So, you’ve entered a property management agreement, expecting your property management company to do its job and make your life as a property owner easier. And yet, they won’t do what they said they would. As a matter of fact, they often create more messes than they clean up. If any of this resonates with you, it might be time for you to switch property management companies.
Luckily, we are property managers in North Virginia who have heard countless horror stories from clients from before they went with us. We can share with you the red flags that show you need to change your property management provider.
Top 10 Reasons to End a Property Management Agreement
1. Not Fulfilling Their Contract
When a property manager signs a property management agreement, that means the manager’s company has become your representative and fiduciary. Most importantly, your property manager is liable for the state of your property. Property managers are generally expected to:
- Give you all the required information so you can make well-rounded decisions as a property owner.
- Behave ethically while they’re managing the owner’s units.
- First and foremost, act in the property owner’s best interest.
- Follow all applicable Fair Housing Lawsthat shield the owner from legal risks.
If your property manager fails to move forward with your best interest in mind, obfuscates critical details, or breaks the law and exposes you to legal action, those are all valid reasons for a property owner to end their contract.
2. Elevated Vacancy Rates
When your rental properties just sit there and collect dust, that’s not adding up to profits. In that vein, high vacancy rates are unproductive for property owners. Effective property management companies will work tirelessly to fill in those unused slots. Ineffective ones will cause undue financial harm from lost rental income.
3. Immoral and Illegal Practices
If property management companies behave unethically or illegally, that can severely damage tenant trust and satisfaction. Property managers who discriminate against tenants, shirk off legal responsibilities, and partake in other problematic activities, will open up their clients to legal ramifications.
If this sounds familiar, it may be time to look for a new property manager who prioritizes legal and ethical values.
4. Unsatisfactory Tenant Screening Processes
If your property manager permits the entry of tenants without sufficient background checking to back those decisions up, that is a bad sign. After all, tenants are the backbone of your success as a property owner. If unqualified tenants come onto the scene, they could hit you with property damage, delinquent rent payments, and legal issues. In the end, their sloppiness can threaten your bottom line and brand name.
5. False Advertising
Property management companies should do what they promise to do, full stop. If they are being paid to fulfill certain tasks, it’s their bare minimum duty to follow through. For instance, if your property manager fails to conduct their promised regular rent collections, filings, tenant screenings, and maintenance tasks, that is a breach of your property management agreement.
6. Erratic or Late Responses
It is critical to stay in the loop about matters relating to your property as a property owner. If you don’t do this, you may not be able to make informed choices, or worse, miss earning prospects.
A good property manager should be your connection to what’s behind the scenes in your business. They should provide you with quality customer service and attentive communication.
So, if your property manager deprives you of essential information, such as vacancy reports, it’s time to say goodbye. Furthermore, if you can’t reach your property manager to address issues promptly, that can bog down the operations of your entire enterprise, from delayed repairs, extra costs, or tenant dissatisfaction.
7. Subpar Property Maintenance
The way your property manager oversees property maintenance can make or break your financial standing. Without a doubt, your units will require repair on occasion. Property management companies that are worth their salt must be capable of organizing preventive repairs and immediately resolving any tenant repair needs.
However, if your property manager doesn’t fix these duties in time, has no system to manage maintenance needs, or is overall incompetent, you will be the one who pays, literally and figuratively.
Botched repairs can incur greater costs later and possibly even make the property worse off than it started, which can weaken tenant retention. As such, a property manager’s failure to make timely solutions is a huge reason you should fire a property manager.
8. Ignorant and Disconnected from Their Industry
The top property management companies are situated right in their service area. This gives them a unique advantage over other companies because they deeply understand their market, have connections there, and know local laws and requirements.
Unfortunately, certain property management companies do not have the manpower to properly manage their units and give their clients the services they deserve.
Smaller property management companies could face a shortage of the resources they need for financial reporting, effective marketing, and in-depth tenant screening. If you find yourself with these troubles, it’s time to get out of your property management agreement.
9. Poor Cost-to-Value Ratio
Profits are the end-all-be-all for rental property owners. It’s how so many property owners make passive income that supplements their wealth and status. Ideally, when you pay property management companies for their services, you should get a return on your investment in the form of more tenant satisfaction, time, and energy.
So, if you have not received the care your property deserves, that may be good grounds to switch property managers. This way, you can make the biggest bang for your buck.
10. Long-Term or Confounding Vacancies
As you know, rental properties are only profitable when they are occupied. As such, property owners need property management companies that can accomplish turnover quickly and assertively shop around for the most qualified tenants.
Because this is so important, property owners should look closely at their property management agreement’s leasing fees. Some property management companies will attempt to attract bad tenants, encourage high turnover, and incur extra fees from their clients.
So, when you choose your company, they should have a tried-and-true marketing strategy with a low failure rate. Their past successes will assure you that properties under their control can flourish.
Terminating Your Property Management Agreement
It can be a necessary, but difficult, decision to terminate your property management agreement with your property manager. This is a delicate situation to handle because your contract is legally binding. So, property owners should be aware of legal landmines and saviors alike.
What is Just Cause?
When you fire a company with just cause, this means the company failed to meet its expectations as outlined in the property management agreement. In other words, it means property owners have a valid, lawful basis for parting ways with the company. For instance, if your property manager mishandles funds when they are explicitly instructed to safeguard them, that could be grounds for just cause of dismissal. You must have just cause for canceling a property management agreement, otherwise the property management company may sue you for breaching it unjustly.
Following the Required Notice Policies
In property management agreements with an early termination clause, each party must stick to notice requirements. Generally, this means all parties must provide written notice between 30 to 90 days before the effective cancellation date. If you don’t adequately follow these terms, you could face a breach of contract claim. Due to that, you should always deliver the notice through certified mail and return receipt before you transition to your new company.
Early Property Management Agreement Termination Fees
Many times, property management companies attach early termination fees to the property management agreement to discourage sudden cutoffs.
These early termination fees could amount to hundreds of dollars or even the entire contract’s worth. Considering this, property owners should think carefully before they go through firing their property manager.
Switch to a Reliable Property Management Company
If you’re looking for a trustworthy property management company with 35 years of experience, 2,000 units managed, and 24/7 service, Professional Property Management of North Virginia fits the bill perfectly. Contact us today to use a property management company that prioritizes customer service.
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