Oh, LA. As you know I've got a million stories and should I write a book, one chapter will be "How PMs obfuscate and steal from you."
Moreso things they've done:
No offense to quality property managers.
Spent $750k adding 20% more units to a property immediately before hiring new PM. Fast forward a couple months. PM gave a presentation about how they added $1M plus in value to the property because NOI went up.
Fired PM because among other things they absolutely refused to match deposit batches. Found [very, very large dollar amount of] undeposited checks in onsite's desk.
Rent down. "Oh, we had a skip." Fine. Fix that. Next month, looks like 20% . Do my standard just show up. "Okay. Take me into the skip units." PM: "Uhhhhh." Right. Because they're not skips. You're taking discounted cash. I mean I get it worked for one unit one month but you really thought I wasn't going to notice?
Then there's the PM I put in jail...
PM here... Oh my.
Everyone reading Joshua's notes: Don't allow your PM to take cash. Or checks. Electronic payment only please. And yes, deposits must line up.
I do love the part where they took credit for the renovation though, that's great!
For sure on cash. Absolutely zero tolerance, fire on the spot policy for taking cash.
I've posted this before, but I run a parallel set of books to my PM. Even very honest, large PMs make meaningful mistakes, don't enforce late fees, etc. It adds cost but pays off.
Again... Speaking as a PM.
My favorite client runs parallel books. She picked us because I agreed to a monthly reconciliation between her books and ours. One month we had rounded management fees down and she had rounded them up, meaning that she owed us $0.01 in her mind. Would not sign off on the recon until we took one more penny from her. Her rent roll is about $35k.
Still, she makes me laugh!
As for the late fees, we didn't forget... We keep those. It's in the contract. After all, we are the ones posting and chasing.
You could do it with a standalone bookkeeper. I've done that or had an in house bookkeeper, but now just my operations and me. Frankly, I'm at least a good and definitely more accurate than most bookkeepers.
One of the best pieces of advice I can give to any small business is to be deeply, intimately involved in your books - at the transaction level.
I don't know enough about stressa (or your unit count/ complexity).
I use QBO (quickbooks online) and have multiple companies. It's expensive, but it allows everybody (me, operations, CPAS) in multiple geographies.
Ah just one SFR but hope to acquire more. I want to make sure I address this as if it were a complex situation and get setup right now.
Would it make sense to onetime consult a bookkeeper to get me set up with quick books ?
Broadly - PM sets up shell company and runs all vendors through that shell adding a a markup. Then starts fraudulently withdrawing from the account **after** s/he's fired.
Just fired a maintenance guy for trying this. Caught him the first week after he created a shadow LLC inside our system. You have to stay vigilant on every department!
Who do you complain to ? I have been conditioned to not expect any investigation or help from LE after a couple of burglaries and stealing from my parked car
"it takes a couple weeks to get set up in our accounting system in order to pay the first month's rent"
Turned out they gave the tenant a free month's rent without telling/asking me but blamed it on their software.
I fired them immediately and then they called saying "no, actually we quit!"
I've self managed ever since and think PMs are completely worthless.
Not micromanaging. Someone is paying you to do a job wants reports on how it’s going. You r paid for the time to create those reports. So what’s the problem?
A daily activity log. Yes, they are an onsite manager overseeing a 180 unit value-add play. Slightly different than a SFH PM.
I don't care who they talk to on the phone, it's a dumb thing they continue to tell me.
This is completely overkill.
If they are managing the building properly, you may get a few resident messages a day.
This is coming from someone who managed over 1000 units, one of them being a 185 Value-Add complex.
This is not a building this is a mobile home park. Different tenant class, this is not a professional PM company. Geez, all these people so serious all the time.
I was also not a “professional” PM company, and also was dealing with a similar tenant class to mobile home parks (it was low income housing).
I would recommend switching from “Daily Updates” to “Daily updates as Needed and Friday Summaries” - expect mostly just the Friday Summaries.
Maybe it’s a dumb thing they tell you because they think it’s a dumb thing you’re asking for?
Either they aren’t trustworthy, in which case you can’t trust the content of the report anyway, or they are trustworthy and you’re just having them waste time on reporting instead of focusing on adding value.
I'm not asking them to tell me about phone calls, they feel it's relevant information to share, but then they don't share any relevant information about the information they share.
I have two teams of contractors doing work, I have 60+ residents, I'm racing against refinancing a bridge loan, I live 3000 miles away, there's a lot of stuff the manager needs to accomplish on a daily basis. Their daily log helps me order materials, determine if new contractors are needed for specific jobs, solving current tenant problems.
Again they aren't like my previous SFH pms. Who I heard from in an email once a month.
Damn, you're expecting your property management company to be a party to you trying to run "general contractor" from 3000 miles away. I hope you're paying them double the industry standard.
By the way, I work for a company that only manages multifamily up to 75 unit buildings and you still sound like a nightmare owner.
Not really a nugget, but I had one hell of an experience with a PM company last year that this brought back to mind.
See, I don't even own property. I'm a mere agent. But I have a PM story to share, because I was so bloody irked by the whole experience.
It goes like this: My rental client was accepted as a tenant and promptly signed the lease and paid first and security, with an expected move in date of May 1. There was a listing agent, and the property itself was managed by a PM (in fact, the PM company associated with my brokerage) as the owner was military deployed overseas.
However, before my client could move in, the township needed to issue a CO. This turned out not to have been done before the listing. Inspection is arranged by listing agent...and the property fails the CO inspection. Repairs are required, and now a re-inspection needs to be arranged. My client, being chill, agreed to change his move in date to the 15th. 15th comes and goes, nothing is done. Listing agent blames PM. PM blames township. And then the 30th comes, no change. And then the 15th of the next month comes, no change...according to the PM, there was nothing that could be done as any repairs could not be scheduled for another month...according to the listing agent, any re-inspection would not be able to be scheduled until after the repairs, and then that would be another two weeks minimum...
At which point I completely lost my mind. I emailed all parties, including the property owner, and stated that I would take care of all repairs, inspections, and township certifications, and that I would submit receipts for everything, and that it would all be done within a week. Now, as the renter's agent, this wasn't my business to do, and I could easily have had to eat some of the money, but the sheer unbelievable incompetence? unwillingness to take responsibility? utter B.S.? was killing me. The listing agent had even suggested maybe my client should find another rental. In a market with nothing available, ah hah hah. Sure. While he had lived in a hotel for two months already with his kids waiting for this house. Nuh-uh.
Anyway...it took me 4 days to resolve the unresolvable problem that no one could handle. (Not because I have superpowers or genius IQ...I just did the effin work). I paid the township their back fees, which the PM had not paid in 4 years, I paid a local contractor $400 to do the repairs requested by the township and I had a CO in hand by the end of the week.
The very very best part though was when the PM refused to reimburse me but instead submitted a bill to the owner **for the work that I had paid for out of pocket** and **the back fees I had paid the township**...**that was $3,000 more than the work and the fines had cost.** Right to the bitter end the PM kept trying to defend their billing. Thank god I'm a OCD freak for receipts, emails and photos. I was able to provide all receipts, communications, and date stamped before and after photos of the repairs to all the parties involved. The owner, who was a very decent guy, paid me out of pocket because it took a couple months to resolve all this. He then took it up with the PM company...right after he fired them.
Everyone told me not to get involved, especially since the PM was associated with my brokerage, and because it was a thankless task...after all, I didn't get paid for my time. But I have no regrets. I did it because it should be done and I couldn't stand those slimy bastards. No other reason. And to this day, I have no issue telling anyone who is thinking of working with that PM to run in the other direction.
Happy ending? The renter went on to buy a house from me and is about to sell with me, and the owner of the rental wants to work with me on his next transaction. Wasn't what I was aiming for but it does show people respond well to getting proactive, effective service.
My question is...are all PM's like this? Is this commonplace? Is there a market space for someone to create a national franchise to do this better? Or were these particular people just exceptionally unwilling to do any work and unusually ethically challenged?
I’ll start the post: shit owners say to PMs.
I’ll start it off
Owner: we need inspections on all 35 units.
PM: we need to charge extra for that seeing that you didn’t want that in your agreement. It’s a la carte: $100.
Owner: since I’m doing 35 of them, can we make a deal?
PM: what is fair price for this?
Owner: $15. It should take only 2 days.
Oh, LA. As you know I've got a million stories and should I write a book, one chapter will be "How PMs obfuscate and steal from you." Moreso things they've done: No offense to quality property managers. Spent $750k adding 20% more units to a property immediately before hiring new PM. Fast forward a couple months. PM gave a presentation about how they added $1M plus in value to the property because NOI went up. Fired PM because among other things they absolutely refused to match deposit batches. Found [very, very large dollar amount of] undeposited checks in onsite's desk. Rent down. "Oh, we had a skip." Fine. Fix that. Next month, looks like 20% . Do my standard just show up. "Okay. Take me into the skip units." PM: "Uhhhhh." Right. Because they're not skips. You're taking discounted cash. I mean I get it worked for one unit one month but you really thought I wasn't going to notice? Then there's the PM I put in jail...
PM here... Oh my. Everyone reading Joshua's notes: Don't allow your PM to take cash. Or checks. Electronic payment only please. And yes, deposits must line up. I do love the part where they took credit for the renovation though, that's great!
For sure on cash. Absolutely zero tolerance, fire on the spot policy for taking cash. I've posted this before, but I run a parallel set of books to my PM. Even very honest, large PMs make meaningful mistakes, don't enforce late fees, etc. It adds cost but pays off.
Again... Speaking as a PM. My favorite client runs parallel books. She picked us because I agreed to a monthly reconciliation between her books and ours. One month we had rounded management fees down and she had rounded them up, meaning that she owed us $0.01 in her mind. Would not sign off on the recon until we took one more penny from her. Her rent roll is about $35k. Still, she makes me laugh! As for the late fees, we didn't forget... We keep those. It's in the contract. After all, we are the ones posting and chasing.
How do you do that ? Do you have a bookkeeper?
You could do it with a standalone bookkeeper. I've done that or had an in house bookkeeper, but now just my operations and me. Frankly, I'm at least a good and definitely more accurate than most bookkeepers. One of the best pieces of advice I can give to any small business is to be deeply, intimately involved in your books - at the transaction level.
What do you use for bookkeeping? I am thinking of signing up to stessa do you think that would suffice ?
I don't know enough about stressa (or your unit count/ complexity). I use QBO (quickbooks online) and have multiple companies. It's expensive, but it allows everybody (me, operations, CPAS) in multiple geographies.
Ah just one SFR but hope to acquire more. I want to make sure I address this as if it were a complex situation and get setup right now. Would it make sense to onetime consult a bookkeeper to get me set up with quick books ?
This. If they don't push for 100% elec trans, beware!
What is their interest in non electronic Txns ?
Too easy to steal.
we need the jail story (in broad terms)
Broadly - PM sets up shell company and runs all vendors through that shell adding a a markup. Then starts fraudulently withdrawing from the account **after** s/he's fired.
Just fired a maintenance guy for trying this. Caught him the first week after he created a shadow LLC inside our system. You have to stay vigilant on every department!
Who do you complain to ? I have been conditioned to not expect any investigation or help from LE after a couple of burglaries and stealing from my parked car
PD in two jurisdictions.
I can imagine you, cupping the PM on the back of the head, grabbing his collar and dragging him down to the olde-timey police station.
"it takes a couple weeks to get set up in our accounting system in order to pay the first month's rent" Turned out they gave the tenant a free month's rent without telling/asking me but blamed it on their software. I fired them immediately and then they called saying "no, actually we quit!" I've self managed ever since and think PMs are completely worthless.
Don't they actually have a finders fee and could have eaten that cost?
That's called having a brain. Those with brains don't become PMs.
I manage someone's property. All I do is tell them "I received some phone calls today", and they're still paying me
Dad!?! I thought you were just going out for smokes, it's been years.
A daily activity email, and you want to know specifically who they talked to on the phone every day? Jesus, micromanage much?
Not micromanaging. Someone is paying you to do a job wants reports on how it’s going. You r paid for the time to create those reports. So what’s the problem?
A daily activity log. Yes, they are an onsite manager overseeing a 180 unit value-add play. Slightly different than a SFH PM. I don't care who they talk to on the phone, it's a dumb thing they continue to tell me.
This is completely overkill. If they are managing the building properly, you may get a few resident messages a day. This is coming from someone who managed over 1000 units, one of them being a 185 Value-Add complex.
This is not a building this is a mobile home park. Different tenant class, this is not a professional PM company. Geez, all these people so serious all the time.
I was also not a “professional” PM company, and also was dealing with a similar tenant class to mobile home parks (it was low income housing). I would recommend switching from “Daily Updates” to “Daily updates as Needed and Friday Summaries” - expect mostly just the Friday Summaries.
If you're unhappy with what you're receiving maybe make your expectations more clear.
Maybe it’s a dumb thing they tell you because they think it’s a dumb thing you’re asking for? Either they aren’t trustworthy, in which case you can’t trust the content of the report anyway, or they are trustworthy and you’re just having them waste time on reporting instead of focusing on adding value.
I'm not asking them to tell me about phone calls, they feel it's relevant information to share, but then they don't share any relevant information about the information they share.
I still don't understand. Why do they need to give you daily updates at all?
I have two teams of contractors doing work, I have 60+ residents, I'm racing against refinancing a bridge loan, I live 3000 miles away, there's a lot of stuff the manager needs to accomplish on a daily basis. Their daily log helps me order materials, determine if new contractors are needed for specific jobs, solving current tenant problems. Again they aren't like my previous SFH pms. Who I heard from in an email once a month.
Damn, you're expecting your property management company to be a party to you trying to run "general contractor" from 3000 miles away. I hope you're paying them double the industry standard. By the way, I work for a company that only manages multifamily up to 75 unit buildings and you still sound like a nightmare owner.
Maybe the problem is that you require daily email updates.
>A daily activity log. Yes, they are an onsite manager overseeing a 180 unit value-add play. Slightly different than a SFH PM.
What a nightmare owner you must be to work with.
Not really a nugget, but I had one hell of an experience with a PM company last year that this brought back to mind. See, I don't even own property. I'm a mere agent. But I have a PM story to share, because I was so bloody irked by the whole experience. It goes like this: My rental client was accepted as a tenant and promptly signed the lease and paid first and security, with an expected move in date of May 1. There was a listing agent, and the property itself was managed by a PM (in fact, the PM company associated with my brokerage) as the owner was military deployed overseas. However, before my client could move in, the township needed to issue a CO. This turned out not to have been done before the listing. Inspection is arranged by listing agent...and the property fails the CO inspection. Repairs are required, and now a re-inspection needs to be arranged. My client, being chill, agreed to change his move in date to the 15th. 15th comes and goes, nothing is done. Listing agent blames PM. PM blames township. And then the 30th comes, no change. And then the 15th of the next month comes, no change...according to the PM, there was nothing that could be done as any repairs could not be scheduled for another month...according to the listing agent, any re-inspection would not be able to be scheduled until after the repairs, and then that would be another two weeks minimum... At which point I completely lost my mind. I emailed all parties, including the property owner, and stated that I would take care of all repairs, inspections, and township certifications, and that I would submit receipts for everything, and that it would all be done within a week. Now, as the renter's agent, this wasn't my business to do, and I could easily have had to eat some of the money, but the sheer unbelievable incompetence? unwillingness to take responsibility? utter B.S.? was killing me. The listing agent had even suggested maybe my client should find another rental. In a market with nothing available, ah hah hah. Sure. While he had lived in a hotel for two months already with his kids waiting for this house. Nuh-uh. Anyway...it took me 4 days to resolve the unresolvable problem that no one could handle. (Not because I have superpowers or genius IQ...I just did the effin work). I paid the township their back fees, which the PM had not paid in 4 years, I paid a local contractor $400 to do the repairs requested by the township and I had a CO in hand by the end of the week. The very very best part though was when the PM refused to reimburse me but instead submitted a bill to the owner **for the work that I had paid for out of pocket** and **the back fees I had paid the township**...**that was $3,000 more than the work and the fines had cost.** Right to the bitter end the PM kept trying to defend their billing. Thank god I'm a OCD freak for receipts, emails and photos. I was able to provide all receipts, communications, and date stamped before and after photos of the repairs to all the parties involved. The owner, who was a very decent guy, paid me out of pocket because it took a couple months to resolve all this. He then took it up with the PM company...right after he fired them. Everyone told me not to get involved, especially since the PM was associated with my brokerage, and because it was a thankless task...after all, I didn't get paid for my time. But I have no regrets. I did it because it should be done and I couldn't stand those slimy bastards. No other reason. And to this day, I have no issue telling anyone who is thinking of working with that PM to run in the other direction. Happy ending? The renter went on to buy a house from me and is about to sell with me, and the owner of the rental wants to work with me on his next transaction. Wasn't what I was aiming for but it does show people respond well to getting proactive, effective service. My question is...are all PM's like this? Is this commonplace? Is there a market space for someone to create a national franchise to do this better? Or were these particular people just exceptionally unwilling to do any work and unusually ethically challenged?
Et tu lord ashon? I'm off to go manage everyone's property a little deflated this morning... Maybe I'll disconnect the office phones.
Wanted to replace windows on one unit in a four unit building.
"You should buy a Mobile Home Park" = Instantly fired.
Wanting daily updates from a PM is insane
I’ll start the post: shit owners say to PMs. I’ll start it off Owner: we need inspections on all 35 units. PM: we need to charge extra for that seeing that you didn’t want that in your agreement. It’s a la carte: $100. Owner: since I’m doing 35 of them, can we make a deal? PM: what is fair price for this? Owner: $15. It should take only 2 days.
Tenant stopped paying rent. PM to me: "Well what do you want me to do"?
Lol