Real Estate Tips |9 min read

Do You Have a Bad Property Manager? 5 Signs and Solutions

Shocked young family receives bad news from their landlord.A bad property manager is a waste of money at best and a recipe for getting sued, at worst. If your property manager checks the below boxes, it might be time to get a new one.

Main Takeaways

  • If your property manager constantly breaches their contract, responds to issues inadequately or slowly, has a low cost-to-value ratio, allows many of your units to stay empty, and has sloppy tenant screening processes, they might be an unprofessional, bad property manager.
  • To fire your bad property manager and end your contract, you must have “just cause,” follow required notice clauses and possibly pay early termination fees.
  • When choosing a new property manager, research them, make sure they’re knowledgeable and experienced, own no for-profit properties themselves, & have sufficient resources, a suitable specialty, and good vendor connections. These tips can help you avoid getting another bad property manager.

Table of Contents

Signs You Have a Bad Property Manager

Here, our Boston property management company will delve into the clearest signs of a bad property manager or company. These issues may simply be red flags now, but they can easily add up to real, irreversible consequences. So, stay aware.

1. The Manager Constantly Breaches Their Contract

If your property manager breaches their contract frequently, it’s time to kick them to the curb.

Once your property management company signs its contract, it legally becomes your representative and fiduciary. If they commit legal, financial, or ethical misconduct, you could be on the hook for it. That’s how their job works. So, if your property manager fails to do these basic duties, they may be a bad property manager:

  • Supply the owner with all relevant information so the property owner can form fully informed choices. On a similar note, they don’t provide all relevant information in a misleading light.
  • Always behave ethically when engaged in management-related activities.
  • Always act in the property owner’s best interests.
  • Obey Fair Housing Laws, the Americans with Disabilities Act, and other nondiscrimination laws.
  • Follow all applicable state, local, and federal laws, in general.

Odor from Air Conditioner: Dealing with Bad Smell in the House2. They’re Slow to Respond to Pressing Issues—Or Don’t Respond, Period

If you face pressing issues, you will need property managers who can relay relevant information to you in time. If they don’t, you could struggle to act in the event of an emergency or time-limited opportunity.

What’s more, if you, the property manager’s primary customer, can’t get a hold of them, they’ll put your tenants on the backburner even more.

This could disappoint tenants at critical moments, like urgent repairs. Then, your reputation, property value, and tenancy rate will suffer.

Even if an issue isn’t quite urgent, you’re in trouble if your property manager doesn’t handle it, period. Routine inspections, maintenance, and other tasks are fundamental parts of their job. If your property manager has left these problems in the lurch for too long, that shows laziness on their part.

Again, your property manager has a grave, legal responsibility toward your property. If they don’t take that responsibility seriously, if they don’t do what they’re specifically paid to do, what’s the point of them being there at all? They simply drain your hard-earned money—and open you up to more money lost in lawsuits.

3. The Company Has a Disappointing Cost-to-Value Ratio

As a property owner, you’ve likely entered this sector to gain a passive profit. Property management companies are supposed to provide more than they cost so your investment can stay that way.

So, if you’ve funneled more money into your bad property manager than you’ve received in freer time and energy, you’re not getting the best bang for your buck. You’re spending a chunk of your income on these services. It’s only right that you get the very best service possible in return.

4. Your Manager Lets Your Units Stay Empty

When vacancies happen, your property manager must actively market your property. This way, you don’t lose cash flow for too long.

If they don’t pull all the stops to get quality tenants or, to the contrary, indiscriminately sign on horrible tenants just to fill seats, that puts you in a bind. Worst of all, it puts your business in a financial or legal spiral downward.

5. The Person Uses Inadequate Tenant Screening

On that note, a bad property manager can jeopardize your safety and success with poor tenant screening processes. If their tenant screening is half-hearted or sloppy, it could put tenants at risk. Furthermore, it could bring unwanted damage, legal disputes, late rent payments, and more to your property.

For instance, if bad property management allows someone with a violent criminal background onto your property, they could always repeat that behavior on the premises.

It goes without saying, but this behavior deeply endangers your tenants. To boot, it gives your tenant good reason to sue you—as if there weren’t enough reasons tenants can sue landlords. Then, it becomes an indelible black mark on your brand. Unprofessional property managers can cause this scary domino effect.

How to End a Bad Property Management Agreement

A property management agreement is a legal contract. So, you need to cover all your legal bases when severing it. Furthermore, you need to stay civil throughout the process, solely focused on the facts and not on emotions. After all, you do not want to face a breach-of-contract accusation that could go to court.

Young skeptic couple is dissatisfied with terms of a suspicious contract.You should consult with a lawyer to reduce liability for you and your business. In the meantime, here are some basic best practices to prepare you for acting against bad property management.

1. You Must Have a Just Cause

When you have “just cause,” you end the contract for valid reasons. Namely, you’re ending it because the bad property management company has not fulfilled its agreement-outlined responsibilities. These causes could include mishandling of funds, housing law violations, and property condition neglect.

To ensure your reason falls under “just cause,” you should look at the agreement’s termination rights clause (if the contract has it). If you do not have “just cause” to end the agreement, the property management company could sue you for breach of contract.

2. It’s Mandatory to Obey Required Notice Clauses

If your contract has an early termination clause, each party must obey certain notice requirements. Generally, each party must provide 30-90 days’ written advance notice before canceling the contract. If you don’t follow this step, you make yourself vulnerable to breach-of-contract claims.

To keep a paper trail, send the notice as certified mail with a receipt. Then, you can start transferring your records and documents to a new company.

3. You May Have to Pay Penalties

Regardless of your compliance with the agreement, it may require you to pay an early termination fee. This could range from a few hundred dollars to the entire contract period’s management fees. Be prepared to pay these off if you’re serious about removing your bad property management.

Guide for Choosing the Ideal Company

There are many points you must consider before you sign on with a property management company. Here are a few of them:

1. Research Them

Thoroughly look over their services, licenses, certifications, and other key information to make sure they’re legitimate.

2. Ensure They Are Experienced and Knowledgeable Enough

You will also want to make sure the company is well-established, with proven local market experience and legal know-how necessary for success.

For instance, they should have a thorough grasp of the market’s parameters. This includes understanding the area’s primary demographics (ex: mainly students vs. mainly families), and how to make your property more attractive to those groups.

Moreover, they should be fluent in state and legal laws. They must have built-in best practices for maintaining compliance with them.

3. Make Sure They Have Manpower

Also, the structure of your chosen company matters. They should have adequate staffing to take care of all their customers. If they’re spread thin, they may not be able to pay your property the attention it needs. And that means you need to look elsewhere.

4. See If They Own an Income Property

If a prospective company owner owns a for-profit property in your area, that gives them a potential conflict of interest. In other words, they’re your competition for getting tenants. So, they might not truly have your success in mind.

5. Ensure Their Specialty Suits Your Business

Some companies specialize in specific property types: residential, commercial, vacation, multi-family, etc. Be careful about selecting the best match for your needs.

6. Vendor Connections

When tenants inevitably need repairs or maintenance, you don’t want to count on just any contractor on the street for the job. For best results, your property manager should have established, tried-and-true contacts for handling these issues. That way, they know what they’re getting into.

Banish Bad Property Management with BMG

Let’s be honest. If you chose to click on this article, it’s likely you already knew something was amiss, deep down. You simply needed external proof and validation that your suspicions were true. And that holds even more true if the topics in this article hit a little too close to home.

If you have a gut feeling that your business is in danger, you need to trust it. Without a doubt, you know your property better than anyone. You have more at stake in it than anyone.

At first, staying with the devil you know may seem easier than starting over with a stranger. However, this is not the time to be complacent. After all, every moment you leave your property in the hands of an unprofessional property manager is another moment you put it at enormous risk.

Instead, be proactive. Nip impending disasters in the bud by switching to a better property management team. One that respects the immense responsibility of protecting your investment. One that will always put you and your tenant first. One like Bay Property Management Group. Call us today to get the property management services you deserve.

 

 

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