Fired my Property Manager Yesterday / Questions on Next Steps

6 Replies

I am an out of state buy and hold investor located in Northern California with two single family homes in Arizona.  Yesterday, after three years with the same PM, I took the step to terminate their agreement.

The final straw came during a turnover of a tenant.  I inquired three times with the PM if there had been any damage found during their inspection of the property.  The PM did not respond at all, ignoring my emails.  

My October invoice arrived on Saturday and contains invoices for over $1,200 of repairs, fixes, and replacement (property rents for under $800 / month).  The invoice is itemized and contains dollar amounts all right under the threshold for seeking my approval (language in PMA stipulates approval for 'any one item over $300).

Furthermore, the PM decided to take all of the rental income from my second SFH (the owner's draw was, by sheer coincidence, within a few dollars of the line item invoice) to pay for the unapproved repairs, replacements, etc. The PM does this even though there is no bridging agreement between the two contracts allowing her to inter mingle funds.

I have worked with this PM for three years and have looked the other way, ignoring poor communication style, and questionable invoices, but could not ignore their egregious behavior in this transaction.

Moving forward, I am going to try my hand at managing the two properties remotely.  I have a network of contractors and handymen I've built up over the years and can just as easily arrange for them to service these two homes as the PM (without the markup, kickbacks and graft).  I also have a good attorney who could handle evictions if necessary.

The one gap I see relates to placement of qualified tenants.  Does anyone have recommendations for out of state placement?  I'm willing to compensate a local agent to advertise and show the property (or at least provide keys), and then screen tenants on my behalf.  Let me know your thoughts on 1)  the experience wit the PM, and 2) finding good leasing agents in remote markets.

Thank you in advance.

    Sounds like terminating their agreement was the right thing to do. Lack of communication is inexcusable. They obviously didn't want to talk to you until after the repairs were done and paid for. Did they deduct any costs out of the security deposit? Seems unlikely that there was $1200 worth of repairs considered normal wear and tear, in addition to tenant related damages.

    As far as showing the property, here's what I would do: You can advertise it and talk to callers about it. Find someone local that you trust, doesn't have to be a realtor. Can even be your handyman and pay them to meet with lookers and just let them in and lock up afterward. He/she can just tell them that if they have any questions, to call you. You can screen tenants using RocketLease.com or something like it.

    I recently just got rid of my property manager on my last two properties as well and do not miss them one bit.  I have been managing my other properties for years and it is not really that much work.

    I recommend using a local realtor and pay them 3/4 of a months rent in commission (they can split half with a tenant's agent if appropriate) to handle any showings and collect paperwork. They can also take care of the lockbox and put it in the MLS for you. I have found that MLS brings in much better qualified tenants and when tenants work with an agent they usually go through some type of pre-screening.

    If you do not want to go that route you can put ads in the local area through craigslist, etc. and only allow prospective tenants with agents to see the property so that they can admit themselves as necessary.  I do not recommend that you give out the lockbox code to anyone but a realtor though as you do not want random people having access to it.

    You can use National Tenant Network or RentPrep to screen tenants and find a copy of the local standard lease application and contract to use.  Make sure that it meets your needs and do not be afraid to modify it if needed.

    Mike - Where are your 2 properties?  I may be able to help you with referrals for your PM or agent needs, but I am basically only familiar with the southeast valley - Mesa, Chandler, Tempe areas.

    @Arch Jeffery   Properties are located in Tucson.

    @Michelle L Thank you for your comments.  I agree that good and timely communications are essential.  That is a key part of why I was paying 10% of rent plus other fees to the PM.  With that lacking, it became impossible to overlook the other aspects of their service that was less than ideal.  The PM with held approximately $500 from the tenant's security deposit in addition to the fees they charged me for the repairs which were never discussed.  

    Hi Mike.  What a pain in the butt.  Unfortunately I hear these cases all the time and it really gives us dedicated property managers a bad name.

    I suggest handling the property management yourself and I agree with Christopher to use a Realtor to lease your rental and screen applicants -- you should approve the final applicant and conduct a phone interview with the applicant  prior to entering into a lease agreement.  Collect your own rents and pay the bills. If you have someone in the area that could perform a site inspection every six months would be great.  Plan to visit your property at least once per year if possible and conduct site inspections. Find a great handy person who can do minor maintenance repairs and who will be available for emergencies after hour calls. Find a good plumber and other vendors that will be on hand when needed.  Keep this list of number available at all times. Residents should call you directly for any matters -- which should be minimum and easy breezy.

    Also, I suggest contacting  and networking with at least 2 to 3 neighbors in the area and start a neighborhood watch group to keep informed about your property and the community.

    Good Luck!