3 Hard Lessons I Learned From Firing My Property Manager
3 Hard Lessons I Learned From Firing My Property Manager
A Quick Story About My First Fully Remote Rental Property
Happy Thursday, Hybrids!
In today’s newsletter, I’ll share a story about overcoming a long-distance real estate investor’s worst nightmare…neglectful property management.
(Today’s issue takes ~3 minutes to read)
In February 2022, my wife and I fired our Property Manager for a home we had just bought 2 months prior.
This was our first fully remote investment, and we bought the house sight unseen.
We conducted two rounds of thorough phone interviews with the PM, and everything checked out based on our thorough criteria. You can find the full list of screening questions we asked here.
But that's where the good news ended.
It turns out anybody can say the things you want to hear on the other end of a phone call. Execution is far from guaranteed.
In short, our judgment could not have been more wrong about this company.
Within 45 days, our property had been effectively abandoned without our knowledge.
Utilities were never turned on (despite being assured they were).
The gas meter had been removed without our knowledge, meaning there was no heat in the house. Not good for January in Iowa…
The water main froze and several pipes burst.
They were allowing tenants to access a lockbox and show themselves through our property without supervision.
The only calls we got from the PM were to let us know about $75 “snow removal” fees, which we verified did not actually happen.
6 weeks went by without a single application to rent the property.
Naturally, we fired our PM.
Despite this outcome, we took away three very important lessons from this experience.
#1. Never take a prospective Property Manager's word at face value without current client testimonials.
Spend the time to do your due diligence.
Speak to at least 2 current clients.
Review all available online reviews, especially any bad ones.
Warning signs will appear quickly, and bad experiences will bubble to the top.
#2. Do not sign anything until you've spoken to all key decision-makers.
We dealt exclusively with the Director of Investor Relations. The owner of the business (who held the license to operate as a PM) never dealt with us directly.
The owner ultimately cut ties with our only point of contact there. Then, she abruptly "closed her business" 7 days later, leaving us with no recourse.
#3. If you see an erroneous charge, chances are high that you're being lied to.
There's a thin line between an honest mistake and a fraudulent charge in a new partnership. If you see your new PM pulling a fast one on you, trust your instincts and let them go.
Trust must be earned by both sides. It cannot and should not be assumed.
In happier news, we went on to find a great PM who rescued us from our early troubles in Iowa and got our properties leased up with happy tenants.
We now own 3 cash-flowing rental properties from 2,000 miles away and sleep well at night knowing our properties are protected.
Despite our struggles, I firmly believe that long-distance real estate investing is a viable option. Just make sure you do your homework…
Happy investing,
-Aaron