Know When to Fire your Property Manager

A great property management company is worth its weight in gold – but a bad one is an absolute nightmare. In the competitive rental industry, some fledgling companies put the majority of their efforts toward building a client base. However, they may forget the importance of great service to keep the clients they already have. This is just one of the many ways a property management firm can lose clients. As an owner dissatisfied with your manager’s performance, getting out of your contract may seem daunting. So, how do you know when to keep hoping it will get better or when to part ways? Continue reading below as we discuss some of the top reasons to fire your property manager and how to cut ties successfully.

Top 7 Reasons to Fire Your Property Manager

A hard lesson for some owners is that not all property management companies are created equal. Whether it is inexperience, not enough staff, or poor oversight, some companies cannot fulfill their obligations in the owner’s best interest. So, when things go south, owners need a legal and amicable way to part ways and find a better alternative. Let’s review a few of the most common reasons to fire your property manager below.

1. Breach of Contract
2. Not Getting What You Paid For
3. Poor Response Time
4. Ineffective Property Maintenance
5. Lack of Knowledge and Resources
6. Poor Cost to Value Ratio
7. Extended or Unexplained Vacancies

Breach of Contract

One of the most common reasons to fire your property manager is over breach of contract. In other words, they do not hold up their end of the bargain. Entering into a property management agreement means the company is now the owner’s representative, and they become a fiduciary for you. Moreover, the property manager is now legally responsible for managing the property and must uphold certain ethical and financial standards. Typically, at minimum, owners expect their managers to –

• Provide all necessary information so the owner can make fully informed decisions
• Act ethically and in good faith while in control of an owner’s property
• Always act in the best interest of the property owner
• Adhere to all Fair Housing Laws which protect the owner from costly liability

If the property manager does not act with your best interest in mind, withholds vital information, or opens your business up to potential lawsuits by failing to adhere to all relevant laws, owners have grounds to terminate.

Not Getting What You Paid For

Depending on how the property management company is set up, it may include all services within the monthly management fee, or some services may be “a la carte.” Whatever the case may be, landlords are required to provide the services that an owner pays for.

Some of these services may include but are not limited to collecting rent, routine filings, tenant screening, and maintenance tasks. Therefore, if the company does not fulfill its obligations by providing agreed-upon services, it is time to find a better alternative.

Poor Response Time

Whether you are an owner living down the street from your property or across the globe, knowing your investment status in real-time is vital. Otherwise, owners may not have the time to make proper decisions, or worse, miss opportunities altogether.

This really comes down to great customer service and professional communication. So, if your property manager leaves you out of the loop or you cannot easily access records such as rent roll of vacancy reports – steer clear! Also, communication is important to your tenants and the overall well-being of the property. Consider this, if you cannot get ahold of the landlord as the owner, imagine what your tenants must deal with. Poor communication or responsiveness could delay repairs, causing more aggravation, damage, and costs.

Ineffective Property Maintenance

Efficient property maintenance can make or break a rental business. Inevitably, a property will need repair at one point or another. Property managers should be able to coordinate preventative maintenance and quickly address any tenant repair requests.

That said, if your representative fails to complete these tasks promptly, does not have a system to handle maintenance requests, or is just incompetent – owners are the ones left footing the bill. While ineffective repairs end up costing more, they also can cause additional damage to the property and cause a great tenant to get frustrated and leave. Therefore, lack of proper maintenance is one of the best reasons to fire a property manager.

Lack of Knowledge and Resources

Ideally, before entering into a property management agreement, owners should thoroughly vet the company they are considering. The best companies have roots firmly planted in the local community, meaning they not only know the market but also local laws and requirements for owners.

Some firms lack the proper staffing to effectively manage their portfolio and provide owners with the services they need. As property management continues to be a growing industry, many mom-and-pop shops have been on the rise. While they may have great customer service or admirable qualities, their limited size could signal a lack of resources to provide quality financial reporting, aggressive marketing, and thorough tenant screening.

If you did not examine all aspects of the company before signing on and now find yourself with ineffective representation, it is time to move on to a different company.

Poor Cost to Value Ratio

Profits are everything to a rental property owner. After all, a steady source of passive income is why most investors jump into this sector. Typically, property management companies charge around 8% to 12% as a monthly fee. However, this can be worth it if the services provided and effort put in match the overall cost.

That said, if you are not receiving the attention your property was promised, and fees are exorbitantly high, this may serve as one of the best reasons to fire a property manager. Ultimately, management fees cut into your profits, so you want to get the most for your money.

Extended or Unexplained Vacancies

A rental property is only making money when it is occupied. Therefore, owners want a company that can complete turnover quickly and aggressively markets the unit to find the most qualified tenant. That said, owners should pay close attention to the leasing fees in their contracts. Unfortunately, some companies try to milk owners of added fees by not placing the best tenants and encouraging a higher turnover rate. Thus, generating more fees for them and more costs for the owner.

The company you choose must have a time-tested and proven marketing strategy with a low eviction rate. This helps owners feel confident that their property will not remain vacant longer than necessary. So, if you have doubts, believe someone else could do better, or are dealing with an extended vacancy for no apparent reason, consider switching companies.

How to End a Property Management Agreement

Sometimes ending a property management contract is the best decision, but that does not mean it is an easy undertaking. After all, this is a legal contract and may involve penalties. The best way to handle parting ways is to keep things centered around facts and results, not personal attacks. This is important because the last thing an exacerbated owner needs is to find themselves accused of breach of contract. So, let’s review a few considerations when looking for reasons to fire a property manager and cancel your contract below.

What is Just Cause?

Just cause refers to the company not fulfilling its responsibilities outlined in the agreement. Essentially, it is a breach of trust by mismanaging the asset or putting the tenants or property at risk. Some examples of causes include not addressing critical maintenance concerns, not properly handling funds, or violating housing laws. Whatever the reason may be, owners need to read and understand their termination rights under the agreement.

On the flip side, “just cause” also protects the property management company from owners simply changing their minds. For instance, attempting to cancel the contract without proper cause could lead to the property manager suing owners for breach of contract.

Following the Required Notice Rules

In every contract with an early termination clause, both parties must adhere to certain notice requirements. Typically, this involves providing written notice between 30 to 90 days before the effective cancellation date. Failing to abide by the early termination terms could landowners in court battling a breach of contract claim. So, take care to follow directions and be sure to send the notice via certified mail with a return receipt. This is not the time for a simple email.

Once the termination notice is delivered, work with the property manager to collect all necessary records and transfer documents and funds to your newly selected company.

Penalties and Early Termination Clauses

An early termination clause requires just cause and a specific amount of notice. That said, property owners may still not be off the hook. A property management firm will often build an early termination fee into the contract to dissuade owners from jumping ship.

Depending on the terms, an early termination fee could be equal to a few hundred dollars or as much as the full contract’s worth of management fees. Therefore, take this into careful consideration when debating reasons to fire a property manager and whether it is really worth it.

Why Innovative Property Resources is the Best Choice

Finding the best property management company to look after your valuable investment is a considerable task. Managing rental units involves constant communication, maintenance, accounting functions, marketing, and legal compliance. Thus, having a trusted and experienced team on your side as an owner is the best decision you can make. So, what traits does a great property manager have? Follow along with us below as we reveal why Innovative Property Resources is the local expert you can feel confident in.

1. Unmatched Customer Service and Communication
2. Relevant Law and Compliance Knowledge
3. Extensive Industry Expertise
4. Efficient Maintenance Coordination
5. Transparent and Detailed Real-time Financials
6. Targeted Marketing Strategies
7. Thorough Screening and Quality Tenant Placement
8. Convenient Rent Collection
9. Assistance with Legal Matters
10. Streamlined Evictions

Choose the Best Manager for Your Rental Business

With so many property management companies for owners to choose from, narrowing it down is not easy. But for owners in Central Indiana trust the local real estate experts at Innovative Property Resources. Our team focuses on property management and property management alone to provide the best possible experience for owners and tenants. If you would like a free, no-obligation rental home analysis to see what full-service property management can do for you, give us a call today.