Possible mismanagement of my out of state properties

[Rodney B Gibson]

Hello all, I have properties out of state. For a while now I have started to notice the stories do not match the bill. In part, I can blame myself for this but now that I am a bit more committed to RE I have started to ask more questions and things do not seem right. Let me give you a quick story. Be mindful I am writing from my cellphone. On Wednesday this week, I noticed for 2 months now I had not gotten paid for one of my homes. I immediately called my property manager, no response. 2 hours later again, 2 hours later again, no response. I called her office and they put me through and she picked up. Now, let me take you back about a month. Last her and I spoke she mentioned to me that the current tenant had complained about the carpet not smelling well and it probably needed to be changed. This was going to be about $2000. I asked her about charging the last tenants and she responded with that she didn't see anything wrong. The previous tenants left. I then told her to give me the quotes of different carpet installers and we will speak about the best solution. Well, I guess she took it upon herself to make that desicion. Then, somehow she decided to take the entire payment at once without consulting me. In addition, she starts to speak to me about the ac needed to be fixed. Back to present. She gave me a story on what had happened and I did my best to remind her that we agreed on her consulting me prior to make any decisions. She said to me that I only had to pay out of pocket for $1000 dollars because she had $1000, from dog fees. Now quick math, I earlier mentioned that I had not gotten paid for 2 months, 1000 a month. I don't think I have to continue here, you all get it. THE MATH ISN'T RIGHT. She told me she would put everything together and call me back within the hour. 2 days later I finally get in contact with her assistant. Her assistant is telling me how the carpet was changed and that I was going to receive a check for the rest. Now keep in mind your ac needed repairs, but that's when I reminded her my ac had been fixed for the same issues 3 years ago, so it should be under warranty. If any, I should just had to maybe pay for the labor. She went back into the records and BOOM! It was there. I told her to send me all receipts for my own records and 24hrs later I am still waiting. Side not, Somehow she was able to mention the tenant still had to bring the rest of the check, and it just made me wonder and ask. Wait, he hasn't brought the entire check yet? Well, she said, if tenants don't make it by the 5th we charge them a late fee of ten percent. Another question, (which should be a no brainer but I still asked) who should this late fee go to? She responded, well it should go to you. Oh ok, I responded. In all the years under this property manager I have never received a single late fee charge, or damage to my home charge, or any charge for that matter. In part is my fault, I should be more aware of "my investments" but I am glad I see things a bit more clear now. Lesson learnt right?

[Steve Rozenberg]

I think there are many valuable lessons in here if they can be separated out and gleaned from this. 

1 major thing is that this is your your business and ultimately your model will succeed or fail based on the business model you have and the people on your team. 

You are the ceo of your rental business and they are the operating system that does the daily operations just because you hired a company does not mean you stop being the ceo of the business. You job is the trust / but verify. You do that thru reports and metrics. If they have a bad model and it does not align with yours then it falls on you to address it and fix it or remove them from your compny. They say the fish stinks from the head down. The problem normally starts with bad leadership and abdicating the role of ceo and replaced with hope and pray they do their job. 

I think there is a “stupid tax” that we have all paid in our investing career. This was yours, be glad you did not get sued or worse lost everything you own. Take it as a lesson, fire them and find a team that is aligned with you, your business model, and your investing goals