BiggerPockets

Hi guys, I'm new here and I hope so much you'll be able to help me.

I got a rental house recently (paid $180K) and hired a property manager, let's name her K., to manage it. K. runs a small property management company with only one employee - herself. It was a "hand shake" deal, no papers were signed but I have a bunch of e-mails where we discussed our deal. Fees for finding the tenants were supposed to be $400 and monthly property management fee was $85 and I was supposed to get rent from K. on 10-12th each month directly to my bank account.

K. didn't do a good job in marketing the house but probably it doesn't matter at this point. She found potential customers - boyfriend and girlfriend and their 2 children moving in together from different households.

We asked $1700 in rent for the house and they met 3 times rent income requirement. Both had poor credit though, with no mortgages/houses ever, he had child support issues and she had a few small bills like smud bill unpaid. Also, there was problem with ex-landlords telephone numbers -they didn't want to give them out to Ann, then they gave fake/non-working numbers. But supposedly finally they gave "right" numbers and K. verified them and was satisfied with the info.

When it came to moving into the house they couldn't come up with the money... and K. took $600 non-refundable deposit to hold the house for them. I was not happy with all this at all and I e-mailed K. and let her know I do not think taking deposit was a good idea and that we should rent the house out to the couple - simply because they don't have the money and they don't have any source to get the money should they need it. In my opinion they were "screaming" potential problems.

Next thing I learn is K. rented the house to the couple. Several times I asked her to mail/e-mail me the lease agreement and K. says sure and "keeps forgetting" it.

Now it's mid October and no rent and obviously it's not coming I have hard time getting hold of K. And when I talked to K. last it was something like they told her they mailed the check, then they "forgot" and would mail it tomorrow and then again tomorrow etc. Since I live 3 minutes away from the house I suggested a few times just to go and get the check, and after that K. told me she would contact tenants and... disappeared.

What I have now is Grand Deed for the house and a bunch of e-mails somehow confirming that K. was (is?) managing it. I do not have tenants names or lease agreement and I'm obviously failing to get it from K. Looks like I can't even post 3-days late rent notice because I don't know their names.

My co-workers provided me with landlord attorney's telephone number but he charges $200 for just consultation and then $700+ for eviction. Shall I go to attorney and pay or shall I try to talk to tenants (I don't have their numbers but I can go to the house... in hope that they will open the door and talk to me).

Anyway, I would very much appreciate if you could advice what shall I do and thank you so very much in advance!

Thank you very much for so quick reply!

Yes, the house is local, and I agree I need to "fire" K. But how can I do this if it was "shake hands" deal and she doesn't answer my calls or e-mails? Just e-mail her informing her she is fired?

I checked her out and looks like she runs the "private company" under religious organizations codes (SIC code 8661 and NAICS code 813110, not paying taxes?). I didn't find any license and I failed to figure out whether she has a broker (I believe not).

Initially tenants were going to move in with a dog but they failed to find $500 pet deposit. So supposedely they moved into the house without a dog.

I was at the house 5 minuts ago, there was only the tenant's daughter who opened the door... the dog was barking behind her.If I somehow get a lease will I be able to use it in eviction process?

I gave the tenant's daughter my telephone numbers and asked her to tell her mother to call me. We'll see whether I get the call.

I don't mind paying attorney fees,I understand that. If I pay for consultation now $200 and later for the eviction - it will come up to $1000, and it will add up to my losses. So I'm trying to torture you, guys, for the information :oops: :D

And I did pay cash for the house and I do not have any mortgage.But I have some other serious expenses - like my elderly mother from abroad with no retirement who lives on her own in another house.

I had to invest the money so I could support my mother and I decided buying a rental was the best deal.Time will tell.

So far I'm getting extra cash from HELOC of my house but I don't want to go too far with it, and I'd better resolve the issue with the house fast.

I don't know whether tenants are hard to come by or not - it was K. who handled calls, showings and screening and I failed to get much information out of her on this. Probably I had to fire her then...

Once again, THANK YOU for your help!

Thank you so much for your reply!!! No doubt you are 100% right, and trust me, I am learning... unfortunately from my own mistakes...

Ann wasn't a real name either, I just decided that K.is even less personal :D

K. called me and e-mailed me the proof of 3-days rent pay or quit.At least now I know tenants names. And she promised to e-mail me the lease agreement and is ready to proceed with lease termination and eviction process.It would be great since in my opinion she created this mess and I would appreciate if she cleans it up.

But this time I'm going to keep everything under my control and once tenants are moved out I'll do everything on my own. No more property managers, Done with it.

The tenant called me and told me she mailed the cashiers check to K. on the 1st of the month but her bank would take 10 days to cash the check :roll: and now she is ready to give K. another cashiers check on Friday (in 2 days :roll: ). I asked whether she could show me the slip of the cashiers check or any other proof there was a check on the 1st of the month... nope,

There were also other issues, and the tenant sounded rather rude and mean.She claimed that K. charged her double rent since they moved in in the middle of the month. She was referring to the deposit they put to hold the house, and during this time the house was off the market (and it was). However she claimed the house was on the market and she has a printout with a date.Maybe one of the websites like www.apartmenthunterz.com who use updated information without property owner's knowledge? I asked her to meet with me and show me the printout so that we could resolve the issues - nope, she isn't doing it. Oh well...

I talked to K., and we decided we will wait 2 more days, try to get rent if possible and then serve the lease termination notice (we have month to month lease) and get ready for eviction. It may minimize my losses... maybe.

Any thoughts?

At this point I don't think you can trust what K or the tenants are saying.

I think you will make more money (or rather lose less, same difference) firing K right now, proceeding with talking to your lawyer and paying $1,000 for the eviction.

I know it's tempting to have K do it, as it's her mess, but clearly she isn't responsible. Time to take matters into your own hands, and put it on someone who is responsible, a good lawyer.

If your rent is $1700/month, if K/tenants drag this out more than 3 weeks you're losing money. Pay the $1K now, evict them yourself. Then get it rented ASAP. That extra month's rent you get from the new tenants by not having this dragged out will pay for the lawyer's services.

Good luck! Sorry for the rough first experience.

Standard disclaimer: this is not legal advice. Even if it were, you shouldn't take legal advice from strangers on the internet. Go talk to a lawyer. Now. :)

I voted for Ibrahim, too. His advice is spot on. You can't verify K's license. She shouldn't be managing properties if you can't. PM's might clean up messes like this, but they will charge you for it. Sometimes people who look good turn out to be problematic.

$85 a month is dirt cheap for a PM. That's another clue you have a problem. A more reasonable rate is 10% of collected rents, plus half to a full month to fill a vacancy.

I make my deposits just under the rent (helps with avoiding confusing the deposit with the last months rent) and if they want me to hold it, they pay that full amount.

I really recommend you spend some time reading in the Rental Property and Landlording issues forum. You need a crash course since you now have so much cash invested. I would honestly recommend selling, but that will create a large loss for you because of the costs of selling. If you can get a grip on the ugly reality of this business and manage this yourself, and then hold on for a few years, perhaps you can get out without a loss. Managing properties isn't actually too difficult and is not very time consuming if you get a good tenant and get them used to paying the rent on time. Finding a good tenant is the hard part.

Thank you so much for all your replies. I feel you are all sooooo right :cry: but I'm just too exhausted now and I'll sleep on it before taking any decision.As Scarlett said "I'll not think about it today, I'll think about it tomorrow" :D . But looks like the decision is going to be a tough one....

How I found K. Her husband, let's call him D., was my real estate agent. I had 5 real estate agents before I found D. and in the beginning I thought I was a excellent customer with tons of cash looking for 2 houses 200K+ each, all cash.... Wrong! :D . 5 realtors were doing poor job, so someone from work recommended me D, and I was very sceptical about him.(and I was working with 2 more realtors before buying my property, so I had experience).

D. was even more perfect that I could ever dream of :D . We worked together for almost a year, 6 offers, 5 short sales - everything was better than perfect. I really couldn't believe D. was real - he was so quick, efficient, organized, knowledgable, punctual, professional,hardworking, I can probably find another 100 words to describe him and I can tell you quite a few "stories" when D. went way above and beyond just to get the results I wanted. And the only thing that sometimes hurt me in D. was that he is soooooooooo honest and he wouldn't do anything which doesn't comply to his moral values, His honor is just huge, and I certainly respect it a lot.I live in so called "depressed" area in CA, and I had cash on top of everything else (credit score, job, etc.) and I had NIGHTMARES for a year I was going through the real estate process that D. could leave me and I'd have to again deal with slow, lazy and unprofessional real estate agents.

K. is D.'s wife of 25+ years, they have 4 kids and are still totally in love with each other.And we all are of the same age. And I have tons in common with K., and I really liked her personality.

My mistake - I assumed that if husband's work standards are extremely high, his wife's standards are also high, and it took me a while to figure out I was wrong.

I'm very much interested in details of the idea "cash for keys", and certainly I'd pay $500 and even more to get the house back in good condition.

The problem is that as I found out it would cost me lots of money to fix the house if I need it.

The house itself was built in 2008, 2200+ sq.feet, 3 bedrooms with loft, and I got it in immaculate condition. The previous owners paid over $450K (in 2008) for it, so I got a deal by paying cash, short sale etc.(a steal?)

However it is a 2-story loft, very tall ceilings (10" everywhere and probably 20" with loft). I got a quote with another house with the same floor plan - just to paint the house would be at least 5K because of special equipment needed. Carpets are new but they are almost everywhere... 2200 sq.f of floors with stairs...I was told it doesn't make sense to replace carpets in rental and it's better to go with cheap laminate, The best quote I got from contractors was over 5K - many stairs on top of square footage.

Beatiful cherry custom-built cabinets in the kitchen and all bathrooms (previous owner paid for extras) - I would probably be upset if they get damaged.

And I paid over 2K for backyard landscaping (on top of 180K) - I really hope the backyard is taken care of.

My question is how to get the tenants out without them trashing the house?

Let's say I agree they move out in a month, and I give them $XXX cash. What if they do not move out (and I do suspect they won't)? I'd be losing a month in rent and time to go ahead in eviction, right?

Thank you! I live in a "depressed" area, and prices for gas and RE and food and living etc. are much lower than in Orange county or Bay area etc. California is HUGE, trust me on that.Today I paid around 3.50/gallon for gas, it is high?

The problem is that I have a very busy lifestyle and have close to none free time and it's extremely difficult for me to take any time off work (to go to a court for eviction, to meet with attorney etc.). And time after work is usually very busy, too. And my salary is not high at all, I barely make ends meet and cover the rest of expenses with HELOC (and still own all this houses and look *wealthy* on paper, LOL).

But I feel very lucky to have a job in this economy in this area.

And I did my research - with 200K how can one support a 75 y.o. till the rest of her life? Paying cash for everything would just "eat" the money fast.. and then what? My worst nightmare is living together with my mom.

Stocks/bonds looked too risky for me and I wasn't familiar with them. MMs and CDs pay around 1% a year ($200 a month? My mom's house HOA are higher than that).I don't think I had too many choices, so buying a rental and hiring a professional to manage it and deal with all stress and me just watching money pouring into my bank account sounded like a wonderful idea to me, LOL.

Hi Tatyana - sorry to hear about such a bad experience. One option you can do is check with the California Real Estate Board and search for info on K. It should show if she is licensed and any disciplinary actions. Also check her husband. If they are on there, you could file a complaint through them.

As for "cash for keys" I work for a management company that handles receiverships, and we deal with some pretty distressed properties. We do cash for keys frequently. Basically we tell the resident that, regardless of payment history, we will give them x amount of money (in one case, $500) if the unit is in good condition and they move out by a certain date. You must have the keys in hand before they get the money. If they are not out, then we proceed with eviction.

Yes, it will cost you, but it gets rid of a problem. Get rid of K., get rid of D., and get rid of the tenants!! Good luck

It's a bit strange the D. is such a competent realtor, but K. seems to be so negligent and incompetent. You would think that D would realize that his professional reputation could be hurt by K's behavior.

In any case, just because someone is likeable or personable doesn't mean they are any good at what they purport to do.