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Fall of a Property Manager – Part II

Richard Warren
2 min read

Last week’s article (Part I) discussed problems with a small town property manager – the only one in town. What started as bad business, being unresponsive and unreliable, soon turned into something much worse. He was apparently operating on a shoestring budget and cutting corners at every turn. It’s quite possible that he meant well initially, but things soon spiraled out of control.

This occurred in the small northeastern mining town of Ely Nevada. While it is four hours from where I live, I have spent enough time there to have a good feel for the area. A networker by nature, I have made a number of very good connections that proved invaluable in this case. When the trouble began I started asking around; what I learned was disturbing to say the least.

A Litany of Complaints

One of my connections is a prominent Realtor who absolutely loves her hometown. She started hearing the horror stories about the property manager as more and more people shared their tale of woes with her. When I talked to her about mine she told me about the others and I asked her to put these people in touch with me. In no time at all I had collected quite a few stories.

A small sampling of the alleged complaints:

  • A woman from California who was told her rental was vacant. She discovered that it was indeed rented and the property manager was pocketing the rent.
  • One landlord was told that she needed a new garage door at a cost of $1900. She thought that was excessive and called a local company to find that not only had they provided the property manager with a quote on that house, the quote was for $900.
  • Another out of town landlord had numerous charges for maintenance work deducted from rent proceeds without being provided with invoices. When he demanded proof the requests were met with excuses.
  • Several cases of rent being collected but not forwarded to the property owners.

A common thread in all of these cases is that the landlords are all out-of-towners. Since they don’t live in the area it is easier for the property manager to avoid them. He probably assumed that they would be reluctant to take action because it would be inconvenient. That certainly wasn’t the case with me and he obviously had no idea who he was dealing with.

My Case

I hired the property manager to find a tenant for a two-bedroom house that had recently gone vacant. Someone called me directly about it and I instructed them to contact the property manager. He had them sign a lease agreement, give a security and key deposit, and first month rent. He left me a message saying the property was rented. That was my last contact with him.

Two weeks after that message I called him to see where my money was. I received no response and called a few days later. I got someone on the phone who claimed that they were having some bookkeeping difficulty but the money would be sent in a day or two. By law he has thirty days to forward the funds so I had no real recourse at this point. I was now leaving messages on a daily basis without response.

By this time the situation was disturbing enough that I had my attorney get involved. She sent him a letter terminating the management agreement and demanding immediate payment of all funds collected. Of course it was ignored. The tenants were also notified that they would be paying me directly from this point forward. The bad news was that the tenants had already paid the next month’s rent. Between rent and security deposit the property manager had collected in excess of $2,000 but I had not received a dime.

Next week: Part III – Striking Back

Honesty is for the most part less profitable than dishonesty.Plato

Photo Credit: Christopher Sessums

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.