If Any of Your Landlord Clients Are Giving You That Uneasy Feeling….

… there may be a good reason.  The scenario below describes a situation my husband was recently involved with.
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Dear Accountant, Lawyer, Banker, Mortgage Professional…
 

I hope you’ll take time to scan the scenario below that my husband, John Snyder, was involved in, as the court appointed property manager.  Had he been brought in years – or even months – before he actually was, the whole thing might have turned out differently.As an accountant (lawyer, banker, mortgage professional), you likely have one or two clients who give you that uneasy feeling, especially if there’s a divorce or partnership breakdown involved.Bringing in a professional like John could save a lot of heartache and financial problems.

Linda Snyder
Back Office Operations
On the Spot Property Management & Building Inspections
207 740 2247


The Situation:

In October 2011, On the Spot Property Management was appointed by the Court to manage a boarding home complex of several dozen units.  It was a divorce case that had dragged on for years, with the judge eventually realizing that the spouse who had been managing the real estate couldn’t account for either the income or the expenses of the buildings, which were joint marital property.

That spouse also insisted that the buildings had been barely breaking even for years, and that the significant credit card bills and “shareholder loans” totaling nearly $40,000 attached to the LLC were the only way to keep those buildings running.

The Court appointment was supposed to be for just three months, but the case continued for more than a year beyond that, until spring of this year.

During that year and a half, On the Spot Property Management was reimbursed for 10% of the collected rents, as well as $45 per hour for such tasks as handling bed bug issues, water and furnace failures, lockouts, public safety calls, evictions, and so forth.  On the Spot’s monthly fee varied from around $1,100 per month to over $2,000 at times, averaging about $1,500 monthly.

Yet even with the additional expense of On the Spot’s fees, the buildings were still breaking even during those 18 months, even with the initial problems of little money in reserve, bills that had gone unpaid, and a heating season having just started…. and even though the managing spouse insisted that the properties were losing money (although he had no records to prove his contentions).

The managing spouse didn’t even provide receipts to his tenants for rents paid nor did he keep other income records, so it was impossible to determine how much money had in fact been collected over the previous decade.

Over the next 18 months, On the Spot Property Management found that the entire infrastructure of the three buildings was shot.  The furnaces had been illegally patched, the plumbing and wiring didn’t meet code, and other neglected issues continued to rear their ugly little heads.

Eventually it was determined that the mechanical systems of one building were in such disrepair that they would cost at least $25,000 to fix – and there was no money to do so.  The building had to be closed, and the tenants relocated.

So where had the money gone?

Of course, everyone involved knew, but by the time On the Spot was appointed to manage the properties, it was too late.  The money was gone, the needed repairs had not been made, and the properties were deep in debt.  What was supposed to have been the children’s college fund was now less than worthless.

Had On the Spot Property Management gotten involved years before, the buildings almost certainly would have been salvaged, credit ratings wouldn’t be in the toilet, and there would have been savings for the kids.

If you suspect that a landlord client of yours is losing money in a way that doesn’t quite make sense, please give John Snyder of On the Spot Property Management a call at 207 712 0674.  He will be glad to speak with you (and your client), and help determine if something is amiss.

Surely it’s worth it to find out now, rather than wait and hope… and have your client lose the buildings entirely, as happened in this instance. 

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New Real Estate-Type Scam

Fraud Sign

My husband John just answered his phone with his usual, “Hello, this is John”, to find dead silence on the other end.

After a couple of Hellos, he was about to hang up – realizing this was an autodialed call – when “Andrew” came on and asked, “Am I speaking with John Snyder?”, to which John of course answered Yes.

Andrew then launched into a spiel we haven’t heard before.  “Because you’re a REALTOR up there in Auburn Maine, I want to offer you the opportunity to buy the list of properties for sale in your area.”

John knew immediately that this was a scam, but having never been a real estate agent, he didn’t know the extent of it.

“I’m NOT a REALTOR”, he responded to Andrew, to which Andrew replied, “Oh, that’s okay.  Even if you’ve given up your license, you can still buy the list”.  John retorted, “I have NEVER been a REALTOR”.  Andrew, realizing he was getting no where, started to do the goodbye-hang up thing, but John stopped him.

“Wait a minute. How did you get my name?”  “Well you must have been a REALTOR at some point.”  The conversation went downhill from there, and there’s little else worth reporting here.

However, had John ever been in real estate, he would have realized that this scam was being perpetrated purposefully on people who have never been real estate agents… because any agent can get the list of properties currently on the market for free, just by going to the website they all use constantly, each and every single day.  When I was a real estate agent, I was on that site for hours each week.  It’s used to find possible properties for clients, to search for listings that have expired and perhaps might be open to a new agent, to price the listings of new clients, and on and on.

The scam is apparently to try to find desperate people who are hoping to flip properties without engaging a real estate agent, and sucker them into buying a useless list.

Caveat Emptor!

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