The properties finally closed escrow in about mid-July but I did not find out the closing dates until a week or more after that. The delay resulted from several factors some relating to my transfer of funds from my THRIFT SAVINGS PLAN (government IRA account) to my self-directed IRA. I was using these funds to buy the property. I kept wondering what was going on and emailing periodically to ask. Slowly the wheels turned. I got word from Horizon Trust Company that the money had been received from TSP and the properties had been funded. Now I was just waiting on the paperwork showing the houses had closed.
About July 23 in a frustrated gesture I emailed the closing specialist with Flipping Formula and let him know that I had not heard anything on the closing progress. I was immediately contacted by Brian with Marquis Properties in UT. He filled me in that Marquis was the seller of the property in Kansas City, MO. and they were holding and managing the property for me until the transaction was complete. He assured me that all was in order and that I should get paperwork soon. He told me the property had closed escrow. Brian was gracious and helpful in helping me to understand what would happen next.
I did not hear from the other company so I emailed Flipping Formula again a couple of days later and a notice was sent off to Robinson Realty for the property in Cahokia, IL. They finally responded by sending me a copy of the Property Management Agreement that I was required to sign with them. After several faux paws I was finally able to receive and open (in the computer) the documents so that I could print and complete them. Robinson Realty finally had to send me a hard copy by express mail. I figure the problem had something to do with the fact that they were sending the documents from an Apple computer and I have a pc. For some reason I could open their email but the documents were not attached or I could not open them even though they sent them twice.
Anyway I got the property management agreement. I also was informed that I had to purchase insurance on the house because the house had no insurance since the property had closed escrow. Now remember this was about a week or two after the close and I am just finding out that the property closed escrow and that there is no insurance on the house.
So I frantically called insurance companies on Friday night and Saturday. I would leave messages on the telephone and via email and was not getting the responses that I need to get the property insured. It appeared that since the property was old (built 1935) they had a whole check list of questions that I had no answers for. Things such as when the roof was replaced last and whether there was a circuit breaker or the old fuse box. I didn’t know any of this information and could only guess, and no one wanted to insure the property without more information on the condition of the house, and they could not or would not send me a check list so I could get all the questions answered at once with the property management office. So I made up a check list as best I could and sent it off to both property managers asking if they would send the information to me so I could get the properties insured.
Robinson returned the questionnaire within a couple of days after Monday. Brian (at Marquis) told me not to worry about the house in Kansas City as they would keep it insured until I got insurance. He referred me to a company that specializes in investment properties in Missouri; unfortunately they do not cover Illinois. Their price and coverage is much better than Liberty Mutual Insurance which was what I got for the Illinois house.
Anyway, I finally got the insurance for Illinois house, driver’s license, Horizon deposit information, W-9 for Horizon and to get the Property Management documentation notarized and witnessed by two people, I was finally able to Express mail the package off August 6th to Robinson so they would have it in time to meet with the Section 8 representative the following Monday. (Both homes have tenants, but the Illinois home has a Section 8 tenant that I was told has been in the house for 2 years).
About a week later Robinson notified me that they were no longer going to management the property because their business is mainly to sell properties. And as it turned out I had to go through selecting a new property manager in MO as well. I am new to this process and I guess this is standard operating procedure once escrow closes you have to get a new property management company. I guess I am just a little miffed that Robinson required me to get two witnesses and haul them down to the UPS Store to get their signatures as well as mine notarized just to find out I have to do it all over again a couple of weeks later.
So this past week I got all the paperwork back to both companies (Marquis and Robinson) so that we could get both properties transferred over and start getting some money. So far I have not received any paperwork on the rents, but I am sure that will come. I am having them keep the rents to pay the deposits that have to be onsite for unexpected expenses. I know that I could probably manage the properties myself since they both have long term tenants in them, but I just like the idea of having someone close by who could check up on the property and make sure the properties are not getting trashed or extra people aren’t moving in. Also the rents should go directly back to Horizon since the payments are part of my IRA and you can’t mix you IRA with your personal funds or the IRS will decide to charge income tax on ALL you have in the IRA because now it is no longer protected.
So that is my tale. I may look for more property around these two homes because the prices are fairly low. I am also told that there is fairly high demand for rentals so they should be able to keep them rented without a problem.