As a rental property owner, you seek the professional services of a property manager to transform your property into a more passive investment. If you are currently seeking professional property management services, you may be tired of managing your property; have moved away from the property, making remote management more difficult; have undergone significant life changes; or are tired of your current provider and are Seek new partnerships.
Having a property manager is meant to be good for investors, but what if having just one property manager actually leads to worse results? You may experience missed calls, emails, lost rent and/or not seeing the management agreement after signing it. Even worse, your property and tenants may already be in poor condition and you don’t even know it.
It’s critical to identify and resolve operational failures that impact your business before they get out of control and cost you thousands of dollars. I’ll cover what your expectations should be and how to manage the situation when you need to leave your current provider and find the right property management company for your property.
Were your expectations met?
It’s crucial to clearly outline the responsibilities your property manager will have. Your provider plays a vital role in overseeing the operations of your rental property to ensure efficient tenant management while maximizing profitability.
Some of the main responsibilities of a property manager are to ensure that your property has a low vacancy rate, keep tenants happy, and resolve maintenance issues quickly to maximize the property’s net income, as follows.
1. Find and filter tenants
By thoroughly screening tenants, your property manager can help ensure that the tenant has a solid background, is financially stable, and is likely to care for the property.
To ensure a tenant is a good fit for your property, the property manager should at a minimum:
- Review all applications
- Promote the property on all major marketing platforms
- Schedule and attend drills
- Conduct background and credit checks
- Verify active employment and income
- Evaluate landlords and/or professional references
- Determine the best applicants based on application requirements
2. Execution and enforcement of the lease
A solid lease establishes a secure agreement between the management company and tenant, outlining each party’s responsibilities, payment schedules, rules and policies, landlord-provided equipment, and utility responsibilities to ensure legal compliance.
Signing a solid lease requires a deep understanding of the agreement’s language in order to enforce the rules when inevitable late payments, disagreements, or misuse of the premises occur.
Your property manager also needs to be strict and fair, which isn’t the easiest balance, but a good property manager will be able to handle the situation when things get tough. In the National Apartment Association’s (NAA) 2022 Property Manager Voice study, rowdy or aggressive residents received the most responses, equivalent to 24% of the “biggest challenges in the industry” question. Having a solid understanding of not only your lease, but also local laws, will differentiate a property manager who can properly address lease violations from one who could get you into legal trouble.
3. Rent collection
If collecting rent is one of your biggest problems with your current provider, then this should be one of your biggest red flags. Your management team should regularly communicate with tenants about upcoming rent due dates and any changes to rent collection policies to help maintain transparency and build trust. In addition to clear communication with tenants, they should also maintain the same level of transparency with their landlords when rent is not paid on time and provide updates on next steps.
How to leave your current manager
It’s certainly not easy to find a good property manager, and it can be even harder to leave your current provider if they don’t meet your expectations. You may find an operational glitch or two from time to time, such as:
- Late communication
- Management company pays overdue rent to owner
- Longer days on market
- Taking longer to hand over property between tenants
- Increase in costs
It’s important not to let yellow flags turn into red flags and trust your gut. Allowing your comfort level or complacency to take over can lead to serious problems down the road, such as lost revenue from negative guest reviews or stolen wages from managers who stop communicating.
If you notice anything unusual in your initial relationship, be sure to take the following steps.
Reach out again
Before considering all other options, try contacting your property manager. Before you jump to the conclusion of moving forward, make sure there are no closures, holidays, or adjusted schedules that could impact their response time. Calls should be returned in a timely manner, and small communication gaps should not affect your mood during stressful times.
When you contact, clearly express your frustrations and highlight every detail that contributed to management’s operational failure.
Looking for a quick solution
If your property management company is still unresponsive, it may be time to escalate the issue to a supervisor or manager within the company, or file a formal complaint with their customer service department (if there is one). You should only perform this step if you have tried multiple times using different methods to make contact. Documenting your attempted communication efforts will help you take action to terminate the contract.
Review your management agreement
If you’ve seriously considered firing your current provider, review your property management agreement. I would make sure to identify the section outlining termination terms and possible termination fees first. You usually need to give 30 days’ written notice to end the contract.
Post-termination steps
Now that you’ve given the proper notice, paid any termination fees, and are ready to move on, you certainly must perform a little more due diligence when choosing your next property manager.
Before BiggerPockets launched Property Manager Finder, finding a reliable property manager was much more difficult. Now, for investors, things couldn’t be simpler. This free resource matches you with top property managers and vets them based on ratings and reviews from other investors so you can find one you trust.
While this tool makes it easy to connect with a property manager, you still have to ask the right questions before handing over the keys to the kingdom. I’ll start with the following points:
- How many years have you been a property manager?
- Are you licensed or certified?
- How many properties do you manage? What types of properties are there? (SFHs/MFHs, STR/MTR/LTR, rented by room)
- What is the monthly fee?
- Are there any additional services not included in the fee?
- How often do you visit and/or inspect the property?
- If the property is vacant, will you also visit and inspect it? Are there any additional costs associated with this?
- Are you responsible for all maintenance and repairs?
- If not, do you have a trusted network of contractors and repairmen in place to respond to emergencies?
- What is the average time it takes for you to hand over a property after a tenant moves out?
- What is your process for screening new tenants?
- What is your average days on market?
- What is the vacancy rate for your portfolio?
- How do you handle past due rent or tenant disputes?
- Have you ever been forced to evict a tenant?
- Can you provide references for current clients?
- Are you investing in rental property in your own name?
These questions are a great starting point, but if you want to learn more about your property manager, I highly recommend diving into 78 Questions to Ask a Property Manager Before Hiring a Property Manager to deepen your understanding of the property Understanding of managers from many perspectives.
final thoughts
Many investors spend months or even years and spend thousands of dollars before finally deciding to pull the trigger and fire their property manager. If your expectations are not met, then it is certainly your responsibility to get your relationship with your provider back on track. When things don’t go as planned, understanding your property management agreement, communicating clearly, and knowing how to find your next manager will move your operation forward and help you get out of an unfortunate situation.
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Notes on BiggerPockets: These are the opinions written by the author and do not necessarily represent the views of BiggerPockets.
