Property Management Nightmare

Property management Nightmare with Classy Assy property manager

Today I get to tell the story of the ultimate property manager horror story and the story is not unique just to our company, but because we did not do our due diligence the first time that I hired a property manager, not such a good story is kind of to be expected.

The story starts with having a property management company that was recommended by my mentor, who was a local real estate agent who had a lot of knowledge in a very small market, brought us in a lot of leads, and did a great job with collecting rent and making sure that the unit stayed occupied.

In reality this is really what you want in a property manager.

She also by our direction, would of course increase rents, and helped me to manage construction efforts on our team she didn't even at the time, require extra payment or fees to be able to manage the construction and at the time.

I didn't realize how valuable this person was. I also knew that based on her StrengthsFinder test, that she was somebody who really did not want to work, she wasn't motivated by work itself, but was more motivated by praise. So knowing that this person didn't have the best workhorse mentality, I saw that as a weakness, and I've learned again in hindsight to focus on the strengths of your team members.

When you see a personality profile on someone, I don't even look anymore at their lower or weaker skills or capabilities. I simply look at the highest and best that they have and focus on that.

This person liked praise and also was highly motivated by protecting other people, like a mama bear of sorts. Knowing that these were her capabilities and that she also was referred by somebody who consistently partnered with that person-There was trust verification, and essentially the skill set was there.

Unfortunately, at the time being young and excitable, which I am no longer anymore. I was connected with a new property management company. -We'll just call it classy a** property manager.

Classy a* property manager went to the market in which we were asset managing these properties and offered to do a secret shop of the property, meaning that they would go to all of the neighboring properties and basically tell me how much below market rent we were and be able to tell me how well the property was maintained or was not.

I did not at the time know, Obviously, the motivation of this person to give us a free review of our property was looking to get paid.

No one works for free, so in hindsight, it wasn't a favor. It never is. It was simply to be able to take over a property and make more money.

So in the process of learning that the opinion of another manager whom I did not vet through other operators, they saw our property being mismanaged as far as the landscaping. They mentioned that the rents were a couple of $100 below market rent, and a couple of other items that I didn't (at the time know how to prove up the data on prove if this was statistically significant information or if it was just trickery) check.

So now we know that whenever someone's giving you a market survey, they need to give you the verification of the sources of where they got the rent numbers from. So usually we'll [email protected] And we'll verify over a phone call and so in your sheets or in your analysis of each market-when you do a market survey-there should be two rows that explain that we checked this data with two different sources at least.

For example, phone call apartments.com, costar/yardi , walking the property yourself, and getting a handheld brochure, also looking at what they say that they charge over the phone/ their websites. So these are a couple of methods to be able to do this.

So I got the information which Of course was not meant to necessarily protect us. It was more of a way to scare me into realizing that the manager that we had just trusted wholesale to do her job, we got information that made us believe that she wasn't doing the full-extent of her job. So I believe these people and realized later on looking back that this person is extremely manipulative, and will say and do anything to get what they want. Whether it is true or whether it is not.

We believed this person and decided to make a change of management. I did not want to let "Jane" go from our property because she was doing such a good job. And moreover, she was a referral from my mentor. Who had an excellent rapport with her. She also represented us very well and always took precautions to be able to ensure that our property was safe, Filled up, and well-collected.

Now moving forward with this new property manager after takeover. I'll just tell you what happened on the back end that we had to realize later on.

So for example, all of our different bill payment methods were not updated correctly. So we had a few utility bills that were actually still being sent to the old property manager's house. And despite numerous attempts over a couple of years, they never paid the bill or paid her back after she paid the bill. She had proof multiple times and was owed money by our property.

In addition to having bills that were going to the wrong address in place that were not being paid. There were other bills that were not being paid as well. And so, you know, we're getting collection notices, but they're being routed purposely to our ownership office so that we were never aware of these things to fix it.

Also, we had a worker that was the recommendation from my sponsor/ mentor, who basically understood the model of apartment ownership SO well that he would actually offer to do all the interior renovations first and then once a resident was in it to collect payment like that.

Now again, looking back in hindsight, realizing that that is an incredible feature that someone is willing to offer because they understand if the unit is not done you don't have heads in beds so you can't really pay for your bills- trying to fund capex.

However, we always have a budget for all of the exterior/interior renovations so he knows that he would get paid upfront or at least you know, a portion of the job to do any of our exterior amenity additions.

**Because he knew this, he was incredible to work with "Davis". What he did was he managed his own crews. He would come in with a scope of work, and he was so good that he would essentially tell us here is the top amount of money you need to raise and my job is to go in and send you basically your final invoice once we're done that's going to be lower than our initial estimate. And he did this every time. So he was very impressive when it came to being conscientious of ownership of our budget. Always turn-key. He never did any change orders. He always stayed where he should have. We trusted him to get into our property and be able to renovate the units on his own time schedule. We had a delivery time date, but under our old property manager, let's call her "Jane" He would get interior renovations done in under 4 weeks on time. We had everything rolling like we should have and I shouldn't have made a change.

As the new property manager took over they actually were very critical of "Davis's" work. Poor Davis. I was convinced that we needed to let him go and that he was doing a poor job. "He wasn't staying within code" were some of all the things I was being told. Those actually were not the facts.

We now know that we get clarification, "then you need to show me the red tag that we got or you need to take pictures of what you're complaining about".

We made the decision to let "Davis" go and so when Jane and Davis left what ended up happening was we had bills that went unpaid we had landscaping that wasn't up kept because we are trying to cut our bills.

We had an issue with our laundry room where there was a water leak that was never fixed and I had to go back in later to try to figure out why our common area of water bill was so large and to go there on the property myself to figure this out.

We ended up having a wonderful on-site hire on the property. She ended up being the sweetest person who was very quality oriented, who was always on time, who was at the property, and who leased up the units. You know just the perfect kind of person you want. She was also very friendly looking, if you will say, so a lot of people, when it came to collections, she was very successful.

That person, classy a** property manager brought her on so she was the only great thing that happened with this management company. The manager however kept her on a "temp" service so our cost was extremely high. We later found this was strategy since this management had HIGH turnover, to not have to pay for huge unemployment bills.

Even in the process of me meeting her and talking to her and finding out some of the things that were not being paid, some of the collections that were not happening, and especially scaring off our renovating team who stayed.

They then brought on a construction team of their choosing. That was a one-lady show with a couple of different henchmen, who had no insurance. We never got on their COI or received an insurance statement from them with a million dollars at a minimum in liability coverage. We didn't have any imdemnification forms like we do now with Metric Property Management which shows me this old manager doesn't look out for their clients downside as metric does ( They are fabulous by the way).

The property manager that we had added to the property was doing renovations with 100% risk of not being covered on our company's behalf. That behavior is unacceptable. Really Negligence. This renovation person took double the time that "Davis" would take when he was doing renovations and so we could never get anything done on time.

We started having vacancy issues where we weren't putting people in the units and then because we had such long turn times on the units, we started having potential cash flow issues.

When I tried to explain this to the manager and say this is unacceptable, i expressed we want to bring Davis back in and do the work the way it was working before.

They refused and so we were stuck with this vacancy.

At this time, I wanted to fire the manager, and my partner at the time or my sponsor at the time told me that we should be reasonable we should give them a chance. He said we should explain what we need, give them a time window, and let them know either fail or win at this task.

We did that and lack of action, 3 months later we are still stuck in the position of not getting the occupancy and cash flow that we needed to continue to have the money for investors.

After we got to the point where we needed to have a serious conversation with classy a** management that the vacancy, the timeframe to turn, the lack of execution on our construction plan it was unacceptable. This property manager ended up not having a clue on the details of how income collection and automated billing should have been set.

She ended up, on a separate call threatening me on the phone calling me "little girl" and telling me I have no idea what I'm talking about and that I was off my rocker compared to her 40 years of experience-basically gaslighting me.

This was the one and only last time that I allowed somebody that I hired and paid to gaslight me. It had happened three times before with an attorney that was handling this deal, called "Kaiser", and then it happened again with the broker on this deal, let's call him "Andy".

Unfortunatley after this call I backed off my instincts and data collected and let them continue to make the project fail.

When we got to the point where my sponsor and I were aware of them not performing we decided that it was time to let them go.

Then everything became very hostile. I started receiving threats on the phone from classy a** manager to pay them.

I knew this was meant to damage because this person knows that if you're not prepared for a call you can't record them. She always found a way to not respond to reply in email for example. She knew that what she wanted to say and do wereintended to scare me or scare us into you know into keeping them as a property manager or working with them.... but that doesn't work with me.

We let the person go. And then the effect that happened right after we let this person go was that they ended up turning a relationship that I had sour on purpose with a partner to try to drive a wedge between me and that person. This destroyed trust that we had built, and the trust that we had built with other people that we depended on that were my friends and family, which is horrible!

We found out that same timeframe that I had another friend let's call her "Erica", she at the time also also hired classy as** management to manage her properties. She ended up having over $100,000 in liens on her property because of a lack of paying bills on their property. these could have been on auto pay. She also was firing them at the same time. They also dealt with the same threats. However, "Erica" was much more versed in business and people trying to get away with abuse. She was able to get her issues resolved immediately by mediation.

For us, once we were able to get that person away from our property, get our money back from our bank account- we knew we had to get our old manager back and we had to beg for Jane to come back. Once we were able to get her to come back, we were able to get all of our bills paid, get everything leased up, finish renovations, increase market rents, and get everything to where we needed to get.

Because of the hostility that was caused between myself and the partner relationship involved with this property we then were starting to be blocked from having the success that we should have because of that wedge that was driven between myself and that other person. Unfortunately, she was told a lot of false information with intent to be able to coerce this person into losing trust in me and be able to, again drive that wedge between us to control my partner. She was successfully able to control that partner but not myself, and the rest of my trusted mentors and Associates.

That slander and defamation ended up turning into two, almost three years of litigation because of false information that was shared. Rumors that were said had no base in reality, which we ended up finding out through the lawsuit process. The end result was that when we went to ask for discovery that the other party had no information and would not let us go retrieve documents proving their point or their claims on their side. The suit was eventually dropped after six figures and legal costs a lot of heartache pain, blackmail, extortion, manipulation, and harassment. to this day, I'm still followed by that partner's husband

Moving forward in life, after this was over, and I ended up walking away with a settlement due to lack of proof from the accusations that we received.

Fast forward a year later, and classy a** property management ended up filing once my trademark expired (because my former attorney for my trademark either retired or left the legal practice and forgot to put down my contact information for us trademark and patent office) to be able to get ahold of me so my trademark / file for my trademark. She ended up putting up a website that was essentially mocking what we do, our branding, and what we care about. As of this year, I was able to refile and get the USTPO to grant us our trademark once their trademark filing expired due to lack of response.

The way I was able to get the other side to quit pursuing this and stop trying to take the income streams that are connected to my trademark and bullying me further, was to make her attorney aware that during the time of COVID-19 in the lockdown another property that I was involved in (that they were managing that I couldn't make the decision to get rid of them on) We had internal meetings where I had access to.

Trello where the conversation that was happening leadership and classy a** management admitted that they were receiving over six figures in paycheck protection money!! On-site salaries at this property were $84,000 for the entire year.

This pay amount for the other property was in no way needed, for the few office people that we had on staff, to cover their salaries from the paycheck protection program. During this conversation, we got some shots of another team member (in close communication with the manager) admitting that there was x amount of money that was coming to be collected by classy a** property management company.

Once I told them that I saw and heard this information (when they were still managing this property), I was kicked off the Slack channel where this information was. I kept the images and later sent that to this property manager in her attorney to let them know that I am privy to the fact that they took more funds for PPP than they qualified for with our property, or that were necessary to keep our property afloat during covid 19 time period.

If this aggressive effort to try to take our trademark progressed any further than this potential federal offense or felony would become public information. I always keep recordings, screenshots, emails, and data in files when I start seeing abuse happen. It is our job to be able to hold people accountable versus waiting until you get backed into a corner, abused, and intimidated to be able to stand up for yourself.

We had another property with them where we sent the information needed to file for PPP but they refused to do so, and instead kept money in our their wells fargo account that we couldn't access when we were trying to transition away from their services.

To date this property manager no longer touches any of our assets. And of course, if anybody out there in the universe that is brand new to "Dave's" east coast multifamily programs that are out there (because this property manager poaches those new students) if any of them get approached by this person, we are happy to reference the story so that you don't have to deal with the same things that myself, "Erica" and others dealt with putting our property at risk for lawsuits, crimes and losses.

Abuse, intimidation, and getting involved in stopping the progress of the impact our business' have on the lives of our community is unacceptable!

Our partners now never do sny of these things, and of course we have created systems and processes to stop this pain from repeating.

To book a call with our team click here-

https://calendly.com/kaylee-6/15min

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