5 Tell-Tale Signs That it Might Be Time to Fire Your Property Manager

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I don’t like firing people.

My initial approach is to try to make it work and bring out the full potential of a person. Sometimes, however, I hold on to a person for too long.

I’ve found over the years that if I’m micro-managing someone then I have the wrong person. Micro-managing means you’re telling someone exactly how you want something done rather than just agreeing on the outcome. You’re repeating yourself and constantly following up. In other words, you’re spending way too much time with someone to get stuff done.

Micro-managing turns you from a passive-income investor into a hands-on investors, and it’s not good for you or for your property.

You and your property manager should agree about the feasibility of your business plan (whatever it is) and your property manager should be able to execute that plan without you telling him exactly how to do it. You should be able to review the key metrics and together adjust your strategy as things change.

However, if your property manager is consistently falling short of your agreed-upon goals, you find yourself micro-managing the manager, or asking for the same thing more than once,  it may be time to consider a change.

Here are the 5 Signs that it Might be Time to Fire Your Property Manager:

Below are the tell-tale signs to look out for. If you see this it may just be that time to walk separate ways.

Sign # 1. Not Meeting Target Goals such as Occupancy, Collections, and Cost Control

If you and your manager agree that your vacancy should not exceed 5% per year and you shouldn’t have more than 2% in uncollected rents and the manager’s performance falls short, then may be time for a conversation, unless there are other factors in play that are outside the manager’s control.

Related: The 8 Reasons Why Using Property Management Is a Waste of Time

Sign # 2: Lack of or Incomplete Reporting

I had a property manager once who gave me owner reports that looked pretty good at the outset, and in truth, I didn’t study them hard enough to make sure they actually did what I wanted them to.

Once we got started, I found myself asking the manager for things like outstanding rent balances by unit or for more explanation of expenses. Because his reporting was not adequate to answer my (what I thought were routine) questions, he had to research these questions and it frustrated him as well as me.

Because this manager was managing primarily smaller buildings, my sense was that his other clients were not as demanding as I was, and that incompatibility became more and more stressful.

Make really sure that the property manager is putting out reports that give you the answers you need without a whole lot of follow-up. If you’re constantly asking for more information because of incomplete or missing reporting, then this is a sign that the relationship could be short-lived.

Sign # 3: Ignorance, Inexperience or Incompetence

This sounds obvious, but many times you can’t tell that your property is ignorant or incompetent until you’re into the relationship for a while.

In the case of my 12-unit, I was dealing with a difficult situation that involved landlord-tenant issues as well as housing code compliance issues. While my property manager appeared to be knowledgeable at the time (at least compared to me), it eventually became obvious that the manager’s inexperience cost me thousands of dollars.

In addition, I listened to bad advice with regards to renting to Section 8 subsidized housing tenants. The property manager was opposed to the idea. I now understand this was because he was inexperienced dealing with section 8 tenants. On the other hand, my new property management company specialized in section 8 tenants, and subsidized housing is the strategy for the part of the city the building is in. It as a major mistake not to rent to section 8 tenants right from the start, a mistake which also cost me thousands of dollars.

Sign # 4: They Don’t Do What They Say They’re Going To Do

I expect people to do what they say they’re going to do or communicate otherwise. That’s it. No more, no less.

I can’t stand it when someone tells me “I’ll email this or that to you by the end of the day”, and the end of the day comes and goes and I get no other communication. The more this goes on, the more aggravated I get, and the more of a red flag it becomes.

Sign # 5: Lack of Owner Mindset

If you boil down Reasons # 1 through # 4 I could generalize that it’s time to fire your property manager when they don’t display an owner’s mindset. While no one is going to care as much about your asset as you, you want your manager to care about it almost as much. You want that manager to behave as if it’s their own building.

Related: 1 Question Every Landlord Forgets to Ask a Potential Property Manager

While on the one hand I don’t like my property manager to also own their own apartment buildings (because they’re likely going to compete with you to acquire additional buildings, and that makes it more difficult to involve them upfront as you evaluate opportunities), I do prefer that my property manager also owns their own multi-family buildings. They generally use the same people and systems for your buildings as their own.

I don’t want my property manager just to meet expectations, I want them to continually push the envelope with the property, and with me. I want them out there coming up with new ideas of how to increase income and reduce expenses. I want them to continually improve their own systems and how they do things.

If I don’t see my property manager aggressively and proactively managing the property it raises a red flag for me.

Conclusion

I think it’s short-sighted to fire your property manager for just one of these infractions (though you certainly could). But the more of these signs you see the more likely it may be time for you to re-evaluate your relationship with them.

I can tell you that if you’re frustrated with dealing with your manager, you’re not achieving your business plan, and you’re spending way too much time “managing” the building, it may be time to pull the plug.

And if you do, and you experience a property management company who performs at the highest level, your life will be like night and day. You’ll have more time to enjoy life and possibly look for more units rather than worrying about the ones you already have.

Was there a time you needed to fire a property manager?

Be sure to leave your comments below!

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About Author

Michael Blank’s passion is being an entrepreneur and helping others become (better) entrepreneurs. His focus is buying apartment buildings by raising money from private individuals. He’s been investing in residential and multifamily real estate since 2005. He is the creator of the Syndicated Deal Analyzer and the eBook "The Secret to Raising Money to Buy Your First Apartment Building".

9 Comments

  1. Peter Silvester on

    Income real estate ownership is for everyone via proper property management.
    Managing income property is NOT for everyone. Attracting quality tenants, screening, on going communications, evictions, remodeling or repairing units is not an easy task.
    With the right property manger you can have a hands-off investment that allows you to keep your day job, sleep at night or travel the world.

    My advise is; Know what your weaknesses are and you will be successful in life.

    DO NOT fire you property manager because you THINK you can do it or you somehow get a inspiration from reading a blog telling you to fire your property manager.

    Be wise, know yourself.

  2. As a property manager, I instinctively strive to be the exact opposite of the terrible traits here. How my properties perform is a direct reflection of my abilities and has been good practice for myself as an investor. Owner mindset is CRUCIAL for any manager, let alone property manager. I know to recognize these things in a good manager but I don’t know if most people who have not previously had any management experience would. You made great points for an investor that hasn’t managed before and is going to entrust their assets to someone else who claims they are good at this thing :)

  3. Good points here.

    I would say you need to keep tabs on your property managers – some more than others. We were burned last year by an unattentive manager out of state. He was vetted by the turnkey company we went through and I called his references (of course one expects stellar reference). Rehab was timely and cost decent. We stepped out of the country, 15 hour difference, no cell phone to call. I didn’t get the traffic reports I asked for, got rent comps that looked like we were slightly overpriced so I demanded the manager to drop rent TWICE. Cost us about 4 mos of vacancy. The new manager reduced to what they felt was market rent and got a tenant within 3 days. Worse, the previous manager didn’t check on our property thoroughly and claimed no fault with moldy water heater closet and adjacent floor damage and cost us HOA fines because trash can was left out. It was as egregious as it gets. The guy sounded professional and was timely for some time and then wrote us off. The turnkey referral company turned out months later was filing complaint against him. I think one reason he wanted to not reduce rents was to not fall short of the proforma he had given us (so he can boast he delivered as promised).

    So the lessons here
    1) even if someone else vetted like a credible turnkey network, their ability to pick winning property managers is still a guess at best.
    2) follow up and keep an eye on managers’ activities/statements especially at the beginning. Look at your expenses and ask for explanations.
    3) demand traffic reports, rental comps. Call other property managers to confirm rents.
    4) hold off signing management agreement as long as possible. In this case they were fixing it up for us and I had pushed them to start promoting asap. I ignored the management agreement… not signing it made it easier to fire and move on quickly without further penalties etc.

    Other lesson:… if they are NOT calling you back and keep telling you they have other priorities (like trees falling due to wet weather, was in eviction court all day– these were the excuses I got from another manager)… set expectations and plan another manager as contingency. After hearing these 2 same excuses a few times, I said I am still paying and taking care of other clients doesn’t help our family. (Yep – we canned this one too).

    Create good relationships – I’ve learned some good things from our managers to use in our self-management. But you need to verify what they are doing and ask why.

    • Michael Blank

      I think you’re right, it’s key to stay on top of the property manager, review their reports and communicate regularly … especially if you’re investing out of area.

  4. These are some good red flags, Michael!

    Realizing that to make real estate income passive, one must have a Property Manager, I have made PM selection of utmost importance.

    I definitely kissed a frog before I found the right manager. My first management company made a habit of showing dirty property with dented drywall to prospective new tenants. They just had the utter inability to have a property sufficiently ready and pleasantly tenantable at showing time.

    You can imagine the type of tenants that would tolerate such conditions. It wasn’t the best character for my properties.

    The PM was promptly replaced and now I have a PM that does more than just collect rent, perform background checks, handle repairs, and manage tenant relations. They communicate well and truly have “vision” for how to increase my Net Operating Income and fulfill my mission of providing clean, safe, functional and affordable housing.

    After a new property is purchased, no one on my “team” is more important than the Property Manager.

    • Michael Blank

      > After a new property is purchased, no one on my “team” is more important than the Property Manager.

      Agreed. The other point is, though, despite your best efforts to interview and hire the “best” manager, sometimes you just don’t know what you don’t know and you only learn these things with experience. So it’s OK to make a mistake, as long as you adjust and learn along the way.

  5. Great topic as we see too many owners wait too long to fire the “bad eggs” in our business.

    Yes, we’re a property manager and no, we’re not perfect, but we don’t think we subject our clients to any of the issues listed in the post.

    Often by the time we’re hired to replace a competitor, an owner’s portfolio is a mess! We shake our heads in disbelief that owners would suffer through all the issues they do.

    Don’t settle when it comes to such a key member of your team that can make or break the success of your investments!

    • Michael Blank

      The challenge from an owner’s perspective is that we THINK we have a completely passive investment and we take our eye off the ball, which is why you see so many portfolios in a mess. Lesson learned for us owners!

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