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Tenant Advocacy Project

Update

Low-income Philadelphia couple forced to flee squalid conditions sues ABC Capital, one of the city’s largest landlords

Rosa Correa and Michael Hamilton were forced to leave their home after their landlord ignored requests to fix serious hazards such as broken windows, leaking sewage, and water shutoffs. They are now suing for constructive eviction.

November 28, 2018 – Rosa Correa and Michael Hamilton, a low-income young couple forced to abandon their north Philadelphia home because of squalid and dangerous living conditions, are suing ABC Capital, one the city’s largest landlords, with the help of the Public Interest Law Center and pro bono lawyers from Ballard Spahr LLP.

Ms. Correa and Mr. Hamilton moved into 3853 North Sydenham Street, a property managed by ABC Capital, in the spring of 2016. They faced squalid living conditions throughout their 18 months living in the home: water shutoffs, broken windows, raw sewage in the basement, and more. After continuously requesting that their property manager fix these serious issues—and getting little but threats of eviction in response—the couple was forced to leave the property and find a new place to live.

The property is managed by ABC Capital. This company, which advertises “10% ROI passive income with turn-key rental investments,” holds more than 1,300 Philadelphia properties in their portfolio, located almost exclusively in low-income neighborhoods. They sell homes to investors, most of whom do not live in Pennsylvania, who then earn income from rents. For a fee, ABC Capital helps their buyers set up limited liability corporations (LLCs), allowing them to remain anonymous. Ms. Correa and Mr. Hamilton’s home was owned by SAAT Investments LLC, a Pennsylvania LLC with the same registered address as ABC Capital’s primary place of business.

“Anonymous LLC investors are making exorbitant profits on rent collected from the poorest Philadelphians, all while those tenants are living in conditions that are intolerable, dangerous, and illegal.”

Ms. Correa and Mr. Hamilton are now suing ABC Capital in the Philadelphia Court of Common Pleas for constructive eviction—causing intolerable living conditions that forced them to move—and deceptive consumer practices.

“Anonymous LLC investors are making exorbitant profits on rent collected from the poorest Philadelphians, all while those tenants are living in conditions that are intolerable, dangerous, and illegal,” George Donnelly, an attorney at the Public Interest Law Center who is representing the plaintiffs, said.

Ms. Correa and Mr. Hamilton are also represented by Ballard Spahr pro bono counsel Matthew A. White and Michael R. McDonald.

“Unfortunately, the vast majority of low-income tenants lack legal representation to fight back against landlords who fail to make the basic repairs necessary to ensure safe and sanitary living conditions,” said Mr. White. “This lawsuit should put the city’s unscrupulous landlords on notice that their practices will not go unnoticed—and they will not go unchallenged.”

In spring 2016, before he and Ms. Correa signed the lease, Mr. Hamilton toured the property with an employee of ABC Capital. He found several major issues—a fridge full of rotten food, broken doors and windows, and no smoke detectors—but was promised that these problems would be resolved by the time he and Ms. Correa moved in. Based on this assurance, the couple paid $2,250 for first month’s rent and their security deposit.

When they moved into the house in June, the smell from the fridge, still full of rancid food, was unbearable, and the home’s badly broken windows and doors remained untouched. Despite this, the couple had no choice but to move in—they had spent all of their available cash to secure the place and had nowhere else to stay.

ABC Capital, which describes itself as having been “created in the heart of the worldwide recession,” was the largest cash buyer of residential property in the city of Philadelphia for several of the past ten years. In 2015, ABC Capital collected more than $5 million in rent for their investor clients.

When Ms. Correa attempted to transfer the water bill to her name, she was turned away because the bill was in a previous tenants’ name and there was no rental license on the property. Ms. Correa told ABC Capital, who assured her that they would fix the problem. They did nothing. Four months later, the Water Department shut off the water due to unpaid bills, the vast majority of which were incurred before the couple moved in.

Though Ms. Correa eventually convinced the Water Department to turn the water back on, this was only the beginning of a long ordeal. She repeatedly complained about the water shutoff to ABC Capital, which did not acknowledge that the couple could not pay the bill and did nothing to rectify the situation. Because of this inaction from ABC Capital, the water was shut off again one month later. Ms. Correa convinced the Department to turn on the water for a second time, though a city employee warned her that another shutoff would force her to leave the property.

“This lawsuit should put the city’s unscrupulous landlords on notice that their practices will not go unnoticed—and they will not go unchallenged.”

The water was far from the only issue. Throughout their time in the house, the property had no certificate of rental suitability—a requirement for collecting rent under Philadelphia law. In January 2017, Philadelphia Licenses & Inspections documented six code violations, including a faulty plumbing system and broken doors. After repeated requests for repairs, including several visits to ABC Capital’s offices, the couple withheld rent for two months to attempt to force ABC Capital to finally address these issues.

ABC Capital threatened them with eviction. Frightened that they would end up homeless, the couple paid $2,250 to cover the rent they withheld after being promised that the repairs would be made. ABC Capital never made the repairs.

ABC Capital offers investors “a totally passive way to hold Real Estate. No physical or administrative involvement is required from our clients.” In addition to Philadelphia, ABC Capital now buys, sells and manages properties in Baltimore, Cleveland, Birmingham, AL, and Jackson, MS.

Around the same time that ABC Capital threatened Ms. Correa and Mr. Hamilton with eviction, the sewage pipe in their basement broke, filling the basement with raw human waste. Despite repeated in-person requests, this problem was never fixed, and the basement remained full of raw sewage until they left the property.

In response to these dangerous conditions, Ms. Correa and Mr. Hamilton began to look for a place to live and save up money for a new security deposit and first month’s rent. They moved out of the house on December 1, 2017, as soon as they had saved up enough money for a new security deposit and found a new home.

“Our clients were forced to move after over a year of living in unbearable conditions caused by a company that sends millions of dollars a year in rent to anonymous passive LLC investors,” Mr. Donnelly said. “That is absolutely shameful.”

Case documents – Philadelphia Court of Common Pleas

Recent Housing Posts

Sours: https://www.pubintlaw.org/cases-and-projects/low-income-philadelphia-couple-forced-to-flee-squalid-conditions-sues-abc-capital-one-of-the-citys-largest-landlords/
Sarah Lam

Sarah Lam

Rental Property Investor from San Francisco, CA

posted over 3 years ago

ABC Capital review and the problem with Turnkey companies

I've done a detailed write up of my first turnkey experience in Texas with Texas Turnkey Property (link). I've seen a lot of threads asking for people to share their experience with ABC Capital as they are heavily promoted on BP.

WHY ABC CAPITAL/PHILLY INVEST:

I found out about ABC several years ago through a well known promoter, Maverick Investors. They had attractive numbers, much better than other turnkey providers I had seen. After seeing generally positive feedback on the company on BP, I contacted them, was put in touch with one of their sales guys named Ari, was the most helpful of anyone at the company. He sent me some properties to look over and I chose the one I was most interested in. It's located in Brewerytown, which promised strong appreciation with modest cash flow. Obviously, appreciation should never be relied upon, but a lot of the factors I look for in a successfully gentrifying market (proximity to transit, beautification efforts by the city, employment nearby, development in the neighborhood, all verified by the Philly planning commission) made me comfortable with my level of risk in pursuing this strategy.

In a gentrifying neighborhood, I figured I would have the greatest shot at a successful buy-renovate-rent-refinance strategy. The purchase price was $155k, their ARV estimate was $220k. My intent was to take out as much as possible through the refinance and purchase a second property with ABC that would cash flowbetter.

I did my research on the property, had a local realtor unaffiliated with ABC give me their opinion on Brewerytown; he alsopulled some comps for the neighborhood for me and crazily enough, ABC Capital's estimates for both ARV and rent seemed right on.

So I pulled the trigger. All cash, closed within 3 days.

THE PURCHASE:

I purchased a property that was already close to being finished with renovation. Usually, these renovations take several months. Instead, it was completed several weeks after closing, around late April, which was great. I started the process of refinancing using a local lender they recommended. (Side note: ABC advertises a B-R-R-R strategy, but if you are out of state with no affiliation to Philly, their local lenders are actually local credit unions and won’t lend to out of state investors.) I found a lender on my own, but the appraisal came in short - $190,000. Disappointing, but not a huge deal.

In both of my turnkey experiences, purchasing has been the easiest, smoothest part. But when the time comes for property managers to take over, it's clear that this is the Achilles heel of turnkey companies.

RENTING/PROPERTY MANAGEMENT aka WHERE **** HIT THE FAN:

First major issue was with renting the property out. In such a hot neighborhood, it should be easy to rent out a well-priced, newly renovated property. A month went by with no activity. I checked on my property's address on google and found two issues:

1.They were using a google street image view of the property pre-renovation with crumbling stucco and all as the first image on Zillow, Trulia, etc. No wonder it wasn't getting any interest! I asked ABC to remove the google street images view of my property and replace it with a renovated one.

2.They had lowered the rent to $1150. I never received an email from ABC informing me of a change. I asked Ari about it, and he explained it was to get somebody in the property quickly and the rent guarantee would pay me the difference. He also said that the rental guarantee of $1300/mo was good for at least one year, but if that first tenant stayed for longer than the year, then the rental guarantee would still pay the difference for the entire duration of the first tenant. I felt that ABC should have let me know before the price drop, not after.

I reached out to a local property manager not affiliated with ABC to get her opinion, and she agreed it was priced right at $1300/mo, but that it wasn't listed on the MLS, which was probably why I was having a hard time finding a renter. I brought it to ABC's attention and they told me that upon further review, they've agreed to start paying a broker to list properties that rent for over $1000 on the MLS. Ari told me they were going to send someone out to take pics of my property that day.

After 2.5 weeks, I asked for an update on whether or not it had been listed on the MLS yet. One of their property managers who explained that my property was burglarized two weeks prior. Uhhh…what? Look, I get that **** happens. ABC Capital has no control over something like a burglary. I wasn't upset with them that it happened. However, I was upset I wasn't informed earlier, especially since I had been checking in regularly throughout that time period. The response from the PM was that they just jumped into action and didn't stop to inform owners. While I appreciated the action, surely after 2 weeks the hubbub would have died down enough to inform the owner.

I asked them what the timeline for repairs was. No progress had been made with repairs because the police department has not come out to file the police report.After the police came out 4 weeks after the burglary, renovations began again. It took about 6 weeks to be completed.

After the second renovation was complete, I waited for news of any renters. In the meantime, the following issues popped up:

  1. I received a notice from the city water department threatening to shut off the water. ABC property management had told me they would cover the water bill during renovation and vacancy. Jay told me I was misinformed by his team, but did not offer to cover the cost of his team’s mistake.
  2. I received several notices from the city inspection department stating that I was in violation of their building permits. I sent these notices to Jay, who assured me personally that his team was aware and already working with the city inspectors on it. Finally, I received a notice from the city stating they were going to take legal action against me and the fines accrued were well into the 6 figures. Pissed, I reached out to Jay who was incredibly rude towards me. I ended up having to call the city over several weeks to work with the city inspectors directly, ALL of whom denied ever having spoken to Jay’s team on my case. Jay did hire a structural engineer who walked the property and gave his approval that the property was structurally sound. The city inspectors took the report and listened to my frustrating story and cleared the violation without requiring me to pay anything. I think they felt bad for me.
  3. That 10 year tax abatement that was advertised by ABC Capital was never completed, either. Jay’s team is incompetent at best, dishonest at worst. I recently received the tax assessment and the value had increased substantially. I was confused because Ari had told me the tax abatement was already taken care of way back when the property was renovated the first time. After calling in, the city made it clear that the deadline was December 2017, and I am no longer eligible for it.

    After 10 months of collecting the rent guarantee without any renters, I noticed that they had dropped the advertised rent to $950, still without letting me know. That’s a huge drop from $1300! Fed up and pissed off, I fired ABC. It took about 2 months to get my final statement and deposit. My new PM walked the property and mentioned a few things that ABC had skimmedover:

  1. ABC neglected to replace the fridge for some reason (it was included in the scope of work). Jay reimbursed me the cost of a fridge in my final deposit
  2. I had purchased a 2 BR, but the second bedroom was so small, you couldn’t fit a twin size bed with the bedroom door closed!! No wonder the appraisal came in under and $1300 rent was too high!

Within 2 weeks, my new property manager had found a renter paying more than the $950 ABC was advertising. No issues with my new property manager.

To all the ABC prospective clients that have been reaching out to me directly for my experience, I hope this is enough to deter you – no returns are worth this much headache. I would stay far, far away from ABC Capital. You should also know that current investors unhappy with ABC have contacted me in the hopes of organizing legal action against the company. Their property management company also apparently has a class action lawsuit being built against them by another commenter in a different thread.

To all the current ABC investors who are unhappy with ABC have also reached out to me, if you need a new PM, let me know. I have been referring others to my new PM.

TLDR: ABC is the worst; false advertising, impotent property management, lawsuits incoming, stay away! Issues summarized:

  1. Property was advertised as a 2 BR, but the second bedroom can’t fit a twin size bed.
  2. 10 year tax abatement – ABC’s property management never registered it, told me it was done, and now it is too late for me to register with the city
  3. ABC never contacted the city for a final inspection, causing the city to threaten legal action against me and accrue well over 6 figures in fines that I had to resolve on my own.
  4. Never found a renter for me after 10 months. My new property manager found a renter in 2 weeks for more than what ABC was advertising.
David Weintraub

I'm not in the business of crapping on local companies, but I feel I need to say something here.

You're not the first person who I've heard about dealing with a really bad situation with this company.  I know there are some folks on BP who feel otherwise, but after the first story I heard I went to someone who KNOWS.  And he said, "Avoid them at all costs.  ALL.  COSTS!"  

If people are getting ripped off, or sold a bunch of goods, that's garbage.  Sorry you had to deal with this.  I'm glad the city stepped up for you.  That's not usually their position. 

Jay Walsh

Jay Walsh

from Philadelphia, Pennsylvania

replied over 3 years ago

Disclosure: I am onr of the founders of ABC Capital Investments, LLC

Dear all that read this,

I do not dispute most of what Sarah said here.  However, i would just like to highlight some of things she said.  She bought a property from ABC on our advice that appraised low $35,000 more than she bought it for immediately (within months) after she bought it.  I am sure she could sell for 220K plus if she wanted today for sure and this is just over a year and a half later. 

We did have a tough time renting the house and in most transitional hot neighborhoods you can have a tough time.  The rents have no't caught up to the values.  That being said she was paid rent until she fired us $1300 as we agreed.  We honored our rent guarantee and would have indefinitely. Any problem she had i resolved.  Did we drop the ball on stuff, YES.  Unfortunately that happens in business sometimes.  That being said she didn't feel any financial pain and we honored our word.  In fact i would happily buy the property back from her today.  I am sure she does not want to sell and that in itself speaks volumes. 

Lastly there are no lawsuits against ABC, that is public record you can look up.  Additionally i don't know how there could be any as no investor ever with ABC Lost money in the 7+ years we have been in business.

Again, are we perfect, NO. However, to be clear in my humble opinion in investment you make 35K immediately and 10% net return per year puts me over 32% return with NO leverage (cash in cash)  I am sure she probably got most of her money back after a refinance... (assume 133k (70% of 190K). 

Again, if Sarah is wants to sell me her house back.  I would buy it in 30 day  and she can keep all the rent she made from inception.  We stand behind our product. 

Sarah Lam

Sarah Lam

Rental Property Investor from San Francisco, CA

replied over 3 years ago

By not disputing all the ways Jay's team has dropped the ball, he has admitted that he has messed up almost every single aspect of his B-R-R method that he built his company on. 

Buy - he advertised a 2 BR, but the second bedroom cant even fit the smallest bed while still being able to close the door. It's incredibly misleading if the second bedroom can't even fit a bed. 

1 year rental guarantee - Above, Jay mentioned he would have continued paying the $1300 rental guarantee indefinitely. When we spoke just prior to my terminating the property management agreement, he texted me, "The rent guarantee is for 12 months of payments. It doesn't extend it for construction delays." Once again, Jay has offered conflicting statements. 

Tax abatement - his team told me it was already done, even though they clearly never bothered to actually check. Now that 10 years of tax abatement is out the window, and my property is being assessed for the new value post-renovation. ABC had 7 months to do this, but never did.

Renovation - I didn't even mention this, but his structural engineer who he paid to show the property was structurally sound so I could submit it to the city to clear the violations even mentioned that there was water leaking into one side of the basement. The property had been vacant for 10 months - clearly there was an issue that was missed. I have since had my new property manager resolve the issue at my expense. 

Permit issues - this one really gets me. Jay personally assured me his team was looking into the violations for MONTHS. Finally, I had to take matters into my own hands to resolve it, under the threat of losing $100K+ in fees and dealing with a legal battle with the city. I can assure you that if the city kept me on the hook for those fees, ABC Capital would have seen their first lawsuit. 

Rent - 10 months without a tenant! Lowered the advertised rent without explaining their policy. The rent guarantees were direct deposited later and later each month until we were nearly 2 months behind. Sure, I got the money in the end, but their operations is a nightmare.

Does any of this sound like the turnkey property they advertised? There was nothing about this process that was painless or passive. 

And sure, Jay eventually addressed most of my issues after I blasted him on biggerpockets. But waging a public war on an online forum is not for everybody - I've had multiple unhappy ABC investors reach out to me directly sharing their horror stories of waiting months upon months for resolutions while Jay's team did nothing, but not wanting to share their woes publicly. 

I'd like to question why Maverick Investors still stands behind ABC when there are so many investors that are unhappy with them. 

To be clear - the reason why I didn't sell my property back to Jay is that there is no way in hell I would ever do ANY sort of business with Jay again. 

There's another, longer ABC Capital review thread on Biggerpockets where more investors share their experiences with the company. The general feedback is that Jay's team is so focused on selling, they've completely neglected their current investors. Their property management is atrocious.  My constructive criticism to Jay would be to focus his attention on the property management operations, or simply hire some other team to do it. His strength is evaluating deals, but his weakness is in operational execution. And it's caused me multiple headaches and honestly, regret. I hope my experience serves as a wake-up call to both ABC Capital, Maverick investors, and prospective investors.

Jay Walsh

Jay Walsh

from Philadelphia, Pennsylvania

replied over 3 years ago

Disclosure: Co-founder ABC Capital Investments

I am sorry to all that have to read this thread.  This is really unproductive but i have to defend what looks like a some type vendetta.  Facts are facts.  I am just stating facts here.  Clearly Sarah was unhappy with ABC and i am sorry she has many reason to be.  However she does not have any reason to go out of her way to slander me and my company and make accusations that are not true.  

Below are facts i dispute from here last post and can prove:

1. The house is a 2 bedroom.  This is first time ever i have heard her even bring up how small a second bedroom is.  This size is consistent with all the houses on the block of which i personally own 3 (same block).  Seems very trivial especially if its rented and clearly has equity and doesn't want to sell back to me.  Again offer stands.

Additionally as a savvy investor i am sure Sarah had a 3rd party property inspection.  Again, nothing about the size of the bedroom was brought up until these bigger pockets posts. 

2. ABC does not do nor do we advertise (you can check online) tax abatements.  Again, happy to buy the property back. Property taxes for 2019 are estimated at $1019 per year. I think its still a great deal that is extremely low for a 200K+ house. 

3.  Yes she had 10 months without a tenant and was paid out of ABC's pocket for each of those 10 months.  Our loss, not hers. 

Again in my humble opinion, I am sure if Sarah was really unhappy (house was a slam dunk great buy) with the house she would sell back to anyone willing to take it.

I welcome anyone to read any thread online about ABC.  We have sold over 2000 houses in 7+ years.  The majority of customers are happy but of course you only hear from unhappy ones online.  That being said you will see from all my threads i have always taken accountability for any issues and addressed them.  We are not perfect but we make sure our clients make money.  Again, Sarah made a lot of money period.  Was it the best turnkey experience NO. Truly sorry for that. 

On a side note.  ABC has recognized our property management was not up to par and in the last 2/3 months started transitioning clients to a VIP property manager while partnering with them to still offer warranties on the houses and do turnovers at low cost.  So we recognized we had a problem and are fixing it.  We have, are and will continue to get better for our clients.

Jay Hinrichs

Top Subjects:
Flipping, Traditional Financing, and Team

Jay Hinrichs

Real Estate Broker from Lake Oswego OR Summerlin, NV

replied over 3 years ago

@Sarah Lam   EVERY single turn key company in America EVERYONE has these issues at some time during their lifespan

if you did not means your not selling many properties.. 

When your offered a full recession that will make you  profit and your respond with Hey I wont do it on the basis that I won't do anything with this company.. that pretty much tells the story.. Granted being a landlord is full of ups and downs being a rehabber and selling to the public like this is full of ups and downs.

NO company is perfect.. NONE.. we see it every day with Every single provider some one is always taking a pot shot at them.. 

Its just not a perfect world out there.. If your that unhappy take the rescission if your not willing to take your money back and a big profit they are offering then.. its just mud slinging. 

Charles Worth

Charles Worth

Investor from New York City, New York

replied over 3 years ago

Have to agree with @Jay Hinrichs this is a tough tough business. @Jay Walsh and other TKs like him rent properties in urban cores which is twice as tough as B class properties with the city issues and tenants you are normally dealing with. Its a very delicate balancing act between growth and getting to a point where things fall through the cracks like they obviously did here. Property management and construction management are the keys and just a little problem in processes or employees can just domino. Just my opinion.

it looks like Jay did the right thing and paid you and you are whole so at least for this property alls well that ends well and anyone that will buy your property back (including costs I hope) is tough to complain about from a personal perspective. Hopefully, @Jay Walsh can fix any issues as I am sure he is trying to do. 

With that being said I think this post by @Sarah Lam  

is important. if mess ups become a chronic issue its tough to keep paying rent guarantees out of pocket without hurting the business itself and as for pricing you don't get that till you sell and there are transaction costs. Its certainly nice to have had a good exit possibility here but I wouldn't rely on that going forward (not that it won't happen just that I wouldn't let that makeup for poor performance elsewhere). So its good to know issues that have come up and more important see if others have the same issue as well as if those issues keep happening as time goes on. If they do its definitely an issue, if it gets fixed just a hiccup as any business would have.  I think if you want the returns that come with urban core investing this is a risk that is just part of the package. Not saying it doesn't suck when it happens but its tough to know who is going to have problems tomorrow. I am no expert but have seen a number of these everything is great than one day its not happen mostly in urban core or lower class properties. I am sure @Jay Hinrichs has seen even more. 

Jay Hinrichs

Top Subjects:
Flipping, Traditional Financing, and Team

Jay Hinrichs

Real Estate Broker from Lake Oswego OR Summerlin, NV

replied over 3 years ago

@Charles Worth   Very good post Charles..

where this rang a little disingenuous is client who has had a rocky experience got paid got an offer of a full rescission and to keep the profit.. being around this industry for 4 decades the best companies usually do in this circumstances and they happen every day cant have everything be perfect.. is you just get your principal back..

So this is deeper than a business deal this is a person out to do harm to a business.

@David Weintraub

Any time your the top dog in a market your going to get picked on... and the negative nellies come out.

Caleb Heimsoth

Top Subjects:
Traditional Financing, Managing Tenants, and Flipping

Caleb Heimsoth

Rental Property Investor from Durham, NC

replied over 3 years ago

I just want to chime in for any newbies who read this thread.

1. Always make sure you vet a provider if going through a promoter. Understand the difference between a promoter and provider. I’ve sometimes seen people go through 2 promoters to get to one provider. Understand the difference

2. BRRR out of state as your first deal is likely a bad idea. Usually you will have to fund the entire thing with cash and if the appraisal isn’t right OR there are rehab issues like here, you can lose money easily.

I would also comment buying all cash from a turnkey company (for at least the first one) is usually a bad idea. You will likely be overpaying. Use financing for the first one and if it goes well, maybe cash for the second.

Charles Worth

Charles Worth

Investor from New York City, New York

replied over 3 years ago

@Jay Hinrichs

Maybe thats always possible and I totally agree in terms of the personal experience described not being as bad as the picture painted in the post or in the title so a little unfair to @Jay Walsh . I am no old hand like yourself in RE but I am in the investment business in general and thats is how I would view it as well. Lesson learned and I got my money out, can't take it personally and its a good outcome at the end of the day. Seems like ABC did the right thing by the client end of the day. 

However, the fact is most TK esp when they go through a third party marketer promise a much more seamless process than the underlying asset or business can realistically deliver. Its no wonder that many of these businesses end up with upset customers such as @Sarah Lam at some point because of this. At the return profiles being looked at esp in this market that is just what you deal with to get those returns. Most people I feel just don't know what they are in for and that is what I took from the post (though again I know to look past the this is a terrible company etc. etc.). 

In my own personal limited experience, I have dealt with nightmare scenarios that sucked my time and my money into a dark hole. Evictions, city issues, construction issues, property managers who had terrible response times, violations, garbage issues, bad tenants who didn't even want to tell what their problems were even when I asked, etc. etc. Just what the asset class has to deal with and I think those who don't see it either got lucky or had a property manager that did their job very well on all points and didn't tell them about it.  

In most of these cases, I think its tough to blame the investor for being upset about that when they had no clue what they were getting into (I am generalizing I don't know what the conversation was between any of the parties involved) . Also tough to blame the marketer because well thats not how you sell the product not by starting off by telling people your life might get turned upside down for a while once every few years and your 15% - 20% return could have as much volatility as my crypto investments if something goes wrong or your property manager has a hiccup. There is a reason true regulated capital raises require certain disclosures which as far as I know no TK provides right now. 

I will also note that in my own experience with @Jay Walsh I found him to be fairly straightforward and less paint a pretty picture than some other folks I had talked to but that was a long time ago and I didn't end up buying anything at the time for other reasons. That was just my experience though and it could mean very little as everyone's experience may differ.  

David Weintraub

Whether they're great, or not great, I'm sure there are many satisfied customers.

That said, I think her biggest complaint seems to be they weren't upfront with her regarding what they said they would do, and what they did do.  Whether that's the fault of an entire company, or a single individual, doesn't really matter to the customer.  When my company messes up, we're all to blame.

Sarah Lam

Sarah Lam

Rental Property Investor from San Francisco, CA

replied over 3 years ago

This thread here is a great example why people who are unhappy about companies are unwilling to speak out publicly. I posted this review because I get dozens of BP users messaging me week after week about my experience with ABC Capital. It's a lot to type out every time. All I did was share my experience and how the actual product and process stood up to ABC Capital's marketing pitch.

Every single issue I had with ABC, I tried to work out with them with varying degrees of success. Unfortunately, little progress was made until I made my issues public on BiggerPockets. I have all the screenshots and emails with date and time stamps logging my correspondence. Emails that would go unanswered for weeks at a time. There is no slander - it all happened. So yes, my issues were fixed...AFTER I had to publicly announce them.

I am open to exiting the property, but not selling to Jay. My refusal to sell to him should not be taken as an endorsement of the product.

Glad to hear that ABC has been proactive about their awful property management - I hope it improves for the sake of their customers.

Sarah Lam

Sarah Lam

Rental Property Investor from San Francisco, CA

replied over 3 years ago

@Charles Worth Thanks for sharing your two cents. Honestly, I had high hopes for ABC Capital. Unfortunately, the sheer number of issues I've encountered have been significantly higher than any property I've purchased with my own realtor, managed by my own PM. I don't expect perfection, but I do expect for the product to be at least somewhat as advertised. For a turnkey company, the process is as much of a product as the actual property. And as Jay himself agreed, his team dropped the ball multiple times.

The tax abatement was mentioned several times in Maverick Investor's webinar pitch. It was also included on the available inventory list sent to me by Jay's team. Jay's team also mentioned it to me while I was selecting my property, and of course Jay's team also told me the abatement had been taken care of for my property without even checking into if it really had been completed. To learn now, 1 year later, that it was never done, and I can no longer receive it is infuriating. Count it as another ball dropped.

Matt R.

Matt R.

from Sherman Oaks, CA

replied over 3 years ago

@Sarah Lam Yeah, that story kind of sucks. Missing out on the property tax break is the worst part IMO, and for many that would have been why they were doing this in that location otherwise the challenges are not worth it. IDK if ABC would like to rectify but that is something that would bother me no doubt as all the regular taxes I understand in Philly make Cali look a cake walk but IDK for sure just what I have read from the local accountants. The good news is maybe that in time all the hassles could be worth it...due to appreciation/gentrification and another reason to pick locations that have that ahead. It is not that you count on it, it is that you might factor for it. 

Jeffrey Castellano

Disclosure: investor

Hello All!  I am sorry to hear about your experience Sarah.  I have been an investor with ABC Capital since the spring of 2014 and then reinvested with them in the fall of 2016.  My first deal with ABC I bought a property in West Philadelphia for roughly 70K and bought it in cash.  That 70K included a full brand new renovation.  The renovation took a little longer than anticipated but not much longer.  As an investor for close to 25 years I know that construction very rarely if ever gets done on time.  Experienced investors know this.  However, if my memory serves me, I believe the construction only went 1 month over the anticipated time period.  Throughout the entire time I received a rental guarantee from ABC during my rehab and guaranteed for up to 1 year.  Every single month, i received rent, even when my tenants decided to move out for the last 2 months of the rental guarantee.  Today that 70K investment is worth MINIMUM 120K :) as the Philadelphia market has been skyrocketing the past 5 or so years!  Whenever I wanted additional information or any updates they always got back to me in a relatively short period of time and they always kept their promises with regards to rental and maintenance guarantees.  I wanted to reinvest immediately but wanted to see what would happen after the first year of guarantees.  So I gave it another year and in 2016 I reinvested because things went smoothly for me.  I had some maintenance repairs that ate in to my return but that is to expected, especially in the lower income areas.  The good news is that the repairs were very affordable being that the materials are very affordable.  In 2016 I reinvested with ABC and things were pretty similar the first time but there was one thing I noticed.  The construction took longer than the first time (3 months delayed instead of 1 month) and it was harder to get in contact with people although they were still definitely responsive.  It is always concerning when you want an update and people are not as responsive as they normally are but I realized that this was due to the amount of volume in rehabs ABC was doing and due to the amount of clients they had.  Back in 2014, ABC was still a relatively small firm, as the market started to pick up it is very clear that ABC started doing a lot of business and as any business owner knows, it is very difficult to scale a business.  Although the communication lapses and construction delays did definitely give me pause, I always got my rental guarantee and maintenance guarantee, the construction always got done and they always kept their word.  Their customer service is not like it was in 2014 but it seems to be due to the increase in clients and business, not because of a lack of effort or care.  

What I think gets lost that most investors do not know, especially when they are new to the game, is that they always expect things to work perfectly.  Things NEVER work perfectly.  When you are investing in a high cash flow market where properties are below 100K and returns are in the double digits its foolish to think that there will not be issues along the way.  If you are an investor and you want a clean and easy experience, invest in San Francisco or New York City where you will have to pay 1 million dollars, you will yield 3-4%, you will subject yourself to tremendous speculation and unfavorable landlord tenant laws but you will have a clean and easy experience (and even then you would be surprised when you get hit with a 7K maintenance issue which will essentially wipe out your whole return!).  It seems like you bought a brand new property for 40K below market value, you received your rent per the guarantee and you are in one of the hottest areas of the entire city!  I am sure the experience was very frustrating from what you said and that is definitely a bummer but what is more of an issue from an investment standpoint is if you did not get your returns or the house did not appraise.  Both of which you got!  Plus knowing the Philadelphia area that house has definitely appreciated since you had it appraised!  For all the young investors please realize that if investments are going to be towards the double digits then there will be risk and there will be more likely more problems than an investment that yields only 3%.  This is simple economics.  If I were you I would use this as a learning experience by managing your expectations.  If a terrible experience is buying a brand new property for 40K below market value at the time, in one of the hottest areas of the city, while still getting your returns, and having all the issues you ran into eventually resolved just because it was "a tremendous hassle" then I wish I had a terrible experience too!  

My personal opinion is that ABC capital has grown to fast and it has resulted in communication lapses and slow construction timelines.  Apparently they moved back their rental guarantee from 3 months post close to 6 months post close on rehab deals and a gentlemen told me that it takes even longer most of the time recently.  Obviously this is not ideal but this is part of the business of investing! I always know that ABC has taken care of me and my investments, has always righted their mistakes and most importantly the investments have always performed.  I will take performance over convenience everyday!  If you want an easier experience, maybe NYC or SF is the right market for you.  Hope this calms some of your concerns.   

Sarah Lam

Sarah Lam

Rental Property Investor from San Francisco, CA

replied over 3 years ago

Glad that your investment worked out @Jeffrey Castellano . Unfortunately, it is no longer the norm these days. You can take a look at the other ABC thread where one out of country investor recently complained that ABC took not just hers, but 40 other Hong Kong investors' money , was completely nonresponsive and they were banding together to get a lawyer to contact ABC on their behalf. She then posted shortly after that ABC had responded (notice a pattern?). 

Delays are one thing. This seems bigger than that. 

Unfortunately, I am STILL getting investors reaching out to me every single day about ABC Capital, sharing their similar experiences to mine. Just because they're not posting publicly, doesn't mean ABC isn't having major breakdown issues in their process in a widespread manner. 

Amit Kumar

Amit Kumar

from San Diego, California

replied over 3 years ago

Thanks for the informative post. I thought about investing with them about a year ago as well, but I was concerned about all of the guarantees – it seemed too good to be true. I’m glad I didn’t invest with them but I’m sorry to hear you had such a bad experience, I hope your future Real estate investments go smoother

KING SHUN CHIK

Here is my experience with ABC Capital. I purchased a 3 unit property from ABC two years ago and had ABC managed it. Everything was going somewhat smoothly until the end of last year. Discovered rental income dropped due to one of the tenants moved out. Wasn't even notified by anyone from Jay's office. In February this year received a water bill from Philadelphia Water Bureau, got hit will a bill of $2,100. Finally talked to Jay on the phone. This was the answer that I got from him, "if there was no water meter, we could not pay the bill." So basically Jay sold me a property with no water meter installed.

Communication with ABC office was a nightmare, calls were never returned and emails were ignored. So enough is enough, when patience runs out, it is time to move on. Decided to switch property manager at the end of March, and asked for the final payment from ABC with all the security deposits that they were holding from my tenants and some miscellaneous fees that were paid, also including February rental income that was never deposited into my bank account. The total final payment is close to $11,000. Since April, I had been given runarounds. Finally got in touch with one of the mangers Peter Brooks, was told that Jay was the only one that could authorize payments. Texted Jay numerous times, also got ignored many times. was told that check was sent to old address but I had mail forwarded to new address but never received any mail from ABC. Even mail was delivered to old address, calls to the people who bought and living in my old house mentioned no mail at all. So I provided new address to Jay on May 22nd and was told that the check was mailed on June 4th. Please note that mail from Philly to NYC does not take more than a week. Today it has been two weeks. Every time I asked Jay when I would receive my check, this was the answer given, "do you want me to stop payment and resend?" How many times you want to stop payments and resend, Jay? I wonder if checks were ever even issued, not to mention actually got sent.

Just last week when my new property manager was trying to renew my rental licenses for my property. They found out that my three-unit property was zoned as two units only. Then my question to Jay is how come I was charged for three licenses in the past two years for a two unit. How come nobody from your office ever told me my property was zoned as a two unit one? Jay, at this point, I am not interested in finding who dropped the ball or who was responsible for all the foul ups, I just want my final payment from you. So please pay up! 

KING SHUN CHIK

Terrible experience with ABC keeps going on.................

After posting my experience with ABC Capital ten days ago. Jay became responsive all of a sudden. Since then, I received my final payment but NOT the Feb rent. The first check ABC spelled my last name wrong so they had to reissue the check. However, I am still waiting for my Feb rent, and it was not sent with the final payment, reason from ABC being rental payment needs to be ACH since it is from another ABC account. I do not see the reason being valid. It should have been sent with the check I received. Again texted with my account info. but no response. It looks like it is happening all over again. Texts get ignored again. No Feb rent.

This morning I checked my account, the final payment check BOUNCED! Unbelievable! Texted Jay but again, and of course no response. 

Jay, What is going on? When would I get my money back??

Catherine Stevenson
Originally posted by @KING SHUN CHIK :

Terrible experience with ABC keeps going on.................

After posting my experience with ABC Capital ten days ago. Jay became responsive all of a sudden. Since then, I received my final payment but NOT the Feb rent. The first check ABC spelled my last name wrong so they had to reissue the check. However, I am still waiting for my Feb rent, and it was not sent with the final payment, reason from ABC being rental payment needs to be ACH since it is from another ABC account. I do not see the reason being valid. It should have been sent with the check I received. Again texted with my account info. but no response. It looks like it is happening all over again. Texts get ignored again. No Feb rent.

This morning I checked my account, the final payment check BOUNCED! Unbelievable! Texted Jay but again, and of course no response. 

Jay, What is going on? When would I get my money back??

 I’ve had an awful experience with them too. Trying to get money for 5 months of rent that they have not transferred to our accounts. They didn't even give us some of our 1099 tax forms. 

Do you have any advice on how to actually get in touch with them? My calls, emails and texts have gone completely unanswered for the past month. I would just like to get my money (ideally) and move property managers.

Sarah Lam

Sarah Lam

Rental Property Investor from San Francisco, CA

replied over 3 years ago

yikes, @Catherine Stevenson that is really bad. I would maybe suggest contacting Maverick Investors and letting them know your issues with ABC. After all, they are the ones heavily promoting them; they hold some responsibility here too. 

I would also recommend you sever ties immediately and document all your attempted communications.

Matt P.

Matt P.

Investor from Columbus, Ohio

replied over 3 years ago

@Jay Hinrichs Unless I am mistaking you for someone else in that other big thread on this issue I read you have 3 mil invested with @Jay Walsh . When you were saying every TK company had these issues at some point you were talking the operations side of things and not the checks bouncing and not paying clients in time right lol?

Jay Hinrichs

Top Subjects:
Flipping, Traditional Financing, and Team

Jay Hinrichs

Real Estate Broker from Lake Oswego OR Summerlin, NV

replied over 3 years ago

@Matt P.   these threads come up on all the turn key providers  this is one or two investor out of 3 thousand..

I will leave it to Jay W and this person to work it out.. As what is common with BP is that you only get one side of the story 

and PM business is a tough one and very difficult to keep 100% of your clients happy.. these companies don't live with the tenants they don't give them marriage counseling or make sure they stay in their job.. or make sure they stay on HUD or what have you.. again any railing against any PM in the US market I am going to take with a grain of salt..

I have done this for 3 decades now and landlording simply is not an exact science in these asset class other wise these folks should landlord where they live.. and do it themselves.. 

This is not a Morris invest situation where literally hundreds and hundreds of investors got taken to the cleaners and ended up with houses that were never even rehabbed.. etc.. but if you this lady above you would get that impression.

There is a reason people move from PM to PM  happens in every market just follow the threads.. they are so common they are right up there with Hey I am new in real estate I am going to wholesale.

the next common is my PM sucks who do you recommend .. then the PM's come on here and have to defend themselves.  there was a long one with Jim Wise a few months back.. and he is pretty straight forward dude.. but no one in this business is perfect.. but I do know ABC is going through a conversion of PM companies so there will be some hiccups but with close to 2500 homes and grand total of this one lady and this other thing.. I don't think there is a reason for the BP folks to jump on the bandwagon here.. but its merica they do what they want the Lam lady she has a major problem and is just not going to let it go so I find her to not be credible at all.. she is just being vindictive.. 

Jay Hinrichs

Top Subjects:
Flipping, Traditional Financing, and Team

Jay Hinrichs

Real Estate Broker from Lake Oswego OR Summerlin, NV

replied over 3 years ago
Originally posted by @KING SHUN CHIK :

Terrible experience with ABC keeps going on.................

After posting my experience with ABC Capital ten days ago. Jay became responsive all of a sudden. Since then, I received my final payment but NOT the Feb rent. The first check ABC spelled my last name wrong so they had to reissue the check. However, I am still waiting for my Feb rent, and it was not sent with the final payment, reason from ABC being rental payment needs to be ACH since it is from another ABC account. I do not see the reason being valid. It should have been sent with the check I received. Again texted with my account info. but no response. It looks like it is happening all over again. Texts get ignored again. No Feb rent.

This morning I checked my account, the final payment check BOUNCED! Unbelievable! Texted Jay but again, and of course no response. 

Jay, What is going on? When would I get my money back??

Having had a lot of experience with foreign investors.. its gets frustrating on both sides. but to my knowledge ABC does not Send checks what are you talking about.. No US PM sends checks to foreign investors at least the ones I know like In AU folks don't use paper checks there and have a really tough time with them.. its all ACH to your US bank account.. no checks.. so something is not being communicated here directly.

Sours: https://www.biggerpockets.com/forums/92/topics/566319-abc-capital-philly-invest-review-terrible-experience
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DEVELOPER COMPANY

ABC Capital is a company dedicated to integral investments in the Real Estate Markets / Real Estate Markets Market, and at the same time, to the commercialization, development and administration of properties.

Founded in 2004, ABC Capital identifies unique opportunities in places that have housing crises in the United States, designing and executing specialized programs for generating large returns on investments, under a product perfected and proven over time: IPP.

ABC Capital Miami is the office and/or commercial and administrative department for South Florida and Latin America. This office, located in Brickell, has the experience to guide you to find the product that suits your investment possibilities, ensuring a simple process and support in your language during and after the purchase.

Our product is unique and always different, but the system is the same. Thanks to that, we can achieve results so that your investment works as you expect.

Sours: http://abccapitalmiami.com/en/company/
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