Managing your property portfolio is a time consuming and sometimes tricky business. You may have a hectic home or professional life and therefore running a rental business may be very tricky for you.
Whatever your reasons hiring someone, a good Property Manager is a great way to ensure the smooth running of your business and offer your tenants the level of service that should go some way towards them being happy with their experience and thus extending at your property rather than vacating.
Occasionally however, as with any job some people that you work with just don’t keep up their end of the bargain. A Property Manager not meeting the requirements of their role can really hamper your business and can lead to both immediate and future issues. As such when does it make sense to consider firing them and moving on?
In this article we will discuss why hiring a Property Manager is a good idea and what signs to look for that they may need replacing. Now obviously firing someone isn’t a pleasant thing to have to do, but you have to be conscious of the impact your Property Manager’s flaws may have on the running of your business.
Why Hire a Property Manager?
Hiring a Property Manager (providing they are a good one) adds a huge benefit to the level of service you can offer your tenants. Good Property Managers can potentially save you significant sums of money and help you to maintain the standard of your property, thus keeping the value in the positive column.
On a basic level there are a number of reasons you should consider hiring a PM and in this section we will look at those reasons.
Collection of Rent
Collecting great can be one of the toughest roles that you face as a landlord. Dealing with difficult tenants can be time consuming and stressful. You will find that dealing with multiple properties is quite a skill and requires more from you than you may have previously thought.
PMs will be well versed in dealing with problem tenants, will often have strong systems in place to handle arrears and available legal advisors ready to help when problems do arise. Plus being a company, the tenants may find a PM more intimidating to deal with than just their “friendly” landlord. This also means that rent arrears problems are rarer when instructing a PM to handle your property.
You may simply live too far from the property to offer a good service. You may not know any local contractors or even have an understanding of the area’s rules in relation to rental properties.
It is common that landlords live in different cities or even states to the properties they are renting out and therefore having a local Property Manager who can carry out inspections, deal with contractors and knows the local laws is a massive plus.
If you are not a full-time landlord, it is likely that you have your own professional life to deal with. If you have a particularly stressful or time consuming job you may find that you simply don’t have the time and energy to deal with the issues that commonly arise during a tenancy. Hiring a PM takes the onus off you to deal with the tenants and can give you the peace of mind that your property is being taken care of whilst you are working.
Even if you are a full-time landlord you may find that after a while your property portfolio grows so large that you cannot give each property the time required to ensure the smooth running of your portfolio. As such hiring a PM to work with you exclusively on your properties can offer you the ability to run the day to day business of your portfolio whilst your PM handles the tenancies.
This works especially well if you are planning to increase your portfolio further as you can handle the buying and selling of properties whilst your PM manages your current portfolio and ensures that your tenants are receiving a good level of service.
Property Management firms will often vet their contractors and ensure they meet all of the relevant insurance criteria, plus meet a certain quality standards. This ensures that you are getting the very best contractors to work on your property and aren’t running the risk of employing someone that you don’t know.
PMs will likely have worked with their contractor pool for a number of years and will be able to vouch for the quality of their work. This is a huge benefit when you are having works done, as shoddy work can greatly affect the value of your asset.
You may not feel comfortable dealing with tenants and would prefer to keep yourself out of the landlord-tenant relationship. Having a Property Manager who can handle the relationship for you can add a more professional element to the process and you will find that tenants are often less demanding and problematic when dealing with a company rather than their landlord direct.
You may just want a simple life. You may wish to take earnings from your investments and have the process looked after for you. There will of course be a fee involved with engaging a Property Manager but for a lot of people this fee will be a small issue in comparison to not having to deal with any aspect of the tenancy.
When to Fire Your PM
Sadly from time to time you will come across PMs that are simply not up to scratch. Perhaps your portfolio is too large or they can’t handle some especially tricky tenants that you have. Both are problems and both need to be addressed quickly. As unpleasant as it is there will be times when you must fire your existing PM and move on to one better suited to meeting your needs.
Tenants can be problematic and sometimes you will come across tenants that challenge even the best of PMs. However if you are finding yourself in a situation where your rent is constantly being paid late or missed altogether you need to look at the problem and lay the blame at the feet of the PM.
One of their biggest roles is to ensure you get paid. Most PMs take a percentage of the rent as their salary, so by not getting the rent paid correctly they are even affecting their own pay. If you find that your PM is constantly behind on rent with little reason my advice would be to look for a new PM.
Lack of Inspections
You need to be aware of the condition of your investment at all times and any good PM should be carrying out inspections and reporting back to you on at least a quarterly basis. If you find that this is not happening this is a very worrying sign and needs to be addressed immediately.
Any problems with the property that are not being picked up by your PM could potentially cost you thousands of dollars to rectify if left to get worse. When instructing your PM make sure that they understand that you expect inspections to be carried out regularly.
Dealing with tenants can be tough, but you have a duty of care to them and must look to provide them the best service you can. This will give them more reason to stay on for subsequent years after the first tenancy is up.
A PM plays a major role in keeping tenants happy and should they be ignoring their queries or missing maintenance issues the tenants will soon become frustrated and may look to move elsewhere at the end of their tenancy.
Make sure your PM is happy to handle tenant’s problems and deal with them efficiently and quickly to avoid any problems in the long run. Any time the tenants reach out to your PM they should expect a response quickly and have their issue rectified asap.
Lack of Communication
Your PM is the bridge between you and the tenants and as such will likely have a wealth of information in relation to the property and the tenants. It is fair to expect constant feedback from your Property Manager on any issues or inspections and you should be having a weekly call or email just to update you on the tenancy.
Communication is key to the relationship and you must be made aware of problems or requests as soon as they come in. If you are constantly having to chase your PM for updates on things it is time to call time on the relationship and move forward with a more forthcoming Property Manager.
A huge warning sign is your PM ignoring emails or phone calls from you or flat out ignoring problems. This cannot be tolerated. Your Property Manager needs to be on top of problems and be responsive to both you and your tenants.
If they are ignoring maintenance issues or not responding to problems this is a sure fire sign that you should look to end the relationship you have with them. A good PM will aim to respond to you and the tenants when issues arise and have any problems handled quickly.
Do not accept a PM that turns the other way when problems occur. This could affect the value of your investment, damage beyond repair the relationship with your tenants and cost you significant sums of money if maintenance issues are neglected.
If it becomes clear that you are having issues with your PM you could look to move to a different Property Management firm or you could take over the role yourself. If you are not well versed in what is required of you as a Property Manager my advice would be to avoid this.
But if you feel confident that you have the time, knowledge and skills required to efficiently manage your portfolio you may be able to save yourself some money by managing it yourself.
I would look to ask myself a few questions before taking on the role, as even though you could save yourself some cash in the short term, the long term effects of running your portfolio poorly vastly outweigh the gain of a few dollars of rent each month.
- Do you understand your state’s rules? As a PM you need to be aware of what you can and can’t do in relation to the tenancy. It is very easy to get yourself into legal trouble if you are not up to date with the relevant legislation. Be conscious that this legislation often doesn’t comply with common sense and as such you can get yourself into quite a bit of trouble.
- Do you have the time? If you have a busy home or professional life you may simply not have the time it takes to efficiently manage a portfolio of properties. You must be readily available to deal with any problems that occur and if that isn’t the case a PM may be the better option.
- Do you have the required skills? Some people don’t relish the confrontational aspects of dealing with tricky tenants. You may not be great at organising inspections or maintenance and you may be terrible at checking emails or answering phone calls. You need to be aware that when managing a property you are providing a service and if you don’t possess the relevant skills it may be best to hire someone who does.
Hiring and firing may not be a task that you relish, but it is a necessary part of running a successful property portfolio. You will have to feel comfortable dealing with people and be able to workout if they are not meeting your needs.
Whilst dismissing someone from their role is unpleasant you have to be aware that keeping on an underperforming PM can affect your business massively and as such must be handled.
Whether you take over the role or move onto a different company is up to you to decide, but working with a good, well qualified PM can be the difference between a successful rental business and a failing one. So treat the decision with the care it deserves.