All Forum Posts by: Jamie Dupont

@Jamie Dupont a lot going on here!

1) You mention the PMC did a poor job screening the previous tenant.
- What specifically makes you think that other than the parties and damages? How stable was their employment & income?
- How well did you discuss the PMC's screening critieria before hiring them?

2) How many parties did the tenant throw that generated complaints?
- How quickly did the PMC address this issue?

3) Tenant Damages: if the tenant was breaking things, why were you paying for them?
- How sure are you the tenant caused the damages?
- When did your PMC go over the lists of damages to ask if they should charge you or the tenant?
- What does the PMC lease state about tenant-caused damages?

4) Last Month's Rent: how did the PMC let the tenant skip out without paying?
- What do you think they should have done? Starting the eviction process when the tenant  is moving out is a waste of time and legal fees (your money!).
- What does your mangement contract state about the PMC chasing tenants for past due balances after they move out?
--- Most PMCs do NOT do collection work!

Appears the PMC has done a terrible job of communicating expectations with you about their services.

Regarding the tenant that wants to pay 12 months of rent upfront:
1) They better have great credit or no-go.
2) Have them prove they are an engineer with a copy of their degree.
3) Get last year's W-2 to prove they were working. 
--- How will you know W-2 is not fake? Sent verification form to that employer!
4) How logical is it to move w/o lining up a new job?
--- Get a written explanation for this! Hopefully it makes sense!

Applicants offering to pay a year of rent upfront is a red flag. The money isn't legally yours until it's earned, which is every month when rent is charged. If the tenant breaks their lease after three months, you are obligated to find a new renter, only charge the original tenant for rent up until the new tenant takes over, and then refund any unused funds. In other words, spending it would be foolish.

I suggest you spend a little time researching other property managers. Use this turnover as an opportunity to research and find a manager that can stabilize the property and take control of the situation so you can focus on other aspects of life.

Remember: cheaper doesn't mean you'll make more money.

Start by going to www.narpm.org to search their directory of managers. These are professionals with additional training and a stricter code of ethics. It's no guarantee but it's a good place to start. You can also search Google and read reviews. Try interviewing at least three managers.

1. Ask how many units they manage and how much experience they have. Feel free to inquire about their staff qualifications if it's a larger organization.

2. Review their management agreement. Make sure it explicitly explains the process for termination if you are unhappy with their services, especially if they violate the terms of your agreement.

3. Understand the fees involved and calculate the total cost for an entire year of management so you can compare the different managers. It may sound nice to pay a 6% management fee but the extra fees can add up to be more than the other company that charges 10% with no additional fees. Fees should be clearly stated in writing, easy to understand, and justifiable. Common fees will include a set-up fee, a leasing fee for each turnover or a lease renewal fee, marking up maintenance, retaining late fees, and more. If you ask the manager to justify a fee and he starts hemming and hawing, move on or require them to remove the fee. Don't be afraid to negotiate, particularly if you have a lot of rentals.

4. Review their lease agreement and addenda. Consider all the things that could go wrong and see if the lease addresses them: unauthorized pets or tenants, early termination, security deposit, lease violations, late rent, eviction, lawn maintenance, parking, etc.

5. Don't just read the lease! Ask the manager to explain their process for dealing with maintenance, late rent, evictions, turnover, etc. If they are professional, they can explain this quickly and easily. If they are VERY professional, they will have their processes in writing as verification that policies are enforced equally and fairly by their entire staff.

6. Ask to speak with some of their current owners and current/former tenants. You can also check their reviews online at Google, Facebook, or Yelp. Just remember: most negative reviews are written by problematic tenants. A tenant complaining online might indicate that the property manager handled them appropriately, so be sure to ask the manager for their side of the story.

7. Look at their marketing strategy. Are they doing everything possible to expose properties to the broadest possible market? Are their listings detailed with good-quality photos? Can they prove how long it takes to rent a vacant property?

This isn't inclusive but should give you a good start. If you have specific questions about property management, I'll be happy to help!

I have a single family in Greece, NY. I've owned it nine years. I have found that careful tenant screening is critical. My current tenant hardly ever calls about any problems. Repairs and maintenance costs have been pretty low. Depending on your current financing and monthly payments, you might get this to cash flow once you get it repaired and get a better tenant in the house. It sounds like your property manager isn't doing his job. My house was appraised nine years ago at $95,000. Now Zillow estimates the value at $210,000, so Greece houses have appreciated nicely in the past three to four years. Double check market rents. Consider the fact that these areas are appreciating nicely. You'll probably do well whether you sell at the appreciated value, or hold on to it and get a better tenant at current market rent.

@Jamie Dupont I run a local meet up here in Rochester-might be a good idea to come and learn strategies on how to find better tenants and contractors.

@Jamie Dupont From a tax perspective, you can deduct repair expenses related to the damages caused by the tenant as long as they’re for restoring the property (e.g., fixing holes, broken fixtures). If the repairs are capital improvements (e.g., replacing entire siding), you’ll need to capitalize and depreciate those over time.

The unpaid rent is considered a loss, but it’s not directly deductible. Instead, you’ll report it as lower rental income on your Schedule E. If legal fees or eviction costs arise, they’re also deductible as ordinary and necessary expenses.

Keep detailed records of every expense for accurate tax reporting!

This post does not create a CPA-Client relationship. The information contained in this post is not to be relied upon. Readers should seek professional advice.

Hi @Jamie Dupont I'm very sorry this is happening to you, that is awful for them to do that. It sounds like the tenant is still there so priority number one should be getting them out. If you haven't hired an attorney I might consider doing so as this situation sounds like it could get ugly. 

Regarding this insurance issue, I would certainly try to get new insurance without making any repairs. There is a chance your best option will be to go over the asbestos siding with vinyl. But be sure to consult with the city for their local guidelines. 

As far as how you move forward from this, if you are confident in the area and acquiring a new tenant that will treat the property better, you can view this incident as a sunk cost and move on that way. If you aren't confident in other management prospects then liquidating the property and looking at some other investment avenues may be the best option. 

I wish you the best of luck and safety in the storm.