Why I Fired My Property Manager
I have a soft heart and a personality that wants to please people. However, I’ve realized that sometimes I’ve got to quit being Mr. Nice Guy. Recently, I evicted a tenant and fired a property manager in Indianapolis. This was long overdue, and now that it’s done, it’s quite a relief. Here’s the story…
About 3 years ago, I bought a house in Indianapolis that was kind of an experiment. I chose Indianapolis, because it’s an undervalued market when you compare median housing price to median income. Also, it has a much better price vs. rental income ratio than south central Wisconsin. I bought the property at a wholesale price through rehabber who had already fixed up the property and put tenants in place.
Rather than looking for new property management, I just stuck with what the seller had in place. This property manager seemed to know what she was doing. However, about 8 months later the tenant fell behind on rent and never got caught up. The tenant vacated on his own without ever having to take further action. The property manager took care of a few repairs, and put the house back on the market for rent. At the time this didn’t seem like a big deal. I’ve been through this situation myself as a property manager of our local rentals.
Four or five months after this the property manager finally re-rented the house to a new tenant. I wasn’t sure why it seemed to take forever to re-rent the property. Throughout this time frame I kept asking the property manager what’s taking so long, are we priced to high, what can we do to different to attract renters? She assured me, it was just the local market. I gave her the benefit of the doubt since we are blessed with a fairly strong market in the Madison area.
For the first few months this tenant seemed good. However, then she slipped with a couple late payments and got caught up. A few months went by, no payment, again. I was all over the property manager about getting caught up this time, and I was ready to evict when the end of the month rolled around and we still had not seen a dime. The manager assured me, they had worked out a payment plan and the tenant would get caught up. It never happened; I let it drag on for several more months with some sporadic partial payments (which I would never allow with my own local tenants). The manager kept making excuses for herself and the tenant. I’m experienced enough in this business to know that 95% of the time when someone is more than 6 weeks behind, they never get caught up, and we finally had to evict the tenant. Among all this, the property manager told me the house was in good shape and could easily be rented again. Well it turns out the tenant had damaged a few things, and had sloppily painted some of the walls and trim that had just been professionally painted by the rehabber a few years prior.
I gave the benefit of the doubt with the first tenant. However, after round two of this, my wife and I decided this property manager has no control over her tenants. Sometimes you’ve got to quit being Mr. Nice Guy, so we said “you’re fired!” Also, being long distance landlords, we had no control over the tenants. So, we felt our only options to get a different result were to sell or change management. Since house prices have dropped over the past few years, we elected for new management.
We learned a few good lessons out of this;
1) If you can’t be in control yourself, make sure somebody is.
2) Pay attention to what your property manager is doing and manage your manager.
3) Don’t let long distance tenants get away with things your local tenants would not get away with.
4) Long distance investing profit margins may look better, but it’s not as easy as you’d think.
5) Deal with problems immediately when they begin rather than letting the problem drag on and on.
6) Don’t repeat the same mistakes over again and expect a different result. If it’s not working change something.
We are looking forward to a new start with a new manager. Our new manager seems to work much quicker and have much better processes in place to deal with problem tenants.
Related posts: Lesson Learned – No More Long Distance Landlording