You Can Avoid These Sarasota Property Manager Scams
As a trained attorney who owns and operates a highly rated residential property management company, and the 2020 President-Elect of the Sarasota – Bradenton N.A.R.P.M. chapter, I’ve been around the proverbial block a time or two and know the games some property management companies play to rip off clients. Here’s some advice, based on my thirty years of experience in the real estate business, to help Sarasota landlords like you to avoid getting burned.
Fictitious Repair and Maintenance Charges
Issue: Things wear out and break. You must make repairs, and regularly perform maintenance items like cleaning gutters, changing pool filters, and pressure-washing walk-ways. Repair and maintenance costs are part of the expected expenses associated with owning rental property — nothing unusual about that. But some property mangers seek to take advantage of their owners by creating fictitious charges as a way of funneling extra cash — your cash — into their own pockets.
The Fix: There are two things that every landlord must insist upon with regarding repairs and maintenance:
- ONLY use licensed and insured tradespeople.
- Monthly financial reporting that includes copies of all original vendor invoices.
This allows you to see who is performing the work, that they are a legitimate company and enables you to follow-up directly if you have any questions regarding the exact nature of the work completed.
This isn’t to say that you should call the vendors after every single repair — frankly, that would be a waste of time and unnecessary — but your property manager should offer full transparency with all repair work. Beware of property management companies that hide vendor invoices from you.
Undisclosed Maintenance Mark-Ups
Issue: Rather than passing on the actual cost of repairs and maintenance to the owner, a mark-up is when a property manager adds a fee on top of the vendor charge, bills the property owner the higher amount, and pockets the difference. For example, a plumbing bill is $200.00, the property manager bills the owner $250.00 and keeps the $50.00.
Some agreements allow for legitimate maintenance mark-ups, and there’s nothing wrong with mark-ups as a rule. The issue is when a property management company inflates invoices without disclosing mark-ups to the owner — another word for that is stealing.
The Fix: Insist that your property manager provides access to the actual vendor invoices and be wary of a company that tries to make excuses as to why invoices are not readily available.
Undisclosed Short-Term/Vacation Rentals
Issue: Unscrupulous property managers not reporting short-term rentals to owners and pocketing the rents themselves.
This very rarely happens with unfurnished, annual rentals — the nature of annual rentals and the relatively short turnover periods don’t lend themselves well to this scam. However, this can be an issue if you own furnished, short-term/vacation rental property. Many short-term rentals are only rented for a few months out of the year but remain vacant for the majority of the year. What’s to stop an unscrupulous property manager from renting it out for a week or two during the offseason and not reporting it to the owner?
The Fix: This is an extraordinarily tough one. Short of posting an armed guard, how can you ever be sure? At some point, it boils down to trust. The best you can do is to make sure that you only hire highly rated, prominent companies with a long track-record, to manage your short-term rentals. Also, monitor your utility bills for any unexplained spikes in usage during supposed times of vacancy.
In Conclusion
While many Sarasota property management companies are honest and do an excellent job for their clients, as in any profession, there are scammers out there who prey upon their clients and customers. Use common sense, check reviews, check the Better Business Bureau, and you should come out a winner in the property management game.
About The Author
John Michailidis, JD, is the broker/owner of Real Property Management of Sarasota & Manatee, a Sarasota, FL based residential property management company providing both Full-service and Lease-Only services to local area landlords. If you own residential investment real estate anywhere in Manatee or Sarasota counties, please feel free to reach out to our team at 941-216-0005, or contact us through our website.
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