Cheap private landlords - story time

[Calvin Thomas]

It amazes me on how cheap some landlords can be. I hear this all the time on BP and other forums, and it just amazes me on how cheap some people can be on managing their own damn property. Something they've likely paid hundreds of thousands of dollars for. I had breakfast with another property manager, and we got to talking about the business.  How managing internally is different or the same as managing other peoples' property.  He gave me three scenarios which were absolutely crazy.

One was from a landlord who used to live in Paterson, NJ, many decades ago and has had a realtor friend manage the property for the last few years while they are retired in Italy. They pay the realtor 300 bucks a month to oversee their property.  Apparently, the realtor no longer wants to do it, and wants to hire a PM to manage their property for 500 dollars a month.  It's a four-family, prob. needs updating, and they've not increased the rents each year.  In New Jersey, since the state is guaranteed renewal and most municipalities max out how much you can raise their rent, it's imperative that landlords raise their rents every single year.  Some municipalities, such as Jersey City, Hoboken, and Weehawken, will not allow you to raise to market once the tenant leaves, and it's now a vacant unit. Thus, again, raising rents by 3% or 4% each year is imperative.

Anyway, the PM told them it would be 10% a month gross rents, and the owners got very angry and upset.  They said it was highway robbery on such an easy property. They'd also make a profit if they paid 10%.  They hung up on the PM and then found a cheaper PM.  The PM said the landlord called back a few months later asking to revisit their management service as during the floods, their current management did nothing, and now they have some issues.

The second one was in a townhouse in a wealthy NYC suburb.  A couple, who relocated to an Asian country needed a PM to take over.  They called this PM and he prepared all the paperwork, rental estimates, etc.  They said he was too expensive since there was little work to do aside from turning the unit over and collecting the rent. They also went with a realtor who filled the unit and collected the rent. This landlord owner is now facing an eviction proceeding since the person they approved to put into the townhouse stopped paying rent after moving in. 

The last example was a real whammy.  This genius lives in south Jersey and decides he could manage his Hoboken property from his home in south Jersey. He listed both apartments by himself, and as soon as the tenants moved in, they stopped paying rent shortly after.  He cried uncle and hired this PM to fix everything; which he did.  He was charged around $4k for legal fees to remove the tenants, and $900.00 for each eviction and removal by the property manager. The later fee was for a PM to meet the court officer, remove the tenant, write a report on the condition of each unit along with pictures and a video. Lastly, all locks were changed.

Landlords, for the sake of all your sanity, hire a PM if you are not local. The money you are saving in the beginning can bit you in the butt big time in the end. Some of you are counting pennies while writing checks for dollars.'

Rant over.