House Rentals: Investments in Texas and Pennsylvania
Investing in house rentals can take at least two routes: investing in a house rental property acquisition and management firm or investing and managing directly rental properties.
Either way, there is always the possibility of failure, but if one has invested in a real estate investment firm, one can sue the firm if investments fail.
This is what two Houston, Texas real estate investors and their wives did. Prominent businessmen Monty Davis and Richard Bergmark and their wives sued Plainfield-based real estate investment firm Connolly Properties Inc. after the rental apartment complexes in which their money was invested began to face foreclosure and bankruptcy.
According to the breach of contract action, the Bergmarks and Davises invested a total of $3.15 million in six Connolly Properties apartment entities starting December 2006 up to January 2009. Under their investment contracts, each release of investment money would be used to acquire, own and operate a specific income-generating property.
Two of the apartment entities in which the Texas businessmen invested own apartment buildings in Watchung Gardens, Netherwood Village and Plainfield in Texas. The other four apartment entities own house rentals in Pennsylvania.
The lawsuit centered on two apartment investments that ultimately failed. The families said that they invested in 2008 a total of $850,000 in the Connolly Properties fund Marshall Woods Trust, which planned to acquire a 305-unit apartment building in Norristown, Pennsylvania.
The Bergmark couple also invested another $240,000 in the Connolly fund Hampshire Court Trust, which planned to acquire a 54-unit apartment building in Plainfield.
In April this year, the families said, Connolly Properties CEO David Connolly informed them that he will not pursue the Marshall Woods purchase but instead acquire a 182-unit building in Falls Township, Pennsylvania. When the planned purchase again failed, the families demanded a return of their investment money.
Furthermore, the families claimed that Connolly Properties has not been responding to their demands, but instead has informed them that their money has been used to buy another property. The families reiterated that this third investment was carried out without their consent.
The two families also claimed that Connolly Properties wrote them assuring them that all its house rentals and other apartment properties have no liens or foreclosure cases against them. They however found out through a newspaper report that a foreclosure action has been filed against Plainfield Apartments, one of their investment properties.
