As apartments fall into disrepair, owner moves to next investment

Editor’s Note:  Triad City Beat does not suggest that Carl Withers or Bedrock Management Solutions has engaged in any illegal activity or that Mr. Withers or his company have been charged with any illegal activity.

Natalie Carter’s unit at Timber Hollow Apartments fell into disrepair, leading to series of personal calamities. A South Carolina real estate investor charges that the complex’s owner is a “crook” who structures real estate deals so that he gets paid regardless of whether the investment works out.

Natalie Carter had found a place to live with her two children, 14 and 7, where her former partner, a violent abuser, wouldn’t be able to find them. She’d bought a used car so she could get to her third-shift bartending job in High Point, and get her daughter to her doctor’s appointments in Winston-Salem.

She was paying $400 a month for an apartment at Timber Hollow, an aging barracks-style complex in northeast Greensboro that was built in 1968 and 1970, that she said was literally falling down around her.

“I didn’t have any water; everything was falling apart,” Carter said. “In the children’s bedroom, the roof is falling in. The bathroom sink fell in half on top of my dog, and is not usable. The shower is caving. In my living room, the water pipe busted, and the maintenance man didn’t fully repair it. The whole wall is completely open.” She added that she was spending $50 a day on bottled water so that the family could bathe.

Carter called the city of Greensboro on Dec. 7 to request an inspection. That was only the beginning of her troubles. The next three months would bring a cascading series of catastrophes.

Notes from Inspector Jarod LaRue’s Dec. 11 inspection posted on the city’s website confirm several of Carter’s complaints, including a hole in the wall and ceiling of the living room where a repair was made but the sheetrock wasn’t replaced, moisture on the living room floor from a leak and water damage to baseboards, signs of a potential leak in one of the bedrooms, a loose outlet in the living room, and a hole in the kitchen wall. In all, LaRue documented a total of 18 violations.

Although the city was able to serve notice to the owner, nobody showed up for the hearing and the city issued a repair order on Jan. 11. In February, LaRue attempted to re-inspect Carter’s apartment. When he stopped by he discovered there was no water or power. Then, on Feb. 19, LaRue posted a condemnation notice, according to his work notes.

By then, Carter had already left. In the past four weeks, she’s been staying in a hotel. On Tuesday, Carter and her children were evicted from the hotel after she complained about bedbugs and she was looking for a place to stay for the night.

Several other misfortunes ensued: Byron Gladden, a Guilford County School Board member who has been helping Carter navigate the social service system and get back on her feet, said Carter’s 14-year-old daughter was experiencing bullying and had been refusing to go to school. Gladden said while Carter was in a meeting with school staff on Feb. 28, a social worker contacted a police officer assigned to the school to notify them that the mother had an alleged misdemeanor school-attendance violation. The Guilford County Sheriff’s Office also discovered that she also had an unserved warrant for driving while license revoked-not impaired from an Oct. 22 traffic stop on Highway 29 in Greensboro. Gladden, along with fellow school board member Deena Hayes-Greene and others, raised money to bond Carter out.

Beyond her mounting housing challenges and legal troubles, Carter also lost her bartending job and has been unable to maintain her medication.

There were more revelations to come about Carter’s housing and Timber Hollow Apartments. Carter said she learned during a visit to the Greensboro Housing Coalition to request assistance — and city code inspection records confirm — that there was no water meter or power meter at the residence. Although both water and power are in the tenant’s name, Carter said they were functioning when she rented the apartment in October 2017, and that her lease includes a provision for her to pay $250 per month for utilities. Beth Benton, the city’s code compliance manager, said the water meter at Carter’s apartment was stolen from a different location.

“There’s a lot of squatting going on in and around that property, and things that go along with that like energy fraud with electricity meters that have been repurposed from other accounts,” Brett Byerly, the executive director of the Greensboro Housing Coalition, told Triad City Beat.

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Carter said the tenants are confused about who should receive their rent payments, and rumors are circulating that the property has changed ownership. Carter said the management office is closed — a fact confirmed by TCB during a recent visit during business hours.

Byerly estimated that less than half of the units at Timber Hollow are legally occupied, and probably less than a third.

“In order for an apartment complex to have cash flow, you really need to maintain a bare minimum of 80 percent occupancy just to service a debt,” Byerly said. “You really need 90-95 percent before you have a positive cash flow. These folks have let their properties get down to this point. It becomes impossible to do anything. When someone says, ‘My roof is leaking,’ it goes unrepaired. It falls downhill like an avalanche of problems.”

Housing inspection records maintained by the city back up the picture of neglect and abandonment painted by Byerly.

Notes from LaRue’s inspection of another unit — one of eight cases currently open at the complex — on Jan. 2 reads: “Missing AC units in back. Appears vagrants may be gaining access through this hole. Tenant states they’ve had problems with vagrants breaking into vacant units here (only 2 of units currently occupied in this building).” Following LaRue’s inspection, the city ordered the owner to secure the building, and threatened to place a lien on the property for the price of repair.

In another case opened in early December, the owner again failed to make repairs and the city wound up condemning the unit. LaRue’s notes from Dec. 5 read, “Toilet broke, sink and toilet leaks, can’t use stove, water bill is outrageous.” Again, the owner failed to show up for the minimum-housing-standards hearing in late January, although they signed for the notice through the mail. On Feb. 15, LaRue wrote, “No active water account at this time. Property maintenance states they’ve fixed electrical issues. Sending 48hr condemnation notice to ensure that residents are not residing without water.”

Other outstanding violations at six other units in the complex include roaches, flooding, water damage, missing smoke detectors, a failed hot-water heater and evidence of intrusion by animals, leaves and debris.

Timber Hollow Apartments appears to be owned by the same real estate investor who owns Ashleigh Park Apartments, located off McKnight Mill Road east of Highway 29, and Avalon Trace Apartments, located in southeast Greensboro. Avalon Trace has been the subject of numerous housing complaints, and members of the Cottage Grove Neighborhood Association have been working with the Greensboro Housing Coalition to court a new buyer based on the belief that conditions at the apartment complex are holding back the neighborhood. Byerly said Avalon Trace is currently under contract to sell to a prospective buyer based in Durham.

Ownership records for the three properties are murky. Tax bills for all three properties are mailed to Bedrock Management Solutions, a company based in the Atlanta suburbs that specializes “in stabilizing assets and distressed property turnarounds.”

The company is familiar to Byers.

“They were not particularly good at being owners and managers,” he said. “They were particularly bad at it.”

The LLCs listed on Guilford County property records for Avalon Trace and Ashleigh Park identify a real estate investor named Carl Withers, who is based in Aiken, SC, as managing member. While Withers’ name is not on the paperwork for the LLC that owns Timber Hollow, the principal office phone number listed on the entity’s filing with the NC Corporations Division is identical to the phone number for Avalon Trace and Ashleigh Park. It’s also the same number that Withers gave out during a guest appearance on a podcast devoted to real estate investing in September 2016.

A man who answered the phone but declined to identify himself on March 9 said Timber Hollow is in the process of being sold to a group of investors in New York. On two additional attempts to reach Withers at the number earlier this week, no one picked up and the voicemail was full. He also did not respond to an email or a voicemail left at Bedrock Management Solutions.

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A former manager for the trucking company Consolidated Freightways, Withers’ investment in multifamily housing was prompted by a mentee relationship with David Lindahl, a real estate investment guru whose 2008 investment handbook was published by Trump University and garnered a forward from the future president.

“We opened up a company a couple years ago, Bedrock Property Solutions [sic],” Withers told host Bill Manassero in a September 2016 podcast. “Once we got over 1,500 units, it just made good sense for us to manage our own properties in-house, and saves the investors a lot of money.”

In a video of Withers speaking at one of Lindahl’s seminars that is posted on YouTube, he gives a testimonial about the good life afforded to someone who is successful at putting together profitable multifamily housing real-estate deals.

“You got to ask: What’s your why — why you’re here,” Withers said. “For me, it’s freedom. I mean being able to do what I want to do. Two weeks from now I’m going down to Costa Rica to fish at Crocodile Bay. I’m gonna be there for four days. I’m gonna be there with a couple baseball players. Tom Glavine — I don’t know if y’all have heard of him… Cy Young Award winner.”

Withers explained the appeal of investing in multifamily housing to Manassero during the 2016 podcast.

“A single-family home that goes unrented, how’re you going to pay the mortgage?” Withers said. “You get an apartment complex, you know, you could go down to about 60-70 percent [occupancy], and you could still pay the notes and most of your expenses if you buy the property right.”

He said he bought his first multifamily property, a 131-unit apartment complex, in 2011 for $1.1 million, invested about $400,000 in rehab, and then flipped it three years later for $3.5 million.

Robert Kim, a real estate investor who also lives in Aiken, SC, said Withers takes advantage of unwitting investors to put together multifamily housing deals where he gets paid regardless, leaving the investors to carry all the risk.

“I believe he’s a crook,” Kim said. “He’s dishonest.” Kim said the syndication model taught by Lindahl is legitimate if conducted properly, but investors have to read the fine print to ensure that they don’t get stuck with bad investments, while the syndication sponsor rakes in money without any personal risk.

As syndication sponsor, Withers would typically set an acquisition fee payable to himself when the deal closed, and then pay the investors quarterly returns minus what he took for himself, Kim said. Withers told Manassero that he typically pays investors 7 percent.

The model ensures that the syndication sponsor gets paid regardless of whether the investment pays off, while the investors carry all the risk. Withers earns “the acquisition fee and whatever he can scrape in the middle,” Kim said. “He’s out nothing. The investors who put the money in — they’re going to suffer the pain.”

It’s easy to set a hook by talking up fishing trips and famous athletes, Kim said.

“It’s basic psychology,” Kim said. “You start saying, ‘I’m rubbing shoulders with Tom Glavine.’ And people say, ‘I want that. How can I have that in my life? Maybe I should put my money with this guy.’”

As member support coordinator for the Midlands Real Estate Investors Association in South Carolina, Kim said he decided to start speaking out against Withers because he wants to protect members from making bad investments. And, he said, reading news reports about neglect of Avalon Trace Apartments in Greensboro last year “made my blood boil.”

During the 2016 podcast, Withers described the life cycle of his investment in multifamily housing with other people’s money, noting that the investment group typically holds on to properties for three to five years.

“We predominantly buy multi-families that need rehab,” he said. “What we’ll do, doing our due diligence, is to figure out what needs to be done to get the property up to the standards that we have. We’ll just bring a team in and fix it as fast as possible and then get out.”

Withers’ investment group purchased Timber Hollow Apartments in two separate acquisitions in 2011 and 2013 for a total of $2.4 million. According to Withers’ schedule the apartment complex is overdue to be flipped.

“As these things come up, on the five-year plan, we start selling ’em and replacing ’em,” he said.

“We’re having fun,” Withers told Manassero. “It’s not like work, at least for me. We have a good time doing what we do, and we love it. This stuff gets in your blood and you just keep moving forward.”