Problems with OOS Property Tenants

[Manco Snead]

Greetings,

Looking for thoughts on the following scenario. 

My first OOS duplex, owned for one year.

Side by side, 1976, clean neighborhood, nice backyards

Purchase price: $200K

Total rent/month: $2000

Mortgage: $1000  Rate: 3.75%

Fired PM #1 after 6 months. Duplex needed more rehab work than I anticipated; PM #2 didn't help much to coordinate contractors, so I did it all remotely; royal hassle. Now finally in good shape, $20k later. PM #2 better than PM #1, but not very proactive and seems to do the minimum.  PM #2 put in tenants a few months ago and already have problems with BOTH tenants paying rent. The last year has been hassle after hassle with this property. If the PM can't resolve current tenant issues I may be out of steam and sell. I've spent hours researching PMs in the area; there seems to be no options that would be an improvement over the current one.

If I sell I think it best to get rid of current tenants with paying issues as they would decrease home value. Then just sell it vacant.

Any thoughts on this?

Much thanks.

[Greg Scott]

In my experience, if one can fight through the problems, the result is better than selling to get rid of the headache.   I would only sell if there is some problem with the physical property that cannot be resolved.  You have a property that looks like it can make great cash flow and have a great interest rate.  Many would fight for an opportunity like you have in front of you.

It seems that part of the problem was relying on the PM for rehab.  Most of them do not have that skill set.  They are fine with minor repairs, but anything that requires coordination of contractor, they are usually not your best choice.  It appears you came to that conclusion as well.  Of course, trying to rent a property that is not in good condition tends to attract residents that are not good residents, so depending on the timing of when the repairs were completed, that may have created another issue.

If a resident hasn't paid, they should be evicted. Assuming that is the case, why haven't they been evicted?  I would fire the PM for not processing evictions in a timely fashion.

If they paid, but simply paid late, why are you getting involved?  Residents pay late all the time.  It is the property managers job to collect, and if they do, they have done their job.  If late payments bothers you, have a conversation about it with your PM.  You can non-renew these residents at lease-end and move on to better tenants.  For the next set of residents just up your screening criteria.  That will make it more likely that you never have a late payment.  Keep in mind that higher quality residents have more choices so you may have to be more competitive on rent and/or have a higher quality product.

If you want to change PMs, I'd look at NARPM.org.  https://www.narpm.org/find/pro... I like PMs who manage property for a living, not realtors who do it as a side hustle.  The ones that have designations are usually pretty serious about managing properties.

Good luck