Being taken advantage of by my property manager
Rental Property Investor · Park City, UT · Member since 2016 · 678 posts · 531 votes
Being taken advantage of by my property manager
Most Popular Reply
Ah, I get it. So the first PM is being fired and the second PM is doing a good job. The first PM obviously understands that this is the end of the line for them and is now carrying out a get-what-you-can action with nothing to lose,
This I definitely have some good advice for.
I was once on a bus driving on a crowded highway and the bus driver, inching along in traffic, didn't allow this dude in a hot car to come out of the parking lot he was in. The guy beeped his horn, got out of the car, strutted to the bus's door, and banged on it.
The driver opened the door and said, "What? What's your problem?"
The dude climbed on the bus, reared back, and punched the bus driver in the face as hard as he could, stepping into the punch. He then turned around, got into his car, and buzzed off down a side street, cool as a cucumber. License plate showing, assault and battery, didn't matter.
The bus driver was in his late fifties, early sixties. He fell out of his chair. Apparently, the guy had something in his hand to help along with that punch, his keys, a roll of quarters, brass knuckles, something. The driver claimed later he lost 70% the hearing in his right ear and half the vision in his right eye.
I know this because I was the only passenger on that bus who stayed with the driver. I was in Greece in 2006, and everyone else on that packed bus, maybe a hundred and fifty people, all had better things to do and jumped off that bus before the cops came. A miserable fact I will always have to bear witness to when speaking of my fellow Greeks.
The first thing the bus driver said when he came to was, "I'm going to get that guy. I'm going to find him, and I'm going to kill him."
And I said to the bus driver, "I understand and appreciate how you feel. Don't say anything like that to anyone else, especially the police. Later, you'll be able to make better decisions about this and carry out those decisions. Right now is not the time."
So my advice to you is very simple, Tony. I understand and I appreciate how you feel. Right now, there's nothing you can do at this time. You should definitely research the right language to put into your contracts in the future. I like Matthew's suggestion, too.
Later, you'll be able to made a good decision about this particular incident and carry it out.
51 Replies
- 7yTheresa HarrisPro MemberMember since 2019 · 15k+ posts · 11k+ votes
How much money are you talking about? If you are now managing it yourself, just move on and think of the money you are saving by not paying PM fees. Make sure you also get the deposit back from them as you will need to pay it to the tenant when they move out.
If the PM is good and they placed a good tenant, then they really don't have to do much every month just collect the rent.
I really wish I had a dollar for every thread on "my property manager is ripping me off" that I've seen in these forums.
I wouldn't be able to get over it, Tony. I would start trying to figure out how to make an arrangement with an honesty property manager that allowed me to keep more of my money. I would read books on long-distance investing and property management and ask questions here on BP until I found a solution, or a series of solutions. And then, after I scaled up as much as I could, I would write a book on it called, "The Definitive Guide To Not Getting Ripped Off By Your Property Manager."
I don't think I'm particularly original in my thinking. So the fact that there IS no such book and yet there's such a plethora of these threads here on Bigger Pockets makes me wonder.
- Rental Property Investor · Park City, UT · Member since 2016 · 678 posts · 531 votes7y
I should have mentioned that this is a 20-unit apartment complex. The management fee is several hundred dollars. I am not managing it myself...had to hire another PM, who will be charging me at least a portion of the month. That's part of the rub for me...being charged twice. The new company completely deserves the money as they have been working very hard and we are seeing results already. I suggested to the prior company that they might bill me for half the normal fee, which I felt was generous. They, however, feel deserving of the full fee.
- Rental Property Investor · Park City, UT · Member since 2016 · 678 posts · 531 votes7y
@Jim K.haha...I think you are onto something. I used to self-manage my SFH's and developed really good processes and systems. But when I scaled up from 8 SFH's to a 20-unit apartment complex in another city I felt it was time for PM.
And you are right...all I ever found was complaints about property managers....which is one of the reasons it took me so long to make the switch. I definitely learned a ton through this first experience and think I could author a few chapters of that book.
- Real Estate Broker · Chicago, IL · Member since 2015 · 1k+ posts · 2k+ votes7y
Originally posted by @Tony Castronovo:
So I recently ended a very bad relationship with a property manager (large company) on the 11th of last month. I've been waiting for everything to clear on my ledger to get my final distribution. Earlier this week I saw that they charged me a full month's management fee (we were on a flat monthly fee), despite that they only managed the property for 11 of 31 days. When I questioned it they said they deserved it because they collected tenant fees for the month. I claim that they only worked 1/3 of the month....and to be honest, if tenants are paying without having to chase them down then there isn't much to collecting rent.
The problem is that they have my money and just deducted it from my account. It''s not like they sent me a bill and I have the right to refuse payment. I have absolutely no leverage here. It's obviously not enough money to take it to court.
Do I just need to get over it? Or is there something I can do? Is there anything you put in your contracts to avoid/mitigate this situation?
I understand the principal here. But I'd just get over it considering there is no resolution available. You aren't going to get your money back by making noise about it - why would they refund if they've already lost you as a client? If anything this experience should set in concrete that you made the right decision to change management companies. As a positive spin, consider all you are gaining by not having to deal with them any more.
In the future, consider the timing of your transition between management companies. Try to get the new one setup a week or 2 before month's end to begin collecting rent as of the first, so that way the old company doesn't have a chance to hold your funds hostage.
- Rental Property Investor · Park City, UT · Member since 2016 · 678 posts · 531 votes7y
Kind of how I am starting to think about it @Matthew Olszak.
I will say though that the timing of the transition was exactly as you describe. I waited until after we collected everything for March and gave my new PM enough time to get things setup before April payments were due. Maybe the only thing to consider was the timing of my owner distribution. I might have overlooked that.
Ah, I get it. So the first PM is being fired and the second PM is doing a good job. The first PM obviously understands that this is the end of the line for them and is now carrying out a get-what-you-can action with nothing to lose,
This I definitely have some good advice for.
I was once on a bus driving on a crowded highway and the bus driver, inching along in traffic, didn't allow this dude in a hot car to come out of the parking lot he was in. The guy beeped his horn, got out of the car, strutted to the bus's door, and banged on it.
The driver opened the door and said, "What? What's your problem?"
The dude climbed on the bus, reared back, and punched the bus driver in the face as hard as he could, stepping into the punch. He then turned around, got into his car, and buzzed off down a side street, cool as a cucumber. License plate showing, assault and battery, didn't matter.
The bus driver was in his late fifties, early sixties. He fell out of his chair. Apparently, the guy had something in his hand to help along with that punch, his keys, a roll of quarters, brass knuckles, something. The driver claimed later he lost 70% the hearing in his right ear and half the vision in his right eye.
I know this because I was the only passenger on that bus who stayed with the driver. I was in Greece in 2006, and everyone else on that packed bus, maybe a hundred and fifty people, all had better things to do and jumped off that bus before the cops came. A miserable fact I will always have to bear witness to when speaking of my fellow Greeks.
The first thing the bus driver said when he came to was, "I'm going to get that guy. I'm going to find him, and I'm going to kill him."
And I said to the bus driver, "I understand and appreciate how you feel. Don't say anything like that to anyone else, especially the police. Later, you'll be able to make better decisions about this and carry out those decisions. Right now is not the time."
So my advice to you is very simple, Tony. I understand and I appreciate how you feel. Right now, there's nothing you can do at this time. You should definitely research the right language to put into your contracts in the future. I like Matthew's suggestion, too.
Later, you'll be able to made a good decision about this particular incident and carry it out.- Real Estate Broker · Chicago, IL · Member since 2015 · 1k+ posts · 2k+ votes7y
Originally posted by @Tony Castronovo:
Kind of how I am starting to think about it @Matthew Olszak.
I will say though that the timing of the transition was exactly as you describe. I waited until after we collected everything for March and gave my new PM enough time to get things setup before April payments were due. Maybe the only thing to consider was the timing of my owner distribution. I might have overlooked that.
In that case, I'd say you did what you could, but when dealing with people like them you are sort of at their mercy unless you are willing to spend thousands to be proven right in court. I'd write off the loss and move on, and be sure to tell anyone who will listen about your experience with this company. It feels bad, it sucks, but the situation is the reality of where you are.
- Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes7y
Originally posted by @Jim K.:
Ah, I get it. So the first PM is being fired and the second PM is doing a good job. The first PM obviously understands that this is the end of the line for them and is now carrying out a get-what-you-can action with nothing to lose,
This I definitely have some good advice for.
I was once on a bus driving on a crowded highway and the bus driver, inching along in traffic, didn't allow this dude in a hot car to come out of the parking lot he was in. The guy beeped his horn, got out of the car, strutted to the bus's door, and banged on it.
The driver opened the door and said, "What? What's your problem?"
The dude climbed on the bus, reared back, and punched the bus driver in the face as hard as he could, stepping into the punch. He then turned around, got into his car, and buzzed off down a side street, cool as a cucumber. License plate showing, assault and battery, didn't matter.
The bus driver was in his late fifties, early sixties. He fell out of his chair. Apparently, the guy had something in his hand to help along with that punch, his keys, a roll of quarters, brass knuckles, something. The driver claimed later he lost 70% the hearing in his right ear and half the vision in his right eye.
I know this because I was the only passenger on that bus who stayed with the driver. I was in Greece in 2006, and everyone else on that packed bus, maybe a hundred and fifty people, all had better things to do and jumped off that bus before the cops came. A miserable fact I will always have to bear witness to when speaking of my fellow Greeks.
The first thing the bus driver said when he came to was, "I'm going to get that guy. I'm going to find him, and I'm going to kill him."
And I said to the bus driver, "I understand and appreciate how you feel. Don't say anything like that to anyone else, especially the police. Later, you'll be able to make better decisions about this and carry out those decisions. Right now is not the time."
So my advice to you is very simple, Tony. I understand and I appreciate how you feel. Right now, there's nothing you can do at this time. You should definitely research the right language to put into your contracts in the future. I like Matthew's suggestion, too.
Later, you'll be able to made a good decision about this particular incident and carry it out.Jim, that's a heck of a story. How we would all love to haul off and punch somebody in the nose just once, right? Smack! I can think of a handful of turd tenants I've had that would fit that bill nicely.
Tony, I'd take them to small claims court after you have your security deposits and keys, etc back. The company, the DB, owner, Suzy at the front desk chewing her gum, name em all. Make them sweat. What they did was crooked and unlawful.
Then tell everybody you know how bad they suck. At least you'll feel better and can get over it.
- 7yMatthew Irish-JonesBusiness MemberReal Estate Agent · Buffalo, NY · Member since 2017 · 2k+ posts · 2k+ votes
@Tony Castronovo. What does your contract say?
Does it stipulate a % of rent collected?
Is so, and they only charged you on what they collected it sounds like they are following the contract.
If the contract and money owed is based on a duration of their time managing. They owe you some money back.
Irish Jones Realty4.947 Reviews - Investor · Taylor Mill, KY · Member since 2016 · 2k+ posts · 964 votes7y
@Tony Castronovo It's only a few hundred? Expensive learning opportunity, cut bait and move on IMO. Unless I'm missing something and it was more.
- Specialist · Grand Rapids, MI · Member since 2016 · 1k+ posts · 611 votes7y
@Tony Castronovo
Most PM companies take the full
months worth of PM because they collected the funds. I would just move on. I have seen way worst where the PMs keep the rent even. You are better off spending the time finding the deals.
- Real Estate Broker · Hyde Park Tampa, FL · Member since 2019 · 2k+ posts · 3k+ votes7y
Tony, I recommend taking the trash to the curb and leaving it there. Your time is too valuable to waste another minute on this company. They lost. You won - and you'll keep winning every time someone asks you for a PM recommendation ("anybody but (large company/little value/steals unearned fee from clients").
Congrats on taking the trash out. A lot of folks live with it, hoping it will recycle itself.
@Tony Castronovo As far as PM horror stories go I don’t think this even makes the first cut in the anthology. A few weeks ago I was talking with a college buddy who lives in CA and owns a 40 unit apartment building in Reno. The PM was claiming 25% of the units were vacant when it was actually full and the PM was just pocketing 25% of the gross rent. Not to belittle your situation, it’s understandably frustrating for you, just pointing out how much worse it could have been. I can see why some PMs get a Robin Hood complex: they deal with all the drama and it’s an extremely low margin business, and they look at owners as filthy rich people whether they actually are or not. One of the biggest misconceptions I had going in to RE was what to expect from a PM. It took me over a year to find one. There are some good ones but many are just straight crooks (Morris Invest/Oceanpointe as a recent example). Now matter how good a PM is, nobody can be trusted to count your money for you or manage your assets as carefully as you would, that’s for sure.
- Multifamily Syndicator · Houston, TX · Member since 2016 · 1k+ posts · 2k+ votes7y
Sometimes, in Real Estate, you just take the hit and walk away. Take as an experience you didn't have to pay thousands of dollars for.
In reality, those of us who really understand the power of buying and holding real estate will continue to win in the long term as opposed to many who are looking for more in life but only think 9-5 is the only way to do.
Dust yourself off and go on to the next deal 💪
Good luck
- Investor · Canton, GA · Member since 2014 · 728 posts · 500 votes7y
@Steve K.
Okay, paid some tuition...
- Rental Property Investor · Park City, UT · Member since 2016 · 678 posts · 531 votes7y
@Matthew Irish-Jones the contract includes a flat fee per month (not based on gross income). It also states that upon termination that I owe "fees that would accrue over the remaining term of the lease". But that language is really for management fees based on rental income. It's really in the grey area.
- Rental Property Investor · Park City, UT · Member since 2016 · 678 posts · 531 votes7y
@Patricia Steiner thank you for your comments. I was offered some advice when I first started looking for property managers (I self-managed for a long time). The advice was to do everything to make it work...like a marriage...that there will be highs and lows but you need to make it work. If I am being honest...the stress was similar to being in a bad relationship. Every topic seemed to be an argument.
What threw me over the top was when they tried to justify to me that I should pay a commission to an agent they brought in to lease up our units...the "new" tenant was an existing tenant who lived in the unit next door. We had been talking to her for months about moving into one of our newly renovated units. The agent got her to fill out the application and then wanted a commission. I could see paying a renewal fee....but seriously? The PM claimed that we wanted to keep the agent happy.
Oh, and I was paying utilities for tenants who had moved in months prior when they were supposed to have switched them into their name. We never billed them back.
And so many of the leads I generated kept telling me no one was calling them back. I literally started showing the units and running open houses on my own as they got tired of the drive.
I could go on and on...but the biggest issue is that "they never accepted any blame or accountability for their mistakes". It was frankly exhausting arguing over every point.
@Steve K. not nearly as bad as the issues you pointed out. But I will say this...we were at 25% occupancy in January and we are now at 85%...we placed 4 new tenants in just 3 weeks after my new PM took over.
- Fort Collins, CO · Member since 2019 · 185 posts · 61 votes7y
@Tony Castronovo I'm sorry about all your trouble with your property management company - however, it can be comforting to know you aren't alone when it comes to struggles with PM. I would agree with others in that you can consider changing the wording in your contract in the future - I don't think it's worth filing a lawsuit, but you could always try to reach senior levels of the property management company to see what could happen. (You could also post bad reviews, but who really has time for that). Best of luck!
- Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes7y
@Jim K. great story, but I think he should be the motorist, not the bus driver. PM blocked him and it is time to punch back. @Tony Castronovo this is definitely enough money to file suit in small claims court. Not only for the money, but also to let people know that they can't push you around.
Simple facts here. They only provided partial month service and therefore are only entitled to partial month pay.
- Real Estate Broker · Hyde Park Tampa, FL · Member since 2019 · 2k+ posts · 3k+ votes7y
Tony, you know what they forgot? You are the client. You are the successful investor. You're the one who makes their very existence in the business world exist. You...not them. You giveth and you can freakin' taketh away - just as you did. (I'm proud of you).
My counsel to investors when it comes to PM relationships: they work for you. And, If it's not working for you, they no longer work for you.
Please don't give this PM free rent in your head. You'll be needing that space to figure out your next deal. You obviously know what you're doing and you're doing it well. Rock on!
- Santa Rosa, CA · Member since 2017 · 325 posts · 701 votes7y
My advice, consider it your final "karma" payment to be rid of them. Better to focus on the future, you dont want to become Javert from Les Miserables. Let is go and be glad they are gone.
Join the conversationCreate a free account to reply, vote on answers and follow this thread.