We have managed one SFR property, about 50 miles away, for 20 years. Got burned by one hoarding Tenant, who illegally was running a business. When he broke the Lease early (turns out he made a fortune and drove away with 2 nice BMW's, but was our worse Tenant ever), we decided to use a Property Manger for the 1st time. Believe it or not, this next Tenant, though very neat and nice, snuck in a Day Care Business w/o notifying us. (Turns out in CA they are allowed to, but are supposed to inform us). We found the PM has been burning through our money (almost $2,000 for 2019 plumbing bills, due to hiring people on weekends for simple things), not calling us in a timely manner when we had an unrelated issue cause water damage! Seems obvious we should fire them. Our dilemma: the Tenants are on month-month, which we would keep, and write our own Lease, if we take over. But they did lie to us, and are a bit melodramatic (have not done our own background check, since we wanted a PM to do all this). Question: In our shoes. 1) Would people advise firing the PM (we have to do so 30-days before March 5th). 2) Do we have the Tenants (who we will keep, but with a lot of stipulations) fill out new application and run a background check? (They are a bit whiny, possibly litigious, as were the ones before them!). One advantage we note for PM's is the (potential) legal advice included (not sure they all do that). Appreciate any thoughts or advise. Thanks
@Jane H. “...they did lie to us” & “possibly litigious”. Base your decision off those two comments.
@Jane H. I followed an adage in the Army saying "if you think you need a haircut, then you need a haircut". I've found the same advice applies to tenants and PMs "if you think you need to end the relationship, then you need to end the relationship". I think you already know the right answer but something is holding you back - compassion, avoidance of conflict, etc. You should be able to easily manage a property 50 miles away. Find a new, great tenant and enjoy the income. Best, Terrell
The PM is spending your money without communicating with you. The tenant does not abide by the rules and is a potential litigant. Get rid of both of them. Find another PM or manage it yourself. Give the tenant a 30 day notice to vacate. This property sounds like it needs more hands on for whatever reason. One of my rental units is 60 miles away. I go there once a month to check up on it. It sounds like for this property you will need to do the same or find a great property manager.
It looks like your life would be much better once you have a better tenant(s) and have a better property manager or manage yourself. I don't see a reason to keep your current PM.
$2,000 for a year's worth of plumbing issues is pretty insignificant. However, if your property manager is not adhering to your written agreement then it may be time to part ways.
Your tenant is on a month-to-month and they are running a business in a residential home. my recommendation would be to contact the tenant and let them know you will only allow them to continue running the business if they take on ordinary maintenance (e.g. they pay the first $500 on all maintenance issues), provide proof their business is properly licensed and registered with the city, county, or state, and that they have the appropriate liability Insurance in place (at least $1 million) with you named as the additional insured or additional interest. If they could meet those requirements and sign a long-term lease of at least one year, I would say they are worth keeping.
Holy cows. Today is the day for a ton of posts about problems, mistakes, and disasters.
It’s definitely a reminder to do your due diligence and know your stuff before investing. And be prepared for the unexpected, because it will happen.
To the OP, I wish you the best. Listen to Nathan. He knows.
Thanks to those who provided input. For some states (such as ours) a daycare is considered a service, and not a business. The tenants were supposed to notify us, but did not have to get our permission to run their "service". The good thing about the PM (who were also taken off guard, but frankly should have possibly noted the wife was working as a daycare employee just around the corner from our home!) was their Legal Dept drafted an addendum which if we go on our own, we plan to incorporate into a new Lease, which Tenants already signed, at least acknowledging since they didn't notify us, they agree to limit number of kids (some of our neighbors are pissed off about the traffic, but we explained to them our hands are tied). State we live in is very daycare friendly, and as LL's we have to be very careful of avoiding potential discrimination. State even allows the daycare options of not having liability insurance, if they notify parents! (Addendum stipulated the basic minimum of $300,000 per incident, which we think is crazy; they are making a neat profit, and pay only about $300 in Premiums). Tenants themselves have actually done a lot of improvements to property as well. We usually did year-Leases, but since the home has things like older cabinetry and older master bath they keep complaining about and other comments they make, we thought month-month was a good way to protect us if things blow up. Those who noted the answer is right in front of us: we pretty much agree. Appreciate you letting us air our concerns. We are also dealing w/out of state relative w/Alzheimer's and cancer, so that was another reason for considering some PM (obviously looking for another one is a possibility; not sure if there could be issues w/a company not wanting to get into this existing situation). Thanks again.
As of Jan. 1, in CA AB1482 made it so just cause is required now to get rid of tenants that have been there over a year!
And CA just changed the law on what is an independent contractors.
PM's are a mixed bag, and you need to add up all the costs. Hiring a lawyer to sort everything out, may cost more than just keep the PM. Any stipulations you put into a new contract should be reviewed by a lawyer, trust me, especially in CA. Unruh Act, unique to CA, can be VERY EXPENSIVE. And as a lawyer at a luncheon quipped, you really don't want a new nickname, that being "defendant".
I would look into ALL the zoning, licensing, insurance issues, etc. for running a day care in your rental.
Ray - Sounds like you may be in CA . Believe me, I called Sacramento and local agency to find out ALL the rules on running Daycare. As I noted, in CA, Tenants are given virtually free reign to open Daycares in your property - they literally just have to "inform" you; they are NOT required to "get your permission". (We still like CA, but are fed up w/this aspect). We agree; a lawyer would certainly cost more than the PM. Our last crazy obnoxious tenants (told my hubby he was "racist" coz he asked both Caucasian husband and Asian wife if they smoked dope; turns out she did, vs. our policy of no smoking!) caused us to seek legal advice, so we know that routine. My understanding is single family homes are not ruled by rent control regulation passed; only multiple units. Daycares rake in a very nice profit, so some LL's actually seek them out, and get higher rents. Will look up Unruh Act (not sure what that is) and wondered about your comment about new rules on Independent Contractors (were you referring to PM or something like that?). (And honestly, we've been very luck for 20 years, with a lot of good Tenants. These newest folks are very hands-on, improved landscaping and keep place very clean, so we are leaning toward keeping them, just debating on Management issue). Thanks again -
Hi @Jane H. - In my experience, at the sign of the first big RED FLAG, you need to move on and find someone better.
You need to be "Slow to hire. Quick to fire." in business.
Make sure you have the right people running your business. If you're seeing red flags already, I can only expect to see more in the future.
I know this will take more work, effort, and time on your end, but EVERYONE that works for you must be held to your standards. If they fail to meet you expectations, take action and make a change.
Best of luck in this situation!
At the very least interview some other property managers in the area.
Be sure they perform annual inspections and preventative maintenance services. These with save money over the long run.