There are times when a rental property owner (long term or short term) desires to change the property management taking care of their property.
Here are a few keys points you should follow if you are going to be firing a property management company and hiring a new one.
5 Steps to Changing Property Management Companies
1. Explore New Management Companies
The first thing you will want to do if you are looking to change property management companies is talk to other management companies who you might want to hire. A good place to find other management companies is to simply drive around and look at who is managing properties in the same neighborhood and compare how the upkeep of these houses to your current situation.
Another idea is to ask your neighbors who they use to manage their property, or you might want to ask a realtor who sold you the house who they might recommend. After you have at least 2 possible management companies, reach out to them and set up an interview. After the interview process, pick the management company that you are most comfortable with.
2. Review Your Agreement
You will want to review the legal agreement you have with your current management company to see if there are any grounds for immediate termination and to ascertain when the current agreement expires. If you’re happy with the current management company and you are leaving because another company is offering superior services for a cheaper price, then you might want to simply let the agreement expire on its own.
If this is the option you choose, send them a letter notifying them of your wishes not to renew with them; many times these agreements roll over or renew on their own if no notification is provided. On the other hand, if you are really unhappy with the current management company, then you should terminate the agreement immediately. Your rental property is an investment, and any long term neglect of your property can have a detrimental effect on the value of the property. You must realize this is a business, and it is not personnel.
3. Notify the Old Management Company
You can do this either through a letter or over the phone.
If you do it over the phone or in person, also follow it up with a termination letter. Whenever you terminate an agreement, it’s always best practice to have it in writing. In the letter, outline why you are leaving, the actual date you want the agreement to be terminated, and the name and contact phone number of the new management company.
4. Contact the State and Local Authorities
Here in Orlando, all vacation homes are placed under a property management company’s umbrella account for the occupancy tax due. If you are changing management companies (especially here in Florida), you should send a letter to the local county taxing division, as well as the State’s Department of Revenue.
This letter should explain that you are changing management companies, and it should list the termination date of the old company and the start date of the new company. Both of these letters should be sent certified mail with a signature receipt requested.
5. Follow Up
Every 3 months or so, it is a good idea to check on the property and make sure the management company is doing what they are supposed to be doing. If the management company knows you will make unannounced visits to your property, they will do a better job than if they know you will never come by and check on it.
Any time you are looking to make a change, it is hard, and it can be very stressful. One of the things I would consider doing before you simply fire the current management company is to send them a letter explaining your displeasure in their services. This letter should explain in detail what you are upset about, how you would like the issues resolved, and a date by which you would like to have the issues corrected.
A good company will have a representative call you immediately to discuss your displeasures in greater detail, and they should follow back up with you well in advance of your stated deadline. If they do not, then this should send off alarms to you that your business doesn’t mean that much to them.
I would also caution you about signing up with a company just because they offer their services for less money. Sometimes you get what you pay for, and when you are dealing with rental properties, any extended time of neglect can cost you thousands of dollars in the end.
Are you happy with your current management company? Have you ever had to switch management?
Please leave a comment below telling us your company management stories!