Saved my self $1000 yesterday, questioning the PM

20 Replies

Last week we had a tenant move into a new property, now I think we can agree as fellow landlords that it's pretty standard that when someone moves into a new place there is always something that needs fixing. So I was prepared or so I thought....

Prior to the tenant moving in they did an inspection on the place. They listed items such as:

1. Kitchen light not functioning.

2. Bedroom light only stays on when holding switch.

3. Trash in yard.

4. Fix counter (there was a blemish in the counter they wanted to fix)

4. One tile in drop ceiling in kitchen fell down due to leak in bathroom (uh oh)

* Number 4 I was very familiar with as I had an issue with a pipe before right where they were saying it was leaking (which also is right next to the toilet, this matters)

Anyways so tenant proceeds to move in and the first day or two I get a call, "Hello Mr. Bahay the tenant has called stating the toilet is leaking. Do you want to send your guys or we can send our own?" I was super busy that day and didn't want to deal with it so I said "send your guys."   

Next day rolls around I get another call from the PM. "Hey Mr. Bahay we sent our guy out there and keep in mind this is a guy that can do it ALL he will take care of all the issues that we found in the inspection and the toilet." My response, "Uh...yeah ok sure (I had forgot about the other issues my focus was the toilet) what's the price to do it all." She replies, "It's only going to be 1260, that's a very good price."

I will skip out on the remainder of the back and forth to keep this short but you can imagine I was taken back here I was thinking at most 300 bucks to fix the toilet and BAM hit with almost 1300 in fixes.

I asked her what was each price for the work, as in I wanted a itemized quote. She didn't have one and had to get back to me.          

She got back to me an hour or so later with the breakdown.      

1. Kitchen light not functioning. - $180

2. Bedroom light only stays on when holding switch. -130

3. Trash in yard. (by passers throwing their trash on the floor) - $150 

4. Fix counter (there was a blemish in the counter they wanted to fix) -220

5. Fix 1 1/2 bathtub pipe and Fix toilet - 580 (these items were grouped together which was kind of suspicious to me as I never saw proof of leaking bathtub, they even mentioned having to possibly replace the toilet lol)

Needless to say my BS radar started going off. As no one could tell me how these numbers were accurate and what were the actual problems. Both electrical issues were more than likely just two switches needing to be replaced....which would of equated to $310 just to replace two light switches.

For anyone that has been a landlord long enough knows 90% of the time a toilet leak at the base is either it is loose or the was ring is bad. His quote included just changing out the wax ring....the material cost....$87....that's one expensive wax ring.

So I told them I will send my guy don't worry about it. I had my guy call them up and schedule a time to go out there. Couple hours later he calls me up says there is no leak from the bath tub, the toilet it's self is fine but there is a leak and he was going to replace the wax ring. The kitchen lights are working fine and the tenants said they would take care of the trash outside. So right off the bat this is 500 bucks in bogus charges (kitchen light, leaking pipe and trash)

So if you are still following along I'm pretty certain the PM was taking advantage of an out of state landlord. I don't honestly think it was the PM personally I think it was their contactor, they told them what were potential issues and the contractor saw $$$ signs and went with it, after all who is going to question them. The PM took their word and passed it on, because after all they are only PM's not contractors.

This is why I think it is so important for landlords to take the time to learn the basics of every trade. I by no means am a amateur I'm pretty advanced in construction but even knowing just the basics would of made most peoples BS radar go off, saving them money. I also think it's important to know what the average prices per trade are, but that comes with experience.

So what was the final cost?

My guy charged me $203 dollars including materials. (he also fixed something else that wasn't on the list) which I don't know about you but that sure as heck beats $1260

Now what to do with the PM? would you address this or let it be? I am on the side of sending a stern email letting them know their numbers didn't add up and there was false information provided. How would you proceed?

Tariq

New to landlording here! Definitely sounds fishy to me. I'd say you have to call them on it. I'm considering using a PM if I look to buy out of state, would you say this is a frequent outcome in terms of using a PM or not so much? Curious because I've heard similar things

Why not ask and have them explain the difference between their bid and your final invoice, depending on that convo go from there.

@Christina Tate After 5 years I have only really had this issue pop up twice, two different PM's. Both times were when the relationship was new. It's almost like they test you to see what they can get away with. The last time it happened I had a very heated phone call with the PM, and I never had another issue with it  since and we have been steady for 4 years. This PM that I am now running into issue, is a very big corporate company of which I will not name, this may be a thing for them. They probably don't deal with a professional landlord to often they mostly deal with the "I have to relocate so I will rent my house landlord."

@Matt K. Definetaly will be doing that at the least.

i agree, call them out! Go ahead and shift blame to the contractor and suggest they seek an "alternative" person, more sympathetic to the challanges of owning rental property, and that now you feel it necessary to fully document future issues(photo's, video) if their people handle any other repairs.

The property manager is only partially responsible, they didn't know what actually needed repair until they sent the contractor out there.  Just as you didn't know for sure what needed fixing until you sent your contractor out there.  The overpricing on things that needed fixing should be the PMs responsibility to catch.  Bills for things that didn't need fixing are the result of a dishonest contractor.

@Tariq B. Good job on trusting your gut and having the balls to speak up and not just take the charge. I feel like many people are way too trusting with PM companies and don't really pay attention. I always like to say trust but verify and that's exactly what you did so good on you. In my opinion I would send them an email and tell them what happened and state the facts. See how they respond and go from there. They may be ignorant to the fact of the matter and the contractor or whoever could have just did that for some easy money. As much as that can be true, I find it hard to believe a decent PM company with experience doesn't know the cost of things and what needs to be done to fix them. The fact that they work with people like that should be a red flag. I have seen way too many people get screwed by a PM company because they overlooked one small thing and thought it was nothing and soon enough a bunch of small things start adding up or boom they get blinded by something down the road. After all is said and done they look back and realize that small thing they overlooked was a sign of bad things to come. Trust your gut on this! Are they honest, hard working people? Was it an honest mistake or does this seem too fishy to you? Is this the only time this has happened? Who was really at fault? I would let them know about this and see how they react, and what they will do to make sure it never happens again. Good luck and thanks for the in depth and informative post!

Originally posted by @Aaron Klatt :

The property manager is only partially responsible, they didn't know what actually needed repair until they sent the contractor out there.  Just as you didn't know for sure what needed fixing until you sent your contractor out there.  The overpricing on things that needed fixing should be the PMs responsibility to catch.  Bills for things that didn't need fixing are the result of a dishonest contractor.

 I disagree here.  It is the property manager's JOB to know what needed repair by getting in her car and driving over there.  If she is just hiring out a contractor to do the inspection, the owner could have picked a couple of contractors off the internet to drive over and give estimates.

What value is she (or her company) adding by taking a message and passing it on to the owner?  Handling these situations is why they collect a fee every month.

Stories like these have me more and more considering starting my own property management business....

@Tony Salemi I agree that they should know what needs repair if it is obvious, but most PMs are not going to drive out to a rental for a $100 repair that they would not be able to recognize, let alone fix like a leak.  (I wish they would).  I also think that most PMs try to form trusting relationships with contractors who they can send out to accurately bid a job this just seems like a bad contractor who took advantage of the PM and tried to take advantage of the owner.

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Call them out.  Most of these PMs advertise that one of the benefits to their service is their connections to good handymen/contractors to complete repairs.  PLUS, they should be getting it at good pricing because, in theory, they are giving these people volume work.

I would push back on their bid and ask them why it wasn't properly vetted.

Originally posted by @Aaron Klatt :

@Tony Salemi I agree that they should know what needs repair if it is obvious, but most PMs are not going to drive out to a rental for a $100 repair that they would not be able to recognize, let alone fix like a leak.......

 Understand I'm not trying to call you out here.  But then what are they doing to ear their money?  

If they don't know about the toilet-fine.  But

1. There was no leaking bathtub pipe at all.  Simple visual check since the tile was already missing.

2. A PM should have a basic understanding of costs that occur at many properties.  Landscapers charge $150 for "spring clean ups" that take more than an hour.  To pick up some litter and toss it shouldn't have been more than a $25 surcharge on their next maintenance.

3. This was on a turn over, so the PM should have been there to at least show the property or interview the tenants.  It didn't necessarily require additional trips.

4. The kitchen lights worked fine.  This doesn't require specialized skills or knowledge to determine.

To the OP.....

Maybe they were testing you.  Well, it looks like you passed.  And they failed.  Replace them.  Either unqualified or untrustworthy.  Both deal breakers.

@Tony Salemi I agree with you for the most part the property manager SHOULD know these things and would absolutely confront the PM if it was their usual contractor.  If it was not their usual guy I would cut them a bit of slack and make sure they don't hire the same guy in the future, and I'm sure the original poster's friend might appreciate the referral.

I recently had a similar situation with an electrical box the contractor charged too much, the PM knew the box wasn't working but not much more than that.  The usual electrician was busy so they hired it out to a different contractor, we basically told the PM that the contractor overcharged and that we would like to avoid using that contractor again.  Other than that the PM has been great especially compared to the previous PM.  Moral of the story being if it is a pattern of behavior for the PM then kick them to the curb but if it was a mistake when working with an unfamiliar contractor make your feelings clear and your PM will learn.

@Tariq B. is the handyman part of the PM company? Some contract it out, some have it in house. If it is in-house I would have very strong words with the PM and consider leaving. If they are outsourced, I would still have the discussion with the PM. They may be just another lazy agent that doesn't know anything about the pieces that make up their field. They can get rid of that contractor and there is a chance that they'll improve.

Really, it's up to you to figure out if this was intentional, internal, and repairable. Best of luck; it is not always an easy decision.

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In my experience, PM's stretch the numbers in order to maximize the amount of "time" they are spending and the amount of money they can bill you for. With my first PM I was receiving bills that were far and above the cost of repair. I presume that their other clients were either unaware of the average costs of these items, or that they simply didn't care to call them out - but I was not going to let that slide. As a Real Estate Investor you must protect your investments and make sure you are getting a maximum return for the money & time you spend. The PM works for YOU, not vise versa. I now manage my own properties and keep very detailed accounts of how much I spend on different things.

*Sorry not a very gracious post*

I am very happy to live near my rentals and not rely on a third party. I am sure this site has conscientious PM’s- but my take is that PM’s as a whole laugh at any fiduciary duty they owe their clients. They will seek to maximize their profits and scratch the backs of the people in their network that they enlist.

With that being said- don’t they require CO’s where you are? If I paid out the nose for a PM, why the hell is there any issue with a new rental??? It should be fully up to par.

You think you saved $1000? You did not. You have paid a PM for not doing their job up until you caught them. 

You then did what every other landlord who is not paying tens of thousands of dollars to a PM does. You responded to a tenant by addressing their concerns by contacting a handyman.

I can only imagine the caliper of tenant they are renting to that would accept a rental in such a disheveled state. They are systematically driving the value of your rental down with each new tenant. So they are costing you on the front end, back end and long term. Yikes.

I fully understand that some owners have no choice- but you should re-evaluate the true cost that this scumbag company is costing you- rather than what you believe you are saving.

Account Closed  You hit the nail on the head.  Handyman charges outrageous prices and gives the girl at the PM office a couple hundred bucks for helping him with the scam. 

Unfortunately there are some bad PMs who take advantage of people and there are good ones that really do care about their clients and their properties.  This is true in any industry.  Once you find the good people you stick with them.  

As a PM, since this was a turnover, I would have expected most/all issues to be known already and addressed before the new tenants moved in.  Does the PM do a MoveIn/MoveOut inspection?  Though, there are often still a few items that pop up.  BUT I agree those prices sound very high and the PM should have vetted those before  passing them on to you.  A good PM is going to watch out for your best interests!  All the time!   One our slogans is:  "An owner's best interest is our best practice"

I'd have a conversation with the PM and find a new one if needed.

Thanks for the responses everyone I like hearing all your experiences. To the best of my knowledge the contractor is not related to anyone in the company, after all this is a nationwide property manager so I'm not sure how they choose their contractors. I have 3 different property managers spread over 3 states and manage some of my own. While I would like to not have to deal with any PM's in my situation, it's just not feasible. I don't really emphasize much blame on the PM as I mentioned I think it was more or less an unethical contractor. But I do think there should be some accountability on the PM, which judging by some of the responses others feel the same way too. As some mentioned they should have an idea of what prices should be. They did do a pre inspection and that's when they found all of the issues (some non existent) but the leaking toilet. I am leaning on the side of that fact that their inspector is either inexperienced or lazy. Which will also need to be addressed. I have yet to get to bringing it with them but I will sure to. Right now I am taking care of one eviction and then a tenant who fell out bed and broke her hip, who needs a ramp when she gets out of the hospital. But I'll let you all know how the conversation goes.  

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