Home Warranty and Property Manager - advice needed

[Alex Schwartzman]

Hello,

I recently bought a turn key property in Indianapolis through a member of this forum, this is my first out of state investment and I am not sure what I can and cannot expect from the property managers, so I am asking for advice.

Two weeks ago I received the following email:
“Over the weekend, the sump pump at your property failed causing the basement to flood. Our contractor had to remove the water, remove the carpet and vinyl, set up box fans and humidifiers to dry out the area and install new sump pump. The cost so far is $454.84. Once I receive the estimate to replace the flooring I will forward to you for review and approval.”

I asked PM about the details on how it happened, they said that they would figure it out, but I had’t heard from them for more than a week. 

My first question is it normal not to receive any communication from PM for a whole week, especially after the accident? I personally think is unacceptable, but would like to hear what the experienced investors think.

I have another question.
I have a home warranty insurance, and it covers the cost of pump replacement.  

The PM was supposed to contact them, but she didn't do it, so the home warranty doesn’t reimburse for work that is done without their approval. PM said that they didn’t contact home warranty because it was an emergency and they had to act quickly. PM  first agreed that Home Warranty should have been called and my charges would be removed, but then they changed their mind and said that they had responded on an emergency basis, and I was responsible for all charges.

My second question: should I be responsible for the cost of pump replacement?

Any recommendations will be appreciated.
Thank you in advance. 

[Mike D'Arrigo]

Originally posted by @Account Closed:

Oh no, not the dreaded "emergency" clause.  My daughter was thoroughly ripped off by a PMC with this one.  They emptied her funds and never told her until they needed more.  She fired them after 6 months, and they agreed to not charge her any termination fees and she agreed not to sue them.  Cost her about $6,000 in ridiculous secret "emergency" repairs over that time frame.  Just makes me sick to think about it.

I suggest you get right on this.  Send them a notice in writing that ALL maintenance must be done with your permission and approval first, and that you will take them to small claims court, if necessary, for the cost of the pump and any unreasonable maintenance costs they've already spent money on, if they don't credit your account yesterday.

Nip it in the bud right now.  And honestly, I'd start looking for a different PMC and seriously consider firing this one before they destroy any hope of a profit.

I'd suggest looking for a realtor willing to manage your property on the side for a flat fee of say 15%, and they only get paid if/when rent is collected - and you make all maintenance decisions.

Not all PM's are crooks and out to rip people off. It is impractical to require ALL maintenance to be done with the owners permission and would be a disservice to the tenant. That's how you lose tenants. When someone's basement is flooding or they have a burst pipe, you can't always wait around to get permission. Tenants have an expectation that these kinds or problems be handled immediately. These are unfortunate circumstances but they do occur, I think the suggestion to use a realtor "willing to manage your property on the side" is bad advice. Property management is a serious business and you want someone who does this as a business--not dabbles in it on the side. 15% would be an exorbitantly high management fee and most PM's only charge on collected rents anyways. Personally, I think insisting on making all maintenance decisions is not a good policy. Do you really want to have to approve a $50 charge to fix a dripping sink? That's micromanaging. Most people will authorize the PM to do repairs up to a specified dollar amount and anything above it needs approval.