Help! Messy Situation and Need Advice ASAP

[Harry Lin]

This is a complicated situation and sincerely hope everyone can give me some advice on what to do next. This is a long story but going to quickly summarize it below.

I purchased a property in Philadelphia on Sep 2017 and my dad had volunteered to watch/manage the property for me since he lives 2 hours away from the property. He hired a PM recommended by our relative who also owns investment in the area. We were able to secure a tenant within 2 weeks after hiring the PM.

Everything was going well, and the tenant was paying rent every month until 2 months ago. He lost his job and now is behind rent for the month of Sep and Oct (rent is due on the 15th of each month). He has also not been paying his water bill since the day he moved in. I had the bill send to both my personal address and the tenant’s address, but I had never received a water bill from the city of Philly. As a result, we owe about $650 in water bill from Sep 2017 to Apr 2019. The water company shut the water down on Apr 2019 and the tenant took it to himself to create another account without my or the PM’s permission. He has also never paid a single month for this new account and now owes about $300 in water bill from May 2019 to Sep 2019. Again, I was not aware of any of this until 2 weeks ago because I thought my dad/PM got it all under control.

Below is a breakdown of the tenant’s debt:

• $300 in Sep 2019 rent (paid $1K)
• $1300 in Oct 2019 rent
• $650 (under my name) and $300 (under Tenant name) in water bill

Total: $2.6KA

Once I took over, I immediately issued a notice to quit on 10/15 to him but was told that he accepted a new job that will pay him $100K, starting on 10/28 and his next paycheck will be on 11/15. He even forward an offer letter to me as prove (seems real/legit). He said he would pay off the remaining rent of $1.6K and the $650 in water bill. I told him maybe we can work out a plan for him to pay it all off in 4 months ($1.3K in rent + $650 for 4 months). The lease had long expired and now it is month to month.

Few days later, I asked if he had paid off the $300 in water bill (under his name) and he said he did. I called the city of Philly to confirm and was told he owes $300.

I called the tenant and was told he’s been paying it off every month and has a statement that shows a balance of $45. He sent me a screenshot of the statement with a balance of $45. I called the water company again and found out that page 2 of the statement shows that he’s pending approval for bankruptcy. He lied and did not mentioned about the bankruptcy.

It took a while for me to unwrap the whole situation because my dad/PM was managing the whole thing and this is a huge mistake on my end....... I am obviously very pissed and mad at them/myself but at the same time I just want to solve the situation. 

Couple of other things....

1. PM set up a rental license but did not perform a certificate of suitability 
2. PM does not care about the whole situation and I am pretty much Googling and learning how to deal with the situation myself
3. We have $1.3K in security deposit

I know I should fire the PM ASAP and hire someone that can help me walk through this process (any recommendations?), what else should i be aware of and should or should not be doing? 

Should I evict this tenant ASAP? or wait until 11/15 to see if he makes that payment.

Sorry about this long but I desperately need some advice right now.

[Nathan Gesner]

You say everything has been going well but the truth is, it was slowly building into a mess and you only recently realized it.

Your PM sucks and should be fired. They should have started the eviction process in September. They have a responsibility to protect your interests and they're obviously not doing that.

Your tenant is lying in an effort to play you like a fool. it doesn't matter if he has another job lined up making $10 million; he is overdue on the rent and you need to evict.

Stop playing around. Hire an attorney and end this. Let them do the heavy lifting instead of spending your time worry about it and researching for answers. You can instead spend your time on the search for a competent, professional property manager.

Remember: cheaper doesn't mean you'll make more money.

You can start by going to www.narpm.org to search their directory of managers. These are professionals with additional training and a stricter code of ethics. It's no guarantee but it's a good place to start. Regardless of how you find them, try to interview at least three managers

1. Ask how many units they manage and how much experience they have. If it's a larger organization, feel free to inquire about their different staff qualifications.

2. Review their management agreement. Make sure it explicitly explains the process for termination if you are unhappy with their services, but especially if they violate the terms of your agreement.

3. Understand the fees involved and calculate the total cost for an entire year of management so you can compare the different managers. It may sound nice to pay a 5% management fee but the extra fees can add up to be more than the other company that charges 10% with no add-on fees. Fees should be clearly stated, easy to understand, and justifiable. If you ask the manager to justify a fee and he starts hemming and hawing, move on or require them to remove the fee. Don't be afraid to negotiate!

4. Review their lease agreement and addenda. Think of all the things that could go wrong and see if the lease addresses them: unauthorized pets or tenants, early termination, security deposit, lease violations, late rent, eviction, lawn maintenance, parking, etc.

5. Don't just read the lease! Ask the manager to explain their process for dealing with maintenance, late rent, evictions, turnover, etc. If they are professional, they can explain this quickly and easily. If they are VERY professional, they will have their processes in writing as verification that it is enforced equally and fairly by their entire staff.

6. Ask to speak with some of their current owners and current/former tenants. You can also check their reviews online at Google, Facebook, or Yelp. Just remember: most negative reviews are written by problematic tenants. The fact they are complaining online might be an indication the property manager dealt with them properly so be sure to ask the manager for their side of the story.

7. Look at their marketing strategy. Are they doing everything they can to expose properties to the widest possible market? Are their listings detailed with good quality photos? Can they prove how long it takes to rent a vacant property?

This isn't inclusive but should give you a good start. If you have specific questions about property management, I'll be happy to help!