A sad story and a question

[Rory Snyder]

Hi everyone — first-time homeowner and first-time poster here.

My wife and I recently purchased an investment property through a broker we thoroughly vetted and felt confident in. They found exactly what we were looking for: a newly renovated home with a new roof, new appliances, and a tenant-ready setup. The property itself has lived up to expectations, and we were initially very happy with the purchase.

Unfortunately, the issues began with the property management company that the broker recommended.

For the first few months, everything seemed fine. Toward the end of last year, however, rent payments started arriving later and later until they stopped appearing at all. We immediately followed up with our main contact at the PM company. After about a month, they resolved the issue, but something still felt off.

Earlier this year, we discovered that our contact’s business partner had been committing serious fraud. We’re still piecing everything together, but from what we understand, this partner was placing unqualified tenants in managed properties, neglecting basic repairs, promising housing subsidies that didn’t exist, and ultimately disappearing.

We’ve since hired a new property manager after thoroughly checking their credentials at both the state and federal levels. However, the financial impact has already hit us. We’ve lost several months of rent, need to cover repairs to get the property back in proper condition, and never received the previous tenant’s security deposit. Additionally, because of the inflated rent rates the fraudulent PM was posting, we had been getting a higher that market rental rate. Now that we've switched to a new PM, they have since proposed a lower rental rate that will only just cover the mortgage without any extra wiggle room.

It hasn’t been the start to real estate investing that we hoped for.

This brings me to my question: is it worth approaching the original broker about the situation and asking for some form of resolution?

The broker is aware of what happened and did assist with some early communication before the full scope of the issue came to light, but they haven’t taken further action. My wife feels there may not be much they can realistically do. I understand that perspective, but my trust has been shaken, and I’m struggling with how to view the situation — especially since we had a very positive experience with them before all this. In fact, we were even considering purchasing another property through them.

I’d appreciate any advice from those with more experience. We’re still learning and want to make thoughtful decisions moving forward.

[Chris Seveney]

Several questions I have is:

1. How is placing unqualified tenants fraud? Tenants can stop paying rent. Its not uncommon.

2. Were the tenants making requests for repairs? While a tenant is in the property the PM typically does not enter unless a repair requested. 

3. Repairs are a common part of owning a rental. what types of repairs were required and were they due to tenantdamage?

4. You mention you were getting higher rent and now less but its the original PM's fault you were getting higher rent? I am not following? What market is this in and are rents down in the market?

You will only spend money chasing something that does not exist, this is the reality of owning real estate which is why we talk about this a lot on these forums that real estate is not easy even though all the gurus tell you it is.