Hi,

I wanted to share my experiences with my rental management company and my tenants. It maybe a long story but I wanted to share it with the hopes of others avoiding what happened to me. Basically, the tenants stole everything in the house that wasn't tied down including a stain glass window, all the rugs, microwave, things in storage that we were not to have access and trashed the house. The 2nd part is that the Management company did nothing to stop this or prevent this happening and actually appear to acting on the side of the tenants. Also, the management company found it within there scope to paint the entire upstairs and most of the main floor of the house in a off yellow color in order to save money on the painting. Irony is that paint job which was sub standard use up most of the deposit and left nothing for the yard work and other damages that were done. Then the former tenants sued the management company and me due to the fact the management company incorrectly accounted for the deposit. So the management company agreed to an out of court settlement with waved my right to follow up on the other damages. The management company did this just so they would not sued be for miss allocation of funds which can be 4 times the amount.

When the tenants were suing the management company, I was informed by the management company, that I was still responsible for paying error since they only provide consulting services. Which was news to me considering that is why I was paying them with thought they would be accountable since they are ones keeping track of the money. So, it begs the question why use a management company.

Also, they have clauses in the contract that prevent me from telling others what there name is or I will be sued for liable for anything that is perceived negative.

When I asked if, I could sue the tenants for the damages still outstanding they said I could but I would have to pay their time for accounting and lawyer fees. But, what the management company failed to mentioned is that when they signed the out of court agreement with the tenants, there was a clause that all future claims are waived and I could not press charges anyway. So, It seems like I was being set up. By the way the failed to notify me of the any of this and I had send multiple emails and phone calls before I actually got a copy of the agreement. I didn't even know I was suppose to be in small claims court until two weeks before the court date. (sort of blessing since I was served correctly and the case would have been thrown out)

Basically, they did nothing to protect my interest and only protect theirs and the entire contract was written in such a way that all damages and issues were passed to me and they had no legal responsibility for anything.

Worst decision that I made in my entire life. I also did my research and they were the best one in the Denver area that was reviewed on Yelp. I interviewed them and asked all the standard questions, but, really felt mislead by the entire process.

There are a LOT of management company horror stories on here.

Appreciate the lesson very much; considering companies in the future and will review any contract IN DETAIL.

This is the rub on management companies and this is a common complaint. I think if you build a team of reliable contractors and handymen, managing things yourself can be easier. One can also outsource tenant procurement if need be. The fact of the matter is that management companies face the same issues each of us face as landlords; it's a challenge to get good help on the contracting side and there's a similar challenge getting decent tenants. These things don't change just because of a third party.

Most here are (full time) Self Managers.

Many here, wear every Hat in the Realty Business.

We know the Song and Dance, (that you BASICALLY refer to)

We just don't participate.

"Most here are (full time) Self Managers."

Sorry this happened.....it makes all management look bad. But......

You had a copy of the management agreement prior to signing & knew the terms. The first question to ask yourself after reviewing those terms is "If the wheels fall completely off the wagon & everything that can go wrong, does go wrong, will my management company work with me to mitigate my damages or leave me twisting in the wind??" And at that point it will be you versus them......they're ALWAYS gonna cover their own tush. Just like you should.

I have the best clients & investors in the world & they are long term. We don't have a 15 year relationship by accident or luck.

John,

Wowzer!

Thanks for posting this real life lesson as a warning for us all!

Liable: look up THE ABBEY hotel in Indiana. Big court case in the news. $300 fine if the guest posts a bad review.

I’m not an atty but I think it's not liable if it’s a fact. And I doubt that would hold up.

And I’d pursue a lawsuit against the PM for your losses. Nothing to lose. Jusge might lean in your favor- we all know they lean against LLs so maybe against PMs.

I think you have a case for breach of fiduciary responsibility.

Also, file a criminal theft report on the residents for the window, etc.

As for reading the contract as someone suggested, I did and actually had a lawyer friend read it and at the time it was explained to me be by everyone it was to prevent unjustified slander. BUT, it is now being used to prevent any negative content with the threat of having to pay their lawyer fees. The words are open to interpretation and I really don't think you point is valid that I should have done my research better. I spent about 6 months trying to find the "best" one Denver and had multiple conversions with them on the topic and I was assured verbally many times that the clause was only for slander and things are going to be fine, we have been doing this for years, check our yelp rating, check our better business bureau rating. As you know, the rating agency can get paid to removed the negative reviews. I guess it is a way for them to create revenue and any negative review on Yelp etc can be overwhelmed by positive and/or potentially removed if the posting agent can not be verified. etc.

Also, any references will be from there preferred clients or maybe their mothers

Also, to add to the story, they wanted to get the current tenants out for some reason which I never was told why. Over the phone was told that I can increase the rent by 50% and they would get "better" people in etc. Well, at time of eviction, I was told my house rental rate is now worth less than what the current rate was let alone the promised increased. When I brought up the phone conversation, they said if it is not in writing then it is not official. Of course there is a clause for that too.

Thats the first thing i thought of : If it is the truth you can't be wrong - can you?

... Shame on this management company. Totally avoidable, they didn't do you right. Thanks for posting. How can readers here help you?

There is another site on the internet that appears to promote out of state investing, use of a property manager, (because your time, even as a newbie investor, is too important to concern yourself with anything as plebeian as property management). Everyone has big dreams and talks about the "deals" they are doing. Number, not quality of investments, appears to be the guiding principle.

John,

Don't beat yourself up over this. Often PMs change over time. They get in over their head or change leadership. In my mind they are as flaky as residents and realtors.

Son12 just sold his home in Aurora so I'm familiar with the HOT market in Denver. The good PMs are probably over worked.

Not everyone should be an owner/manager. It takes the right person, training, and time.

But if you are interested your market is so hot you don't need much energy to get it rented. You need help with screening applications (easy to get) and a killer lease to protect yourself.

There are a few Denver folks on this site who are great people and would help point you in the right direction.

Find the best real estate attorney in the Denver Area and pursue this Management company for numerous breaches and other factors as well.

This management company has to follow Colorado's rules/laws/code of conduct. Get a copy of the Real Estate law and pursue this company they need to be put out of business. I guarantee you, you are not the first owner in Denver they created a problem for and there will be another out of town owner that will get taken by them.

Find the best real estate attorney not in the county this management company does business but in a neighboring county. Have a good conversation with the attorney to see what options you have to pursue this management company.

Rough bit of luck with that bum company. I like Mr. Taylor's advice of hiring and training someone to do things my way. Even the "best" PM will still have a conflict of interest with other clients, and the way they make money is not through rent percentages, but rather fees. Leasing FEES, maintenance FEES, turnover FEES.... I have a buddy who owns a PM company in Branson, MO....a pile of their income is from fees. You need to be getting those fees!

My goals for 2018 include developing detailed checklists for the move-in, quarterly inspection, and move-out processes. I want to hire someone for a flat $25 to do those tasks for me as flawlessly as I would. All maintenance is hired out already. My end game is to have me responsible for making decisions on whom to hire (contractors) and whom to approve (tenants), and not much else.

try Steven Dexter Lathrop Gage

John, your experience is why I dont use management companies. They have no skin in the game and arent affected by the choices they make regarding who they accept as tenants or how they manage your property. Regardless of thier decisions they get paid and have virtually no responsibility.

My experience came 'full-circle.' In the beginning...I was alone, one deep, I did everything myself (advertising, cleaning, vetting, repairs, collecting, balancing the books, you name it--I did it. For years--don't know how I managed it. ?? I had a full time j-o-b and 2 daughters at home who were latch-door kids. Every day I was walking a tightrope.

I finally researched and hired a prop mgr. He had his own way of doing things that benefited him and not me. We were at constant lager heads which was more stressful than on my own. He did all sorts of stupid stuff-mostly just being too lazy to check, and failed to do the most commonsense things.

Finally I sat him down and told him going forward we would have a division of labor. ALL repair complaints went thru me FIRST before he decided if or how to resolve them. *I* would make those decisions. He would advertise and I would choose the tenants from the applicants. And if NONE of them pleased me, he had to keep advertising. HE did all the initial acctg--but I reviewed everything he sent me, and proved via my bank statements what monies he did(or didn't) send to me.

He hated this oversight, but after a while he came to realize the other side of his policies. He never had an owner SHOW him how what he was doing hurt them. He was totally mystified why some owners up and left him. He had been trained as a young man in a certain management way and had been doing it for 30 years, and no-one called him on it.

Now, we have been working team work on the management of my properties. I send out MY handyman for most small jobs and I pay him out of the rental bank acct. For jobs that req licensed contractors, I require him to get 3 estimates, and I choose. I go to the applicant's current home for the check. He does the lease signing and gets 1/2 month's rent for that. Right now he gets 10% of the rent for 90% of the work. I get 90% of the rent for 10% of the work! We each do what we are best at.

Recently his business almost failed because his wife had cancer and was slowly dying. He lost MANY owners who had no patience when he was at the hospital all the time. Sometimes I had to wait for my rent payments because he had a hard time breaking away to do office work. He didn't want his wife to die alone in the hospital when he was away. I respect that. I am not hurting for the money--as long as I finally received it. I kept doing my acctg and eventually all was resolved. His wife finally died and he is back in the office now.

We had another big conversation where he thanked me for not leaving him in the darkest hours,and being patient money-wise. And he is doing some of the same things I instituted, with this other owners, and they are happier too. With a little training he came full circle.

Sorry that happened to you but thanks for taking the time to post this on the forum.

Having four assistants trained to complete specific task is so much better than having only one full time employee. Assistants can have flexible schedules, flexible needs and flexible desires to work.

You have some options. CO requires PM's to be licensed so if I were you I would file a complaint with the RE Commission.

There isn't too much you can do about the way they handled some things such as using an ugly color paint but there are two issues, both involving the handling of the SD, that were clear violations.

The had a responsibility to you to send you a copy of the final SD accounting BEFORE sending it to the tenant. They may have held the SD but the owner is still the one who is ultimately responsible. And since they claim they only offer consulting is even more reason why you should have had the opportunity to sign off on it.

My sense, based on how some PM's are guilty of this, is that their SOP is skimming off the SD by deducting for disallowed expenses. If a tenant complains they claim "my bad" and refund the amount in dispute. End of discussion.

Only this tenant decided to sue which threw a wrench in the mix. The #1 reason RE brokers have their license suspended or revoked is due to mishandling SD/Escrow funds. They had go to the attorney to squash the suit because going to court may have triggered the Comm learning about the violation.

Since the tenant sued both you and the PM technically the atty is now representing both parties. But since the atty never contacted you before signing a final settlement how is that representation?

They cause a problem, hire an attorney and then charge you for legal fees.

Most PM contracts have a list of ordinary services and expenses that do not require them to check with the client. However, defending a SD lawsuit is not an ordinary PM expense no matter what the contract says. You had the right to approve the cost, select the attorney or get a separate attorney if you wanted.

Filing a complaint offers some benefits besides getting some closure. If they are fined, suspended, license revoked, etc. could allow you to sue them. It should also free you without fear of repercussion to speak openly about your experience.

Just so that you know the RE Comm. is compelled (some by state law) to investigate every complaint. And no matter the result the investigation will become part of their public file for anyone looking for a PM.

You should write up your experience, your concerns and include in addition to the SD issues the comment "if it's not in the contract it doesn't count" which is essentially a code of ethic violation.

As a Realtor I am truly sorry and embarrassed by the unethical manner this company treated you.

IF the day ever comes that you want to give it another try please don't use YELP. They are fine if you're looking for a good pizza joint but not for professional services. Regulated industries such as RE, law, accounting have professional boards where you can search the practitioner to see if they have a history of complaints or disciplinary actions. That would be a good place to start.

Good luck!