Tenant stealing electricity

[Carol Frome]

Hello, Im trying to sort out how best to handle this. My former property manager was overbilling me like crazy and never gave me receipts for materials. He is retired now. 

Last spring I instructed him to rent a vacant one bedroom apartment, which he did almost immediately. Months later, I found out he had rented it to his neice. 

After she moved in, my quarterly water bill shot up from $300 to $900. He claimed he couldn't find the cause.

Now, in winter, my electric bill for the common area has also shot up. It was $45 a month. It went up to $200 and something, then to $300 something, and now $600+. We finally figured out after shutting the common area breakers off that "someone" moved the breakers for her apartment onto the common area. 

I still owe him money $2600. I already paid him $2000, even though I'm sure he was overbilling me.

I'm thinking of paying the electric bill and just not paying the former manager-uncle. The tenant is 19, pregnant, appears to party a lot, and she claims she has no lease (she does) and seems to be clueless about utility bills (her lease says she is responsible for heat and electricity). I suspect that uncle manager had been paying her bills other than the water, which I pay for everyone. But now he seems to have stopped. She got her first propane bill. Electric then skyrockets.

The former manger and I share the same lawyer. In fact, the lawyer recommended him.

[Timmi Ryerson]

This situation is strange indeed.  It is unclear from what you wrote whether you really know much about that unit.  I cannot tell if it has been rented under this property manager who is either still managing or just quit and put his niece into the unit.  I am surprised that you do not have details about the lease.  It sounds like you know very little about what is going on with your valuable rental properties.  With that in mind, I would suggest you proceed as follows.

1.  Get and electrician to look at the panel and tell you how it is wired and whether it was rewired in some way.  If the panel is not metered to each unit, find out what needs to be done to be able to turn the responsibility for paying utilities over to your tenants.  But remember that when you do this, especially if you have a landlord agreement with the utility, you will need to have a way to be sure that the tenant signs up for taking over payments so that they get the bill and not you. 

2. Give the tenant notice to move out.  In most states it needs to be 30 days unless she is found to be out of compliance and then you can give her a notice to comply.  I would not give this tenant a second chance at anything.

3. Request access to the unit to do an in person inspection of the unit. (She may be growing plants with that kind of water and electrical utilization or worse cooking drugs).

4. Have the water company come out to check for leaks. If they find any, get them repaired immediately.  Ongoing leaks can undermine the soil below your building which can cause catastrophic issues. Also meet them there to find out about your meter system.  You may need to consider putting separate meters on the units.  Ask the water company for suggestions.

5. Advertise for a new tenant while you are doing these other steps so you have someone to rent when the unit is ready.

6.  Once you have the information about the wiring and potential leaks, if it turns out that it was rewired and there are no leaks then contact a good real estate attorney who can assist you with any recovery of money you may be entitled to..

7.  If you do not want to manage your properties yourself, then find another property management company but now you know what you do not want.  There are great articles about how to hire a property management company and what to ask on this Bigger Pockets sight.  

Finally, I will say that you will need to be more hands on with your investment even if you do have a property manager.  You are losing so much money with these kinds of mistakes that you may end up losing your whole investment. You can manage your investments yourself as an alternative.  You will need software to do that and be successful.  There are many companies to choose from. I use Smart Property Systems because it does everything I need and most of it is automated.  But that decision is up to you. 

I wish you well.  I have honestly never heard anything like your story in 35 years of doing property management.