Nightmare with my property manager - advice needed!

[Jennie Ohyoung]

I own a small portfolio of 4 single-family rentals in Michigan (older, workforce housing). All were purchased cash and professionally managed by the same property manager for a few years. For the most part, 3 of the 4 properties have been stable with long-term tenants and consistent cash flow.

However, one property has turned into a nightmare:

• First tenant was a professional tenant and stayed in the property for months without paying rent, and before they got evicted they destroyed the entire kitchen/basement.
• Next tenant of ~4 years suddenly developed hoarding issues → property ended up filled floor-to-ceiling with debris, and turnover required full cleanout + rehab
• After spending a few thousand on the cleanout, PM communicated via email: “cleanout done, just need paint etc.” before getting a 5 figure bill
• No estimates, no budget, no approval requests

After the work was completed, we were presented with:

• ~$20k+ in repair costs without proof (pictures, receipts)
• No prior authorization (our agreement requires approval >$200 unless emergency)
• No staged updates as scope expanded
• No clear reconciliation of costs

This single event wiped out most of the portfolio’s profits and pushed the property deeply negative.

PM’s position is essentially:

• “This is normal for older, low-income housing”
• “Repairs needed to be done regardless”
• “Tenant issues (hoarding, mental health) are unpredictable”

My questions for the group:

1. Is this level of spend (>$20k, >100% of annual rent) ever considered normal without owner approval?
2. How do professional PMs typically handle scope creep during rehabs?
3. At what dollar threshold do you expect a PM to stop and get explicit approval?
4. Is this more of a “bad situation” or a “bad property manager”?

What advice do you have if you were in my shoes? Appreciate any insight — trying to figure out whether this is part of the business or a sign I need to make a change.

Thanks in advance.

[Richard F.]

As a licensed PM for 30 years, retired for the last 2, I will tell you that you need to immediately start interviewing for a new PM, and provide the current PM with written notice of contract termination AFTER you read the agreement to determine what, if any termination cost might be. You may be stuck with them until you can wait out the term. You have a Bad PM. 

Also, the "hoarding" Tenant and the deadbeat that was there for months, clear signs of poor management. Proper, in depth screening, mandatory annual walk through inspections with pics which are forwarded to Owner for review and discussion prior to a Rental Term Renewal should be routine. Late fees should be automatic and trigger the Eviction process if not cleared timely. It will never be cheaper than today, to get rid of a Bad Tenant, but you do need to check the LL/Tenant laws for the jurisdiction of the Rental Units.

Your contract should also very clearly state the dollar amount at which they needed to get Owner approval, period. How have the done so in the past? I've always had owner approval, via email or a signed Vendor Contract for expenses over one month's rent for a unit. Reno's always had an approved, signed, written estimate from the Contractors, and for major jobs we requested funds for the full amount from the Owner prior to allowing the Contractor to start on the job. We would hold the funds in our Trust Account, and make progress payments based on actual job site inspection. We always withheld the last 10% until the Owner was able to inspect the final job personally if they wanted to.

Lastly, regardless of the neighborhood, whatever tier of the Rental Pricing Pool you are in, you need to attract the Best applicants from that pool. The unit must be clean, safe, fully functional, and should be bright...not dark or dinghy. People that rent tired, ugly units do so because they have no choice and are settling for it, or because they are used to those conditions and don't notice. Overall, there are more Good Tenants than Bad, but you have to attract them and screen for them.