All Forum Posts by: Brad Larsen

@David Woz  You make some valid points on the maintenance concerns, but I also think you may be expecting too much without a little bit of extra effort of understanding on what goes on in a PM company.  I think you should bring these concerns up to the PM Company before looking to fire them.  The grass is not always greener on the other side and I'm amazed at the advice people offer saying to just "fire them" without knowing the pain of doing that.  

I wrote an article once about where landlords (owners) fall in regards to Property Managers to give you the other side of the coin.   https://www.biggerpockets.com/forums/52/topics/402958-investors---are-you-a-c-class-landlord

There are tons of well written articles on this subject.  Someone will jump in and share them.  If not, do some searching in here and you will find them.  

@Trey Fischer  Lawyer Up - 100%.  This borders on government over reaching and is no short of a straight up shakedown.  Also, complaining to the Mayor's office and City Council would not hurt either.  I'm sure this is a tax collection / fee effort along with an over zealous new inspector getting pressured to do some work, or wanting to look good to their bosses.  Either way, it stinks.  You either catch these issues at sale, or let it slide.  

@Account Closed  The 2% annual is the up front warning of what is to come.  If the owner sees a trend, or is just animate about upping the 2% - they make an offer of renewal and the tenant has two choices.  Agree to the rate and renew, or move out.  In other words, the owner (landlord) still maintains full control of the rent increase on renewals which we have seen go both ways.  Some owner refuse to up the rent, even when the tenant agreed to the rent increase....yes....seriously.  And some owners want max dollar and often up it to a flat figure.....like $50 or $100 / month.   

Take care! 

@Emily Powell  Hi Emily! The comment above confused me a bit as I don't know their intent or how they explained it to you.  The best method here is to try and explain what we do and maybe that relates.  We offer the free "Animal Guarantee" of $1,000 to cover any of the pet / animal damage caused that exceeds the security deposit amount.  It's not a reimbursement necessarily, more of a situation where we will cover the work.  If the tenant causes a full security deposit amount of damage from the excessive wear and tear (kids for example) - then any pet / animal damage would come after that.....and is our policy of up to $1,000.  

What is challenging is when a pet / animal destroys carpets (example).  This is an easy one to pick on.  We have to pro-rate the lost useful life of that carpet to meet fair wear and tear concepts with the courts here.  We use a depreciation of 7 years.  For fun - new carpet costs $7,000.  Tenant destroys carpets in a 2 year tenancy depriving the owner of 5 years worth of useful life.  Tenant is billed for $5,000.  Security deposit is $2,000.  Our guarantee is $1,000.  (We have an optional guarantee of $5,000 just FYI).......giving $3,000 in total coverage to the owner.  There is a $2,000 difference now that the owner has to cover out of their pocket.  This will then turn into a collection effort against the tenant.  

In our experience this is very rare.  Very rare.  Long explanation, but I hope this helps with understanding the concept of how the math may work out.  The execution of this may vary.  Take care! 

@Emily Powell  We have a similar policy with an "Animal Guarantee".  Essentially, it says the same thing - that we will cover the damages up to "X" above the Security Deposit by collecting and retaining the monthly fee.  

The owner is covered x 2 in this method.  First - the security deposit - and Second - the Animal Guarantee.  

Our owners love this as we back them up much more than any deposit would.  PLUS - if you or your PM mishandle a pet deposit mixed in with a security deposit, that is (have seen it in person) grounds for a losing lawsuit if the tenant sues.  Mixing the two funds together is a giant loophole that tenant attorneys exploit.  Exposure wise, you are much safer with this technique.  

Hope this helps! 

@Janet Lancaster  Expecting a Property Manager to live under an expectation of knowing who is coming and going at a home at any given time is unreasonable.  

Here is the first question in doing what you want that you should ask - HOW?

How would someone - anyone - know who is coming in and out of a home?  Drive by daily?  Install a camera system in the home?  Hire a bouncer to sit at the door every day?  

The tenant is not going to willingly call the PM and explain the situation in 99/100 cases.  Nor are they going to want to go thru the hassle of doing applications and paying for the fees associated.  They will take their chances and do what they want to do in their own home.  (In their mind - it's their home).

Recommend working with the PM a bit closer and focus on the positive.  Are they paying rent on time?  Now that you know what is going on - is the tenant willing to update the lease?  Hope this helps. 

This issue sounds very unfortunate that you are having.  The advice given of understanding the agreement is first and foremost.  From there, open and level headed communication with the PM is next.  

From a PM company perspective - we see a lot of owners make stuff up in their heads to try and justify canceling.  We don't charge a lot of up front fees and we don't get five figure commissions like Realtor's on transactions - so to stay in business and provide a great service - we have to protect ourselves.  From what you may ask?  Owners who want to hire us, allow us to do the work of finding and placing a tenant (for a minimal up front), and then find a way to fire us now that all of the "hard work" is done in their perception.  We call them "C" Class Landlords.  

This does not seem to be your situation as I would imagine you as an "A" Class Landlord just for seeking out the answers to difficult questions in a rationale manner.  

Would recommend open communication with the PM and refrain from making threats of legal action or online reviews.  That only causes them to posture accordingly to any blackmail attempts.  We see this a lot by tenants and owners!  "If you don't do exactly as I want, I'm going to leave you a negative review"  Some would call that extortion.  It's the way of the online world we live in. 

If all else fails, seek out attorney advice for a 2nd opinion on what actions would be needed next.  

By default - we raise the annual rent 2% for renewals.  This is documented up front so it's known and expected by tenants.  When questioned, we help them understand that every year the owner's taxes and insurance always go up.  In some cases, taxes go up a lot more than 2% if you don't pay attention.  The local taxing authority plays the game of "who is paying attention" and will blanket send out Property Tax hikes of 10%, 15%, 20%.....whatever they feel they can get away with and then deal with the 20% of the folks that complain.  The old 80/20 rule.  They will F over the 80% not paying attention and deal with the fallout of the 20% who are....and still win HUGE in the end.  Atleast we don't run with a large deficit! 

Your first find in a market that you may not be living in .... is a Property Manager.....a big one.  Reason being: 1) they have buyer agent specialists that will focus your home search to homes they can actually manage, 2) they have off market pocket listings that come up on a regular basis that you can be first in line for and 3) they have all of the vendor referrals for make ready items you may need.  

An everyday Realtor who has no involvement in the management side will sell you anything.  They have no real experience in renting or managing.  Anyone can pull comparable rental rates, that is not the issue.  Marketing, leasing, insurance, management, repairs, make readys, inspections, and security deposits are where they are lacking.   

Start with the end in mind.  A long term rental making great cash flow each month under solid property management allowing you to go find more of the same deals and not deal with leaky faucets!  Good luck and welcome to San Antonio!