Bad news – Property management gone hectic – oh crap.
Well yesterday I found out my 2nd property manager for my Savannah Mobile Home Park has been quite possibly stealing money from me from the get go. I found both property managers a bit unreliable and unmotivated. My property could potentially offer them around $450/month commission or 10%, but I consistently received weak results off them even with much full paper advertising.
Recently I decided to sell the park back to the intial seller and received $5000 back and the complete mortgage financed would be considered paid/cleared. He tells me the current property manage has rented out more and collecting rent even though he has been telling me only 1-2 have been rented (I have 7 total trailers and 3 lots to rent). I was a bit amazed because I thought I was personally failing and all the money I was putting into the park kept bringing back bad results.
So I found out I was earning around $2500/month in income from collected rents but I was only received around $200-500 from the property manager. I was told he couldn’t get them rented. I’m currently underway in Alaska. I can’t see the property so I have to go on the property manager being honest collecting his share and depositing the rest. So this whole entire time I could of been earning a $1000 profit. This is what I expected when I bought the property and thought it was a good deal. I feel so used, but I have to accept the responsibility and loss just because my judgement was bad. I’m still following through and selling the park back. Even with it really being profitable and being lied to I can’t risk using a 3rd property manager not being able to visit and see the rents collected myself. I’ve already spent over $22,000 renovating, down payment, and utilities paying for the park. I can’t accept any more losses. Now if I did have a trust worthy property manager it would have been a great choice to buy the park and long-term profitable for retirement option.
I do have another property manager in Hampton, VA. The honor code is the same with her, but she has always deposited full rent and kept me in knowledge on anything happening. I listed the property with her to sell and even offered her to take 1 full months rent for herself because I took it off the listing. She also takes NO commission for just depositing the money. She only collects a 10% commission when she has to work with the tenant, repairs, or any other work. I’m lucky to have her and hopefully our honest relationship will continue for many more years.
So will this prevent me from buying another big property with many units? No. But I feel any mobile home park OR multi-unit property I plan to manage completely myself for my next purchase. I suppose when you are collecting 4-10 rents property management becomes different and the likely hood to steal is higher. I had no idea this 2nd property manager was stealing rents even when I was paying him labor for everything he did. I’ve come to a conclusion for the 3 months I was using him he profited around $3000 while I lost that much. There were red flags. For one thing the utility bills were high and I kept questioning him why. I couldn’t be there to check so I figured it was just the cold weather.
well another wise lesson learned. I’m a bit relieved of the -$80,000 in debt since selling the park back. Sure I lost around -$18,000 within I’d say 7 months of owning it.
From start to finish consider getting rid of it I lost about -$1500 each money, whereas if I had an honest property manager I would of been earning +$500-1000/month a solid 50% ROI monthly and around 100% ROI for my initial investment of $10,000 down on it. Not bad for a 27 year old that never even visited the property/problem – error #1.
I wish I had tight friend, real business people in the states, and a family that supported me. None of my family members or siblings would go to the property and help me get it started for any of the amount of the time even when I offered a long-term share in monthly profits. In business I’ve learned years before you can’t rely on family members. It’s up to myself to become successful even if its really hard sometimes and the mistakes are very costly.
Has this ever happened to you on a real estate investment? Do you think I’m stupid or smart for trying to do this investment being an out of state investor? I’ve found I can’t rely on other business professionals. How about yourself?