How to Fire Your Property Manager

Property managers are an essential part of your business as a renter. But the risks are high when you place that kind of responsibility in the hands of a third-party vendor. The risks are perhaps higher if your property manager is an individual in a solo business. There are 307,621 property management businesses in the U.S. Unfortunately, that gives you a lot of opportunities to get it wrong.

With this in mind, it’s also a safe bet to assume at some point you may need to know the best way to fire your property management company. This blog will help you do it.

What Is a Property Manager’s First Responsibility to a Landlord?

Let’s start with the baseline; what is a property manager? Hiring a property management company or a “solopreneur” property manager means engaging a third party to oversee operations of a real estate unit. The property manager is there to preserve the property value while generating tenant income. This could include:

• Handling building maintenance
• Organizing work orders and requests
• Doing light cleaning, maintenance, snow or leaf removal, and so on
• Resolving concerns or complaints from tenants
• Managing rent collection
• Paying bills on the property
• Handling the showing and leasing of open units
• Monitoring security
• And more

Hiring a property manager frees you to focus on other tasks, including building a business portfolio. The cost of employing these professionals is often tax-deductible against the income you earn from the property. In effect, if the property manager is good, their service pays for itself. That alone probably makes outsourcing all the mundane tasks associated with the tenant and property management business attractive.

But what if this relationship sours? How do you fire your property manager or property management company? What would cause you to fire them in the first place?

Why Would You Fire Your Property Manager?

Learning that not all property management companies are the same is a hard lesson. A bad property manager can depreciate the value of your lot and buildings and ruin relationships with good tenants. All of this responsibility means property managers must get it right because the risks to your business are too significant to put up with incompetence for very long. Property owners often figure this out after several bad experiences that are either mildly or wildly inconvenient.

Some of the top reasons to fire a property management company include the following:

• A contract breach of some sort
• Not getting the full service you paid for
• Slow, inadequate, or no response to problems
• Ineffective maintenance on the property
• A lack of resources or knowledge about how to complete tasks
• A high cost to service delivery value ratio
• Extended vacancies not explained by the market
• Tenant complaints that are not unfounded

Entering a contract with a property manager means they are legally responsible for managing your property. While a contract may spell out the various duties of a property manager, the written or unwritten rules of a contractual agreement mean the company must act in your best interests at all times. But what happens when they do not? Failing to hold up their side of the contract is a top reason to fire a property management company.

How to Fire Your Property Manager

Investopedia says, “Property managers typically are not required to have any particular educational background or credentials.” Considering how regulatory-laden the housing industry is, that sentence is actually terrifying. The lack of credentialing is probably why there are so many inefficient solo property managers out there today.

However, we know that firing someone is never easy. When it’s a solo property manager on your payroll, you may feel more personally obligated to keep them employed. This often happens with small investors just getting started in the business. Maybe you hired a friend or someone you know to manage the property. Things can get messy if the property manager fails to do the job.

Above all, when firing an individual property manager, it’s best to keep things business like and professional and avoid personal attacks. Follow the rules of the contract you established, and then make the cut.

How to Fire Your Property Management Company

It might be harder to fire a property management company because they may provide more value-added services than a solo property manager. Look at the contract you signed to see if any penalties are involved with terminating the agreement. Many property management companies have a clause that includes a termination fee if you jump ship early.

The real question here is: Do you have just cause to fire the company, and can you prove it? Typically, just cause for firing a property management company before the contract expires includes:

• Not addressing critical concerns of the property owner
• Failing to handle money in and out of the business properly
• Violating housing laws or discriminating against tenants

Failing to have documented just cause can lead to the property management company suing you for breach of contract. Check the early termination clause on the contract with the property management company before you fire them. Usually, you must give written notice (usually 30 to 90 days) before the termination. Take care to follow contract directions to ensure that you comply with the legal terms of the agreement.

Once you’ve put the property management company on notice, there should be a clear-cut process for transferring records and documents to the new company you’ve selected.

What Should You Look for in a Good Property Management Company?

While the criteria for how to fire your property manager is relatively clear-cut, so are the requirements for finding a better company to replace them. If you’re searching for a good California property management company, some criteria to look for include:

• A track record of clear communication and customer service
• Clear understanding of compliance rules and relevant tenant/housing laws
• A leader in the industry with excellent references
• Efficient systems for handling tenant maintenance issues
• Real-time, transparent money handling practices
• Solid marketing strategies to attract tenants
• Technology systems that make it easy to collect rent or put in maintenance requests
• Streamlined eviction processes
• Assistance with legal issues
• A proven process for screening tenants

Tenant Planet is devoted to the idea that you should never have to learn how to fire your property management company. Tenant Planet meets all of the criteria—and more—for the best property manager to handle all of your investments. Call on us to find out how our track record sets us apart.

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