Another reason you should have a property manager

16 Replies

backstory: bought a house in Charlotte, NC with 100% financing back in 2006, lived in it for 3+ years, became rental after that. No equity so can't sell. Property became vacant a few months ago, I now live in Clearwater, FL, have managed it myself from afar. 

Between my partner and I we manage more than 150 properties so I figured I could just manage another one from far away. I can do my own background check and lease and online rent collection. I had my parents post a for rent sign and I fielded all the calls. Found someone who wanted it, he met them at the house to give deposit to hold the house. Still didn't have lease in place. While there he asked to have access early so he could paint, someone could just meet him later that day to lock behind him. He was a nice guy and my parents didn't know any better, and didn't ask me, just told me after the fact. 

Long story short finally got lease, took forever to get money to start rent. I'm in town for the holiday and plan on meeting him there to get fully paid and give him the keys. When I get there he hands me keys and tells me he has already changed the locks, yesterday so he says. No one gave him a key, turns out he used a universal garage door opener when he painted to give himself access before the lease was ever signed. That was a month ago! I was astonished but didn't mention it in person yesterday, I'm not confrontational and he is much bigger than me. Basically he has had access for the last month even though I never permitted it and he didn't fully pay until last week. 

What do I do now? (Besides never let my parents act as my PM again). I don't want to evict, costs money plus missed rent. I barely break even if that ($850 PITI payment, $80 quarterly HOA, $1000 rent). He has been very elusive and slow at responding and has already lied about rent check being mailed when it really wasn't. Do you just rip him a new one over the phone and then go with ZERO tolerance from here on out? No leniency on late payments and threaten eviction if payment is even one day late?

Let this be a lesson to all of you who try to manage property from out of state, you might save money on the front end but risk headaches and losses and costs on the back end. 

Would love to hear some opinions on what to do from here. 

@Brandon M.  

Sorry you have had a bad experience. Honestly I would take that your system in obtaining renters long distance is broken not that the idea is awful. If you had better systems and policies in place you would have down much better.

We manage across the country with no problem. On the other hand our helpers, do nothing more than open the door. They do not ask business questions to our helpers because that is not appropriate. This also allows us to control the process and make sure information that we are not okay with doesn't happen. We do NOT accept a deposit without a lease. Keys aren't give without first months despot etc. Managing long distance means you need to be a stricter landlord because you don't have your "rprexense" keeping things in line. 

Elizabeth mentioned better practices which should address your issues. Zero tolerance isn't legally possible, you can have a tenant pay late every month, 11 days late and doubt you'll be kicking them out until the end of the lease. Frankly, I like late fees and don't mind collecting them.

Biggest advantage to a PM is tax angles, a passive income, next advantage is another shield of liability, they are insured and often bonded, if they mess up and you can hit them up for some 10M liability matter, I doubt you'll be losing other properties of have cash accounts seized. :)

Your systems are defunct, I say that out of love for you and would also say that to a stranger. You have some takeaways here and others can learn from your mistakes.

1. Only you or a professional should allow a prospective tenant access to see a property.

2. Only you or a professional should collect money on your behalf 

3. Document everything, particularly a notice for him to cease and desist alterations to your property 

4. Your potential tenant trespassed

5. Your potential tenant altered your property without permission 

The last two points are red flags in my book. Couple that with the fact that you have been dancing around for about 6 weeks and rent is not paid in full. Please tell me you have not accepted partial rent...

What is occurring is a set up where he runs the show, not you. Considering that this is your house this is not a good set up. You don't have to be a jerk but you can fully explain to him the reasons for your needing him to not alter your property and to pay rent on time. 

Just like with children; you train your tenant or your tenant trains you.

I would be very strict about it. Find a new one. Where do you want this to end if it starts like this? Getting access this was is almost criminal.

Of course I didn't accept partial rent, but the more I think about it the more mad I get. It is definitely borderline criminal, deceitful, taking advantage of my parents who didn't know the difference. 

I can certainly evict but again, the property barely breaks even if that so I am trying to avoid missing out on rent for 4-6 week while I evict, plus the eviction costs (especially since I will have to pay someone to do it all for me, appear in court, etc), plus any missed rents while I get it rented up again. 

That is why I am torn, I am pissed at him but I NEED to have rent coming in so I don't have to come out of pocket for anything with this house. 

Just wanted to add that while I understand you are venting your anger on here, you need to be extremely professional in dealing with this tenant.  The "rip him a new one over the phone" statement will likely not work and also may get you in more trouble.  If you manage more than 150 properties with your partner, you likely have good systems in place already to handle trouble tenants -- proper notices, attorney, etc.  I believe your emotions are in the way here as anger and fear of an eviction is not the way to handle it.  I'd keep it all in writing, pay or quit, timely filings if necessary, strictly follow lease terms and landlord tenant rules and don't let tenant see anger in any of it or he'll use it against you.    He might shape up and pay timely and follow the rules once he knows you will follow proper procedures and expect the same from him.  If not, it's better that he goes.  It is an unfortunate situation, but don't let your fear of eviction and lost rents allow you to lose your common sense business practices or you could lose even more in the long run.  

Maybe "rip him a new one" is not the correct term for what I intend to do. I of course will be very professional about it, no profanity, but I will be very stern about what will go on and what will not be tolerated. What he did is borderline criminal and I plan on making him aware of that. He has shown a tendency to not be truthful in the short time I have been dealing with him, multiple times of him telling me he was sending full rent (before I was to give him the keys) only to have a check for 1/2 month rent in my mailbox, another time of him telling me a check was in the mail only to tell me a week later money was sent via Western Union. 

What I also discovered this morning is that the power has been in my name the whole time (which it was supposed to be until last Saturday when I met him to give him access to the house). Since he decided to give himself access a month ago I am going to inform him he is responsible for 100% of the power bill. 

This is the only property I manage in North Carolina so I don't have attorneys/agents/PMs, the rest of my properties are in Florida so I do have the appropriate people for my properties here. 

If you give a tenant an inch they will take a mile, that is the moral of the story. 

Originally posted by @Brandon M. :

This is the only property I manage in North Carolina so I don't have attorneys/agents/PMs, the rest of my properties are in Florida so I do have the appropriate people for my properties here. If you give a tenant an inch they will take a mile, that is the moral of the story. 

You may be visiting your parents more often now! As you know, nothing beats having "eyes" on the ground. You can still manage it from far away if you find someone in NC (other than your parents) to regularly drive by and keep a check on things. Visit the property yourself at lease quarterly. Thanks for sharing your story.

Is your new tenant on a lease or MTM agreement? The advantage of a MTM is that the rent can be raised sooner to cover extra costs or extra risk. Rent raises can encourage tenants to choose on their own to move. A REI colleague of mine in Vancouver raises the rent by $5 each time a tenant gets out of hand and they get the message real fast and either shape up or ship out.

Next opportunity you have to meet with your tenant, I would suggest that you sit down and go over the entire rental agreement again. Make a copy of it and highlight every violation to date, for emphasis, and address each one. Have him initial each clause. If it were I, I would also take along a buddy as a witness and for extra protection. The tenancy is still young, so you can most likely turn this around by being polite, professional, firm, fair and swift. 

This would be a good time to review your notes from your previous tenant screening and/or dig deeper with the background check. You need to have a clear idea of the tenant's history and mentality. The tenant may be a bad apple (rotten to the core) or may have just dropped off from a different kind of tree and is exercising some free spirit on a loose rein!

@Brandon M.  Another thought. The rental agreement that you and he signs can show the date he took occupancy as the date tenancy began.  If it doesn't already show that, then amend it to reflect the date he actually gained access and started to occupy. Once this is in writing and signed by all parties, then work on getting compensated for the extra days he was there, for both rent and utilities. Everything is negotiable!

This sounds like that movie "Pacific Heights".  Hope you actually get some money out of this tenant and they didn't do any other "alterations".

Unfortunately he is on a 1 year lease and not MTM, so an increased rent cannot be done until this time next year. There was not really anything in the background check that drew red flags, that is the frustrating thing. 

And in this case paying the power bill will not be negotiable, you want to grant yourself access to my house prior to me granting you access, then you will pay for 100% of the power bill that was incurred from day 1. 

I will keep you updated once I finally talk to him, he seems to be conveniently unavailable/slow to respond when I try to reach him regarding late payment, etc. 

Evict.  He will probably never respect you or your property.  Your heart will thank you for the decrease in stress when he's gone. 

I was going to say evict, but I really like @Bill Gulley  's suggestion.  He may be a problem for you, but until he does something blantantly wrong like breaking the terms of the lease or committing a crime that you can prove, I think your hands are tied.  This is coming from a person who has a PM, so my experience with dealing with tenets is lacking :P  I'm an introvert and hate dealing with people's crap...

Originally posted by @Brandon M. :

... I don't want to evict, costs money plus missed rent. I barely break even if that ($850 PITI payment, $80 quarterly HOA, $1000 rent). He has been very elusive and slow at responding and has already lied about rent check being mailed when it really wasn't. ...

Would love to hear some opinions on what to do from here. 

Sounds like a bunch of bad reasons to keep a bad actor IMO.

As a PM, you should know that the owner must be able to withstand prolonged financial vacancies, especially those where the property remains occupied by non-paying tenants while an eviction is ongoing.

Originally posted by @Steve Babiak :
Originally posted by @Brandon M.:

... I don't want to evict, costs money plus missed rent. I barely break even if that ($850 PITI payment, $80 quarterly HOA, $1000 rent). He has been very elusive and slow at responding and has already lied about rent check being mailed when it really wasn't. ...

Would love to hear some opinions on what to do from here. 

Sounds like a bunch of bad reasons to keep a bad actor IMO.

As a PM, you should know that the owner must be able to withstand prolonged financial vacancies, especially those where the property remains occupied by non-paying tenants while an eviction is ongoing.

 I certainly know an owner must be able to withstand prolonged vacancies but as I mentioned before, I don't have any margin in this property. It was purchased at the top of the market and lost value in the late 2000s, I still haven't quite made it back to even yet. I haven't really been able to put any aside to cover vacancies. 

I am keeping him around, I have accepted rent for December and can't really justify the reason for kicking him out. I will not tolerate any late rent from here on out though. 

Originally posted by @Frankie Woods :

I was going to say evict, but I really like @Bill Gulley  's suggestion.  He may be a problem for you, but until he does something blantantly wrong like breaking the terms of the lease or committing a crime that you can prove, I think your hands are tied.  This is coming from a person who has a PM, so my experience with dealing with tenets is lacking :P  I'm an introvert and hate dealing with people's crap...

 Oh he just made it much easier for me to evict now. Got a call yesterday from the natural gas company, turns out he turned on his own natural gas weeks before having his daughter call the company to have it put in her name (was told he has past due bills with the gas company so that is likely why he had her call). AKA he was stealing gas and they will likely be proceeding with prosecuting. 

So of course now he is not responding to calls or texts, so I am now in the process of evicting him and getting a better tenant in there.