Property Management Company Ripping off my In laws

[Greg Von Notias]

My inlaws have a 4 unit property that should net around 10K a month. 

The PM company tell them EVERY month that between 4 and 7 thousand dollars of maintenance/repair is needed. My inlaws say, "well the building is old". It is form the 1970s. They have been doing this to my inlaws for many many years...the fluctuations of income alerted me to this becaus it makes no sense.

They think I am wrong. But how can I catch them. Should I lost the PM co.pany here...if you google their name and look on Yelp they have terrible reviews and I went to the courthouse and looked their name up to find they have been sued over ten times in the last 8 years.

What is the best way to catch them? It has become a sensitive matter and they get flustered and frustrated...they dont want to deal with it.

Any thoughts?

Fyi, on their website they have accreditations listed, and I called each one, they are not members. The HOA said they would call them and demand they take theirs off and that has happened. They are bot even part of the BBB.

Thank you in advance.

[Patti Robertson]

As a PM I can tell you this is entirely possible if the building has never been maintained.  I had an out of state investor purchase a 6 plex in my market for $300K two years ago.  She had a home inspection and it showed she needed to invest at least $100K to bring it up to building code.  She did virtually nothing, because she spent all her cash buying the building.  She hired the part time agent who didn’t know what they a were doing to manage it. When he got a military deployment he turned it over to a PM who lives and operates two hours away.  She went on like this for a year before she hired me.  I looked the building up in our city records and found she had an active zoning violation, which I’m guessing is what caused her to call me.  I asked her to send me a copy of the home inspection from when she purchased it that outlines significant work needed.  One of the units houses a hoarder/cat lady who kept her unscreened window open so all the neighborhood cats could come and go. She had a rotting dead bird on the floor of the bedroom that she had just been walking over.  She was literally the only paying tenant, so the owner made us keep her in place. When I went one by one down the repairs the inspection revealed needed fixed a year ago and asked the owner what work she had done, she revealed she hadn’t done any of it.  I made the mistake of agreeing to take the building on only after getting her to agree that she had both the funds and the desire to make the necessary repairs to bring the building up to code to a habitable condition.  We inspected each unit and prioritized a list of what needed to be done.  Even though she agreed to do the work, she fought every step of the way and I had to guilt trip her at times to do basic work - like installing working smoke detectors.  We rehabbed the empty units one by one and filled them with paying tenants.  She still has one unit vacant and not rent ready because she is unwilling to let us hold back the funds to prep it.  We are almost one year in and she gave us notice to not renew because she hasn’t gotten enough rent proceeds this year.  She delivered us a dilapidated building half empty,  half full of dead beats that her own home inspection said needed significant work that she knew she had not yet addressed. 100% of the potential rents would not have addressed her issues.

I almost forgot to add that a month in we had a tenant abandon and blamed the reason to bed bugs.  Not a single tenant mentioned anything about bed bugs when we inspected or talked to them up to this point.  The owner told me the previous PM had treated one unit for bed bugs.  When I called him for details he said his handyman bought a can of spray at Home Depot and they sprayed the one apartment that had them. The bed bug company said this was the worst case of infestation they had ever seen. That treatment alone was $8K, but they knocked it out. It was mind boggling that the tenants didn’t say anything, but this just goes to show you what tenants in properties owned by slumlords some to expect. They are used to living in terrible conditions and have very low expectations.

My point is that before you jump to the conclusion to throw the PM under the bus, travel to the market and do a physical inspection of the building - inside and out. If there is decades of deferred maintenance the building very well could need significant amounts of the rent to go into repairs. 

Just sayin’.