Switched PM and discovered the property is gutted ...old PM ghosting us.

Memphis, Tennessee
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Switched PM and discovered the property is gutted ...old PM ghosting us.

Matt Stephan
Member since 2023 · 4 posts · 2 votes

I'll try to keep brief, looking for anyone who has gone through this even on a small level and what their path was.

First time out of state investor, BRRRR'd a property in Memphis (B- area) finished in May 2024. Bought house and did $30k rehab (down to studs) with one company and also agreed to do first year PM with them. Long story short, PM communication non-existent, currently owed 3.5 months missing rent (We have received rent payments but NEVER without hounding them) and overall have been provided no awareness of the property status. First tenant supposedly moved out in May 2025 and I saw a couple pics on Zillow of the property (1 year since full rehab) and the place looked beat up. Since I cannot ever get any reply from them and needed this place rented, I switched PMs.

New PM's first visit to the property they share shocking photos/video that the house is trashed and gutted; ALL cabinets, toilets, furnace, ac unit, furnace, shower heads, gas meter (Apparently removed because of non payment and possible detection of gas leak) ...GONE. Evidence that repairs that were in the rehab contract were not done (hole in new flooring revealed rotted joists that were to be replaced.) $20k estimate in repairs and replacement.

I was never notified by the old PM as to any of this, I have no idea how long the property has been like this, I have a tenant contract from the PM but I don't even trust that. The theories I've considered 1.) The full rehab was never really done or not to contract (It was appraised and inspected during the refi so...)  2.) The company did not pay the vendors from our draws during rehab and the Contractors came and took materials back for no payment? (Both doors have evidence of being forced open and then re-secured) 3.) Vandalism and theft (Why was I not then notified by the PM?)

I also have another BRRRR with this company that is now 4 months behind schedule and I can get absolutely no replies on its status. I'm financially invested but this massive red flag is making me consider my exit strategy.

At this point for the first property I'm filing a complaint with TREC, new PM is helping file a police report, calling my insurance, going to most likely have to lawyer up and I have to move forward with repairs as I need the property rented ASAP. I'm also having the new PM check on the 2nd property under rehab but at this point I'm not sure it even exists:)

Has anyone experienced this? Is this a massive scam in Memphis or just a horrible company? I have to think the old PM has to have some accountability or liability in this? 

I'm committed to real estate investing, but this is a scenario I could never have imagined and I'm looking for any wisdom or guidance. 

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Chris ClothierBusiness Member
Rental Property Investor · memphis, TN · Member since 2009 · 2k+ posts · 3k+ votes
1y

You got scammed. You have to tell people who you are talking about if you really want to find out what is going on. It happens every day in every city - not just Memphis. You bought a property from a company expecting a full BRRRR. This is extremely difficult when you are hands-on, and the risks skyrocket when you try to invest this way from afar passively.

It is doubtful that the property you purchased was in a B- area, as you indicate.  It is impossible to take a house to the studs for $30,000 unless it is a cracker box, and even then, it is still unlikely.  You got hoodwinked all the way around, and whoever you bought the property from, hired to do the renovation, and agreed to manage are all in on it. 

You need to get to Memphis and get your head around what you've bought, where it's located, and put your eyes on the people who can actually get you out of the mess you're in.  Your exit strategy will be clear when you have a full accounting of what you've invested in and what the current value of your properties is.  

You can do an autopsy of mistakes later.  Right now, my advice is to take quick action and figure out what you have.

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  • Chris ClothierBusiness Member
    Rental Property Investor · memphis, TN · Member since 2009 · 2k+ posts · 3k+ votes
    1y

    You got scammed. You have to tell people who you are talking about if you really want to find out what is going on. It happens every day in every city - not just Memphis. You bought a property from a company expecting a full BRRRR. This is extremely difficult when you are hands-on, and the risks skyrocket when you try to invest this way from afar passively.

    It is doubtful that the property you purchased was in a B- area, as you indicate.  It is impossible to take a house to the studs for $30,000 unless it is a cracker box, and even then, it is still unlikely.  You got hoodwinked all the way around, and whoever you bought the property from, hired to do the renovation, and agreed to manage are all in on it. 

    You need to get to Memphis and get your head around what you've bought, where it's located, and put your eyes on the people who can actually get you out of the mess you're in.  Your exit strategy will be clear when you have a full accounting of what you've invested in and what the current value of your properties is.  

    You can do an autopsy of mistakes later.  Right now, my advice is to take quick action and figure out what you have.

    Podcast Guest on Show #224
    REI Nation4.577 Reviews
    WebsiteView Page
    7Reply
  • Mike Kirby
    Rental Property Investor · New Braunfels, TX · Member since 2021 · 289 posts · 256 votes
    1y

    I 100% agree with @Chris Clothier, get yourself to Memphis and see what you really have. 

    0Reply
  • Adam BartomeoBusiness Member
    Real Estate Broker · Cape Coral, FL · Member since 2015 · 2k+ posts · 1k+ votes
    1y

    This is case and point of how important it is to have a team in place. Although, @Chris Clothier is correct when you are first starting, once you have a trusted team in place you can handle everything from a far. We work with lots of investors that have never seen their property but we send them enough info that they know what is going on.

    I am a little surprised to hear that this was a scam and even more surprised on how intricate it would have to be for someone to get scammed.

    [email protected]239-339-3969
    Bartomeo Property Management4.7150 Reviews
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  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    1y

    They are right ^^^^You must get your OWN eyes on your property. Never trust anyone else. This is on you as much as anyone. Even if this new company appears to be better, or even if you have a 'team-in-place' down the road, you still need to get to the property(s) at least once or twice a year. If you cannot/will not do this, then I would get into a different investment strategy...there are easier and safer ways to make a dollar......

    1Reply
  • Camille T.Pro Member
    Member since 2019 · 45 posts · 33 votes
    1y

    On rehabs I always pay as you go with contractors--I will pay for materials, then at the end of the workday I have them facetime me and show me the work they have done that day.  Then I pay them  for that day's work.  I do that even with contractors I've used many times.  And I walk my out of state properties in person at least every 6 months.  

    0Reply
  • Tyler Tapley
    Real Estate Agent · Memphis, TN. · Member since 2018 · 175 posts · 101 votes
    1y

    Gosh that sounds terrible.  We take videos and share it with potential buyers and sellers.  I've seen too many photos where people will use a photo of a furnace in an attic (or a water heater) and it is to a different property than the one they own.  Very sorry yo hear all of these issues.  We are happy to help if needed.

    0Reply
  • Jay HurstBusiness Member
    Lender · Dallas, TX · Member since 2017 · 1k+ posts · 1k+ votes
    1y
    Quote from @Matt Stephan:

    I'll try to keep brief, looking for anyone who has gone through this even on a small level and what their path was.

    First time out of state investor, BRRRR'd a property in Memphis (B- area) finished in May 2024. Bought house and did $30k rehab (down to studs) with one company and also agreed to do first year PM with them. Long story short, PM communication non-existent, currently owed 3.5 months missing rent (We have received rent payments but NEVER without hounding them) and overall have been provided no awareness of the property status. First tenant supposedly moved out in May 2025 and I saw a couple pics on Zillow of the property (1 year since full rehab) and the place looked beat up. Since I cannot ever get any reply from them and needed this place rented, I switched PMs.

    New PM's first visit to the property they share shocking photos/video that the house is trashed and gutted; ALL cabinets, toilets, furnace, ac unit, furnace, shower heads, gas meter (Apparently removed because of non payment and possible detection of gas leak) ...GONE. Evidence that repairs that were in the rehab contract were not done (hole in new flooring revealed rotted joists that were to be replaced.) $20k estimate in repairs and replacement.

    I was never notified by the old PM as to any of this, I have no idea how long the property has been like this, I have a tenant contract from the PM but I don't even trust that. The theories I've considered 1.) The full rehab was never really done or not to contract (It was appraised and inspected during the refi so...)  2.) The company did not pay the vendors from our draws during rehab and the Contractors came and took materials back for no payment? (Both doors have evidence of being forced open and then re-secured) 3.) Vandalism and theft (Why was I not then notified by the PM?)

    I also have another BRRRR with this company that is now 4 months behind schedule and I can get absolutely no replies on its status. I'm financially invested but this massive red flag is making me consider my exit strategy.

    At this point for the first property I'm filing a complaint with TREC, new PM is helping file a police report, calling my insurance, going to most likely have to lawyer up and I have to move forward with repairs as I need the property rented ASAP. I'm also having the new PM check on the 2nd property under rehab but at this point I'm not sure it even exists:)

    Has anyone experienced this? Is this a massive scam in Memphis or just a horrible company? I have to think the old PM has to have some accountability or liability in this? 

    I'm committed to real estate investing, but this is a scenario I could never have imagined and I'm looking for any wisdom or guidance. 


     If you do not have the time or cash to visit the property you are looking to buy out of state, do not invest out of state. I can almost guarantee that this house is no where close to a B- neighborhood. 

    Hurst Real Estate, INC4.991 Reviews
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    0Reply
  • Tyler Tapley
    Real Estate Agent · Memphis, TN. · Member since 2018 · 175 posts · 101 votes
    1y

    I don't want to step on any toes...but if you private message me I am happy to review and possibly even go by the property and take a video for you (I would need the address and the keybox codes).  Just trying to help...if you have an assistant or think your new management company is doing a good job then no problem at all.  I don't manage property (and I'm not a contractor) I'm just trying to help if needed.  There are a few really bad turnkey companies that are taking money from people and not doing the rehab or doing an incredibly poor job and hoping the properties refinance somehow.  I just had one where I went to it and there is literally no driveway...you'd have to park on the street and walk up to the house.

    0Reply
  • Larry Myer
    Real Estate Coach · Nationwide · Member since 2014 · 12 posts · 12 votes
    1y

    Hi..I have over 40 years of real estate experience in the turn key investment business here in Kansas City.  My entire practice was out of state and out of country real estate investors.   90% of my business came from investors just like you.  Causalties from bad PM, money missing, squatters, rent scams and on and on.  Instead of a fancy house logo on my business cards it shoudl have had a janitor with a broom because thats what I became known as...the clean up guy.   I fixed bad management messes and made them work.   All my business were C and D properties.   

    When I took over a portfolio I suggested the owner come in town to meet so we could both see what wewere working wih.  We would work up a realistice game plan with SOW, budgets, when and how funds would be transfered to make repairs.   I would also aske for contact information for your team--attorney, insurance, contractors so I copuld help coordinate all angles and hit this project from all angles.   I would also sit down with previous PM to get keys, tenant files and back stories on tenants.  Sometimes they cooperate sometimes not.   

    If they are required to be licensed to manage then stste REC is another bullet that could be fired if they do not cooperate.  

    Most of the time I could make things right--over time.   Sometimes the portfolio was too far gone, owner was completely out of cash or just plain fed up.   Then help with an exit plan while mitigating damages.

    You are not alone.  Sadly there ae managers that prey on out of towners because they are here and you are not.   Trust but verify...Ronald Regan.

    Larry Myer 

    1Reply
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