AP at larger properties

[Bruce Lynn]

Is it pretty common for larger mutlifamily to have big AP?   Is that just part of the AM/PM strategy?

I'm hearing more about AP on takeovers that the new ownership did not seem to have knowledge of, and high AP at existing properties that have cash flow issues.   I'm kind of surprised that vendors will keep providing services if their bills aren't being paid?   Does the PM/AM just keep switching vendors to see what they can get away with as times get tough and vendors cut off services?   Seems like word would get out, but maybe there are enough smaller vendors looking for work that they're willing to take a chance.

I remember back in the day there were issues with banks/lenders wanting us to take on AP for them with all the property preservations.  Utilities, lawn mowing, locksmith, etc.  They were notorious for not paying.  I'd end up putting it on the closing statement and not budge off of that.  They'd get so mad, that it made me think there was a strategy to get us to eat the costs.

[Greg Scott]

After closing on our first big apartment complex, we found out that the prior owner had not been paying any of their vendors.  They were a very unethical group.  They had been burning through vendors.  One of our biggest challenges in the first few months was to get vendors to come out to work on the property.  We had to go meet many vendors in person to show we were not that company from New Jersey that stiffed them.

We don't operate that way.  We always pay our bills on time. 

At that same property, we now have great relationships with our vendors.  They help us out in many ways, often just as a favor.  They have gotten so comfortable with us that sometimes we have to ask them to please bill us for stuff they should have invoiced weeks or months ago.