How To Deal With a Bad Property Management Company

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As a rental property owner, you seek the professional services of a property manager to turn your property into a more passive investment. If you are currently seeking professional property management services, it is likely you are tired of managing your properties; have moved away from the property, making it harder to manage from afar; had a major life change; or are fed up with your current provider and are seeking a new partnership.

Having a property manager is intended to be beneficial to investors, but what if having one only turns out for the worse? You may be experiencing unanswered calls, emails, lost rent, and/or you haven’t seen them after signing the management agreement. Worse, your property and tenant could already be in bad shape, and you wouldn’t even know. 

It’s crucial to identify and address operational failures impacting your business before they spiral out of control and cost you thousands of dollars. I’ll cover what your expectations should be, as well as how to manage situations when it is time to move on from your current provider and find the right property management company for your properties. 

Are Your Expectations Being Met?

It is crucial to clearly outline the responsibilities your property manager will be expected to handle. Your provider plays a vital role in overseeing the operations of your rental properties to ensure efficient tenant management while maximizing profitability.

Some of your property managers’ key responsibilities to ensure your property has a low vacancy rate, keep tenants satisfied, and address maintenance issues swiftly to maximize the property’s net income are as follows.

1. Finding tenants and screening

By thoroughly screening tenants, your property manager helps make sure the tenant’s background is reliable and that they’re financially stable and likely to care for the property. 

To ensure the tenants are fit for your property, the property manager should, at minimum, be:

• Reviewing all applications
• Advertising the property across all main marketing platforms
• Scheduling and attending walk-throughs
• Conducting background and credit checks
• Verifying active employment and income
• Evaluating landlord and/or professional references
• Making a decision on the best applicants per the application requirements

2. Lease execution and enforcement

A solid lease creates a safe agreement between the management company and tenant that outlines all parties’ responsibilities, payment schedules, rules and policies, appliances provided by the landlord, and utility responsibilities, ensuring legal compliance. 

Having a solid lease in place requires a deep understanding of the agreement’s language to enforce the rules when an inevitable late payment, disagreement, or misuse of the premises occurs.

Your property manager also needs to be strict and fair, which is not the easiest balance, but a great one will be able to handle situations when the going gets tough. Abusive or aggressive residents garnered the most responses on the National Apartment Association’s (NAA) 2022 Voice of the Property Manager study, equating to 24% of responses to the “biggest challenges in the industry” question. Not only having a deep understanding of the lease, but local law, will set apart a property manager who can resolve violated lease terms correctly from one that can land you in legal trouble.

3. Rent collection

If rent collection is one of your biggest hassles with your current provider, 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 in rent collection policies to help maintain transparency and build trust. In addition to clear communication with tenants, they should be equally transparent with you, the landlord, when the rent has not been paid on time and provide updates on the next steps.  

How to Move On From Your Current Manager

It certainly is not easy finding a great property manager, and it can be even harder to move on from your current provider if they are not meeting your expectations. You may realize one or two operational failures from time to time, like: 

• Late communication
• Late rent payments to owners from the management company
• Longer days on market
• Longer duration to turn over the property between tenants
• Increased fees

It is vital to not allow yellow flags to turn into red flags and trust your instincts. Letting your comfort level or complacency take over can lead to serious problems down the road, like lost revenue from negative guest reviews or stolen wages from a manager who stops communicating. 

If you notice any instances that are out of the ordinary from your initial partnership, make sure you take the following steps.

Reach out…again

Start by attempting to contact your property manager before considering all other options. Before you jump to the conclusion of moving on, make sure there are no closures, holidays, or adjusted schedules that may affect their response time. Phone calls should be returned in a timely manner, so do not let a subtle communication gap affect your emotions while tension is high. 

When you do get in contact, clearly articulate your frustrations, emphasizing every detail that has led to operational failure on the management side.  

Pursue a swift resolution

If your property management company continues to be unresponsive, it may be time to escalate the matter to a supervisor or manager within the company or file a formal complaint with their customer service department, if available. This step should only be taken after you’ve made multiple attempts to reach out using different methods. Documenting your attempted communication efforts will help you when it comes to taking action to terminate your contract.

Review your management agreement

If you’ve reached the point where you’re seriously considering firing your current provider, review your property management agreement. I would make sure to first identify the section that would outline a termination clause and possible termination fee. It is very common that you will be required to give 30 days’ notice in writing to terminate your contract. 

Steps After Termination

Now that you have given proper notice, paid any termination fees, and are ready to move on, you must certainly perform more due diligence in selecting your next property manager. 

Before BiggerPockets launched Property Manager Finder, it was so much harder to find a reliable property manager. Now, things could not be easier for investors. This free resource matches you with top property managers and vets them with ratings and reviews from other investors so you can find someone you trust. 

Though it’s easy to connect with a property manager with this tool, it is still imperative that you ask the right questions before handing over the keys to your kingdom. I would start with the following:

1. How many years have you been a property manager?
2. Are you licensed or certified?
3. How many properties do you manage? What types of properties? (SFHs/MFHs, STR/MTR/LTR, rent by room)
4. What are the monthly fees, and what services do they include?
5. Are there any extra services not included in the fee, and how much do they cost?
6. How often will you be visiting and/or inspecting the property(ies)?
7. Do you also visit and inspect the property if it’s vacant? Will there be additional costs associated with that?
8. Do you handle all maintenance and repairs?
9. If not, do you have a network of trusted contractors and repairmen in case there’s an emergency?
10. What is your average timeline for turning over a property after a tenant moves out?
11. What is your process for screening new tenants?
12. What are your average days on market?
13. What is your portfolio’s vacancy rate? 
14. How do you handle late rent payments or tenant disputes?
15. Have you ever had to evict a tenant?
16. Can you provide references from current clients?
17. Do you invest in rental properties in your own personal endeavors?

These questions are a great starting point, but if you are looking to find out more about your property manager, I would highly suggest diving into “78 Questions To Ask A Property Manager Before Hiring Them” to sharpen your understanding of the numerous angles of the business that were previously overlooked.  

Final Thoughts

Many investors go months, even years, costing them thousands of dollars before they finally decide to pull the trigger and fire their property manager. If your expectations are not being met, it is certainly your responsibility to get your partnership back on track with your provider. When things do not go as planned, understanding your property management agreement, being clear with communication, and knowing how to search for your next manager will propel your operations forward and get you out of an unfortunate situation.

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.