Is my property manager taking advantage of me?

Lender · Playa del Carmen, México · Member since 2014 · 2k+ posts · 1k+ votes

6y

Hey @James Cerasoli, I hate that you're having to deal with this situation!

I have to ask, though: Your property manager is a licensed New York real estate broker? Does he have other property management clients? What are they experiencing?

These are not the actions of a professional property manager: What you're describing sounds more like the behavior of a handyman who is in waay over his head.

4 Reply

Anna Sagatelova

Property Manager · Cleveland, OH · Member since 2019 · 446 posts · 566 votes

6y

It sounds like your property manager is a one-man show. It also sounds like your management agreement with him is bare-bones.

Both of those things spell trouble to me. You ideally want to work with a PM who has systems in place and runs your properties like a well-oiled machine, of course with a human touch and attention to detail. You also want a contract that spells out all terms and sets clear expectations for how much you can and will be charged if specific situations arise. Of course no contract can spell out every contingency, but major surprises shouldn't happen. A great PM will also manage your expectations if 10% expense is not realistic for your property, and be able to explain to you why that is, instead of just charging you and leaving you bewildered.

With all that said; you should not expect any maintenance to be included in your monthly fee. Does he charge you for vacant units? Is there a separate leasing fee?

I recommend you shop around some professional PM companies in your area. I wouldn't necessarily focus on the cheapest option, but raise the hypotheticals of situations you've faced and ask them how they'd handle it. Vet that they have experience working in your specific neighborhood and with similar assets.

3 Reply

Billy Smith

Shawnee Mission, KS · Member since 2016 · 716 posts · 313 votes

6y

Pay more up front for the yearly amount 15 %,then you should see no nickle and dimes when working on the rentals for all the stuff that goes wrong .Unless you bought a house that needs tons of work .

1 Reply

Matthew Irish-JonesBusiness Member

Real Estate Agent · Buffalo, NY · Member since 2017 · 2k+ posts · 2k+ votes

6y

@James Cerasoli does your contract stipulate you need to approve costs over a certain threshold? Also, were pictures of before and after provided?

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Theresa HarrisPro Member

Member since 2019 · 15k+ posts · 11k+ votes

6y

Did he do major renos to the units with your permission? And are these units furnished? Why is he charging for mattresses? Any cleaning from turnover is charged to the tenants and taken from their deposit along with any damage that is not the result of normal wear and tear. $105 for a padlock and handle for the shed-I don't think so. Some of those charges (water bill) should have been charged to the tenants.

I'd find a new manager. Even if you are 6 hours away, i'd be tempted to do it yourself and find a good local handyman (doesn't have to be a man) who you can call for repairs.

1 Reply

Karl B.

Rental Property Investor · Erie, PA · Member since 2015 · 1k+ posts · 2k+ votes

6y

And this is why I self-manage....

Goodness gracious... he's getting rich off you. Not knowing what repairs needed and the scope of them, I'd tell him to stop mowing the lawn so damn often.

When tenants moved out was he taking damages out of their security deposits or not?

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James Cerasoli

OP

Realtor · Long Island, NY · Member since 2018 · 15 posts · 7 votes

6y

@Mitch Messer He's not a NY broker and he does have other clients so you make a great point to see if I can find his other clients, past or present, to reach out to and find what their experience has been. And I think you're absolutely right.. he's a handyman who is way over his head lol

0 Reply

James Cerasoli

OP

Realtor · Long Island, NY · Member since 2018 · 15 posts · 7 votes

6y

@Anna Sagatelova Yes, he's a one-man show and the agreement is certainly bare-bones so there's a lot of lessons learned here. I signed a contract he wrote up without any terms or contingencies of my own, which in hindsight was a clear mistake. He doesn't charge for vacant units and the leasing fees are included in his 12% property management fee. Thanks for the tips, I'll definitely have loads of questions lined up for the future interviews I have with legitimate prospective prop. management companies. Looks like I'll have to do my first firing of my real estate career.

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Anna Sagatelova

Property Manager · Cleveland, OH · Member since 2019 · 446 posts · 566 votes

6y

It certainly sounds like a learning experience. Most professional management companies won't allow you to change their standard management agreement contract, but it should be a detailed contract and they should be very transparent about their fees.

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James Cerasoli

OP

Realtor · Long Island, NY · Member since 2018 · 15 posts · 7 votes

6y

@Matthew Irish-Jones That's a mistake we made, not putting it in writing on an amended contract. We told him after the first crazy bill to have us approve any costs/repairs over a certain threshold but he only honored that temporarily. As for the before and after pictures, this is another shady part.. I don't know if he's just busy, old and forgetful or purposely not providing us with this but we've asked before and nothing. My partner and I were about to contact a tenant to check for us because of the distrust. It's definitely time to start thinking about other property management options.

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James Cerasoli

OP

Realtor · Long Island, NY · Member since 2018 · 15 posts · 7 votes

6y

@Theresa Harris No major repairs without our permission like an upgraded bed or bath or something crazy like that but he has installed a brand new stove without our permission on this latest bill. The mattress he ran by us before buying. And you brought up another issue, he told us we can return security deposits to two tenants and then hits us with this! Just a bad experience and I'm already highly considering sourcing out a handyman and taking over the overall property management responsibilities myself since it's manageable with only 6 tenants and I am moving nearby in a few months. Thanks for the advice and input.

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Joe SplitrockPro Member

Moderator

Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes

6y

Raccoon removal $150

Looks like he is having fun with the city boys...

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James Cerasoli

OP

Realtor · Long Island, NY · Member since 2018 · 15 posts · 7 votes

6y

@Karl B. Haha! I was laughing with my partner about the lawncare nonsense. He even had flower planting on one bill. And he was not taking the damages off the security deposits himself and it took him almost 2 months to tell us what the damages were and even said we can return the deposits back to two of the tenants who moved out. I think I may follow your tracks and begin self-managing while finding a local handyman and having a leasing agent handle finding and showing the place to new tenants.

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Theresa HarrisPro Member

Member since 2019 · 15k+ posts · 11k+ votes

6y

Originally posted by @James Cerasoli:

@Theresa Harris No major repairs without our permission like an upgraded bed or bath or something crazy like that but he has installed a brand new stove without our permission on this latest bill. The mattress he ran by us before buying. And you brought up another issue, he told us we can return security deposits to two tenants and then hits us with this! Just a bad experience and I'm already highly considering sourcing out a handyman and taking over the overall property management responsibilities myself since it's manageable with only 6 tenants and I am moving nearby in a few months. Thanks for the advice and input.

I think that is a good idea. I'd also check with your tenants to see that what he said was done has been done-the painting, new stove, etc.

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Stephanie Simmons

Flipper/Rehabber · Lakeland, FL · Member since 2019 · 131 posts · 91 votes

6y

@James Cerasoli then why did you pay for expenses that you didn’t approve?

1 Reply

Carlos Gonzalez

Investor · Phoenix, AZ · Member since 2015 · 346 posts · 170 votes

6y

@James Cerasoli

I’m in the wrong business. Give me his phone number so I can partner up with him. He’s definitely making a killing

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Chris B.

Chandler, AZ · Member since 2020 · 295 posts · 272 votes

6y

Ditch this guy ASAP! So many NOs in this story. Is he a licensed contractor or has many years of experience in the construction business? Prices aren't necessarily excessive, but... Have you seen the quality of the work in person? Does he have liability insurance? Is his work any good or is it dangerous to tenants or just plain poorly done? Was the work needed? Was even half of it needed? Probably not unless this place was destroyed. He disrespected you by doing this kind of stuff without consulting with you. Also, I wouldn't trust a PM who also does his own maintenance in general unless I knew a lot about him and his history first.

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Robert SchulmeistersPro Member

Member since 2019 · 35 posts · 29 votes

6y

It is all relative. look at it from all sides.

As a new Yorker myself I know 6 hrs away in Long Island can be from manhattan

I don't see square foot charges just a list of broken down items that seam to look at dazzling you with #s.

That being said. having been a contractor for 20 years no # by itself looks crazy, but without specifics such as square footage hourly rate, Day rate or flat rates its tough to justify one way or another.

You can use book and internet resources for national costs, Such as RS MEans Nation construction data or home owner versions of https://homewyse.com

The better ones can be adjusted by zip code. Note ALL of Long Island is way above national rates, but Nassau county is not the Hamptons or North shore.

My suggestion is to agree upon an hourly rate, day rate or flat fee for most of these handman, light carpentry jobs.

Demand pictures of before and after, all phones have them, time in hourly break down or even 1/4 hr billing. Anything bigger than patches, fixing locks ie small stuff get actual measurements

example sheet rock a 10' x 8' room walls and ceilings, with 8' ceiling = 368ftsq. Usually doors and windows are not subtracted because they take more time to cut out. Then you can compare on one of the sites homewyse.com, adjusting for zip code and quality and area. That site even gives you break downs on materials and labor. I do think that site is on the lower end, but you can present as supporting evidence for cost questioning.

Start having them break down costs, time and don't forget to add overhead for getting items etc. Just like a real contractor.

This will send the message that you can't just throw #s at me and expect me to give you a blank check. Support the costs with break down, explanations and pics.

But ask yourself these questions.

Is the work done quickly in time, are the tenants happy.

Is the quality there or do the tenants not care of the quality?

Are the costs of material real or approximated.

How much does a licensed plumber cost in that area. Usually here in NY area they charge a minimum service call fee up to 2 hours + materials + overhead + travel.

The same is for electricians, carpenters etc... NYS county and city Gov'ts keep adding requirements to small businesses driving up their billable hourly rates every year. Then add OSHA, dept of health as well as insurance. My house plumber has a crew of two, that work 40 hrs /week just to cover liability premiums for the company. These overhead costs in NYC area are insane. so keep that in mind when negotiating hr rates.

Which leads to the examination when figuring maintenance, did you find our going trade rates in the area?

Are you mad at the high price of repairs, the amount etc.

Also some charges should be submitted to insurance. Tenants renters insurance for toilet overflow and damage or charge back to tenant.

Painting an apt/room should be an agreed upon price when someone moves out. If it is extra work or extra coats of paint, that should come from security deposit. All this should be managements work.

Did you have a system for move outs about rent increase, deposit charges etc.

I learned from old timers years ago when running a carpentry business. If you pay 105-15% above going hourly rate, you get a lot better workers. Sometime lower price is just that.

If you want more details or info hit me up directly and we can chat over the phone.

1 Reply

Account Closed

San Jose, CA · Member since 2015 · 4k+ posts · 3k+ votes

6y

Originally posted by @James Cerasoli:

Hey all,

I purchased my first rental property May of last year that is a 3-unit student rental. I found a property manager through the attorney I worked with in the area who claimed he uses him on his own properties and that he's an excellent handyman so I thought that would be perfect considering I'm about 6 hours away.

My partner and I were shocked when we received our first "quarterly" bill as we only had a 10% maintenance allocation and this bill exceeded that by almost 3X, totaling to $1985 and that absolutely killed our cash flow for the first 3 months. Following this, we had a talk with him telling us to run large purchases and optional repairs by us and the next two quarterlies were much lower but the items he was charging us for were still dubious.

Now onto the most recent quarter when 3 of the 5 tenants moved out, he hits us with a bill for an absurd amount of $2762 on top of a single bedroom we had him renovate that came out to a total of $4621. We already pay him $360 (12%) a month for his management fee so I don't know what this is paying for because he found tenants at the absolute last minute, never asked us if we wanted to increase rents or bill back utilities, never shared us the rental listings and never showed us any pictures he took to advertise the property. And so far, the tenants he found are headaches and he's coming to us with all of their problems.

Here are the quarterly bills and the bill he gave us for the room renovation. I have zero experience with construction and repair costs so please let me know if anything seems inflated. And I want to know if I need to get used to all these charges (especially with a student rental) and take them into account for future properties or if my property manager is in fact taking advantage of us.

Room Renovation

Q4, 2019

Q3, 2019

Q2 2019 and turnover costs

Q2 2020 and turnover costs

Get a lawyer. Yes, you're being ripped off. Happened to me, happens to a lot of people who believe the gurus saying that real estate is an easy investment that can be hands-off with property managers. So, get a lawyer and learn your business and take control of your investment. There is no such thing as passive investments where you can trust other people with your money. good luck.

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Matthew Irish-JonesBusiness Member

Real Estate Agent · Buffalo, NY · Member since 2017 · 2k+ posts · 2k+ votes

6y

@James Cerasoli At some point you can not pay this guy if he is in direct violation of your contract, and can't prove work done. Your PM contract should really protect you from this stuff. Tell him you can't pay for anything without proof of work. He may have to go back and take pictures and dig up the original text from the tenant about the issue but, that's his problem not yours.

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Colleen F.Pro Member

Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes

6y

When looking at your bills a couple thing struck me. First, some costs should have been deducted from security deposits. There should be a move out report that says what the damages were and the estimates for repairing them. That money is deducted from the tenant deposit. Toilet issues may very well bill back to the tenant based on why they occurred. Smokes and CO on some apartments at turnover, if they are missing they are definitely billed to the tenant. Toilet seat replacement as well.

Next, You have the question of whether the charges are for things that should have been done. The landing carpet as well as a new stove and fridge strike me as potentially unnecessary projects. At minimum you should have pre-approved.

Lastly you have the costs not being approved upfront. So all in all you either get this PM on the same page with you or you find another PM.

1 Reply

Jonathan R McLaughlin

Rental Property Investor · Boston, Massachusetts (MA) · Member since 2016 · 2k+ posts · 2k+ votes

6y

@James Cerasoli A’s @Robert Schulmeisters mentioned it’s not that any one number is out of whack but the sum total is cause for pause. And not calling you about subfloor water damage / stove, etc. not cool. Also, what is “electrical”? And was it permitted insurable etc?

But it sounds like this is a student rental? You are going to have to budget for things like water damage, sheet rock damage window etc.if you have a particularly damaging bunch. And it’s really irrelevant that you had budgeted 10% for maintenance...things cost what they cost. I’m confused about the security deposit situation as well. Don’t forget you are responsible if the PM mishandles it, often to the tune of multiple X damages. Be on top of that one.

You have a lot more questions to ask before going nuclear and it sounds like you need to make a trip up there.

Love the raccoon though—removal from where? 😳

1 Reply

Kyle J.

Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes

6y

@James Cerasoli In pretty much every state that I'm aware of, you need to be a licensed broker or working under one to act as a property manager. So this unlicensed "handyman" operating as your PM is your first issue.

And obviously he's taking great liberties with spending your money, and likely taking advantage of you since you're so far out of the area. I mean, you have the raccoon charge that so many others have mentioned. But $221 for "Mattress/box spring/frame"? Serious, WTH was that charge for? Over two hundred bucks to probably just throw away a mattress someone left behind? Come on.

You'd be way better off getting a professional/licensed PM who will likely have established relationships with their own handymen/tradespeople who can do this work for much cheaper. And I'd suggest setting up some sort of system where charges over a certain dollar amount have to be approved by you before they're incurred so you're not caught off guard again by these outrageous bills.

Live and learn from this one though. It's all you can do. Best of luck.

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James Cerasoli

OP

Realtor · Long Island, NY · Member since 2018 · 15 posts · 7 votes

6y

Thanks for the advice everyone. This is definitely a huge learning experience. The issue with the security deposits was that we inherited these tenants so it was hard to prove that they did these damages and therefore be able to rightfully deduct it from their security deposits but I told him to take pictures of the entire property so we have it to base off of for the future.

I told him that I’d like to have before/after pics of any work and repairs done on the property from here on out since it’s hard to blindly trust someone doing work on your property 6 hours away and he understands.

I’m also having all future repairs and other costs go through us for a pre-approval before going ahead with them. Or at least, have costs over a certain threshold go through us first.

I want to assume responsibility in this situation, accept the blame and learn from it. The core of the whole problem was not being on the same page with him and that’s my fault so we’re driving up there in a couple weeks to have a meeting with him and lay out a more structured and rigid contract and plan moving forward. If this persists, I will keep him as a handyman on an as-needed basis and take on overall property management responsibilities myself. I may do this anyway when I move 2 hours south of there in the fall.

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Drew SygitBusiness Member

Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes

6y

No before & after pics to prove what needed to be done and that it not only was done, but done well?

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Is my property manager taking advantage of me?

Is my property manager taking advantage of me?

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