Not happy with my PM Company. Need Advice please

[Michael Lewis]

Hoping for some advice. I recently purchased a property in Cleveland from a Turnkey company. I have another property in escrow also in Cleveland with he same TK company however recent events have made me apprehensive as to whether I'd like to move forward or pull out of escrow. Here's why. This is month 4 and apparently my tenants check came back NSF. However I was never notified of this when it happened. Instead when I recieved my Owner Statement on Nov 15th it clearly stated NSF and no funds have been deposited. I had to reach out the PM(by email of course because reaching a live person is IMPOSSIBLE) I was told that apparently the tenant had an issue with their bank and would come in that evening with a money order(which they never did). Ok here's my gripe. #1) When was my PM company going to notify me that a payment wasn't made? #2 Why haven't they started the eviction process? #3 I signed a 6 month rent guarantee with this TK/PM company and when I made mention of this they said yes you're right if no rent is paid by end of month we will definitely pay you full rent(Why wouldn't they make me whole on the 15th and try and collect from the tenant to reimburse themselves?) I am keeping their name out of this as a courtesy to not tarnish their seemingly good reputation. Is this the behavior I should expect from a solid PM company? If so, I cant say that I'm satisfied and I'm about 80% sure I'll pull the plug on my second Cleveland property that is expected to close in a week as I just don't feel comfortable. I live in CA and need eyes and ears I can trust managing my property(s). Any advise is GREATLY appreciated.

[James Wise]

@Michael Lewis

This is a major over reaction on your part. By your account it's the 15th of the month & you've already been notified of the payment issue, yet you are also upset that you haven't been notified of the payment issue. How much sooner & in what way are you expecting to be notified?

The only possible gripe you can have that would have some legs would be that they are sending you an owner statement as opposed to providing you with an online portal to possibly view things sooner but to expect them to call you about every minute detail the moment it happens is not a realistic expectation. They cannot call you the day it's late & then everyday thereafter to personally update you on this tenant's rental payment. The rent collection process is not as smooth as some believe. There is some serious leg work that goes into collecting rent from tenants. On top of that tenants say a lot of things that do not come to fruition & or get followed up on. Contacting you about every minor update that likely won't come to fruition would be a waste of your time, their time & result in them managing your property for net loss when you factor in the time & labor involved in all of these unnecessary updates.

Let's take a look at the two ways that this could go down.

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The rent is due on the 1st & the tenant doesn't pay it. 

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Option 1. 

Property Manager personally contacts you every step of the way.

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Day 2.

Property Manager calls tenant about the rent not being paid. Tenant does not answer, Property Manager leaves voicemail.

Property Manager calls to tell you the rent hasn't been paid. You become upset. Property Manager fields multiple questions from you that they do not have the answer for or at best can only provide you with speculation.

• Why didn't the tenant pay rent?
• Do you think the tenant will pay rent tomorrow?
• Should we start the eviction process?
• How much will the eviction cost?
• Does this happen often?
• What are you going to do to get the tenant to pay the rent?

Day 3.

Property Manager calls tenant about the rent not being paid. Tenant does not answer, Property Manager leaves voicemail.

Property Manager calls to tell you the rent hasn't been paid. You become upset. Property Manager fields multiple questions from you that they do not have the answer for or at best can only provide you with speculation.

• Why didn't the tenant pay rent?
• Do you think the tenant will pay rent tomorrow?
• Should we start the eviction process?
• How much will the eviction cost?
• Does this happen often?
• What are you going to do to get the tenant to pay the rent?

Day 4.

Property Manager calls tenant about the rent not being paid. Tenant does not answer, Property Manager leaves voicemail.

Property Manager calls to tell you the rent hasn't been paid. You become upset. Property Manager fields multiple questions from you that they do not have the answer for or at best can only provide you with speculation.

• Why didn't the tenant pay rent?
• Do you think the tenant will pay rent tomorrow?
• Should we start the eviction process?
• How much will the eviction cost?
• Does this happen often?
• What are you going to do to get the tenant to pay the rent?

Day 5.

Property Manager calls tenant about the rent not being paid. Tenant answers & says that that they will pay the rent on day 11.

Property Manager calls to tell you that the tenant is going to be paying the rent on day 11. Property Manager fields multiple questions from you about this new agreed upon arraignment with the tenant that they do not have the answer for or at best can only provide you with speculation.

• Why didn't the tenant pay rent?
• Do you think the tenant will be able to pay rent on day 11?
• Does this happen often?
• What happens if the tenant doesn't pay rent on day 11?

Day 11.

The Tenant does not pay rent as agreed to on day 5.

Property Manager calls to tell you the rent hasn't been paid as agreed to on day 5. You become upset. Property Manager fields multiple questions from you that they do not have the answer for or at best can only provide you with speculation.

• The tenant said they would pay the rent, why didn't they pay the rent?
• Do you think the tenant will pay rent tomorrow?
• Should we start the eviction process?
• How much will the eviction cost?
• Does this happen often?
• What are you going to do to get the tenant to pay the rent?

Day 12.

Property Manager calls tenant about the rent not being paid. Tenant does not answer, Property Manager leaves voicemail.

Property Manager calls to tell you the rent hasn't been paid. You become upset. Property Manager fields multiple questions from you that they do not have the answer for or at best can only provide you with speculation.

• Why didn't the tenant pay rent?
• Do you think the tenant will pay rent tomorrow?
• Should we start the eviction process?
• How much will the eviction cost?
• Does this happen often?
• What are you going to do to get the tenant to pay the rent?

Day 13.

Property Manager calls tenant about the rent not being paid. Tenant now agrees to pay rent on the 15th.

Property Manager calls to tell you the will be paid on the 15th. Property Manager fields multiple questions from you that they do not have the answer for or at best can only provide you with speculation.

• Why didn't the tenant pay rent?
• Do you think the tenant will pay rent tomorrow?
• Should we start the eviction process?
• How much will the eviction cost?
• Does this happen often?
• What are you going to do to get the tenant to pay the rent?

Day 14.

Tenant calls Property Manager to say they will now be paying on the 16th & not the 15th.

Property Manager calls to tell you the rent will be paid on the 16th, not the 15th. You become upset. Property Manager fields multiple questions from you that they do not have the answer for or at best can only provide you with speculation.

• Why did they change the date?
• Should we start the eviction process?
• What are you going to do to get the tenant to pay the rent this time?

Day 15.

Property Manager sends out your monthly report. It states that the tenant hasn't paid rent & that the property manager's policy is to issues 3 day notices to all of their tenants who have not paid their rent yet in the next day or so depending on weekends & holidays. Based upon weekends & holidays the eviction will be filed with the courts between the 18th-22nd & the court day will be 4-6 weeks thereafter. 

Property Manager fields a multiple questions from you that they do not have the answer for or at best can only provide you with speculation.

• You said they were going to pay on the 16th. Why are you going to evict them?
• Do you think the tenant will pay rent tomorrow so you don't need to evict them?
• Do you think they will pay tomorrow?
• What can we do to get them to pay tomorrow?

Day 16.

You call Property Manager at 1pm to see if rent was paid. It hasn't been paid yet. Property Manager agrees to email you by the end of the day to update you. End of day comes & no payment is made they explain that they will be filing eviction if rent isn't paid by end of 3 day notice. In this case given when notice was posted, when weekends & holidays are the Property Manager can file for eviction on the 20th day.

Day 17.

Tenant calls Property Manager to say they will now be paying on the 19th.

Property Manager calls to tell you the rent will be paid on the 19th. Property Manager fields multiple questions from you that they do not have the answer for or at best can only provide you with speculation.

• Why did they change the date?
• Are we still evicting them on the 20th if they don't pay?
• Do you think they will pay this time?

Day 18.

Tenant calls Property Manager to say they will actually be coming in to pay today.

Property Manager calls to tell you the rent will be paid later today. You are very excited.

Day 19.

Property Manager calls to tell you that the tenant never came in yesterday. Property Manager fields multiple questions from you that they do not have the answer for or at best can only provide you with speculation.

• Why didn't the tenant come in yesterday?
• Why did they say they were coming in if they weren't?
• Are we still evicting them tomorrow if they don't pay?
• Do you think they will pay this time?

Day 20.

Property Manager files for eviction. Property Manger notifies you that they filed for eviction.

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Option 2.

Property Manager provides you with the appropriate amount of timely notices as per their streamlines policies & procedures.

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Day 2-14.

Tenant doesn't pay rent. Property Manager follows their normal collection protocols to attempt to collect the rent.

Day 15.

Property Manager sends out your monthly report. It states that the tenant hasn't paid rent & that the property manager's policy is to issues 3 day notices to all of their tenants who have not paid their rent yet in the next day or so depending on weekends & holidays. Based upon weekends & holidays the eviction will be filed with the courts between the 18th-22nd & the court day will be 4-6 weeks thereafter.

Property Manager explains to you that they will be in contact with you when the 3 day period has expired and the eviction has officially been filed. Property Manager fields a multiple questions from you.

• How much will this cost?
• Is this the only option?
• What have you done to collect the rent?

Property Manager explains they have done everything in their power to collect the rent and that this is the only option. Property Manager explains costs & says they will reach out to you on the 20th based on weekends this is the 1st day they can legally file the eviction. They will let you know if they filed or if rent was paid at that time.

Day 20

Property Manager files for eviction. Property Manger notifies you that they filed for eviction.

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As you can see above Option 1 had an amount of labor that would be logistically impossible to devote to every client & still remain profitable given the amount of money a client pays to the Property Manager every month. If the Property Management company isn't turning a profit they won't be around to provide the service. On top of that I think we can all agree that Option 1 was also incredibly inefficient and much time was spent discussing situations that never actually happened. 

Option 2 is what a client should expect from a Property Management company. Enough information in a timely fashion to keep you updated but also allow the Property Manager to effectively run their business without putting you through an unnecessary emotional roller coaster ride.