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When Do You Fire Your Property Manager?

With the surge in real estate investing in recent years, many people have moved money into real estate all over the country. This has been especially true of our area and now with Round Rock and Killeen being rated by Entrepreneur Magazine as some of the best places to buy real estate in the nation, the trend is skyrocketing here. More property management companies have been springing up all over Round Rock, Georgetown and Hutto areas as a result, but many of the clients we have dealt with recently have had less than stellar results with other companies they have done business with.

We encourage these clients to realize that just like with any expeniture in life, you get what you pay for. So with an investment as important as a piece of real estate, discount property management MAY NOT be your best solution and can be penny wise and pound foolish. The more cost effective that a property management company is, the odds are that their customer service stance will be less than acceptable to you and there is a larger chance that they may not really care for your property and maintain it by keeping a close eye on it.

Property management is really a thankless job. There are several ways that a property manager can earn themselves a pink slip with their clients. These are:

When the property is NOT financially performing well, and particularly if the performance is below the owner's expectations.
If the operations of the property are not improving year-to-year, it may be time to find a new property management company.
And if the property FAR ourperforms the investors expectations, the job of property management looks easy to the investor and they think that the manager is not needed.

So you can be derned if you do and derned if you don't as a property manager! There are however several things that an owner/investor will sooner or later recognize that they should get from their property management company. These are the real reasons to keep or fire your property manager. They are:

A property management company must always keep their investor clients up to date on market conditions of both the leasing and for sale values of the investor's property. This is just good business and keeps the investor informed about the investment and its value so that they can make wise financial decisions regarding the investment.
Your property management company MUST care for your property as if it were their own. We were asked to list a sell a property recently for a prominent investor in our community. They had the property managed by another company in town and I was appalled at it's condition. It sold for 35% below market price because of the condition of the property. The sad thing about that is they were right her in town and never checked the condition of that property for 16 years of management under the other company. If your property manager does not monitor the condition of your property on a regular basis, write the pink slip now or it will cost you later!
If your property management company has a high turn over rate among the employees, this is a bad sign. Further it doesn't allow you to form a tight relationship with a particular property manager that represents you. Warm up your pen and write that pink slip.
Make sure that they are giving you consistent reports, both financial and condition reports. If they do not provide this, time to move on. Most of these sorts of things may be automated today anyway so it should not be a difficult thing for a property management company to produce for you.

All of these are good reasons to consider a new property management company and property manager. It is a very good idea to start your relationship with the company by outlining your expectations clearly within the management agreement. But also, be realistic with a property manager. They will NOT be able to bail you out if you have a negative cash flow situation due to improper structuring of you deal when you purchased. For this reason it is smart to work with an investor-minded REALTOR when you are acquiring your property portfolio and to have your purchase criteria clearly defined up front so that you don't end up with a property that sucks you dry and you can't sell without taking a loss!

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