How my skepticism of property management companies increased.

Over a week ago, I had a fourplex under contract. However, due to the condition of the property, I cancelled the contract. Instead of dwelling on the emotions of what could have been, I want to focus on the lessons I learned.

There were two root causes of the discrepancy between the condition of the property as the real estate agent presented it in the MLS, and how the condition of the property was during the inspection. One cause was the energy provider, APS, had violated the building code in significant ways, that the property owner, would have no power over, because APS owns the power lines. I am hoping to address this in a later post.

All the other reasons had one actor that either caused, or could have prevented the property damage: the property management company. The property had recently been renovated, and the interior of three of the units, while not ostentatious, was classy, clean, and well maintained. I would have had no qualms about living there, and was planning to.

However one unit, had a disheveled tenant. His unit was trashed. It had a destroyed bathroom counter, a damaged door, damaged brand new tile, and his electricity had been cut off.

For all this he had been rewarded with a year long extension of his lease, which I would have gone on for over 315 days of the time I owned the property. From the stench of the unit, which I give my word of honor, was very severe, I doubt the property management did an inspection prior to extending the lease.

There were other examples of neglect that appeared to be undermining the owners investment. For instance there was a laundry room. However, it was overrun with termites, graffiti, and cost it utilities more than double it received in income. Yet still the property management company did not recommend shutting down the money losing proposition.

Another challenge was the roof. There was mild roof damage. Every fourplex, in either direction that I looked at on the street, from street level, perhaps eighteen in total, in order to confirm there utility connection was also not compliant with the building code, had PCP pipes, that moved the water from the roof, to enable drain off, except that unit. Had they worked with the owner to make that very affordable, and sensible upgrade, they could have significantly reduced the property damaged caused.

The aim of this is not to say never, under any circumstances, ever use a property management company. But rather, to say, this experience confirmed my skepticism that property management companies provide enough value to warrant their large fees. This experience has increased my skepticism, and caution, toward the whole proposition.