PLS HELP!! Property manager spend $8k over budget

[Joshua Lanzieri]

Hi I had my property manager handle my renovation on a unit in Maine while I am living in Connecticut. I specified that my budget is $15,000. After she gave me the numbers, I calculated the rehab to be around $16,000 which I was fine with.

I saw on the app we use to track expenses that there were small charges for the rehab which I was fine with. Today an almost $19,000 charge came in which totaled the renovation charges to almost $22,000. I cannot afford another above the $16,000 which is why I told her $15,000 was the budget.

I also stated to let me know of any extra charges that come up so I can watch the number. And out of no where a $19,000 charge comes out.

What do I do?? I’m a young investor and have no money. And I feel like I got took advantage of. I also cannot afford this.

[Greg Scott]

Hard lesson. 

Open ended contracts, particularly verbal ones, usually end badly. This is a lesson I have learned on a few occasions.  Always have a detailed scope of work and a price in a written contract.  

Path forward. 

Have a frank conversation with the property manager.  It is fair to express your disappointment that they exceeded the cost target you gave them.  On the other hand, don't assume they were screwing you. It could be the rehab they did was the right thing for the property and one that might get you more rent. It could be that the decision makers were not aware of the ceiling on your budget.

The hard part will be explaining you cannot pay the overage.  You will need to work out a mutually-agreeable solution.  Yelling won't help.  This is where keeping a cool head and using good negotiation skills will likely yield the best outcome.

Good luck.