How to Know When It Is Time to Change Property Management Companies?
Having a property management company is essential when you have many properties to look after but not enough time to do so. They help you with rent collection, communication with your tenants, and maintenance and repair the property. Moreover, they periodically send you financial statements regarding these properties too.
But the world you and I live in isn’t linear. Things can go south in any aspect of your life and your rental properties aren’t immune to it. There are times when you need to change property management companies because the current one has messed things up.
There can be many reasons why you might have to change your property management company. And in this article, I’ll look at 4 major reasons why you might need to take that step.
4 Major Reasons Why You Need to Change Property Management Companies
1. The Communication is Either Sporadic Or Unresponsive
It goes without saying that a good relationship starts with good communication. And for a good business to succeed, it needs proper communication from both you and the other side. And in real estate, it matters immensely.
When you start getting sporadic updates from your property managers, you should immediately know that something’s not right. This effect compounds when they stop replying to emails and picking up your calls altogether.
In all my years in the real estate industry, I’ve seen this to be the start of problems for the landlord. These two situations are only the tip of the iceberg when it comes to what’s going (or has already gone) wrong.
You need to know that your property manager won’t take an eternity to update you on the latest developments. And if this happens more than once or twice, you have some serious issues at hand.
But it’s not always you who’s having difficulty in communicating with the property management company. It can be your tenant too. They too can have issues with repairs, rent, the lease’s expiry or renewal, or anything else. This will cause you to lose tenants and money as well.
I believe that this is where you need to change property management companies. Yes, property managers can be busy, but that doesn’t mean that they alert you only when things have taken a turn for the worse. Find a new company that values accessibility and communication.
2. Rent Isn’t Coming In on Time (or Not Coming In at All)!
Collecting rent on time is something that every property management company prioritizes highly. Yet red flags can pop up even here. Once again, this’ll come to your attention when the payments start coming in late or are coming in sporadically (as in some being on time and some late).
In some cases, I have seen this issue get to the point where the payments had stopped coming in altogether. If this is happening to you, it’s time to change property management companies.
Before you hire a property management company, ask about their rent collection process. Talk about what the consequences of late collections will be and who will keep the late fees.
I will strongly advise you to write about the collection policy clearly in the lease agreement. More importantly, it should be enforced properly by your property manager. Your highest priority should always be to have well-screened tenants living in your property/properties.
This can only happen with a competent property management company. When your rent isn’t coming in on time, your manager must follow up immediately with the tenant(s) concerned. Otherwise, your own financial situation will be shaky.
If none of this is happening in your case, it’s high time that you change property management companies. I will recommend that you find a company that has an online payment-receiving system. This will help you monitor every payment coming in, making your life hassle-free.
Moreover, this system should be in a way where tenants can schedule recurring payments and set payments in advance. This will make your and your tenants’ lives easier. After all, there is no reason why you should be waiting for paper checks to arrive in your mail every month.
3. Increasing Routine and Preventative Costs
Repair issues will never get better with time, and overall maintenance will never simply vanish into thin air. These costs will be incurred when you have tenants in, no matter how careful your tenants may be.
It’s apparent to everyone in the real estate market that maintenance costs are rising these days. And you cannot expect your property management company to simply erase these costs. But if these costs keep on increasing, without any logical explanation, its time for you to change property management companies.
An experienced property management company knows how to keep these costs under control. What I mean by this is, they have good contacts in the construction and repair industries. These contacts enable them to get good discounts on repair services.
This strategy keeps the costs under control. You save money this way, without sacrificing the quality and without ignoring rules and laws. And if this keeps on happening to you, you have a great property management company helping you.
If you find out later on that you have deferred repairs at your property, there’s something fishy going on. In my years in this industry, I’ve seen this time and again. This eventually becomes yet another case of “property management company incompetence”.
An apt response to any repair issue is a fundamental duty of a good property manager. They need to keep the costs down while simultaneously balancing the needs of your investment. This is where preventive maintenance comes in.
I strongly believe that preventive maintenance solves countless problems before they even arise. This happens when your property management company does regular inspections of:
- Appliances
- HVAC systems
- Electrical systems
- Roofing and landscaping and;
- Plumbing and water systems
Proactive maintenance policies keep your property in good condition. Naturally, this translates to satisfied tenants who’d like to stay longer.
Another type of property management company incompetence is when repairs are simply not being made at all. This can lead to conflicts between you and your tenant. It will ultimately lead to the tenant leaving when their lease is over.
4. Maybe You’re Missing Out on Detailed and Accurate Accounting Statements
Receiving payments on time is crucial. But you should also expect to receive accurate and detailed accounting statements periodically. They should have the details of every transaction that has been made. From the repair expenses you’ve made, to the collections from every tenant and the overall savings.
If you cannot understand the accounting statements you’re getting from your property manager, it’s time to change property management companies. You’re not just trusting them with your property, but also with your money.
Another thing I’d like to mention is hidden fees and unexpected costs. If you’re coming across these issues, talk to your property manager immediately. If this keeps on happening despite assurances by the managers, it’s time you changed companies.
Summing Everything Up
There are four major reasons why you should change property management companies. Increasing costs, rent not coming in on time, sporadic communication and not getting detailed accounting statements are all of them. If you’re facing one, or a combination of these problems, or all of them, you need to take action and give us a call.
