Management Company forgot to get signed lease - Columbia, SC

21 Replies

I have a 5 bedroom rental property that I rent to local college kids where the lease terms generally runs from Aug. 1 to July 31. Because I'm renting to students, we start looking for tenants for the upcoming August in February of the same year. For the property in question, I asked that either the current tenants resign a new lease or we begin advertising the property. On Feb. 18, the property manager informed me in writing that the current tenants wanted to renew their lease and that they would send them the lease that day to have them resign. Fast forward to June, I get an email from one of the current tenants letting me know that they all would be moving out at the end of the lease. They also informed me that the management company never reached out to them about renewing their lease. I reached out to the management company and they informed me that since the tenants gave their intent to resign that they wouldn't ask them to sign a lease until July 1, 30 days out. They also admitted that they only talked to one of the tenants about renewing and took their word that the 4 other tenant would also renew. I have all of this in writing in the form of text messages.

After 2 months of advertising their has been no interest. Classes start this week. All of the students secured their housing a long time ago. The property will almost certainly remain vacant until next August. Does anyone have any advice for me on how I can mitigate my losses? Do I have any recourse?

Alex, the second thing I would do is part company with the PM.  Surely the PM knows that this is a student rental and that it is either leased for the coming school year or it is not.  There is no waiting 30 days out to resign when it's student housing.  Recourse?  No.  There's no recourse for stupid and this wasn't legally an issue but it does demonstrate a lack of understanding about your property and the tenant profile.  

But the first thing I would do is aggressively market the heck out of the property.  Run an ad in the school newspaper ("Not to late to live off campus," Not to late to stop the commute").  Leave flyers in student hangouts, hold an open house, advertise to non-students - and there's always AirBnb for football games, visiting parents, etc.  

Stop everything and get your property rented.  Then dump the PM and get someone who knows that business to support your business.  Fingers crossed that you pull this one off successfully...

I agree with Patricia.  Do anything and everything to save the situation and cut your losses.  That being said, real estate is a business.  A factor that hurts most business is bad employees.  The PM is your employee for this business and it is still your job to make sure the business is running smoothly.  Buck always stops with you.  And I know how you feel, I have gotten F***ed over by some PMs in the past and it HURT

Thanks for the feedback. I definitely agree, that I need to find a new PM for the property. They were completely unapologetic about their mistake and their handling of the entire situation just validated that they have no clue about student rentals. Even now when I google the property, the listings dont' reflect the drop in rental prices that we've agreed to so I can tell that they have no sense of urgency to get it rented out.  Schools here starts on Tuesday so I've missed out on the student rental market for the semester if not the year. My best bet is probably to try and rent it to a family or some young professionals.

@Alex Black - as much as don't like PM's and self-manage my rentals, I'm not sure you can pin this on the PM. Usually, the notice to renew or vacate is sent 30 days before the end of the lease, so to expect your tenants to sign a renewal 5 months before is not realistic (I wouldn't sign something like this unless I was extremely clear on my long term plans and the rental deal was excellent - there is so much that can change in 5 months).

Ultimately, you need to take ownership of your mistakes - you are supposed to manage the PM. Did you follow up to see if the lease was sent and signed? Did you ask for your copy of the document? Do you have reminders and followups for all the important events in the "life" of a rental - annual taxes payment date, insurances renewal dates, lease termination date, renewal notice dates, etc?

What was done in June and July to re-rent the place? You had 2 months to secure new tenants - heck, why was not rented in the first month? How is this situation different from hearing all the way to June "we aren't sure what we gone do, if we gone renew or not" or not hearing anything till renewal time? What was your contingency plan?

 Do you know why they didn't want to renew? Did you do all what @Patricia Steiner suggest above? Do you know why there was no interest? When was last time you visited the property? It looks to me there might be some underlining problems with the property - make sure it's in excellent state and ready for new tenants.  

@Costin I. - It sounds to me like you are not familiar with or are unexperienced with student rentals. Expecting tenants to sign 5 months before is completely normal in a student rental. Tenants weren't found because there are no students left to rent to. College students in this area find their housing in early to mid spring semester and go home during the summer. There were no issues with the property other than it was being lived in by 5 young college guys. The PM confirmed with me in Feb that they sent them a lease to sign and then later followed up with me over the phone that that property as well as two others were leased for the upcoming school year. In her mind, they said they were going so sign a lease equaled lease signed. But the reality was the PM only talked to one out of five. If PM had spoken to all of them they would have realized that 2 were graduating and leaving.

@Alex Black  

1. If that is normal, then put it in the lease - renewal notice sent 6 months ahead, extension signed 5 months ahead.

2. If the PM told you over the phone the lease extension for the property in question got signed, and you have no doubt that was the case and not a misunderstanding with the other properties I understand she's managing for you, she outright lied to you and you need to fire her right away. You are still at fault for not requesting a copy of the document at that time.

All I'm saying, all this was preventable if you were to do your part of management. Nobody is going to take better care of your property and interests than yourself. Sorry, you must take ownership [ read EXTREME OWNERSHIP (E.O.) - a true leader takes 100% ownership of everything in his domain, including the outcome and everything that affects it.]

@Alex Black  your story is exactly why I won't recommend PMs for student rentals in Columbia. I personally know lots of them and they do a fine job for most properties but they just don't understand the timing or urgency of the student rental product. The timing of the market is incredibly important.

I like @Patricia Steiner 's advice re: AirBnB. I've been doing some research on STRs in Columbia and have been pleasantly surprised about how much they go for in and around UofSC.

@Costin I. - good advice, moving forward I will have that included in the leases and then be sure to request a copy of the leases after they have been completed. I'm not sure why you're so convinced that I'm not taking ownership. I own the properties so I'm the one who loses out if mistakes are made. A mistake was made this year and now I know what to do differently next time around. At the end of the day I'm paying them specifically to take charge and keep the property rented. Why have them at all if I'm the one the managing the properties?

@Will Gaston -  I previously did manage the properties myself but I'm now at dental school in Charleston so I'm not able to completely handle the properties myself. I'm not sure about the AirBnB route. The house is in Five points which is perfect for student rentals but not necessarily ideal for family rentals or AirBnB. Also, I would need to furnish the whole house which would likely cost more that what I would make back and then I would have to figure out storage for the furniture when I return it back to college rental. I think my best bet is to try and market it to young professionals in Cola. 

@Alex Black It doesn't seem hard to find a lousy PM these days.  My daughter has a similar story here in Charleston  SC.   Left it in the hands of a PM (friend of a friend) while she lived out of the country and it's been a disaster from day one.   It's also a great student rental and he also neglected to list it early in the year (though he told her he did).   For more than one reason, she's decided to sell her property but with a different PM she might have thought differently.   She contacted a lawyer for an opinion and the lawyer concurred with most of the advice you've gotten here... cut her losses and dump the PM.   I'll be listing her townhouse soon.  :-/

@John Semanchuk - that's frustrating, it's definitely hard to find good help. Especially when the PM company has no skin in the game if things go wrong. I may have to return to lease only for the following year and manage as best as I can from Charleston.

Definitely one of those situations that makes you want to pull your hair out. That's why there are a ton of resources out there which can help you to turn away from PMs and towards being able to manage the rental properties yourself, with a certain level of automation brought to the process (ie. listing the property and publishing it to 10+ other major listing sites, comprehensive tenant screening applications which includes a nationwide criminal background check, credit check, eviction history check, and requires references for prior tenancy;  digital leases, payments/online rent collection, and automated maintenance tracking). This way you can remove some of those pain points from the rental management process and won't find yourself delving out 6 - 10% plus a month's rent to a PM. If you have any questions in regard to the screening process, let me know. Happy to help! @Alex Black

I agree with @Patricia Steiner 's ideas for marketing the heck out of it.  You might also see if there's a university housing office that keeps a list of rental properties in town.  This may be less common, now, as more universities try to profit from the dorms/housing that they own, but it's at least worth looking into.

For the next week or two, it's still possible to get fall semester students that are starting late.  At a big enough university, there will also be some students that want to start in the spring semester instead (in January), so you might be able to salvage part of this year.

really sorry to hear that. I were looking at student rentals in VA. I can tell you most PM can't handle it. Because they want everyone to use their website, nobody answer the phone or the person who picks up have no clue. If you want to leave voicemail, mailbox is full. Very sad story.

You have to get on top of everything even if you have a PM. Sometimes it is better to use a small company even a single agent.

@Alex Black Feel your pain...finding myself in a somewhat similar situation now with student housing in my case renovation that took too long and a will be nice house which currently look as if it was vandalized...demo just over and school start next week...hope to get it rented for spring semester.

I would do what @Patricia Steiner recommended...but advertised it by room as well...not familiar with the university you are operating in but there are usually last minute transfers...graduate students that return from fellowships or research students which many time have harder time to secure places due to lack of credit and such...all these tenants usually look solo...if you can give the option of renting it furnished then even better.

I would also not let the PM handle all the advertising...I am putting the ads with my contact on Places4Students...Perchn and Craigslist...the 2 first sites are specific for student housing...heard also on Uloop...then when I get an inquiry I forward it to PM and follow up with them to make sure prospective tenant was contacted.

I also agree @Costin I. above that the responsibility is all ours as investors...I would not run after the PM for every little things...but I would put myself a reminder to ask for copies of the leases by Mid-March and nag the PM until I get them...Even that doesn't always work...I was calling both PM and contractor on an almost bi-weekly basis and still didn't manage to make them move fast enough...and high on my TDL is to look for an alternative management when renovation is done.

Good luck

Try to rent out individual bedrooms on month to month leases. It is more management work but if you fill most of the rooms you might even make more. There are usually transfer students looking for something mid year.

@Alex Black , I've got a college rental myself so I definitely feel your pain.  Although I self-manage.  I missed the student bubble last year due to the previous tenants wrecking the place.  The risk we take with college rentals.

I've got a few suggestions to hopefully help you out of this jam.

Dorm Drop-outs:  As college begins, there are usually late newcomers or students who drop out of the dorms (or kicked out).  You might have luck attracting some of those tenants for the year.

AirBNB:  It's not ideal because you'll need to furnish but this is an option.  If it's a big college then try to capitalize on game days.

Old Tenants:  Reach out to the old tenants and offer them a finders fee if they help you find tenants.  $500-1,000 buys a lot of beer for college kids!

Regarding your management issue, that is unacceptable.  While I'm not the type to immediately say fire them, this would an immediate termination from me.  In such a volatile market that college rentals are, you simply cannot miss the bubble.  You can always look for a new property manager, although sometimes they can be hard to find.  Especially for college rentals.  If you decide to self-manage it's possible, let me know if we can help you and I'll assist you to getting set up.

    @Alex Black there is a lot of good info here.  I'll raise my hand to recommend AirBnb on this one.  5 bedrooms will be a huge draw for this football season.  You can rent the whole house for $1200 to $1500 a night with a 3 night minimum for the 4 SEC games.  That should help off set your losses for the year.  

    Let me know if you need someone to help set that up for you. 

    Originally posted by @Alex Black :

    @Rob B. - I was using Rentalutions/Avail previously when I was managing the properties. It was ok but not very user friendly.

    Hi Alex, thank you for the feedback; I'm sorry to hear that it wasn't a great experience. This is definitely something that has taken some time to iron out as far as making sure everything works as intended, but having said that, there have been quite a few changes/updates to the platform since the Rentalutions days. I'm going to DM you for some additional feedback if you don't mind. Otherwise, a lot of really great advice on this thread. Thanks for your reply!

    Originally posted by @Alex Black :

    @Andrew R. Lucas - that sounds great but the house is unfurnished. A conservative estimate, it would probably be a minimum of $10k in furniture cost to make it a somewhat attractive AirBnB.

     You should talk to a staging company.  They typically rent out furniture on a monthly basis.  They'll have trendy items as well.  It's a short-term solution but then you're not stuck with all the furniture afterwards.

    Or, make the investment to furnish it and starting next year list it as a furnished home.  You could increase rents.  There are a lot of college kids who prefer a basic furnished home and willing to pay a premium.