No matter how many years of experience you have as a landlord or how many properties you own and rent out, working with a property management company can help to reduce your stress levels and simplify the business of a being a landlord. Not all property management companies are the same, though. While there are plenty of firms with experience and know-how, there are also the occasional lemons — property management companies that don’t deliver on their promises or that end up being more headache and hassle than help.
If you’ve signed on with a bad property management company or worry that your property manager is not doing their job, you have options. Here’s how to deal with a bad property management company and how to find a company that’s worth your partnership.
Red Flags for Bad Property Management
In some cases, the signs that a property management company won’t live up to your expectations can be visible before you sign a contract and agree to work with the company. In other instances, red flags might not appear until after you’ve been working with the company for a while. During your initial contacts and meetings with the firm and in the weeks and months after you’ve signed on, here are the signs to keep an eye out for.
1. Poor Communication
When you hire anyone to do a job or to work for you, you want the reassurance that they will also be there to answer any questions you have or to address any concerns that come up. A good property management company will be easy to get in touch with, either through email or via phone. If you call them and leave a message, they’ll return your call, ideally within 24 hours.
A company that doesn’t communicate well is likely to miss calls or emails and to take more than 24 hours to return messages. If you feel as if you can never get a hold of a real person at the company, even before you’ve signed a contract, that’s a red flag to take seriously.
After you’ve signed a contract, if the staff of the property management company seem to be always out of the office or slow to get back to you, you might feel a bit concerned or even panicked. Poor communication with you, the landlord, can make you question how well the company communicates with the tenants. Since tenants are your source of income, you want to be sure you’re working with a company that is concerned about your tenants’ needs and interests.
2. Lack of Knowledge of Landlord-Tenant Rules
A variety of federal and state laws are in place to protect the rights of tenants and to create a fair housing environment for everyone. A property management company needs to be aware of what is protected class under the Fair Housing Act, what tenants’ and landlords’ rights are under the Pennsylvania Landlord-Tenant Act and what the appropriate process is if a tenant has an issue or stops paying their rent.
3. Poor Follow-Through
Property management companies typically offer services such as apartment and home maintenance as well as repairs should anything break at a property. One major red flag to look out for in a company is poor follow-through. Just as you want the company to return your emails or calls as quickly as possible, you also want the company to respond to any issues tenants are having as soon as possible.
If a company promises to fix a burned out lightbulb in the hallway, but takes weeks to do so, or says it will take care of a dripping faucet in a tenant’s bathroom but is slow to send out a plumber, that can be a cause for concern. If the company doesn’t move quickly or needs lots of nudges and reminders to do its job, you are going to end up with unhappy tenants. Unhappy tenants are likely to move once their lease is up, which can mean lost income for you.
4. Limited Services
If you have a lot of properties to rent out or if you live far away from your properties, it’s handy to have a property management company that’s close by to take care of any issues that might come up or to help you manage and screen tenants. But not every property management company offers a full suite of services.
Before hiring a company, ask what services it provides and what you are going to be responsible for doing. Ideally, the company will take care of everything from repairs and maintenance to rent collection and tenant screening. If not, they’re only doing part of the job of a property management firm.
5. High Eviction Rate
Finding good tenants can be difficult, which is one reason why so many landlords work with property managers. A good property management company will have a
rigorous tenant screening process in place. The company will check references, run credit checks and verify employment, all with the goal of finding a tenant for your property who will pay the rent on time and treat the home with respect.
How can you know if a property management company does a thorough job of screening tenants? One thing to do is take a look at or ask for its eviction rate. Across Pennsylvania, the eviction rate is 1.77 percent. The average eviction rates in several Pennsylvania countiesare as follows:
- Lancaster County: 0.74 percent
- York County: 1.27 percent
- Dauphin County: 1.97 percent
Ideally, the property management company will have eviction rates below the state average or lower than the average for the county the property is located in. If the company evicts a lot of tenants, that can be a sign that it isn’t doing its due diligence when it comes to screening people in the first place.
6. High Vacancy Rate
Another red flag that a company isn’t doing its job very well or is somehow trying to cut corners is a high vacancy rate. Ideally, the company you work with will have a vacancy rate that’s well below the average for the area or state. In Pennsylvania, the rental vacancy rate in 2017 was around seven percent.
A high vacancy rate can mean several things, none of which are good. If a company has a lot of vacancies, it might not be doing a good job of advertising or marketing its properties. A high vacancy rate can also be connected to a high eviction rate or to a high rate of tenants who decide to move out before their lease term is up. Another reason for a lot of vacancies is that the company doesn’t understand market rates and is pricing rentals too high for the market or location they are in.
7. Limited Hours
Appliances don’t live in a 40-hour a week world. Refrigerators tend to break whenever, whether it’s at 10 p.m. on a Saturday or 9 a.m. on a Wednesday. The furnace can go out at any time of day. The plumbing can clog or leak around the clock. Although not every issue with property needs attention immediately, some problems demand a quick fix.
If a property management company doesn’t have someone available 24 hours a day, seven days a week, that can present a real challenge when something goes wrong outside of traditional business hours. Having limited hours, especially if a company is difficult to get a hold of, should be a significant red flag for any property management company.
8. Your Payments Are Late
In some cases, the warning signs that a property management company isn’t great might not show up until you’ve been working with it for a while. If the company collects rent from tenants for you, it should send the amount you’re owed monthly, on a consistent schedule. If that doesn’t happen, a few things might be going on. The company might be struggling to get tenants to pay on time, which is another sign that the company didn’t do a thorough job when screening tenants.
Consistently late payments from your property management company can also suggest that it is having difficulty keeping up. It might have a lot of debt or just poor bookkeeping practices. The company might be understaffed, meaning there isn’t a designated person to oversee payments to landlords. Whatever the reason for the late payments, you can interpret them as a sign that it’s time to move on and find a new property management company.
How to Deal With a Bad Property Manager
If you’re currently working with a property management company that has displayed any of the red flags above or that just isn’t meeting your expectations, what are your options? You have three choices:
- Negotiate with the company
- Fire your property management and take over management of your properties on your own
- Switch property management companies
In many ways, negotiating with the company might be difficult or impossible. If the managers at the company regularly don’t return your calls, it can be challenging to work with them to come up with a solution that suits both you and the company.
There has to be something of value there for you to want to take the steps necessary to try to work with the company. Before you try to arrange a solution, make a list of the pros and cons of working with that particular company. If the cons list is longer than the pros list, you’ll most likely be better off switching companies or trying to manage your properties on your own.
Firing the property manager and assuming responsibility for collecting rent, screening tenants and handling maintenance requests and repairs might appeal to you if you’re a do-it-yourself type. But the second option overlooks the reasons you hired the management company in the first place. If you live far away from your rental properties or have a full schedule, you most likely don’t have the time to devote to handling tenants and being on-call for fixes 24/7.
Switching companies might work best for most landlords. Although the company you’re currently working with might give property management a bad name, there are plenty of other firms ready to prove the value and worth of a reliable property management company.
How to Fire Your Property Manager
Once you’ve decided to part ways with your current property management company, there might be a few steps you need to follow to terminate the contract. Depending on the terms of the contract, the company might require notice, such as 30, 60 or 90 days. Some contracts state that you can only terminate them for cause, such as a breach of contract on the part of the company, while others let you terminate them for any reason.
You might have to pay a fee for early termination unless you can prove that you are ending things because the company breached the contract. It’s a good idea to put everything into writing so that you have a paper trail of your communications with the company should there be any problems later on.
Along with officially ending things with the property management company, you’ll need to let your tenants know of the change in management. You don’t have to give them details about what went wrong with the first company, but you do need to let them know who will be managing the property going forward and how the tenants can get in touch with the new property manager.
After you end the relationship with the management company, collect any paperwork or documentation the company had about your properties. You’ll want a record of the security deposits made, reports about your property’s income and expenses, such as repair bills and maintenance costs, and copies of the leases your tenants signed. The company should also send along any
remaining rent that it owes you.
What to Look for in a Good Property Management Company
Ideally, one bad experience with a property management company won’t scare you away from working with another company in the future. Before you hire a new company, do some research to get to know the company and its reputation. Here’s what to look for when hiring a good property management company:
- Experience: How long has the company in business? A company that has years, if not decades, of experience, is going to have a more thorough understanding of how property management works and of the needs of landlords and tenants.
- Vacancy and eviction rate: The lower the vacancy rate and eviction rate, the better.
- Tenant screening process: Ask the company what it does when screening tenants and what criteria it uses to help determine whether or not someone is likely to pay their rent on time.
- The number of properties managed: Is the company on the small side, with just a handful of properties under management? Or does it have a full portfolio of properties? If so, does it manage buildings like yours or have experience with your type of rental?
- Services offered/hours of operation: For the sake of your tenants, you want to work with a company that is available 24 hours a day, seven days a week.
- Locations served: Does the company understand the particular landlord-tenant rules of your state and county? Is it familiar with the market rates and typical rental process for the area your property is in?
Switch to American Heritage Property Management
Your property management company should make your life easier, not more complicated. If you’re not getting what you wanted from a company or if you’re working with managers who don’t seem to care about your property or tenants, it’s time to switch. American Heritage Property Management is a full-service property management company that has been serving landlords in Central Pennsylvania and the Baltimore area of Maryland since 1981. We’re available 24/7 for maintenance and repairs. We also screen and select tenants, collect rent and help landlords prepare leases. To learn more about our services and how we can help you, contact us today.