husband had been working closely with him about minute details of what the costs of running the apartment should be. The statements indicated that we were making $3,000 every month. Not great, but better than owing $7K.
"Well . . .," he wrote on IM, "the numbers are the way they are because I haven't placed some extra repair and maintenance expenses on them for the last few months--ones that are not monthly recurrences."
"Yes, that's right," he explained. "I wanted the numbers to look good for you in case there was an interested investor."
"WHAT?!!" After my shock subsided, I asked him, "Do you realize that this would look like we were intentionally hiding something? I'm not selling the apartment this way. I can't lie about the numbers!"
So, he did what I asked and reported ALL expenses that had been incurred. It turned out that we owed him around $15,000. At least we straightened it out before we disclosed a bunch of lies. Whether we knew about it or not, we felt liable.
And so it went, month after month, for each apartment.
The one in KY started "breaking even" about a year before we sold it. Our young, and very competent, PM thought that paying the utilities and insurance due the prior month with rents from the next month constituted breaking even. I tried to explain to him that it actually meant that we were behind every month. He didn't get it.
When that PM in KY left and we hired the worst management company ever (you can read about all of these people in my prior posts), we really thought we'd make money because they filled the complex so quickly. Well, you remember how that ended. I think that management mistook our property for a shelter because no one was required to pay the rent.
Yep, financially, it was the worst two years of my life. It's over now and I'm eternally grateful. No more monthly statements that made our hair stand on end. No more endless phone calls. No more bad news in e-mails and on IM. No more wondering how we were going to pay two management companies thousands of dollars every single month. No more frustration and stress.
Having the apartments sold almost makes me not care that we lost a fortune. . . . almost.