Newbie here– is my property manager taking advantage of me?

21 Replies

I recently decided to take the plunge and bought an out-of-state SFH rental investment through Roofstock. The existing lease expired about a month after we closed and the tenant did not renew the lease. I decided to keep the existing property management in place as they were one of Roofstock's preferred partners. The existing lease ended Jul 31st 2019 and I emailed the property manager on August 3rd to ask about getting a turn bid over to me. They informed me that they were having a hard time getting a contractor in but had walked the property ad ensured it's vacnacy and would get me a bid as soon as possible. I continued to request this bid every several days for a few days, growing increasingly frustrated. About three weeks after the lease had ended I was informed that the manager on my account was no longer with the company and I'd be reassigned. The new manager seems more responsive, but it still took until August 16th 2019 to get the turn bid– a full 6 weeks after the tenant vacated. Finally having the bid I'm now seeing that the carpets need to be replaced as they smell like dog urine. Of course this costs a lot more than the security deposit but when I looked through the lease to see what recourse I might have I also saw that the tenant needs to be notified of any damage within 45 days of move-out or have their deposit returned. I am wondering if my property manager may have screwed this up since it has now taken 46 days before I even had a report of the damage.

I have been incredibly patient with this group and am in the middle of negotiating their waiving the leasing fee to place a new tenant. I'm wondering now if I should continue to push forward or cut my losses and find a new property management group.

For context, the property is outside Indianapolis, IN. Does anyone know a capable PM in the area?

@Josiah Tullis   I'm not sure what you mean by a 'bid'.  You bought a place and the current tenant's lease expired at the end of July.  Two weeks later, they have a prospective tenant; but the carpet wasn't cleaned (or stinks) of pet urine.  Is that the basic issue?

The property manager should have done a post move out inspection and have the property cleaned and billed it back to the previous tenant.  At this point, get the carpet cleaned and the new tenant moved in.  Otherwise, find a new management company and let them do it.  you are losing more in lost rent than it will cost to have the carpets cleaned.

Thanks for the input, @Theresa Harris . I was waiting on a bid from a contractor for repairs due to damages from the last tenant. Unfortunately, since the carpets need to be replaced (the PM says a cleaning will not be enough) the cost far exceeds the previous tenants security deposit. I've asked the PM about billing the previous tenant for this but haven't heard back yet.

Tough one. On one hand, you could get rid of them now and let a better one take over and hopefully get you good tenants, but then you'll be paying full price from them to place the tenants, etc. On the other hand, you could save that placement fee (assuming you win the negotiation) and then see how the communication is, and decide then to fire them or not based on that (if you do that route, make sure you approve the tenants they want to place in there...none of saving that fee will be worth it if they place bad tenants). Kind of your call which to do... both routes have pros and cons.

I only work with actual turnkey companies, so haven't worked with Roofstock to know this, but is the PM that comes with those properties through Roofstock or is it farmed out to a local manager not affiliated with Roofstock?

@Josiah Tullis It’s time to get on a plane. You have no idea if it needs new carpet. You don’t even want carpet you want LVP. Does it need paint? Fixtures? A front door? You have no clue. You’ve got to get there and lay eye on it.

I would put it on Facebook marketplace and schedule an open house for when you’re there and find your own tenant. It’s easy. And you’ll end up with much better tenant.

Throw a touch pad deadbolt on the front door so you can get workers in there whenever you need them. Put a ring floodlight on the front porch in case you need to keep an eye on things.

Systems systems systems. It’ll be 2 days worth of work before you arrive and 3 days worth of work when you do arrive. 5 days to create systems so these problems never happen again.

And the best part..... all the lessons you’ll learn so you can plug the next property into your systems.

Typed on iPhone

Originally posted by @Josiah Tullis :

I recently decided to take the plunge and bought an out-of-state SFH rental investment through Roofstock. The existing lease expired about a month after we closed and the tenant did not renew the lease. I decided to keep the existing property management in place as they were one of Roofstock's preferred partners. The existing lease ended Jul 31st 2019 and I emailed the property manager on August 3rd to ask about getting a turn bid over to me. They informed me that they were having a hard time getting a contractor in but had walked the property ad ensured it's vacnacy and would get me a bid as soon as possible. I continued to request this bid every several days for a few days, growing increasingly frustrated. About three weeks after the lease had ended I was informed that the manager on my account was no longer with the company and I'd be reassigned. The new manager seems more responsive, but it still took until August 16th 2019 to get the turn bid– a full 6 weeks after the tenant vacated. Finally having the bid I'm now seeing that the carpets need to be replaced as they smell like dog urine. Of course this costs a lot more than the security deposit but when I looked through the lease to see what recourse I might have I also saw that the tenant needs to be notified of any damage within 45 days of move-out or have their deposit returned. I am wondering if my property manager may have screwed this up since it has now taken 46 days before I even had a report of the damage.

I have been incredibly patient with this group and am in the middle of negotiating their waiving the leasing fee to place a new tenant. I'm wondering now if I should continue to push forward or cut my losses and find a new property management group.

For context, the property is outside Indianapolis, IN. Does anyone know a capable PM in the area?

If the management company didn't get the itemized damage invoice to the tenant within 45 days then yea that's a problem as each state has a set period of time that this must happen or the tenant could sue for return of the deposit and in some states can sue for double damages. I am going to assume based upon the verbiage you say was in the lease that in your area that time frame is 45 days. From your post it's unclear if that happened or not though. I understand you didn't get it within 45 days of move out but you didn't mention if they got it to the tenant or not. What's the word on that?

 

@Ali Boone I bought on Roofstock in Aug 2018 and they did not property manage themselves. They offer "vetted" PMs in the local area for you to choose from, or you can find your own. I chose one from their list, and it's been good enough so far.

@Josiah Tullis It is a little annoying I bet

If I were you, I would start sourcing for a new PM while I get hands-on with my property instead of waiting on those guys.  

From a tactical perspective, you can go on Thumbtack right now and get bids from carpet contractors who are ready to be deployed to your property within 24 hours if they can get access and get the job asap. You can do more than you think with technology these days even as an out-of-state investor. 

With REI, one cannot be passive because these folks aren't the ones losing money so you have to protect your interest however way you can.  

Hope things work out for you.

Good luck... 

If the lease ended July 31st it has only been 17 days of the 45 days so they still have time to keep the security deposit and requested funds from them.

@Josiah Tullis

Keeping the same property management shouldn't even be an option. Also, I will suggest getting rid of them before renting out the property.

Call Lowes or Home Depot. They will sell and install the carpet for you.

One of the sad things about this business is that most of the time when a Tennant moves out, their deposit is hardly enough.

That's about the same deal I got with all the property managers I tried, or they were worse.
So that's the reason I sold all my rentals and invested the money in more passive investments that paid better returns.

I had to fire a property manager last year "aka" terminate contract based on cause. They would lie, cheat and steal. Complete scumbags. Make sure you obtain photos and receipts of everything. Make them sign a contract

Its too bad so many investors have so many bad experiences with PM's.  Having been in the industry now for over 25 years I have seem it all and there really is no stereotype that ultimately sticks.  Some investors think all PM's are crooks @Angelo Mart it is too bad that has been your experience.  There are many in the 3rd party mgmt side who have tried to work with owners who have never seen their property but believe the PM is ripping them off.  Long distance investing can work but it has to be a mutually beneficial partnership between the PM team and the owner.  It really starts with trust but also an alignment of standards.  

@Josiah Tullis  I am familiar with the Roofstock list of "vetted" PM's and they include good and bad.  Like many service businesses there are differences in PM's and often an out of state investor stays with the Roofstock vetted PM without making sure there is alignment.  In Indy there is so much more to understand than just the claimed rent and condition of the home.  For instance, many out of state investors are convinced because we are somewhere in flyover country that homes do not require air conditioning.  We spend a lot of time discussing this issue because today it is 92 degrees and 90% humidity and there is not a rental on earth that is going to attract top dollar if there is no AC.  And the quality of the tenant will suck also. When that home does not rent and the owner blames it on the PM.  The PM is at fault if they are not discussing the lack of AC in August.  But that discussion should have occurred before the owner and PM partnered together. 

Enough rant.  Just please don't crap on the entire PM industry because of a few bad experiences.  Ask your PM for their standards.  See if you are in alignment before you go into business together.  If they do not have standards it may very well be they are all about money and doors.  That might not be a good place to trust your investment. 

@Josiah Tullis

I know you’re out of state, but here’s some perspective....

I purchased an empty duplex August 6. I repainted the interior, had carpets replaced, installed ceiling fans, and did other cosmetic updates. A tenant moved in last week, and another is moving in tomorrow.

You want to ask if a PM should do their job within 6-8 weeks? I would have fired them 4 weeks ago.

Fire quickly, hire slowly, especially with property managers. I see no reason to continue working with this PM company. You may have to do some of the work yourself while you find a replacement property manager (ideally by going to the property yourself as someone was suggesting). Some things can be done remotely, but if you're new it can be harder. The first property manager I hired said it would cost $1500 to fix everything before putting a new tenant in place. When I asked to see the itemized list of work, it was hard to get the list. When I ultimately got it, it didn't reveal much of the work needing to be done. I started getting concerned. I had someone independent of the PM company go out and look at the property, and realized he wasn't being completely honest with me. I got rid of him. The next PM I hired said he could get the property ready for $350 and produced a Word document with pictures of everything that needed to be done. The level of service completely different. When you're in a "bad relationship" the best thing to do is breakup and move on.

I think at this point I would be coming in and beating a dead horse, but there is absolutely no reason for the PM Company to not respond to you.  Even if the next property manager to take over your account makes the excuse that the previous one didn't leave a transition plan, that to me, says that the PM company itself does not have efficient enough systems in place to take care of your (and others) needs.

Investing out of state is so tedious, that you need to most responsive PMs you can get.

Bottom line:  Find a new PM and make sure you have relationships with all of the key people (contractors, other PMs, realtors, inspectors, etc) on your own.  There should be no excuse not to have these.  This situation could have been mitigated if you had been able to send out your own trusted contractor (while looking for another PM).  ;)

GL!

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