My Property Manager From Hell

August of last year Mrs. YFS and I decided to dip our toes into the rental real estate market.  We choose one of best areas for rental properties in my opinion.  This is an area with cheap properties, high rent to ownership ratio’s and tons of government assistance.  Despite the negative press section 8 tenants get, our experience with payments has been great!…. So far

 

Our problem wasn’t the tenants it was a low integrity piece of shit property manager.  You see, we interviewed about 10 property managers and only 2 would take our small portfolio of no homes at the time.  I wasn’t going to buy a rental property out of state then look for a property manger.  This is the mistake that one too many out of town landlords make.  They identify a property then look for someone to manage it.  Rookies!  I wanted a team in place before we purchased the first home.

 

Besides, who knows the rental market better than a seasoned property manager who lives in the area?  No matter how savvy or smart I think I am.  Nothing makes up for actual experience with the market you’re serving.

 

It came down to two companies and 1 of them backed out of the interview at the last minute.  So, by default we went with this guy.  Everything was fine and dandy until money changed hands.  Then all his promises went out the window.  Fast forward about 6 months into the management of our property with this guy and all types of bad stuff starts to pop up.

 

Let me share an email exchange with you between me and our “ex” property manager.

 

Me:

 

I received a $70.00 bill for “Improperly prepared Material refuse out on wrong day” the volume was 2.0 cubic yards.  The city removed the items on 6/21/11

Can you look into why the city had to remove 2 cubic yards of litter from property 1?

 

Please see the attached file for the official notice from the city.

Thank you

 

Him:

 

 I’ll check on it

 

Me:

 

(2 weeks later)  Were you able to follow up on the non-compliance notice? This notice coincides with the removal of the fence.  Was the fence debris removed completely from the property 1’s site or set out for the city to take?

 

Him:

 

Yes it’s probably for the old fence. .   You may have to pay for disposal of the fence materials from the City.    We did not figure this cost into the cost of removing the fence.   The City normally takes everything but they must have determined this amount of debris is over the limit they will take.   Normally a debris person would charge upwards to $300 to remove it and take it to the dump.  The price the City is Charging is much cheaper that a private debis hauler would have charge.   I guess the only thing for you to do is pay it.

Me:

 

The city is not charging a 60 dollar fee for taking the debris.  The city is charging a 60 fee for putting the debris out on the wrong day.  The notice states “Improperly prepared material, refuse out on wrong day”.  I don’t think I should have to pay a fee for a mistake that was caused by your contractor.

Him:

Would you like me to charge you $300 for debis removal from the property?   Instead of $60 from the City?

Me:

The city did not charge for debris removal.  Your contractor was correct for putting the debris on the street for the city to take.  What was done incorrectly was the day the debris was put on the street.  Hence, a private contractor was not needed for debris removal.

Him:

If you had of paid $300 for removal at the beginning we wouldn’t be having this crazy discussion.   Pay the $60 no matter what day it’s supposed to go out. You don’t understand what we go through here with the City.     You have to trust me that I’m taking care of you.  If you don’t then hire someone you do Trust!!!

 

End of Discussion!!

Me:

 

You’re confusing me.  I paid what you quoted me and what you quoted me only.  I was provided 1 price for removal and 1 price for removal + rebuild.  I chose removal.  Which you told me included removal of the fence and debris.  Then I receive a bill for 60 dollars from the city so I was curious as to why.  Then I find out the non-compliance letter is  for fence debris put out on the wrong day so I notified you.  This has nothing to do with trust, this has more to do with me receiving a bill for what I thought was taking care of.

 

But, if you won’t take care of it, I will.  No problem, have a nice day.

 

Him:

Yes Please take care of this bill from the City.   Now that I know what it’s for then It’s something you need to pay.   It’s much cheaper for you to pay this than it would have been for me to increase the cost of the project by a larger amount.   I didn’t do that is because I got the job done for a very inexpensive cost in the first place.  You need to trust my decisions for your property.  I work very hard so that you make a profit.

 

Those who know me personally know that this didn’t sit too well with me.  This was just one of many altercations that me and this gentleman had concerning our rental properties.  I’m glad I followed my gut on this one and didn’t purchase more properties in the first year without testing him out.  I believe in systems and efficiency and despite my lack of knowledge at the time of the real estate market of Upstate NY. I know how to effectively lead a project and build a team.

 

This particular team member who happens to be integral to our real estate success just wasn’t working out.  Any question of his methods or proposal was with met with a “just trust me, or you have to trust me” verbage.  As my knowledge of real estate grew I started to realize he was not working in our best interests, but I’ll write these thing later.

 

Let’s get back to the story.

 

Me:  (a few weeks later)

 

 I would like to discontinue using <name of his company> as the property manager for my property effective 9/1/2011.  I think you would agree that our differences in personality, business experience and goals are too much of a hurdle for us to establish and sustain a professional business relationship.

 

Moral of the story:  Never ever ever ever do business with someone who does not keep your best interest at heart.  My wife simple said “I’m surprised you lasted this long with him”

 

Oh and this is how he responded to my request for termination.. He’s such a classy one isn’t he?

Him:

 

Let me know next year if you made the right decision of not taking my advise on purchasing Investment properties and also for moving your properties to a non legal property management company.   Your new property management company is not a NYS Licenced Real Estate Broker and he can’t be held liable for your investment properties or your money here.

 

I’m a licenced professional Real Estate Broker and all my actions are regulated by NYS.   You have no recourse with this illegal Property Management Company.   In NYS you must be a Licenced Real Estate Broker to own a Property Management Company or your breaking the law.

Good Luck because your going to need  all the luck you can get.

 

I got quite a chuckle out of his response.  The reason being is that I performed a significant amount of research and inquired with several real estate agents and insurance brokers about my current property manager.  Needless to say all his claims were false.  My reply was simply.

 

Me:

 

Thank you for your concern.  I wish you the best.

 

Reader thoughts!

 

What are your thoughts on my property manger from hell?

 

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0 comments

  • That sounds like a real shady dude. Just like politicians who make promises and grand gestures on the campaign trail to garner peoples' support then never follow through or blatantly do the opposite once elected (like my segue?) I could understand if there was a legitimate need for the addition money to be spent like the amount of work being more than originally anticipated, or something happening during the removal process, but this guy is just schmuck. Unfortunately, sometimes it takes firsthand experience to learn these things, but luckily for you it didn't take long for his true colors to show.

  • Wow. I'm glad my out of town property manager is as good as she is. If I get more rental property thought it will be in town where I can get to it to see for myself what is going on!

  • Marissa @ Thirtsyixm /

    Holy, YFS! My dad's has investment properties all over the country and the one he stresses is finding classy, honest people that he trusts to be his eyes and ears.

    I hope the next one works out a lot better.

  • Niki /

    His response to the termination letter alone is hopefully enough to make you feel like you made the right choice. He should know by now that people get uncomfortable when they are told to "trust me" because it's almost always a sure sign that you shouldn't.

  • YFS /

    I agree with your dad 100%. You must have people on your team who have your best interests at heart and are willing to grow with you. The new property manager is 200x better than this guy and fits my handsoff approach much better. We have already competed our 2nd deal and we are working on the 3rd deal as we speak.

  • YFS /

    Our new property manager is amazing. We are only a 2 hour flight away and my wife has family in the area so it's not too bad. The real issue is that our old property manager didn't work with my system. I only want to spend less than 1 hour a month on real estate activities. Which means I need a strong facilitator and a person who I can trust on the ground to run things. The new guy fits this requirement to a T.

  • YFS /

    Eric he was real shady politician like in his approach. He acted as if the slightest question was a judgement of his intelligence. Heck if it wasn't for my research we would have never received such high rents for the property. He originally was going to put the property on the rental market for $150 less than what we receive now. I think this was because he wanted to rent it out quick instead of doing some leg work. Anyways, I agree with your first hand experience statement. That's why when people ask me if they should go to B-school to learn to run a business I tell them. "You need to run a business to learn how to run a business"

  • You're right, school can't replace what experience teaches us, but it does give a pretty good background and helps build the foundation for which the business can be built upon.

  • YFS /

    I know I made the right choice. The new guy is amazing. It's complete night and day. "Just trust me" doesn't work with me at all. My response is typically, prove it or show me how this makes since. If you can't explain yourself or your actions then I am instantly turned off. I won't even get into unauthorized repairs/changes he was doing to the property. Well I might.. just in another blog post 🙂

  • YFS /

    I agree but i would use the words "education" instead of school. I believe in continuous eduction rather than formal school when it comes to business. Everything taught in B-school can be learned via free resources. The benefits of B-school in my mind is the network you could potentially be around. Top b-schools might be worth the price of admission if you network properly once you're there.

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  • Ridiculous! You definitely made the right choice, but you don't need me to tell you that! I've heard of other horrible property managers. It makes me wonder how they get away with this. Do people just put up with bad service?

  • YFS /

    Do people just put up with bad service? Yes, some people don't educate themselves and blindly listen to their property manager. Also, a lot of times your cap rate is still very high despite your property manager being a jerk. If you're making a good amount a money per month you may be willing to put up with some things. I personally didn't care how high our cap rate was. I just didn't like how he did business and I wasn't going to line his pockets if I didn't like how he operated.

  • Wow, sorry to hear what a pain that is. I'm heavily reliant upon a property manager for some college properties a few hours away. The kids there are insane, needless to say, we need to rely on him quite heavily. He's been pretty good so far and we lucked out that he isn't a run of the mill property manager. He was a carry-over from the old seller and they were kind of partners. However, we are concerned that he may walk eventually and leave us in a lurch. So we gave him an unexpected bonus for Christmas and hope he stays with us if we keep taking good care of him. We're profitable, but it would be quite a hassle if we ended up with a guy like the one in this story.

  • YFS /

    The crazy thing is just like you the first thing that came to mind many times was "well we are profitable" but I just couldn't get over his lack of professionalism . This little story is just the tip of the iceberg. Luckily, after I fired this guy. I found a real property manager who works really well with our system. We bought our second property the same month we fired the first property manager. We brought a real peace of crap too, in a good neighborhood of course. Which required extensive repairs. This was a true test. Needless to say he delivered above and beyond. Repairs were completed 2 weeks ahead of schedule and he found a tenant b4 October arrived. We are working on our 3rd property as we speak. I'm sure with this guy we can hit out goal of 4 properties in 2012.

  • Yikes! That sounds like a nightmare. Property management is one of those things that scares me away from investment properties. This just sounds time-consuming and stressful to find these property managers and then to manage them. I hope it works out better in the future for you!

  • I think you both spend a lot of time on the exchanges over $60 bill.

    What I would be interested in the finance details. Recently I have bought a little property of my own. Which cost me around $240,000 . After all the maintenance and administration fees, taxes I have got $4,000 left in my pocket.

    This is inflation adjusted income, relatively low risk income (if no mortgage involved). What are yours figures?

  • I agree with the previous comments, and I'm happy to hear that you're through with the crazy man and have such a good replacement.

    What I wonder most is how that guy actually manages to stay in business; you certainly can't be the only one to call him out on his nonsense/part ways!

  • "Just trust me" haha. Well, the excessive spelling mistakes might be a sign of the detail that he was putting toward your property.

  • YFS /

    Jeffrey my new property manager is much better than this guy. When you're building a team you're bound to run into a few bad apples along the way. I still spend less than 30 minutes a month on my real estate activities. Despite our disagreements this was far from stressful for me at least.

  • YFS /

    This was just a sample of my problems with this guy. I could care less about the sixty dollars it was how he handled the situation. I have a post coming up about how I only spend 30 minutes a month on average handling my real estate properties and detailing my cash flow.

  • YFS /

    No I wasn't the only one to call him out on his crap. I think he's really good at identifying deals but bad at managing properties and clients expectations. If I had to work with him again it would only be to identify properties for purchase.

  • YFS /

    I left the emails as they were so you can get the full experience 🙂

  • Juan /

    That sounds like quite the run around. I don't know if I would be able to survive 6 months working with someone like that. At least now you have a little bit more experience.

  • YFS /

    It was quite a run around. The problems didn't start immediately but maybe 2 months into our relationship. Unfortunately, you can just take your ball and go home. This is a business and sometimes you have to stomach a trouble employee until you can find a suitable replacement. It took me a long time to find someone else.

  • What a pain! I am sorry to hear that you had to deal with this nonsense. I also own a rental property and I am lucky that the property is only 15 minutes away. So, I am the property manager. It can be a great headache sometimes, but it is worth it in the end. Most of the times, it is very quiet anyway… Wish you the best of luck in finding someone who you can trust.

  • […] YFS tells us about his old property manager from hell. […]

  • YFS /

    Lucky, I found another person who came with ridiculous praise and references from multiple sources. Life is so much simpler now.

  • […] For example, rental property 1 I am charging $925 per month. Annually that will be $11,100.  This is the property my property manager from hell found for me.  What he lacked in professionalism and property manager skills he made up for it in identifying […]

  • It's really important for landlords to find out the background of a property manager before entrusting their properties/estates to them. Experience teaches that hiring the wrong person brings lots of problems and stress. All of which have been avoided in the first place if a thorough examination was conducted in the first place.

  • YFS /

    Great tip. Can you provide some insight on what you would do to thoroughly examine a property manager?

  • Find some of their previous clients and ask them about how trustworthy and efficient are the services of the property manager involved. For one, landlords can find reviews about the property manager through Google.

  • YFS /

    The funny thing is I did that! Not one bad review. Apparently, his clients tend to like this approach and are very hands off when dealing with him so they take what he gives. Also, no bad reviews on google. Sometimes experience is the best research.

  • Touche. Outstanding arguments. Keep up the good spirit.

  • seedebtrun /

    Holy wow! It sounds like you made the right decision to discontinue a work relationship with that guy. That's insane.
    My recent post Mile High City Trip – Part 2

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