property manager withholding some of my revenue

Santa Clara, CA · Member since 2021 · 15 posts · 7 votes

Is there a valid reason why my property manager consistently withholds some of my revenue in addition to the agreed upon minimum account balance? Numbers: $400 min account balance. My current balance is $720 with my PM after the owner draw. Why would they do this?

0 Reply

14 views

Most Popular Reply

Richard F.

Honolulu, HI · Member since 2008 · 3k+ posts · 2k+ votes

Aloha,

You really need to closely review your Management Agreement to see what it says about reserves or if they are witholding for taxes or other legit expenditures. If it is not addressed in the Agreement, email the PM for an explanation. Do not waste time with a phone call, get a response in writing.

1 Reply

See this reply in the discussion

6 Replies

Jump to latestLatest

Sort by

Allan Smith
Contractor · Nashville, TN · Member since 2014 · 1k+ posts · 1k+ votes
3y
Probably because they are bad at accounting or incompetent. I've had to hold my PM's feet to the fire a few times on that type of stuff.
0 Reply
Richard F.
Honolulu, HI · Member since 2008 · 3k+ posts · 2k+ votes
3y
Aloha,
You really need to closely review your Management Agreement to see what it says about reserves or if they are witholding for taxes or other legit expenditures. If it is not addressed in the Agreement, email the PM for an explanation. Do not waste time with a phone call, get a response in writing.
1 Reply
Nathan GesnerBusiness Member
Moderator
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
3y
Quote from @Chris Gallick:

Is there a valid reason why my property manager consistently withholds some of my revenue in addition to the agreed upon minimum account balance? Numbers: $400 min account balance. My current balance is $720 with my PM after the owner draw. Why would they do this?

1. Did you read the Property Management Agreement before signing it? It should answer this. If you don't have a copy, you should get a copy and read it front to back until you understand what you agreed to.
2. Why aren't you asking your property manager this question? You should be comfortable asking questions of your PM and they should be professional enough to respond in a timely manner with a clear answer.
I would not ascribe it to incompetence or bad accounting. They probably created a "reserve" account wherein they withhold a certain amount of the Landlord's money so they have funds on hand at all times to pay bills on your behalf. For example, if they pay out your rent income on July 7th and then a plumber bill comes in on July 12th, they won't have any rent money left to pay the bill and will have to use the reserve fund of $400. When the Tenant pays August rent, the manager will use some of that rent money to build the reserve back up to $400 and then pay the rest out to you. It's still your money; it's just held so they can pay bills quickly instead of waiting for the Tenant to pay the next month's rent.
The DIY Landlord Book4.7247 Reviews
Website View Page
1 Reply
Theresa HarrisPro Member
Member since 2019 · 15k+ posts · 11k+ votes
3y
Call and ask them why.
0 Reply
Chris Gallick
OP
Santa Clara, CA · Member since 2021 · 15 posts · 7 votes
3y
I appreciate the thoughtful replies. I reached out to my PM prior to posting here. I'm still awaiting a reply. In the past, it takes them a few days to reply to my inquiries, which I find bothersome.

I've begun looking for other PM's in the SLC area just in case. I would appreciate any recommendations.
Thank you!
0 Reply
Michael SmytheBusiness Member
Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
3y
Check if your Owner Statement has a section for "Unpaid Bills". Your PMC may be holding funds for these upcoming expenses.
They may also be holding back rental funds that haven't cleared their bank account yet.
Logical Property Management4.9455 Reviews
Website View Page
0 Reply

Join the conversationCreate a free account to reply, vote on answers and follow this thread.