Property manager ripping us off?

Question

Hey guys,

So my grandfather passed away about 6 months ago and my mom inherited 2 motels totaling about 40 units. Our area brings in people from all over to work at oil refineries on a contract basis for about 2-4 weeks at a time and this keeps her motels full for most of the year. A lot of tenants pay in cash.

The property manager that had been managing the two properties and living in one of the rooms left shortly after my mom inherited it, forcing here to hire a new lady. She lives in one of the rooms, collects the money, does the books, and make sure rooms are cleaned daily by her team of maids/handymen. For the past couple of months she's been reporting that only a few rooms at each motel are booked, while the cleaning ladies and maintenance staff are telling my mom it's booked to capacity. The manager is showing off to my mom her $100 hair cut, her brand new furniture in her room at the motel, and taking her family on $2000 cruises (bragging about how expensive these things are). My mom is losing money and believes she's getting ripped off but she doesn't know how to go about proving it and confronting her.

My question is: what can I do to help her? Is there some sort of system we can use to hold her accountable? Or a way we can prove that she's stealing from my mom?

Any and all advice on how to handle this situation is greatly appreciated. I feel terrible for my mom and know she's tired of the constant stress this has put on her. I want to step in and help her solve this problem.

Thanks!

Ravi P. · Answer

Sorry, I tried to edit a word on my previous and accidently hit post.

...you can compare the housekeepers daily room list to the in-house and departure list. Same with the handyman. Have him keep a log of all rooms he does work in.

Also based on the lack of business you can fire her and let her know that you cannot afford to keep her since the business has dropped.

Maybe you can pay a little more and hire a manager with experience. Check out HCareers.com they have a many folks looking for hospitality related jobs.

Let me know if you have any questions. I don't know everything but will do my best to help. I have some experience working in the hospitality business.

Good luck

John Thedford · Answer

I will consider doing a spot check going by there in the evenings about 8 o'clock and knocking on about 10 different doors see if somebody opens the door and just tell them oh I'm sorry I have the wrong room then compare your notes to what the manager claims is rented

Ravi P. · Answer

It is obvious the live in PM has to much control and no oversight. Or becuase your mother inherited these properties she may not be too familar with the business and operations.  You need to have a segregation of duties. This is too difficult with smaller propertiesyou do not have the scale and revwnues to have layers of management. The quickest approach is to have someone there to oversee the property. Working right along side of her. Also, if you do not have one already consider getting a hotel property management system (pms). Do you also have an electronic lock or do you still use a keys. Moving to a pms and electronic locks are much easier to audit. Depending on the pms and electronic locks they can intergrate and make the audit far more realiable. Also housekeepers should be keeping a log of rooms that were cleaned and wether this . Compare

Ravi P. · Answer

@Marcus LouvierAccount Closed

I do not think selling will be that easy. It is difficult to sell an asset that has a negative cash flow and even harder to convince anyone that the property was worth acquiring. As a fellow investor you would want to sell for the highest value possible. You already have an investment and turn it around and then sell. This would be an ideal investment for an owner operator that would live on site.

Account Closed · Answer

Easiest option is to sell the properties, which would give you options to decide how to invest or distribute the money to your liking.

Evan Thomas · Answer

Taking off from Ravi's point about firing the current PM due to lack of business, you could do possibly:1. Fire the current PM immediately2. Hire a local property manager that would generally work on small/large multi-families3. And while that more expensive monthly PM is keeping you afloat in the near term, you can get busy using HCareers, Indeed, SimplyHired, or another outlet to find a long-term, live-in property manager who can diligently manage the motels.

Once you have the new PM your mother will have enough time & money to research a little bit about the systems that will keep her new PM accountable. In less than 6 months your mom should have two cash-flowing properties that she can hold on to or sell at a better value.

Joel Owens · Answer

This guy does hotel impossible. Maybe he does consulting work or his company does.

http://www.anthonymelchiorri.com/

Additionally you might could offer to joint venture with a larger hotel operator and give away some of your equity if certain milestones are hit.

For instance you own 100% of something worth 1 million or 70% of something worth 2 million 1,400,000

So it's not always the percentage but what you get in return. Some owners doing a joint venture will put in the buy in partner has to hit certain profit and volume goals to get the percentage of ownership in the deal.

Thomas S. · Answer

If the properties are only 10 minutes away from where she lives and she does not know whether the PM is stealing or not her only option is to sell. It is very clear she has no desire to be involved in the operation of the business.

Property manager ripping us off?

Most Popular Reply