I have always wanted to say that to someone and now I finally get the chance to do it! Whooo Hoooo! Well in reality, I’m not actually really going to say those words out loud to anyone, but dag gummit I am going to fire the heck out of one of my current property managers and I am happy to do it!
You see there may come a time in your real estate investing era when you will most likely need to change property management companies. Whether it’s because they are absolutely horrible or for your own personal reasons, it does not really matter. What does matter is how to do it successfully with minimal impact to yourself and your tenant.
Lucky for me, I have the luxury of going through this process right now so I can tell you all about it. I have ended the partnership if you will with one of my property management teams and for good reason. They are horrible! It comes with great pleasure to me to be released from the death grip they had on me and my rental property. Ha, okay maybe it was not that bad and it definitely could have been much worse but if you have paid attention to this blog, you will come to know that I am picky about things and for good reason. I think in order to have a prolonged successful real estate empire, it is necessary to work with the right teams and people who can help you achieve this. And the Property Manager is one of the most important players involved. There are certain must have qualities that a property manager should have and it is important you find one with all these qualities before entering a contract with them. I have also created this awesome property management interview question list so that you can ask all the right questions when looking for a new property manager.
So where did I go wrong?
I knew beforehand what to look for in a property manager and also knew what questions to ask when I interviewed them. The property manager in question came with my 2nd turnkey rental property that I purchased and the turnkey provider was just starting a new property management team. The owner passed my interview list with flying colors but because they were new, could not provide references of existing landlords who were using them. And that folks is exactly where I went wrong. I took the chance with the new property management team. They had answered all my other questions so well and now I feel like I got duped. My line of thought was that if they turn out to be no good then I will just replace them. So that is exactly what I am doing.
So why am I firing my property manager?
Here are the actual reasons why I am choosing to terminate this property manager and have the rental property transferred over to another property management company.
a) Horrendous communication. Out of the 6 or 7 times that I ever had to call the PM, they only ever picked up the phone once. They took days to respond to my voice mails. I normally prefer email communication especially for non emergency issues and this communication was even worse. My first emails would pretty much always get ignored and I always had to send a 2nd or sometimes even a 3rd email just to get a response.
b) They did not look out for my best interest for repairs. This one was quite strange because it is specific to this house. Prepare for my rant. 🙂 On this specific rental property there was a re-occurring plumbing problem with a pipe getting blocked over and over again. After the 2nd time the problem occurred, I specifically contacted the PM by phone and by email letting them know to have the plumber put in a permanent fix. This would entail running camera’s through the pipes to see where the blockage was. I was completely ready and prepared to pay extra to do this just so that I can have the problem fixed for good. Well guess what happened? The problem happened again for a 3rd time, they did not tell me about it and put in another band-aid. Okay great I thought, they just ignored my previous request and sent a repair guy again. What really threw me over the edge is that the problem happened a 4th time and again they did not even attempt to do a permanent fix after the plumber’s invoice specifically noted the permanent fix solution in the 2nd and 3rd invoice. It was after this 4th attempt when I finally decided to fire them.
c) Bad owner’s/tenant online portal. I am all about accessing reports and anything online. It’s so much more convenient for me. These days, most property management companies have cool online sites/portals where landlords can go in and view statements, reports and repairs. Well this PM did have one however they did not maintain it or run it properly. The statements were never made accessible to me and although this is a minor issue, it did not help the cause one bit.
Below are the steps I took for terminating my agreement with the property manager.
How to fire your property manager:
1) Find a new property manager
- Prior to firing your property manager, you will first need to confirm you can find a valid replacement. When doing your search, be completely honest and straight up with the new property manager. The new property manager will play a vital role in making sure the transition goes smooth. It is important you find out what steps and process the new property manager will take during this transition. Luckily, I was able to transfer my rental property to another existing property manager that I have who is a rock star! We worked out and clearly defined the steps needed for the transition which you will see below in step 4.
2) Review the property management contract/agreement
- If you are working with a legit property manager, then you signed a contract prior to going into business with them. In this contract you will find a clause on how to properly terminate the agreement. Make sure you abide by what it says and follow the exact steps needed to do so. In my case, I just needed a written document with at least 30 days notice. Now that you have found a replacement property manager and reviewed the steps needed to terminate the contract, its time to take action.
3) Fire your Property manager
- Now that you have your new property manager squared away and you know how to legally terminate the contract, you will want to perform the necessary steps to fire them. Send a letter/email or phone call if applicable to inform your property manager that it is no longer working out and you are putting your notice in to terminate the contract. Inform them why you are terminating, who the new property manager will be and when the final rent payment will be that they collect. It is important you remain cordial at this stage. You don’t want to piss off your current property manager as they still have control of the property and it would be in your best interest to play nice. After the property is moved over and the tenant is making the new payments to the new property manager, then you can kick and scream to the old property manager all you want. 🙂
4) Coordinate and devise a plan with both Property Managers
- You personally may not have to do much during this transition but it is important you understand exactly how it will go down. For your own peace of mind. These are the kinds of steps involved during the transition:
a) Have your new property manager contact your current property manager to get all the necessary info on your current tenant. Phone numbers, lease, deposit info, etc…
b) Make sure current property manager provides all info to your new property manager and find out when the security deposit will be sent to the new PM.
c) Have your new property manager contact the current tenant to inform them of the new change and provide all the necessary info for the current tenant.
5) Stay involved until your tenant makes the first payment to the new property manager
- At this state you are pretty much done and are just waiting final confirmation that your tenant is making the payments to the new property manager. Make sure this happens and remain in the loop until it is certain the tenant is following the new procedures. It is best if stay on top of this and to not solely rely on the property managers.
Additional tips for firing your property manager:
6) Time the transition at the expiration of a lease.
- It would be easier for all parties involved if you time the switch at the end of an expiring lease. The tenant can then renew a lease with the new property manager and you can start a fresh cycle and paperwork with the tenant. If the tenant decides to leave, it will be easier for the new PM to make the house rent ready, find a new tenant and take care of all the paperwork themselves as they normally do.
7) Understand the costs involved.
- Make sure you know all the costs upfront by the new property manager and also confirm if there are any costs involved with terminating the contract with the old PM. Sometimes they do charge for terminating.
8) Obtain copies of all paperwork.
- Be sure to gather all statements and reports from the old property manager. Once you are done with them, it could be very difficult to get these and these documents in the future and the documents will come in handy when you do your taxes or update your income/expense spreadsheets.
If you follow all these steps then you should hopefully be in a position of successfully transitioning your rental property to a new property management company. Hopefully you will not have to go through this but when you are in the rental property business, it is best to prepare for all outcomes including evictions, late payments, and bad property managers.