Problem with PM, please help!

Background

We have a property in a rougher housing area in Orange NSW. Have had the same tenants since we purchased the place in 2010. Tenants was always a bit patchy with payment since the start but never owed more than 3-4 weeks of rent while property was managed by a local agent.

Around the end of last year, we moved property management to a company operating out of Sydney. It's a friend's new venture and we thought we support him with his new company. We had knew him for a while, had property dealings with this guy before (though not in property management) and things were always ok. Well, not this time.

Situation with rent payment deteriorated after PM move. I think because of the remote management. Old PM used to knock on tenant's door when he's late, with new PM managing from out-of-town this couldn't be done. Long story short, warnings were sent, went to tribunal and we eventually had the right to evict tenant. At this time rent owed had grown into $3,800. I ordered PM to proceed with eviction but PM advised to negotiate with tenant and his community advisory board to put him on a payment plan instead - tenant to continue to staying at the property and paying extra rent per week to catch up on the amount owed. The deal was that anytime tenant fails on his promise, we could go straight to debt recovery and eviction. With this understanding, I agreed.


Issue

On July, I noticed that tenant hadn't paid extra as agreed and instructed PM to move forward with debt collection and eviction, claim insurance and start over with a new tenant. Since then, I've made numerous calls and emails to PM but still hasn't heard anything back until now. Her assistant had been sympathetic, passing messages when I called and tried to help with updates when he could, but he didn't know much about the property so couldn't help. Oh and PM is the licensee in charge, so I can't raise the issue up too!

To add salt to injury, I contacted the owner (my friend) but he's gone AWOL too. Couldn't reach him via mobile and emails, left messages in his office but not returned. Losses so far $6,800 and counting :(


Questions

1. What can I do from here? We have a free-rider living in our property now and a non-contactable PM. I don't have a copy of previous tribunal decision to pursue eviction myself, or tenant ledger to claim insurance.

2. Is there any ombudsman / govt department I can contact?

3. I'm err-ing on not terminating agreement now, as I live overseas at the moment and will need someone to help with tribunal, insurance, etc. Ideal situation is for management to move to a local PM, but I'm not sure if any PM will take the case on with the tribunal case, possibly reno required if there are damages, etc. so it's probably be a while until property is earning again.

I know it was my mistake to move management of the place from a good local PM to an unproven non-local PM, just based on the fact that it's a friend's company. I'm kicking myself for that, so please don't beat me up more over it :eek:
 
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my suggestion; immediately terminte

youre arrears were $3000 odd, now $6000, they ve basically stopped paying, you might as well terminate and start looking for a new tenant, plus get a new PM

****s me to tears when one tries to help a freind out or give a new guy a fighting go to only get spat back in your face
 
Thanks Truly Exotic!

That's what I feel like doing too. But I'm not sure if other PM would take on the management now while it's still occupied by a non-paying tenant and may need substantial reno before earning them any management fee. I'd also probably need the files and ledger to make an insurance claim, which I may never get if move management now.
 
Perhaps a letter to the old PM telling them why you changed and that your friend has let you down badly.

Fess up, you have learned your lesson and would like them to take over management again and solve the problems

They would charge an hourly rate for the tribunal but it is worth a try I guess
 
Can't they take the tenant to court and garnishee wages / benefits etc? Or this is a long drawn out process. Sounds bad either way - good luck. I reckon you have a valid claim against the PM for negligence / bad management
 
Sorry to hear of your situation.

I've just had a tenant leave one of my orange IPs with quite an arrears. Seems that the agents like to tread carefully with low demographic tenants and letting them slip behind while they sort their lives out seems the norm.

I'd get a local PM onto it straight away. Many have closed their books on cheaper properties out there so you may need to ask a few PMs before you get a yes. I'd say you'd need to start on a clean slate with them and deal with the current issues yourself.

There's definitely a different way properties are managed in the country so your friend was probably out of their comfort zone in managing it.
 
Vacancy rates are quite high in Orange at the moment although it has improved in the last few weeks. While you don't want to boot out tenant now you need to consider if you are ok with the tenant living for free as I don't see a tenant that far in arrears paying anything. On the upside its better to not have a property vacant over the holiday season to avoid serious damage.

If the assistant is still taking your calls I'd ask her to fill out a termination notice if that's what you want. I'd doubt that the PM is doing his own paperwork so someone else in the office should be able to sort this out for u.
 
There are strict rules and procedures that need to be followed before evicting and warrants, lock out, local courts to collect arrears etc etc. Yes you had a poor choice and are now paying. Go back to the original agent and say sorry and please help. Get the tenant out and good luck with the rest. If it is a known poor area WHY DO YOU NOT HAVE LANDLORD INSURANCE! Russian roulette is very dangerous!:(
 
Thanks All for your reply!

Macca - I did told the old agent that we're moving for personal reasons rather than because they did something wrong. It'd be good if we could go back to them, but unfortunately they told me that they're winding out of housing area at the moment so couldn't take us back.

Sexyv40 - the issue now is that PM is not contactable at all. I only got so far as the receptionist and very occasionally her assistant. So I don't have the files, old tribunal decision or ledger to move forward with either insurance claim nor eviction and requesting garnishee order.

Beachgurl - sorry to hear about your property. It is quite a situation at the moment, and I'm planning to start contacting agents again to see if any will take on the management. May I know with PM you use in Orange and if they're good? You could pm me if prefer to disclose it here. Thanks.

I agree that it's not good to have the property empty during the holiday season. Our other place in Orange was broken into once when empty and was trashed and damaged.

Salvatore 1 - We do have both building and landlord insurance. It's the files and tenant ledger that I don't have.


Just wonder if anyone know of a govt body / ombudsman I could contact to complaint about PM's conducts? Also, do I still have to be their client to be able to lodge a complaint?

Thanks!
 
Macca - I did told the old agent that we're moving for personal reasons rather than because they did something wrong. It'd be good if we could go back to them, but unfortunately they told me that they're winding out of housing area at the moment so couldn't take us back.

Will be nearly impossible to find a new local PM willing to taking on a property when the tenant is already a case unless your willing to pay a "premium" for the eviction and tribunal process followed by a finding a new tenant.

I know the "horse has already bolted" but this may end up being one of those expensive life lessons where you have found out that there are no friends in business and the two should never be mixed.

If it were me I would be contacting all the local REA/PM and see if any one is willing to take over management of the property initial on a fee for service basis then once its resolved then reverting back to a standard MAA arrangement. If you find a new PM then just cancel you current MAA for breach of contract and move on and never use a "remote" PM option again especially when you knew your tenant was a case to start off with.

If you can't find a PM and your current PM keeps hiding the it maybe cheaper to fly home and fix the issue "hands-on" rather than keep haemorrhaging $$$$ every day it remains unresolved or even give Mick a call if you get desperate (http://www.gattocorp.com.au/).

Good luck.
 
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There must be a way for you to take over from the manager, and then regain all the relevant info to act. Check your agreement to see how to dissolve it.
 
Salvatore1, womble66 and dabler - many thanks for the information and suggestions. I'm currently looking for a replacement PM and will be contacting Dept of Fair Trading re. current PM.

womble66 - very good suggestion re. paying premium. Hopefully I could find a replacement PM soon. Part of me wants to fly home and fix this, but I'm not sure what I could do personally though - rather than confronting my 'friend' - don't think that'd help too. I have a young family here with husband who travels a lot, so won't be able to stay and wait out on the tribunal matter. And don't think I'd be brave enough to show-up on tenant's door either :eek:

interesting idea re. Mick Gatto. I hope it won't get to that, but it's good to know that there is that option.

Anyone could suggest me a PM in Orange, who may want to take on the matter, will be most appreciated.
 
Update

Hi All,

Just thought I'd provide an update on what's happening since my last post a couple of days ago.

I had a good phone chat with the Dept of Fair Trading officer, who suggested that I filled in a written complaint against the REA online. I did this and an officer called afterwards to let me know that she'd be the one handling my complaint and contact the REA on our behalf. So at the moment I'm waiting for an update from them.

For me to be able to make a complaint though, I'd need to still be the REA client. This means that I couldn't move the management to another agent at the moment, which is not a problem as I still haven't managed to find one who agreed to take on our case so far :eek:

I learnt since then that Dept of Fair Trading is the body that issue licences for REA, so hopefully they'd be able to help us with the issue.
 
be prepared for a phone call or email from the person who you tried to help out saying how dare you report them to department of fair trading
 
Hopefully you get a resolution to this.
Pretty much a worst case scenario has played out here.
The Risk in these area's is quite high, ie Tenants/vacancies/Rental Agencies.
The reward can be high too, but High Risk High Reward is too close to gambling for my liking.
 
Salvatore 1 & Zimby - many thanks for the kind wishes. I do home this can be resolved soon.

Zimby - yes, it is a higher risk areas. We have few other properties located in housing estates in other Country NSW areas (ie. Taree, Albury, Tamworth, Armidale), so went in with eyes wide open, but ones in Orange has been the most challenging ones by far. We actually had another place burned down by tenants a couple of years back! Lucky insurance paid up after a long process.

TMNT - haha, that would be an interesting call if it does happen :rolleyes:

The full story is much much worse that what I'd let on so far, unfortunately. We actually had 6 managements moved to support this guy's venture! There were problems with some of the others too which had cost me $$$. The management of the other properties are now either moved back to previous PMs or in the notice period for moving. Maybe I'd post another thread on that when all the moves have been completed and we have some resolution on this one.
 
Just a bit of parity, like any location there are good and bad parts of Orange and for those of us who purchased in the better locations, things are going well.

Any investor seeking a low end property in a rougher part of town chasing yield is taking on a risk.

Best of luck going forward.
 
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