Out of State Property Management Problems

[Sam Booth]

Hi all, 

I have only had rentals a few months and my property manager (out of state rental) was great at first but now he has spent a large amount of money on seemingly small items like $1500 for a branch removal that fell off a tree in the yard, hundreds of dollars of yard cleaning (unrelated to branch falling) (Tenant is supposed to do this). In our agreement he was not supposed to pay over 500 without asking me, other things like this have been done as well without telling me. I am called him out on this and he never responds and now he doesn't seem to ever know what maintenance is being done or anything. I have also asked for photos multiple times of any maintenance or repairs and he now says that he will not provide photos every time because its not possible. 

Any advice?

1) I could sell the property, the rents are high so the likely hood of this working out is good and I can relocate to a local market where I can manage myself (I have a flexible job that will allow this). The property is in excellent shape currently. 

2) I could try to get another property manager but the problem with that is I could fall into the same situation. 

What's your advice?

[Drew Sygit]

@Sam Booth Check your management contract to confirm all this is in writing and how you can terminate.

Then find a new PMC using below:

In our experience, the #1 mistake owners make when selecting a Property Management Company (PMC) is ASSUMING instead of CONFIRMING.

It's often a case of not doing enough research, as they don't know what they don't know!

Owners mistakenly ASSUME all PMCs offer the exact SAME SERVICES and PERFORM those services EXACTLY THE SAME WAY, so price is the only differentiator.

So, the first question they usually ask a PMC is about fees - instead of asking about services and HOW those services are executed.

EXAMPLE: PMC states they will handle tenant screening – what does that specifically mean? What documents do they require, what credit scores do they allow, how do they verify previous rental history, etc.? You’d be shocked by how little actual screening many PMC’s do!

This also leads owners to ASSUME simpler is better when it comes to management contracts.

The reality is the opposite - if it's not in writing then the PMC doesn't have to provide the service or can charge extra for it!

We have a 14-page management contract that we've added our real experiences to over the years, with the intent of protecting both us AND the landlord. Beyond the Monthly Management, Placement & Maintenance fees, all other fees in our contract are IF EVENT -> THEN fees.

We don’t know any PMCs to recommend in the area mentioned, but since selecting the wrong PMC is usually more harmful than selecting a bad tenant, you might want to read our series about “How to Screen a PMC Better than a Tenant”:

https://www.biggerpockets.com/member-blogs/3094/91877-how-to-screen-a-pmc-better-than-a-tenant-part-1-services-and-processes

We recommend you get management contracts from several PMCs and compare the services they cover and, more importantly, what they each DO NOT cover.

EDUCATE YOURSELF - yes, it will take time, but will lead to a selection that better meets your expectations & avoids potentially costly surprises!

P.S. If you just hire the cheapest or first PMC you speak with and it turns into a bad experience, please don’t assume ALL PMC’s are bad and start trashing PMC’s in general. Take ownership of your mistake and learn to do the proper due diligence recommended above😊