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.
- Breach of Contract
- Not Getting What You Paid For
- Poor Response Time
- Ineffective Property Maintenance
- Lack of Knowledge and Resources
- Poor Cost to Value Ratio
- 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 Bay Property Management Group 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 Bay Property Management Group is the local expert you can feel confident in.
- Unmatched Customer Service and Communication
- Relevant Law and Compliance Knowledge
- Extensive Industry Expertise
- Efficient Maintenance Coordination
- Transparent and Detailed Real-time Financials
- Targeted Marketing Strategies
- Thorough Screening and Quality Tenant Placement
- Convenient Rent Collection
- Assistance with Legal Matters
- Streamlined Evictions
Unmatched Customer Service and Communication
Communication is crucial to any professional or personal relationship. Thus, an essential function of a property manager is to respond to both owners and tenants promptly. Bay Property Management Group focuses solely on property management and maintains a commitment to delivering unparalleled customer service. Whether during regular business hours or through our after-hours emergency line, someone is available 24/7 to look after your property’s needs.
Relevant Law and Compliance Knowledge
Part of being a successful and legal landlord is complying with various federal, state, and local housing laws. That said, it is a daunting task to keep everything running smoothly and ensure proper compliance to avoid fines. So, leaving this responsibility to a trusted property management firm gives owners the peace of mind they deserve. Our team at Bay Property Management Group stays up to date on all relevant requirements and helps owners understand what is needed to rent their property legally.
Extensive Industry Expertise
It is not always easy to hand overall operations of your rental business to a third party. However, there is a big difference between handing it over and handing it over to someone with established expertise. That means thoroughly researching potential management companies is critical to your success. Led by a licensed real estate broker, BMG offers owners a wealth of experience throughout every department, from management to leasing, support staff, and accounting.
Efficient Maintenance Coordination
Maintenance requests will happen, and handling them is one of the main responsibilities of a property manager. Tenants expect to have concerns addressed promptly, and this is essential to a good landlord-tenant relationship. Bay Property Management Group utilizes experienced in-house maintenance technicians and an extensive third-party network of vendors. Thanks to our established vendor relationships, BMG helps to ensure quality work, efficient turnaround, and competitive pricing.
Transparent and Detailed Real-time Financials
A successful investment comes down to the numbers, and detailed financial reports help owners make informed decisions. Therefore, financial transparency is critical. Bay Property Management Group offers monthly and annual statements that include vital information on –
- Cash Flow
- Maintenance Invoices
- Rent Roll
Using the latest technology, Bay Management Group provides owners a convenient Owner Portal. Thus, allowing them to check in on their property’s financials from anywhere at any time. Plus, our in-house accounting team prepares annual statements along with a 1099 to make tax time a breeze.
Targeted Marketing Strategies
A vacant property costs an owner money in the form of lost income potential. Understanding the local competition and demographics in your neighborhood is the key to renting efficiently. Our team at BMG knows the local market and can aggressively and strategically advertise to limit vacancy time. Our listings reach a large tenant pool using all major search engines to fill vacancies in an average of fewer than 30 days.
Thorough Screening and Quality Tenant Placement
Thorough tenant screening is the first and best defense against problem tenants. However, screening tenants and communicating with applicants requires landlords and owners to follow all Fair Housing Laws. Therefore, using the experience of a property manager can help owners avoid discrimination claims and potential problems down the line. Bay Property Management Group uses a standard set of qualifications that include income verification, criminal background check, creditworthiness, rental history, and previous landlord references. Completing these safeguards to choose the best applicant has allowed BMG to boast a less than 1% eviction rate.
Convenient Rent Collection
Today’s renter expects to be able to pay rent conveniently online. Technology has made the rent collection process simple and easy for all parties involved. Tenants can set up automatic payments to never miss a month, while landlords can send rent reminders and quickly assess late fees. Through a streamlined Tenant Portal, Bay Property Management Group helps make rent collection a straightforward process. In addition, modern technology helps BMG efficiently disburse funds to owners through direct deposit or a standard check.
Assistance with Legal Matters
On occasion, and even with the best precautions in place, property owners may face legal matters. Whether it is a tenant dispute, eviction, or paperwork issue, Bay Property Management Group is here to help. With a strong familiarity of both local and state laws, our team drafts a legally sound lease to help protect owners and tenants. In addition, we ensure the completion of compliance items and make sure the property is properly licensed and registered. When it comes to inspections, safety, leasing documents, and mitigating liability, hiring an experienced property manager is your best bet.
Although no one likes to think about it, sometimes tenants fall behind, or other circumstances leave no choice but to turn to eviction. When that occurs, owners face a long and expensive battle to regain control of their property. Legal eviction proceedings require specific notices to be issued and a set timeline of events to adhere to. For owners unfamiliar with the law or process, their efforts may actually hinder proceedings. That is where Bay Property Management comes in! Our team has an established standard practice to handle late rent and work with tenants whenever possible. If eviction is the only answer, we can guide owners through every step of the process.
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 Southern Pennsylvania, Central Maryland, Washington DC, and Northern Virginia trust the local real estate experts at Bay Property Management Group. 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.