Property Managers: How Does One Deal w/ the Cruddy Ones
We have all heard the horror stories of terrible property management. I mean, really, bad property management is probably the number one problem in all of America. Overstatement, yeah; but it's just my way of venting frustration. Luckily, I've found a decent one where I invest.
My question basically organically generated as a result of reading a lot of the feedback on the forums to other questions. "My property manager did X, Y, Z....what do I do?" The paramount answer seems to be "fire them immediately and find another PM." Great. However, this brings up a major issue. Firing them sounds simple; in practice, it can be a kick in the pants.
Here's what happened in my situation. I hired a PM. I spent hours vetting them. I interviewed the company's head for about an hour and did some research. I even asked them about the one negative review they had on Google, and I was satisfied w/ their answer. Once I signed, it was like Pandora's box of hell.
1. That guy I spoke with went totally off the radar. I never heard from him again. I was assigned to a few of his minions.
2. They did not readily list the property. It went on their website and the MLS about 2 weeks later.
3. They quoted a high rental price to me and then quickly kept asking to reduce it, ultimately a 25% reduction.
4. I left them a voice message asking if they thought building a back yard fence would increase demand for the property. I never heard back from them about that. They called and said they had a tenant ready. On the day they were to sign the lease, the PM asked when I was going to build the fence I promised. Holy cow! I told them I was not going to build a fence; I asked for their opinion. That tenant walked.
5.Their communication was terrible. I gave them feedback for the whole business, suggesting they contact all their clients who have vacant homes on the market and provide them a weekly update as to the activity on their listings for the week. I also suggested they at the very least return phone calls and emails. The response was golden. This is, sadly, an actual quote, "Your expectations are higher than any of our other clients." Their other clients must be corpses then.
6. When they finally got an application in, they pushed me really hard to accept it. Here's another amazing thing (and tell me if I'm wrong on this one), when they ran the applicants credit, they did not get a credit score. I said that was incredibly suspect to me, since I've run dozens of credit checks myself and I ALWAYS received a credit score back. These folks claimed about 10% of the time that happened. Everything else checked out. So, like a foolish clown, I approved, just to get a tenant in place after they failed for 3 months.
7. The tenant failed to pay. I inquired with them on the day after I normally would send a pay-or-quit. They did not call back. After about a week I finally got a hold of someone at the PM company. They asked me on the 17th of the month if I wanted them to send a pay or quit notice. Wow! I told them to do so immediately and to start the eviction process. A week before court the tenant tried to pay them and I asked them not to accept payment. I did so not because I wanted the tenant out, but because I needed to fire this clown-show of a property management company. After the eviction, I fired them. They took the remaining amount they were to receive per the PM contract from the security deposit.
Question: It seems Realtors (yes, I am one because I don't trust most of them) and PM's have contracts that mostly protect themselves. The contract w/ every PM I have used so far stipulates that if I cancel the contract, they get paid. In essence, what they're saying is, "If we suck at our jobs and do not do right by you, we will make sure we still get paid."
What is the work around? How does one fire a PM without getting screwed? I am very lucky to have a PM now that is doing well for me. However, even he has the "if you cancel, I'm still gonna get paid." He just hasn't screwed me over yet.