Me vs. my Property Manager

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Me vs. my Property Manager

John Boland
Rental Property Investor · Heathsville, VA · Member since 2020 · 22 posts · 7 votes

I have come to the fork in the road with my property manager....and I need perspective.

To give the background my wife and I relocated and turned our home into a rental, a common move. We then rented to the first applicants willing to pay, a common mistake. After the first year they began to slip on payments and instead of evicting we tried to be nice and give them a chance... 3 months later of no rent and we faced a crisis.

In comes the property manager. He was referred to us by a coworker and we knew we needed a pro. We met and right away noticed his bull dog tendencies, the type you want arguing on your behalf. Perfect for a couple like us.

He had the eviction process rolling and even got the former tenants to settle. And finally when we got back into our house we saw the destruction left behind. Rotting food, burnt counters, destroyed toilets... my wife and I were in our mid 20s and this was our first home so we were a bit emotional. Right away he knew what needed to be done, who to call, how to get this house to rent worthy status again.

After the 4 months of missing rent and the time it will take to make repairs we were looking at paycheck to paycheck. We were able to take a loan from family to help pay for the repairs but it was still short of what was needed. The PM knowing we were in a tight spot offered to find financing for the rest of the repairs.

Now to the present. He has had the property rented out consistently without a single month of vacancy for the past two years. Haven’t had any issues or maintenance concerns, and what we were renting for 1750 he is renting for 2300. Everything is running smooth... kinda. He says the debt was paid off and he would like to use that same monthly debt payment to create a savings for us for future cap ex. Now up until this point it was my wife doing all the dealings with the property and the PM

In the past 3 months I’ve had a change of heart to rental properties. I was against it but after reading Rich Dad Poor Dad I say give me all the properties I can buy. I knew that first I had to better understand the properties I already had ... and to question him about this idea of a savings to be managed by him.

Time to manage the manager! So I contacted the PM and created a spreadsheet stating what numbers I wanted to see, bank information, essentially a monthly statement. I feel he has been a great PM outside of paperwork to this point and I figured I’d show exactly what I want. He had oral surgery done so I gave some leeway to complete the task. Today I finally asked for any progress to which he answered “I’ll get to it this week”....

I have sent him an email stating new expectations moving forward, refusing to do it in a text or phone call, and that any concerns shall be emailed to me. He of course texted and called, which I did not respond to. He finally sent an email late saying he cannot complete the paperwork this week(which he has had a month to do), that I should call him if I have any concerns, that he will perform any emergency action but does not consider the requested paperwork as such.

Am I delusional or is this absolutely no way to conduct business? Any guidance would be amazing cause it’s 4 am and I’ve been up for 2 hours stewing over this.

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Joe Martella
Rental Property Investor · Cherry Hill, NJ · Member since 2015 · 626 posts · 495 votes
5y

Let's put the breaks on here.  So you and your wife are still new to rental game - outside of the bad experience you had with the tenant you put in place, you have not managed the repairs or rental beyond that.  You tried managing the property and that wasn't successful.  You found this PM.  He cleaned everything up, got you financing to fix the property and even got you an additional $550 a month (6,600 yr) cashflow (I assume it would have to be cashflow since you were paying the bills at $1,750 a month and he rented it for $2,300).  Based on what I was reading, he was paying all the bills associated with the property.  You and your wife have been hands off.  Some PMs don't deal with paying off the mortgage or any other financing.  They just collect the rent, take their cut and send the rest to you.  You then pay the mortgage and other bills you have.  

Now the PM is telling you that you need a capex fund.  I don't disagree with him on that.  It seems like your PM is trying to set you up for success.  It is my opinion that you and your wife should have been managing the bills for the property all along.  

Let's look at it from the PM's perspective.  He has taken over the property, paying the bills and sending you the leftover.  Neither you or your wife cared.  Now he gets a spreadsheet from you with a demand of 1 month completion when you had no interest before?  Perhaps he has a large portfolio and doesn't have time for your spreadsheet?  Maybe you aren't paying him enough to do all of that work for you?  Does he have a portal that you can look at?

From your side of the story, it seems like he has been taking care of you.  I don't allow anyone to manage my money.  They can manage my property, but not my money.  I would say that you and your wife should be building your own capex account as you see fit, not the PM.  I would keep him managing the property and manage my own bills and money.  If your wife was dealing with him successfully, I would let her continue to deal with him.  "If it ain't broke, don't fix it."  If you don't like the guy because of a "tasking" there are worse PMs out there, believe me.  I had a PM leave my tenants with froze pipes and no hot water for 2 days before calling me.  

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  • Aaron W.
    Rental Property Investor · Northern Virginia · Member since 2019 · 793 posts · 620 votes
    5y

    @John Boland I'm sorry to hear your difficulty with your property manager.  I am a big proponent of PMs but it is essential to find the right one as they can make or break your investment depending on how they manage it.

    A professional PM should be using an online portal where the landlords can go in and run their own reports. If they don't have one, then they are probably not a professional shop and not really a property manager. 

    It may be time to find another management company.

    Best of luck!

    5Reply
  • Ken Gee
    Investor · Tampa, FL · Member since 2021 · 27 posts · 29 votes
    5y

    There are a lot of PM's out there doing what you describe.  Find a new one.  Find one who is more professional and up to the task of handling your money like a fiduciary/management agent should.  AJ's comments above are dead on.

    By the way, any savings for major repairs should always be held by you, not the PM (except for a short period).  No reason for a PM to be holding a lot of your money.  Too dangerous.

    Unfortunately, the PM hasn't changed, but your requirements have, so time to find one who can meet your current requirements.

    Good luck.

    Ken

    4Reply
  • Shawn L.
    Rental Property Investor · Natick, MA · Member since 2015 · 128 posts · 188 votes
    5y

    @John Boland It's not uncommon for a PM to hold a small amount in a reserve fund, maybe a couple hundred per unit for repairs that arise. Sounds to me like your PM is holding all of your reserves? That's a hard no for me. Also the fact that he is struggling to produce reports would be very concerning. I'd be looking for a new PM yesterday.

    6Reply
  • Colleen F.Pro Member
    Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
    5y

    @John Boland  In my experience a capex account is in the property owners name but I haven't used a lot of PMs.  What does your agreement say?   I would ask him for output now based on whatever software he uses even if it does not have all the elements you want that should be easy, then set a timeline for getting the rest. He has gotten you an increased rental return and good tenants now make sure that things don't go bad financially, he could just not be good at paperwork. how many rentals does he manage? You should of course be able to do your own rough numbers if you have been kept informed. 

    0Reply
  • Jon KellyPro Member
    Investor · Bethlehem, PA · Member since 2016 · 929 posts · 951 votes
    5y

    @John Boland Bottom line, I agree it's likely time to make the switch. But, it's not because of the PM it's because of your relationship with the PM. I understand where the property manager is coming from. You've allowed him to run like this for 2+ years, things seem to be going well and out of the blue he gets an email from you asking for new requirements... 

    What was in your original agreement with the PM? The PMs duties and compensation should be clearly spelled out in a written agreement. 

    "He says the debt was paid off" Does this mean you borrowed money for repairs and let the PM pay off the debts? You didn't know how much you still owed on money you borrowed?

    If you're interested in purchasing more rental properties it's likely time to switch to a professional property manager. Good PMs are invaluable to landlords. 

    1Reply
  • Joe Martella
    Rental Property Investor · Cherry Hill, NJ · Member since 2015 · 626 posts · 495 votes
    5y

    Let's put the breaks on here.  So you and your wife are still new to rental game - outside of the bad experience you had with the tenant you put in place, you have not managed the repairs or rental beyond that.  You tried managing the property and that wasn't successful.  You found this PM.  He cleaned everything up, got you financing to fix the property and even got you an additional $550 a month (6,600 yr) cashflow (I assume it would have to be cashflow since you were paying the bills at $1,750 a month and he rented it for $2,300).  Based on what I was reading, he was paying all the bills associated with the property.  You and your wife have been hands off.  Some PMs don't deal with paying off the mortgage or any other financing.  They just collect the rent, take their cut and send the rest to you.  You then pay the mortgage and other bills you have.  

    Now the PM is telling you that you need a capex fund.  I don't disagree with him on that.  It seems like your PM is trying to set you up for success.  It is my opinion that you and your wife should have been managing the bills for the property all along.  

    Let's look at it from the PM's perspective.  He has taken over the property, paying the bills and sending you the leftover.  Neither you or your wife cared.  Now he gets a spreadsheet from you with a demand of 1 month completion when you had no interest before?  Perhaps he has a large portfolio and doesn't have time for your spreadsheet?  Maybe you aren't paying him enough to do all of that work for you?  Does he have a portal that you can look at?

    From your side of the story, it seems like he has been taking care of you.  I don't allow anyone to manage my money.  They can manage my property, but not my money.  I would say that you and your wife should be building your own capex account as you see fit, not the PM.  I would keep him managing the property and manage my own bills and money.  If your wife was dealing with him successfully, I would let her continue to deal with him.  "If it ain't broke, don't fix it."  If you don't like the guy because of a "tasking" there are worse PMs out there, believe me.  I had a PM leave my tenants with froze pipes and no hot water for 2 days before calling me.  

    15Reply
  • John Boland
    OP
    Rental Property Investor · Heathsville, VA · Member since 2020 · 22 posts · 7 votes
    5y

    @AJ H. It is a hard decision because he has helped us through a lot and in every other capacity has been great.

    It’s really the paperwork side that bothers me. Having a portal would be nice but it’s really I feel I should be able to ask any of the questions I have on numbers and have the answer within an hour.

    2Reply
  • Joe Martella
    Rental Property Investor · Cherry Hill, NJ · Member since 2015 · 626 posts · 495 votes
    5y

    @John Bolandthat is a very high demand of someone with only one property that should be managing his own money. If it is in a portal you should figure it out using the process he has in place.

    3Reply
  • John Boland
    OP
    Rental Property Investor · Heathsville, VA · Member since 2020 · 22 posts · 7 votes
    5y

    @Ken Gee spot on about the cap ex savings. That’s really what kind of stirred the pot and prompted me to get involved. Up until recently I was in the Navy and so long as the mortgage was covered it was out of sight out of mind. My lack of caring created a void to knowledge of what was going on.

    0Reply
  • John Boland
    OP
    Rental Property Investor · Heathsville, VA · Member since 2020 · 22 posts · 7 votes
    5y

    @Joe Martella yes he has been amazing. Do not think I don’t see that. He was able to secure financing to finish the repairs which obviously we are grateful for and he has taken a portion of rent to pay that bill. We handled our own mortgage and the other debt that was created.

    Again, he is awesome at the things he does. Now to my involvement, oh boy did I put myself out of the loop. No hiding that fact, my knowledge went as far as “did we get the rent to pay the mortgage? Yes? Okay”. I couldn’t have been more hands off.

    Do we need to have a savings for maintenance/cap ex, obviously. Do I think the PM should manage it, absolutely not. Him asking the question to do it made me ask the question of where is all the money going? I’m playing catch-up but better late than never. I appreciate his foresight and I do think his mindset is he doesn’t want us to go through what we did before.

    0Reply
  • John Boland
    OP
    Rental Property Investor · Heathsville, VA · Member since 2020 · 22 posts · 7 votes
    5y

    @Joe Martella there is no portal or location to acquiring any information without asking him directly for it

    0Reply
  • Justin Hoggatt
    Investor · Morrison, CO · Member since 2015 · 221 posts · 177 votes
    5y

    Property Managers are generally very busy and stretched thin.  Accounting is also generally the worst aspect of it all for a lot of managers.  A change in process can be hard to accommodate based on original expectations.  I'm not really making excuses, just sympathizing.

    Knowing your bottom line should be your prerogative and readily available.  Managers should have a strong accounting team and/or software.  The fact that he's pushing you off isn't a great sign.  Don't forget that he works for you and you're able to let him go at any time and find a replacement.  If you have a renter in place, it's probably not a bad time to switch.  

    1Reply
  • John Boland
    OP
    Rental Property Investor · Heathsville, VA · Member since 2020 · 22 posts · 7 votes
    5y

    All, like I said at the beginning: "I am in need of perspective". You have each given a different take and I am truly appreciative of that. 

    Our PM has done an excellent job and has always had our back. My lack of involvement and knowledge on the comings and goings is exactly what I am trying to improve upon. A precedent was set over the past 2 years and I am trying to raise the standard. This may be uncomfortable for he and I but it needs to be done. My "spreadsheet" to summarize is: Fees, Maintenance, Repairs. I still feel asking what the expenses are for the month to month is not unreasonable and should be readily available, at the very least for the previous month. A means to obtain this information without an email chain should be established. I am not trying to become a more hands on owner micromanaging, I am trying to become a more aware one as I should have been at the start. 

    1Reply
  • Zachary Elliott
    Real Estate Agent · Burlington, KY · Member since 2018 · 206 posts · 232 votes
    5y

    I agree with the general sentiment here that the PM should not be holding all of your reserves. Additionally, maybe it'd be worth just having a conversation with the PM and telling him that you'd like to be more involved in the process. I know in Kentucky, PMs are required to provide monthly statements, showing all income and expenses. I don't think asking for this information should be a huge ask, but as one of the other people in this thread pointed out, it seems like maybe you just need to approach your desired change in how your relationship works from another angle. Good luck!

    0Reply
  • Shawn L.
    Rental Property Investor · Natick, MA · Member since 2015 · 128 posts · 188 votes
    5y
    Originally posted by @John Boland:

    All, like I said at the beginning: "I am in need of perspective". You have each given a different take and I am truly appreciative of that. 

    Our PM has done an excellent job and has always had our back. My lack of involvement and knowledge on the comings and goings is exactly what I am trying to improve upon. A precedent was set over the past 2 years and I am trying to raise the standard. This may be uncomfortable for he and I but it needs to be done. My "spreadsheet" to summarize is: Fees, Maintenance, Repairs. I still feel asking what the expenses are for the month to month is not unreasonable and should be readily available, at the very least for the previous month. A means to obtain this information without an email chain should be established. I am not trying to become a more hands on owner micromanaging, I am trying to become a more aware one as I should have been at the start. 

    If he can't even tell you what fees, maintenance and repairs you're paying, that is a humungous red flag. How does he know how much to pay you every month? Is he just guessing? I'll double down on my earlier post that I'd be looking hard for a new manager. In the meantime keep pushing him to get you the data you need. This is basic stuff that you need to file taxes but that's a whole different discussion.

    0Reply
  • Joe S.Pro Member
    Investor · San Antonio · Member since 2020 · 3k+ posts · 3k+ votes
    5y

    It’s not clear to me by your post what exactly are wanting. You say all the great things the property manager has done for you and then you turn around and say you made these demands and he’s not answering your demands fast enough. What am I missing? What are you looking for from your property manager? From what I read you had one property that you turned over to your property manager when you was in a bind and he helped you Plus got you a higher rent to boot. 

    3Reply
  • Alex Forest
    Rental Property Investor · Henrico, VA · Member since 2019 · 265 posts · 155 votes
    5y

    @John Boland Keeping it all in perspective, it seems he handled the bind in years past well, and got the rent up for you. Those are big pluses and important. Is it located in an area where there are a number of strong PMs? If you were to set boundaries and say no to the holding of reserves for capex (which is good idea), is all that is left the monthly reporting that is the left that is bothersome?

    Is the amount disbursed off from monthly rental income often each month?  Is there something you are looking to track down, disbusements that are lower than anticipated due to unexplained repairs? Or just an interest in monthly accounting?  

    1Reply
  • John Boland
    OP
    Rental Property Investor · Heathsville, VA · Member since 2020 · 22 posts · 7 votes
    5y

    @Joe S. "demands" makes it sound like I am asking for something outlandish... As to the post, I was looking for others perspectives on what I am experiencing...which is something I have never dealt with before. And for the "demands", I feel if someone is entrusted/hired to maintain something they should in turn be able to show the cost of doing so and documentation to prove it. That is the only "demand" being made. 

    1Reply
  • John Boland
    OP
    Rental Property Investor · Heathsville, VA · Member since 2020 · 22 posts · 7 votes
    5y

    @Alex Forest This started off with a no to the cap ex savings under his management and then turned into wanting to know more of the month to month. Outside of the rent amount, his fee, my mortgage I cant speak on where every dollar goes. I know that per the lease landscaping maintenance will be maintained by the landlord, outside of the first year I dont know if its still the same company being used and/or the same rate. It is just more and more that I am becoming aware of that im not aware to 

    0Reply
  • Loren Clive
    Residential Real Estate Broker · Paia, HI · Member since 2016 · 479 posts · 311 votes
    5y

    Whenever I do property management, I send monthly statements to clients accounting for all funds. And send them checks monthly with the funds collected minus my fees and expenses. I'm a one-woman shop--it's ******** to say this guy is too busy to be bothered with accounting. 

    The fact that your PM has not done this and refuses to produce statements after over a month is a red flag. I do NOT agree that he has done an excellent job since how do you know what he's done if you aren't getting statements? You just know what he's told you he's done. For all you know, he could be charging even more rent and pocketing the difference. 

    Get a new PM or do it yourself. 

    0Reply
  • Ned J.Pro Member
    Investor · Manteca, CA · Member since 2017 · 1k+ posts · 2k+ votes
    5y

    At this stage I don't think I would "throw the baby out with the bath water"  quite yet...... but I would definitely want more financial info to prove to me that everything is on the up and up...... guess who are the most successful con men? The ones that look like they are kicking ***, but once you really look at the hard data, they are embezzling a TON of $$

    My suggestion...... distance yourself from the "demands" of financial statements....... tell him your CPA or your lawyer needs these documents by X date ... you are getting audited on your taxes.... or some other legal issues.......and need ALL the financial statements for ALL of your investments and you need them by X date. If he cant or wont follow up with the scenario, you are in big trouble. By distancing yourself it may help you maintain a cordial relationship with the PM until you decide if you want to keep working with them... you aren't the PITA client that only has one unit that is now demanding a bunch of attention after 2 years of his service.... the lawyer or CPA is the person needing the info. You've been horrible on your end of the book keeping and now the CPA/IRS needs to see all your documents

    NO WAY in hell am I letting a PM keep my CapEx or other "rainy day" fund...... his suggestion is very sound, but you keep the $$ in your direct control.. not his....

    1Reply
  • Ricardo R.Pro Member
    Property Manager · Michigan Ctr, MI · Member since 2016 · 661 posts · 581 votes
    5y

    @John Boland thank you for posting, I read the response by @Joe Martella and wow... his assessment and view point is dead on... of course going off of the info you provided. John, I'm with you and to your credit you did say that you are just in the 'information gathering' phase and just want to be more informed because you don't know what you don't know... so that is fair. However just to highlight the mindset of where you may be approaching it... from the title of your post which is 'Me vs.  my PM'.... VS. is not typically what one uses when they see their PM as part of their team or as a valuable member in helping you make your asset cashflow dreams come true or even in giving credit to someone which has from the sound of it had your best interest at heart. There is likely much more to this than you may have been able to share on here and again, it is fair to give you the credit in that you are just gathering information but if what you initially wrote holds water I would certainly re-read @Joe Martella 's reply again. My view point: When it come to PMs it's really not about the technology or the 'flashiness' or even about the price or rates... it's more about the SERVICE and the trust, can you trust a PM to have your best interest in mind when you're not looking and even if you were completely absent (you do have owner responsibilities) -- It sounds like you can, again I don't know the full story and just going off of what you wrote, but it sounds like he has been doing just that. 

    [email protected]810-844-1104
    4Reply
  • John Boland
    OP
    Rental Property Investor · Heathsville, VA · Member since 2020 · 22 posts · 7 votes
    5y

    @Ricardo R. Fair assessment of the title. Never the intention to portray him as though he is not the keystone to the operation.

    I felt I was pretty transparent as to how involved he is and an asset. In multiple responses I said how he “has been great” and “excellent property manager”. As I was waking up throughout the day you can even see my responses mellow out.

    This was never an out of the blue fill out my form MF. He and I had the conversation through email and over the phone. Talked about the possibility of expanding my portfolio, ways to upgrade the property he manages for us into rentals in nicer areas. But, after a month of no progress on any information (a basic monthly summary), I asked again to which I felt blown off.

    There has never been a question of his performance or trustworthiness. Even the greatest carpenter can suck at paperwork. But just cause he is excellent in all other areas besides this doesn’t mean I don’t trust him, I still want to see it though.

    When I originally posted there was no true intent or should I say there was no clear question I was asking. Perhaps what I was saying wasn’t what everyone else was hearing.

    1Reply
  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    5y

    He's tried to help you and get you set up.  Most PM have a small reserve (mine does $500) to cover small repairs.  If I understand your concerns, after more than 2 years of him managing it and getting more than you would have for rent, you want him to do it your way.  

    You want him to only contact you via email, not to call or text.  Sorry, but that is a bit much.  First phone calls are much faster and easier (or in person) to sort out problems.  He's helped you out and is doing a good job managing your property.  Nothing on his end has changed.  If you don't want him having as large of a reserve should a problem arise as your place, talk to him and explain that.

    2Reply
  • Ricardo R.Pro Member
    Property Manager · Michigan Ctr, MI · Member since 2016 · 661 posts · 581 votes
    5y

    @Ned J. Wow okay... and then some wonder why their PM doesn’t want to work with them or worst winds up firing them as an owner. The PM has a system - albeit possibly outdated - but nonetheless a system which has apparently been quite effective in turning this man’s property around and on the road to success despite minimal to no input from the owner and NOW you want to inquire about it... I’m sorry but these are questions and concerns an owned needs to inquire before or during the first few months not 2 years later! This PM has his s*** straight; the owner hasn’t kept up and your advice is to been even MORE untrustworthy as an owner?

    Just a thought... how about just approaching your PM and saying “thank you so much for making sure I got paid on time and taking care of my property. I would like to be a more involved owner and start fulfilling some of my obligations, can you walk me through the history and finances of my property?”—- or you can play the CPA, I don’t need it but he needs it game.

    [email protected]810-844-1104
    4Reply
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