All Forum Posts by: Edward Brewington

I really appreciate all the advice. I'm going to contact the PM and initiate the suggestions you gave me here. Thanks!!!

It's really expensive, but I see your point.

There was a problem with rodents getting into the house and the tenants were complaining, so I hired a service to solve the problem. The initial cost and monthly visits were quite expensive, so I said I would do the initial phase and stop the problem now, but I am not going to pay for the whole year, I did 4 months. The property management told me this is a problem in the whole area and most landlords in that area agree that it is their responsibility. I feel I have done enough and the tenants need to take some responsibility from here on out. Am I wrong? Should I continue the service? One year is well over 1K. Thought?

@Anthony Wick Yeah....I came to the same conclusion. The rent at the moment is $950 a month and the mortgage/principal/insurance/PM fee are not that much since I paid almost half of what the property was worth at the point of sale. The passive income is very good.....just some headaches in the last year.

I need to find a better PMC and I think I found one.....just need to finish this contract.

@Drew Sygit

I'm copying this directly from the contract.....that was  the outline of costs on the contract I wrote.

You're correct. It's in Warren, Michigan, basically Detroit. It is a C class neighborhood, but the previous tenant I had when I first bought it was quite responsible; rent always prepaid, few issues and quickly resolved, and just a hard-working family man. At that time, I corresponded with him directly to make a smooth transition when I took over the property, and eventually got a PM....so I built up a relationship with him. He stayed there for almost 2 years under me. The PM at first did not have much work to do with the previous tenant because he was stable....that last about 2 years.

Here is what it says exactly about maintenance:

"Owner hereby authorizes the Manager to approve all work orders that are under $200, anything above said amount will require approval of the Owner within a 72 hour period after notice (entered into the system). In the case where the work order has yet to be approved or declined withing the 72 hours, the manager has constructive acceptance and is authorized to approve the work order. the work shall only commence if there are adequate funds available in the account with the Manager. Failure to have sufficient funds will result in a delay of the work being performed. It is the sole responsibility of the Owner to keep sufficient funds in the Manager's account. Manager shall not be liable for but not limited to, any injury, damage, loss rent etc. from failure to perform work order not yet authorized by the Owner.  (If tenants are responsible for a portion of the repair, amount will billed to tenants ledger)

Out of curiosity, what kind of cost structure should I expect in a class c neighborhood?

Do you think this PM is warranted to raise the renewal to $250 a few months ago? I just think it is excessive. 

To me, the most important thing is "who" you put in the property that makes the property an asset. My property I had in Las Vegas had an outstanding renter who I worked with during the crash (back in 2010 until I sold it in 2017). No issues other than a boiler issue that I simply replaced. The renter made that property an asset!!! Of course, that property was a better neighborhood, a class B place, 3br/2ba, two story SFR.....so yeah a different circumstance. Screening tenants is the most important aspect to being a rental property owner....no doubt about that!!!

@Michael Noto

Here you go:

Leasing 100% of 1st month's rent

Monthly management 9%

Maintenance Oversite 15% (only billed if job is completed)

Legal $329 start or legal process for non payment of rent. $350 for 30 day notice. $200 for written. Eviction TBD

Hourly $40

Tenant move out $50

Lease Renewal - $99.00 (Found out my contract says $99 but they recently raise new owners to $250)

Tenant Late Fees  25% of tenant late fees is paid to MPM

Deed Purchase $50 (only if not provided w/management agreement)

Administrative Billing - Not to exceed $35 per tansaction, unless biling is charged back to tenant, then the agreed upon oversight fees will apply. (utility/municipality charges)

Minumum Escrow Account $300 with additional $100 per month until escrow reaches $500

Owner will pay a penalty of 1% interest/month on any negative balances in accounts over 30 days

Owner will pay a $375 documentation fee on any Section and tenancy 

***As you can see they charged me the new owner renewal fee instead of what my contract says.....they did reverse this, but I just said...ok....but I'm moving on after this contract is over. They said I'd have to pay fees if I break the contract early. There is no 30 day notice.

@Filipe Pereira  

Yeah.....I've known for some time that this PM is not working in my best interests. 

Yes....the tenant pays each month, but since he's a contractor, his pay is erratic and he's been late several times. Likewise, his kids seems to be doing silly things like putting lotion bottles in the toiled.

The PM did not hire quality contractors or do a thorough enough job because immediately we had issues with the pipes under the kitchen sink, the toilet (before the lotion incident) and the outdoor lawn faucet......this is after I spent well over 7K to remodel the whole place after the previous renter moved out. I created an attic room as well to give more storage or an extra room as well. 

I asked for licensed contractors but I'm not sure the work was quality because I would think they would bring any possible problems to my attention. It seems that they were ignored. That's a problem of not being physically there to check their work or to look at issues myself. 

I really enjoyed reading your comments Filipe because it shows I have a lot to learn. 

I told the PM I'll be moving on after this contract....I could not give a 30 day notice because they would charge me fees for leaving early so I have to wait until December to change PMs. Lesson learned!

Thanks.

@Wesley W. Wow! Outstanding point there.

@Dick Rosen  The tenants have been late on their rent for more than half the time they have been there in a year. They just tried to have me fixed a window they broke, and the funny thing is, they would not say they broke it until we said we would not replace it without knowing how an attic window broke. I guess he slipped and fell and broke the window, that's what he eventually told the PM, but he would not tell the contractor, so the PM had to push him for an answer. They've broke a faucet and dropped a lotion bottle in the toilet.....the house was fully remodeled before they moved in.....so....I'd say the tenant is flawed in some ways compared to the other properties I have. Hardly any issues with my other properties. 

Outstanding responses and I really appreciated everyone's input!

I pay 9% of the rent at $950 a month. The rent stayed the same and he resigned the renewal at the same conditions as before......that's why I thought this charge was a bit ridiculous. 

As for their service, I'd say the PM company is ok and at times frustrating to work with. They can be difficult to get a hold of sometimes, although I call when they open in the mornings or send an email.

The contractors they hire are expensive compared to the PMs who have their own contractors....much more than the ones I have in Ohio. 

Their website portal that we correspond on is old and needs to be updated....they forgot to put my 2019 tax docs as well as an end of the year report....I had to request that after a few tries. 

I like the guy who monitors my property, but the company and the accounting divisions seem to be slow and I need to be persistent if I want answers.

I'm actually shopping around now and I did talk to a few PMs and they do charge a renewal fee, but I think I found one that doesn't and has good reviews.....I'll be talking to them tonight my time. 

The fact is.....I need a PM that has my best interests but also doesn't overcharge me on what I think are charges that are questionable. 

Thanks everyone!!!