95%+ of property managers use deposits for operations | Hacker News Reader

95%+ of property managers use deposits for operations

3 pointstaylorhou12 comments

If y'all are shocked about SBF and the crypto industry misusing customer deposits, I'd like to bring attention to an even bigger fraud of an industry. The rental/property management space is so dirty... less than 5% of the players can even reconcile their books let alone understand that security deposits in their bank accounts aren't funds they can just borrow from to operate their business.

Why do you think every renter has a bad feeling when they move in and hand over the security deposit funds and think "I don't think I'm ever seeing this ever again?" It's cus those funds were used to pay back the previous tenant moving out (at best) or better yet, they return a portion of the previous tenant's deposit while pocketing cleaning and "move out" fees.

Security deposits are the perfect Ponzi scheme cus there's never a "run on the bank" style event where every tenant moves out at once. Even so, every once in a while, the shitty managers dip so low that they can't even refund the <10% of tenants moving out each month.

Anyone reading this want to help me shine a light on my industry, dm or reach out! I'm not hard to find and I'm happy to be an open book. My company (apmhelp.com) helps 1k+ PM companies with accounting, finance, and automation and we see everything.

Not a Ponzi. You can argue that deposits should be kept separate and shouldn't be touched without calling it something it's not.

That's not what's happening unfortunately.

This is the worst attempt at self-promotion on HN that I have seen in quite a while. Glad I flagged it before I even got to the end.

What self promotion? I mentioned my company simply to add context/credence. If anything I'm calling out my own industry when I otherwise should not be. I make money from dirty managers... When they are clean there's no money to be made.

Also, my target audience is not on HN.

Which country is this? In Australia, real estate agents use trust accounts for deposits in escrow, and are not allowed to use them as general accounts. And rental bonds are held by state governments.

United States. Australia and Canada seem to be much more serious in regulating rentals.

Is there a difference between this and fractional reserve banking, or is that a Ponzi scheme too?

Fractional reserve banking -- from my economics class -- the difference is that the government or/and an independent central bank acts as a backstop.

How is that remotely close to what I was pointing out? Property managers spend, borrow, steal tenant security deposits for their own personal gain. Consumers are harmed whether they like it or not and when it comes time to move out, they lose their security deposits to BS reasons and just give up because it's usually not "worth it" to hire an attorney to go after a company for the equivalent of one month's rent.

You're mixing up two different things: landlords borrowing from the security deposits they're holding while tenants are still there, and landlords wrongfully keeping security deposits when tenants move out. I agree the latter is bad but not the former.

sorry, property managers are NOT the landlords. In the United States, a big portion of rentals are managed by a third party property manager who is hired by the landlord to manage on their behalf. I'm specifically talking about them who are mishandling/using tenant security deposits that they are holding. we call them "management held security deposits"

Even so. As long as I get my security deposit back when I move out, why should I care what's happened with it in the meantime?

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