Business at 1st Choice Property Management is in a tight spot, but its owner still believes better days are ahead.

Broker and business owner Stuart Gingerich said Wednesday that the company’s troubles are the result of the recession and high vacancy rates, but are slowly being resolved.

“Right now,” Gingerich said, “there is no doubt about the fact that we are running into financial problems, and with that, we are losing some properties.”

According to Gingerich, the trouble started about a year ago, when the recession was hitting high gear.

“We can operate with a vacancy rate of between 4 and 6 percent,” he said, “But with what I had, we were up in double digits – 14 to 15 percent or more. Now we’re back in that 4 to 6 percent range, and I really feel that will help.”

A combination of the high vacancy rate, low or missing payments from some tenants and a sharp increase in utility costs, he said, led to a severe shortage of cash. That shortage caused the company to fall behind on utility and tax payments, including two years’ worth of personal property taxes. Personal property taxes are assessed on items businesses pay for and capitalize as assets that are not part of the building or real estate, such as computers and furniture.

“We still owe personal property tax on what we’ve got here, but it won’t affect any of the properties,” Gingerich said. “We preferred that any cash we had at the time would go to the properties, not to what we had here.”

The company’s situation became public Tuesday, when Susan Hochstetler — a former tenant of Gingerich’s whose property has since been transferred to Maplewoods Property Management — and several other tenants found their water shut off due to unpaid bills. Gingerich, however, insists those properties were part of a unique situation. Although the utilities were listed in the company’s name, he had purchased them personally on land contract from their former owners.

“Granted, there were back taxes that had to be paid,” he said. “With vacancies and people who owed us money, I just didn’t have enough to pay them.”

As time went on he found himself unable to pay the real estate taxes on the properties as well as the utility bills. The shutoff, he said, was the result of a miscommunication between himself and Maplewoods. The utility bill accounts for those properties were still in the process of being finalized before being reopened under Maplewoods.

“They needed to be taken out of our name so I could get a true balance of what we owed,” Gingerich said, “I didn’t notify Maplewoods of what they owed. I thought I had.”

He said those bills have since been taken care of.

In response to that situation, Maplewoods is now offering a special deal to any tenants of 1st Choice affected by unpaid utility bills. The company will pay the delinquent utility bill of any affected tenant if the property owner will sign with them for at least 24 months.

Another issue, raised by Maplewoods broker Lou Ann Stoner, was the lack of security deposits transferred to the company along with the transfer of properties. According to Gingerich, he is still hoping to come up with that money.

For now, Gingerich is trying to bring some stability back to the company, and he said it is coming, however slowly.

“My main thing is I’m trying to tell everyone I’m trying to do anything and everything I can to avoid hurting anyone because of our financial downfall,” he said. “Obviously, we’ve been trying different avenues including rent specials and deposit specials. Myself, I’ve been trying to look into private investors.”

Although nothing is locked in yet, he said there has been some interest from at least one possible investor.

After offloading several properties to Maplewoods, 1st Choice is now in charge of approximately 150 residential properties located primarily in Goshen and Elkhart. Gingerich believes the company will be able to hold steady at that level of activity.

“November will still be a little difficult,” he said, “but by December it should be getting better. Hopefully by January we will get back to an even keel,” he said.

He also had a message for those tenants still with the company.

“I just ask them to be patient and work with me,” Gingerich said. “We’ll get past this. I just need to have a little more time.”