8 Signs You Need to Change Property Managers
Oct 3, 2016
8 Signs that You Should Probably Change Property Managers
Hiring a property manager is a great decision in many instances. Some reasons you may decide to go with a property manager or management company include:
- Living In a different city, or state than your property manager
- Owning too many rental units to manage independently
- Circumventing the hassle of maintaining and retaining tenants
- Lack of experience or knowledge of real estate laws and regulations
- Simply prefer the property to run autonomously
How do you know when the property manager you hired may not be the best one out there for you? This article aims to give some insight into that very question.
8. You Hear from Them Too Much... or Not at All
It is no secret that good communication is a solid foundation for any business partnership. Communication is especially key in business relationships between property owners, and property managers. A good property management company should alleviate stresses which come from owning a rental property. They should be the buffer between the property owner and tenants. They should be the first to know, and to disclose any maintenance issues on a property. In most instances, the property owner is not on site on a regular basis, so they rely on the property management company to maintain an in-depth, up-to-the-minute awareness of the property's condition. This type of information is generally disseminated to the property owner through monthly reports, maintenance logs, and regular contact via phone or email with news, updates and any other information pertaining to the property.
If you are a property owner, and you find yourself constantly leaving messages on a machine, sending emails and follow up emails, and all to no avail; then perhaps you should look into switching property management companies.
A good property management company has nothing to hide, and will regularly be the one reaching out to convey information to you. Lack of contact on the part of a property manager, usually indicates one of the following issues:
- Negligence regarding property inspections, maintenance, and general property upkeep
- Mishandling of money
- Major problems between property managers and tenants
- Lack of adequate bookkeeping
- Lack of adequate staffing
- Lack of communication between tenants and property managers
Any of the above-mentioned issues can cost you a fortune. Whether these expenses present themselves as major damage to your property, legal costs and damages associated with poor accounting, nonpayment of rent by tenants, high turn-over rate, or long periods of vacancies; eventually lack of action on the part of a property owner to change property managers will come at a steep, and serious cost.
The opposite is also true. Having a property management company that contacts a property owner over every single, tiny issue that arises can be just as damaging as a property management company that is absent. One of the main reasons for hiring a property manager or property management company is so that the property is managed. Property management companies that incessantly seek permission or approval before taking any action defeat the entire purpose of hiring a property management company to oversee a property in the first place. This kind of action on the part of property management indicates generalized inexperience and/or incompetence; which means it is probably time to look for a property management company which has the experience and transparency of service to effectively manage your property.
7. Extremely High Maintenance Costs
A quality property management company should have a good relationship with a wide array of vendors and contractors in various trades. These relationships allow or property managers to compare quotes, have multiple contractors from which to choose for maintenance work, and get you the lowest price possible for repair work that may need to be done on a property. The bottom line is, your property management company should have a network of maintenance related vendors with whom they have built a solid reputation. These good relationships with contractors should result in general maintenance done at the lowest price available.
Property management companies which have not established themselves among local vendors as credible and trustworthy, and who have not established a network of trusted vendors will often pay premium prices for even regularly scheduled maintenance.
Additionally, elevated maintenance costs can be a potentially serious red flag, indicating:
- inaccurate invoices and accounting practices (intentional or otherwise)
- Lack of regular maintenance and inspections of the property
- Mishandling of tenant maintenance requests
Part of the reason to hire a property management company in the first place is to have a trusted source to shop around and find you the best possible price on maintenance work. If your property managers aren't providing this service to you, then perhaps it is time to seek out something new!
6. Rapid Escalation of Conflict Between Property Managers and Tenants
Dealing with "problem" or disgruntled tenants is part of the job description for property management companies. Acting as a buffer between tenants and property owners is one of the primary functions of a property management company. This means that property managers and any staff associated with that property management company should be trained in deescalating verbal conflicts, efficient conflict resolution strategies, and should effectively implement that training in handling conflicts with tenants. If you notice a dramatic, or even a steady increase in the frequency of irate customers leaving online reviews, or litigation levied against you on behalf of previous tenants, then it is very likely that your property management company is ineffective at conflict resolution.
Relationships between all parties involved should remain positive and professional. Angry tenants can mean property damage, bad PR,and costly lawsuits or withheld rents.
The failure to establish a working relationship with tenants by a property management company will result in the inability for them to establish any sort of authority or enforcement of regulations.
Conflict is inevitable in this industry, however, is you notice high tenant turnover rates, increased negative activity, or increased litigation on behalf of tenants, then it is probably time to consider a new property management company.
5. "Bad" Tenants
The primary function of a property management company is to do everything in their power to move in the most trustworthy, reliable, unassuming tenants as possible to keep the vacancies to a minimum, evictions to a minimum, and the turnover rate of tenants to a minimum. How do property management companies accomplish this? Through high quality, thorough screening procedures.
A big indication that it may be time to switch property managers, is if the quality of tenants shows a downward progression. If hiring a property management company results in consistently unreliable, or unruly tenants, then it may be time to seek out a property management company with a better track history of retaining tenants, and signing leases with high quality, well-qualified tenants.
4. Lack of Followthrough
Property managers should not only find reliable tenants, but they should also be reliable themselves. In any business relationship between an employer and employee - follow through is not a conditional thing. It is expected that both parties will follow through and keep to their word. Property management companies which are lackadaisical about deadlines are demonstrating a lack of respect for your time, and your investment. And consider: If they are inconsistent with you, their client, imagine the lack of accountability and reliability they display to your tenants!
It all goes back to the importance of trust that must exist between a property owner, tenants, and property managers. Without that solid foundation of persona accountability and reliability, there is no chance that any business can be run or managed effectively.
3. Inconsistency in Cash Flow
If a property management company is competent, experienced, and knowledgeable, they should be marketing your properties effectively. Property management companies who aren't in tune with the current marketplace, or who are not keeping properties in tip-top condition are likely to consistently have vacancies.
Some fluctuations in tenant count are to be expected. There are some months out of the year which consistently perform better than others, and the local and national economy do play a role in vacancy rates, however; these standard fluctuations are gradual and happen again and again over time. these fluctuations are easily predicted, monitored and documented. The problem occurs when a property management company is not effective or diligent in their marketing or maintenance of your property. It shouldn't be the property owner who is searching for solutions to low rental rates - a good property management company must display initiative and learn how to effectively market rental units.
Huge fluctuations in vacancies and cash flow can not only be stressful but can also put your investment at risk. If your cash flow seems to be all over the place, then perhaps it is time to consider a new property management company.
2. Late or Inadequate Monthly Reports
As a property owner, you should be receiving reports regarding your property consistently at the same time every month. These monthly reports should always be on time, and be well organized. Unkempt or sloppy reporting are a huge red flag that there is likely some serious organizational issues with the property manager in general. Either disorganization or laziness. Either way- your investment can be at risk.
Consistent, on-time, well-organized reports are something of a litmus test to the efficiency and organization of a property management company as a whole. Pay attention to them, and you may gain some important insight into the state of your rental property.
No one will ever have as much care or concern for your investment as you will, however, you want to find a property management company that cares almost as much as you do. You do yourself, and your investment an injustice by settling for a property management company that does just enough to get by.
A good property management company will seek out new channels for income, and will seek to get the highest rents from the best tenants they can because they are professionally invested in shared success. A great property management company exhibits tenacity and determination to grow themselves and to grow your investment.
Wasting time with a property manager that does the bare minimum is sustainable, but won't lead to real growth.
Hiring quality property management is not a task to be taken lightly-
Good property management can be a night and day difference for property owners; freeing up valuable time by taking over the daily tasks which make renting out a property tedious and relentless. A good property management company will work for you, and with you, towards the shared goal of success and financial growth. A bad property manager can be the difference between the success and failure of a major investment.
Watch out for these warning signs, and be proactive in making sure that you have the absolute best team surrounding you as possible,