I fired my property manager today
I actually employ a property manager. I don’t contract with a 3rd party to do it for me. I want to have control over every part of the management. I just don’t think that they will be able to do as good as I can. There is a little Ego involved there, I know. My company was getting big enough in 2019 that I needed to have help to keep getting bigger. I did interview one property management company and they seemed like they would do a good job, but I always came back to the control issue.
I was very happy with the decision to hire our first employee, call her Susan. She was able to take much of the day-to-day tenant relations off my plate and I was able to focus on my other priorities. This was also great for my family; I could spend more time with them. My wife continued to run the finances for our operation and I was able to obtain more properties. We purchased a 16-plex this summer and the former owners had let it get down to 25% occupancy. There is a whole post in itself there, so I’ll not spoil it here. But we were down to 25% occupancy and it was looking bleak. I was happy, because I had hired a property manager to do the lease-ups.
I had outlined the job description for the property manager and we arranged for at least weekly meetings to discuss the business. I had found that one of the deposits for a tenant was in cash and I explained to Susan that cash should not be accepted and must be returned. She wondered why anyone would return cash, after all it could just be placed in the bank and there never was a concern for bounced checks or charge-backs like credit cards can do. My response was that what would happen if the tenant in unit 6 didn’t pay one month? Susan would inquire as to missed rent. The tenant would then say he put the rent into the drop box. It wasn’t there. We would have no way of knowing what had happened. Did unit 6 lie and say he put the cash into the box? Did someone come by and rob the box? Worst, the owner might suspect that Susan had stolen the money. So, don’t accept cash. Don’t do it. Our policy is that we literally must return the cash with a note as to why.
Things were going well and it became easier to put more work onto Susan (and pay her the hours, of course). What had seemed like an expense that we couldn’t justify at the start, now became a great investment. She was good at monitoring the security camera system and she was helping to root out some of the drug use that was going on in the new buildings. This employee pay was directly taking my time off from doing the business stuff I didn’t want to do, and I could free up my valuable time to do other things to make money. I agreed to take on another role with my employer – that’s another story, but I did it because it fit in with my 50-year plan. Now, I had extra hours working on my job and less time for the business. But because I had hired a manager, I was able to make much more money than if I was doing it all myself.
Unfortunately, it all came to an end
We furnish a few units and rent them out. We had a contractor lease five units at once and we needed to get these units furnished, so it was all hands on deck to get units ready. Susan was tasked with hiring day labor to get furniture moved and units cleaned. I gave her the task to get the five units ready within a week. This would be a great way to see if she was able to manage people. It turned out it was a great way for me to see that Susan would not be a good fit for us, to say the least.
The day-laborers were found on Craigslist and accept cash only. Susan was given a small budget to get this done and a book to make receipts. The project started on Tuesday. I was away at my day job for the rest of the week and returned on Saturday. I found none of the five units ready and multiple receipts for laborers, including one that was still there ‘working’. Working, for him, consisted of complaining about the neighborhood and the quality of the tenants that we had, while pontificating on how dirty is the refrigerator they left, without doing any cleaning. This terrible worker couldn’t be blamed on Susan except for the fact that he should have been fired immediately. Susan was missing in action all day Sunday and so my family went to work to get the job done by Tuesday. None of this was terrible, just a nuisance, until the stupidest thing happened.
A bowl went missing
Tune in next post to find out why. In the meantime, do something I failed to do: read Andrew S. Grove’s High Output Management.