Turn-key bumpy start

[Account Closed]

Hello BP

I’m off to a bumpy start with a turn-key company. I’m weighing my options and any input would be greatly appreciated.

I purchased a new construction SFH in Atlanta suburbs (Covington). I live in San Francisco. The company told me the houses won't be vacant for over 60 days max, normally rented much faster. Also, rent projections are within $50 of accuracy. In reality, the house sat vacant 4 months (around the holidays) and I ended up agreeing to rent it for $175 less than projected. 43% less cash flow than projected.. I'm already un-happy and tell them they should correct it somehow. They offer to pay the leasing/marketing fee - $900.

Next month I see the bill for $900 leasing fee + $300 for a repair since there was no hot water (in a brand new house - they were responsible for overseeing that the hot water heater was up and running before closing). The house is under warranty and they could of had it sorted out for no cost (if contacted builder) but they went with their own plumber and I can not get reimbursed now. They are not budging when I tell them I need to be reimbursed.

Lots of problems already. The turn-key company partners up with a local PM. With all of these problems in the first 5 months, it’s clear that I need to cut them all out..

• Should I be interviewing PM's in Atlanta?

• How crazy of an idea is it to manage it myself, from CA? I have recommended plumbers, electricians, and handy-men. The house is brand-new and the hope is that it’s not going to be high-maintenance..

I’ve been told turn-key can end up costing you and now I’m paying the price. Thanks for your time, in advanced...

Ryan

[Chris Clothier]

@Account Closed up in Ohio.  I think they do a stand-up job and offer good, detailed practical advice. You don't find him just cut and pasting comments across the forums - he really tries to give good advice.  But,... :)

Saying that the holidays are going to be slow and you should expect a longer vacancy and saying that rental rates are expected to be lower during the holidays is stinking thinking.  Our words have power.  The old way of managing property has to go out the door when you are trying to reach a level of excellence (and all of us as service providers should be trying to reach perfection).  If we as business owners and service providers set the expectations low, then our companies will hit those expectations.  If we voice that it is ok and acceptable to have slow months and to miss our investors expectations that WE SET FOR THEM...then what is the point of trying to be a great company.  We all might as well be average.

The mindset of every management company should be that the old rules are out the window.  Why should an investor expect a longer vacancy at the holidays?  Why should an investor expect to receive a lower rent on a property that rents at the holiday?  They shouldn't!  That should be unacceptable.

This isn't about me so there's no need to post number or stats or any of that BS, but we are an example of simply changing what is acceptable as business owners and therefore changing the expectations of investors.  There are no slow periods anymore.  

You cannot miss a rental rate by $175 without making up the difference.  You cannot have a $900 water heater bill and simply explain it away as we had to get it taken care of immediately without using the warranty.  That may be the case, but somebody owes Ryan that money.  That bill should not be on him.  

Ryan, simply saying that Turnkey costs you more in the end is not true.  That is not always the case, but it will be the case if you don't take a few steps to correct it. I hate that you are having this experience.  You need to get the management situation cleared up quickly and I would hound the (insert word!) out of the company I bought this from for a return of my losses.  

They set your expectations and failed miserably to hit them.  I also think you have to let the general public know who you dealt with.  It will hold them accountable and give them an opportunity to make it right.  Even if it takes them dealing with a little bad press, if they do the right thing, you are made whole and can move forward in a different direction.