I won't go into all of the details because I would have to write a book to explain everything, but a quick background: I bought 3 duplexes in Cleveland last year, hired a PM company (Northpoint Asset Management - avoid like the plague), found tenants and all was well... until it wasn't lol.

One of my duplexes is in a good part of Cleveland, right on the border of Lakewood (affluent city). It's not B class, but solid C working class area. My PM company filled the down unit within a month and a half - definitely slow for the area. The up unit sat vacant for many months until my PM lady was fired for being bad at her job. The new guy filled the unit within weeks - great work I thought! Unfortunately he didn't do much due diligence on the tenant. He was in his late 40's, horrible credit (not unusual for the area), no bank account (also not too unusual for the area), no rental references because he lived with family his whole time (BIG red flag), and not enough income to qualify for 2.5x rent. Any one of these things by themselves may not be a big deal, but all together is a no-no for me.

Sure enough, 4 or 5 months into the lease he starts to slow pay. A month later, both front and back door are kicked in by someone, the down unit lady is complaining about cars being parked on the lawn, loud noises, violent stuff going on, etc. We fixed the issues and sent him the bill, which he happily did not pay. The next month, I have to ask my PM company why the rent isn't turned in yet. His reply, "Oh, I'm not sure, I'll have to look into that". It was the 15th of the month - just an idea of how BAD these people are at their job. I had to request that they initiate the eviction process.

A week later I got a call from the PM that the tenant was arrested, which is a breach of the lease (we don't allow convicted felons). We communicated with the tenant in jail, arranged for his things to be removed from the building by his friends. I thought the worst was behind me lol it gets MUCH better! So we schedule to have his people come remove his belongings from the building. My PM, in his infinite wisdom, thought it was a good idea to allow everyone to have access to the building and left it unlocked and had no supervision of the process. I'm pretty sure most of you know what happens next!

So 4 days go by and I hear nothing from my PM. I reach out asking for an update on the unit, asking if we have the ad up and looking for tenants. "I'm not sure, I'll go by today and have a look." Then I get a call later that night, "It looks like someone else moved in, I guess the ex-gf decided to move in and won't let me in." Classic!

Needless to say, that PM got fired shortly after. The next person they hired to replace him was a very nice girl, seemed like she was going to save the day. It was too much for her, she quit a week later because of all the issues. Then my PM company FIRED ME! haha I can't make this stuff up! They said they had nobody else to handle my properties and it was best to part ways. So I started to self manage. I reached out to the tenant, who stated she had been paying the other PM in CASH (which is not allowed on the lease, or by the PM company). Typical hood rat trying to get away without paying.

I started the eviction process immediately. She never showed up to the hearing and we won the case by default. We took back possession of the unit, not too bad of shape. But wait, THERE'S MORE! During her short, free stay, she decided to run ALL of the water nonstop for 21 days straight. I received a bill from the water company for $970 (typically it is $50 - $70) and a sewer bill for $1,900 (typically $70 - $90).

Let's recap the damages here so you can see what type of risks there can be in real estate:

- Lost rent due to vacant/non-payment $3,750

- Replacement of doors kicked in $650

- Cost of eviction $450

- Cost of PM company (they had the balls to charge me still LOL) $750

- Cost of water/sewer bill $2,870

Total costs - $8,470

This property fully occupied throws off about $400 per month in cash flow, so this fiasco represents about 22 months worth of profit. That's almost 2 years down the drain because of how bad the PM company managed the property.

All of this being said, I love real estate and take the lumps, learn the lessons and move forward. I've finally passed 100 units this year and look forward to reaching 200 in the next year or so. Don't let the dips deter you from experiencing the peaks!

Cleveland, Ohio

15 Votes