All Forum Posts by: Mike Welch

I ended up using Tucson’s oldest and most established property management company.  I had mixed results but chose to take on self management of both properties until I sold both in 2016.  My lesson was the ‘buffer’ provided by property managers was less valuable with a handful of out of state rentals.  It is more important to be close to the details of the property to care for it properly.  Good tenants can be the ‘eyes and ears’ of a property.  The property management company was good initially as I was getting started.  I highly recommend managing directly if you have only have a handful of units.

@Arch Jeffery  Properties are located in Tucson.

@Account Closed Thank you for your comments.  I agree that good and timely communications are essential.  That is a key part of why I was paying 10% of rent plus other fees to the PM.  With that lacking, it became impossible to overlook the other aspects of their service that was less than ideal.  The PM with held approximately $500 from the tenant's security deposit in addition to the fees they charged me for the repairs which were never discussed.  

I am an out of state buy and hold investor located in Northern California with two single family homes in Arizona.  Yesterday, after three years with the same PM, I took the step to terminate their agreement.

The final straw came during a turnover of a tenant.  I inquired three times with the PM if there had been any damage found during their inspection of the property.  The PM did not respond at all, ignoring my emails.  

My October invoice arrived on Saturday and contains invoices for over $1,200 of repairs, fixes, and replacement (property rents for under $800 / month).  The invoice is itemized and contains dollar amounts all right under the threshold for seeking my approval (language in PMA stipulates approval for 'any one item over $300).

Furthermore, the PM decided to take all of the rental income from my second SFH (the owner's draw was, by sheer coincidence, within a few dollars of the line item invoice) to pay for the unapproved repairs, replacements, etc. The PM does this even though there is no bridging agreement between the two contracts allowing her to inter mingle funds.

I have worked with this PM for three years and have looked the other way, ignoring poor communication style, and questionable invoices, but could not ignore their egregious behavior in this transaction.

Moving forward, I am going to try my hand at managing the two properties remotely.  I have a network of contractors and handymen I've built up over the years and can just as easily arrange for them to service these two homes as the PM (without the markup, kickbacks and graft).  I also have a good attorney who could handle evictions if necessary.

The one gap I see relates to placement of qualified tenants.  Does anyone have recommendations for out of state placement?  I'm willing to compensate a local agent to advertise and show the property (or at least provide keys), and then screen tenants on my behalf.  Let me know your thoughts on 1)  the experience wit the PM, and 2) finding good leasing agents in remote markets.

Thank you in advance.

Anne,

Welcome to the forum! I also invest in Tucson and found inventory tightened significantly from 2011 heading into 2012. Would be very interested in comparing notes and hearing about your experiences managing a portfolio of properties in Tucson.

Prashant - Sound advice. I do have several handymen I could work with locally to manage service calls. This might be a better arrangement until I have more properties in my portfolio.

I'm a CA resident who invests in AZ properties. I invest in Tucson, Arizona, where I lived for ten years, have many contacts, and a local network.

I'm building up my rental portfolio and currently have two properties which I'm planning to hold through retirement. My goal is cash flow and long term appreciation.

I've hired the most established PM in Tucson and have worked with them for two years. I'm interested in the opinions of other investors who have worked with PMs on out of state properties.

Some concerns I have with the current PM:

1) Tenant Damage: The property manager responds to all requests to the tenants, dispatches contractors, then bills me for all repairs completed. Some examples include kitchen sink stopping up due to tenant clog ($100), tenant causes drying machine hose to come off the wall and requires a handyman to re-attach the hose ($75), tenant trips fuse and requires electrician to reset fuse ($125). Should I push back on expenses of this nature? Are they my responsibility or the tenants? Are they a cost of business, or is the PM simply taking the path of least resistance by deducting the expense from my owner's draw?

2) Communication / Response Time: PM never takes my calls, even when in the office. PM recently took over one week and multiple calls, VMs, emails, prior to response.

Should I be seeking other PM's? This PM's out clause requests payment of all of their fees if I terminate for convenience.

Given that I have two properties, I might consider either 1) finding another PM, or 2) self managing. The second option would be challenging as I travel with work, and have an intense corporate gig that takes much of my time and energy.

Please let me know if I should be more patient with this PM, or if I'm being too patient and should be seeking alternatives.

Thank you in advance for your thoughts and comments.

BS in Information Systems
MBA,
MA in Communication / Organizational Leadership

Over 16 years working with large corporations in the high tech space in Northern California mostly in technology sales, product management, consulting, etc.

Finance background has been very helpful in projecting long term deal value. More importantly, it has caused me to question stocks and turn to real estate as a form of investment I can 1) truly understand (as opposed to investing in a multitude of complex organizations), and 2) impact the outcome of through my actions and decisions.

Brent F. - As long as you're providing a statement for an account that has the required 20% available in a relatively liquid form (i.e., either cash in an account, or a stock fund) it should raise no concern with the listing agent requesting it.

Wayne Brooks - For a recent short sale with Chase, I went to my bank branch and had the manager draft a letter stating proof of funds. This is more time consuming to obtain (possibly the bank will fax this to you - mine wouldn't), but has the benefit of listing only the $'s required for the down payment, earnest money, etc., as opposed to a full bank statement that could prompt a counter offer.

I've been asked for proof of funds with every deal I've done. It is a juggling act as you don't want to reveal funds above what you're offering. In this case, I'd deposit the funds in a 'stand alone' savings account that has no other funds, print a statement and send this.

Section 6.D of amendment 64 has a carve out the permits CO landlords to prohibit use in any way they see fit. This is different from CA and other states where permitted use is medical in nature, and the substance is viewed as 'medicine:'

(d) NOTHING IN THIS SECTION SHALL PROHIBIT A PERSON, EMPLOYER, SCHOOL, HOSPITAL, DETENTION FACILITY, CORPORATION OR ANY OTHER ENTITY WHO OCCUPIES, OWNS OR CONTROLS A PROPERTY FROM PROHIBITING OR OTHERWISE REGULATING THE POSSESSION, CONSUMPTION, USE, DISPLAY, TRANSFER, DISTRIBUTION, SALE, TRANSPORTATION, OR GROWING OF MARIJUANA ON OR IN THAT PROPERTY.