The Not-So-Obvious Reason Your Property Management Company is Failing You

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Property managers.

Oh, how many of us love them? (Secret answer — not many!) Why is property management such an often-hated industry? Well, the answer is easy. Because the majority of property managers out there just aren’t very good!

Property managers typically not being the cream of the crop isn’t anything new, and in fact, it is a continuous battle for many real estate investors. I would venture to say that property managers not being good is also a huge driver for why a lot of investors refuse to invest outside of their local market. Quite frankly, I hear you, and I totally get it. For me, investing locally isn’t worth it (no cash flow in Los Angeles, I wouldn’t know how to manage a property any better than even the worst property manager, and I don’t want to see my properties every day), so I end up putting up with property managers, but I do understand why a lot of you refuse to take on a property manager.

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Obvious Causes of a Property Management Failure

A lot of articles have been written on property management, including what to look for in a manager or management company, how to know when it’s time to fire them, or how to know if you are getting taken advantage of by your manager. One of my favorite articles I ever wrote is called “Surviving the Hell We Call Property Management.” I really couldn’t think of a more applicable name for the article…

There are a lot of more obvious things to look out for when dealing with a property manager that may be signs of impending doom. The basic list of these things includes:

  • Nickel and diming you
  • Constantly charging (or overcharging) for maintenance/repairs
  • High turnover of tenants
  • High rate of evictions
  • Hiring expensive contractors for every small fix
  • Lack of communication
  • Not taking care of the property
  • Missing payments

I’m sure I’m missing some, but think of all the obvious reasons a property manager might make the hairs on the back of your neck stand up.

Well, in addition to this list, I want to bring up a less-obvious cause of potential property management failure. The reason I am bringing this up is because I am currently experiencing exactly this issue with the property manager on my properties, and in talking with some folks in the general real estate industry, they all concur that this is actually a huge thing with property management.

A Not-So-Obvious Cause of Property Management Failure

As with any topic I write about, in no way am I trying to imply that doom will always be the result if this happens, but it is something to consider and keep an eye out for if you are ever in the situation of having a property manager run your properties.

Are you ready for it? Can you guess what isn’t so obvious but can still send the quality of the property management on your property down the toilet? (Great pun for rental properties, huh?)

Property managers or property management companies that grow too big.

Let me paint the picture here. My absolute favorite type of property manager is an individual, oftentimes a real estate agent, who isn’t necessarily associated with a property management company but knows how to handle property management (and is licensed, when applicable) and does it well amidst his other work (still likely as a real estate agent). Even if not an agent, the manager works somehow in the real estate industry so he knows the ins and outs, how to work with investors and how tenants work. But he isn’t reliant on the income from managing by itself because, let’s be honest, the margins are horrible!

Related: A Great Property Manager is More Important Than a Great Property: Here’s Why

The reasons I like the individual guy (or gal) manager are:

  1. I love the communication ability. I don’t have to go through a secretary, I always get my manager directly, and we can talk whenever we need to and get things accomplished quickly and efficiently. Most importantly, when I call, the actual manager answers (what a concept).
  2. This kind of ties into communication, but I don’t have to deal with property management software statements. I HATE the statements property management software produces! I have yet to ever see a program that spits out statements that I can even understand (and I have a degree in engineering). I love just good ‘ole fashioned Word document statements, or Excel, or whatever is just easy and simple.

In general, communication and understanding are my favorite aspects of working with an individual. I also feel like when you are more personally tied to the manager, they are more emotionally invested in taking care of your properties. It takes a lot for a manager who is running hundreds or thousands of properties to care much about you personally. But when I develop a relationship with my individual manager, I really feel like that goes a long way and opens up the door for me to give him reason to want to take care of my properties.

Now, the downside of the individual property manager — they can only manage so many properties by themselves, and the problem with that for them is only having a few properties doesn’t pay much. To be in a financially lucrative situation as a property manager, you have to have a very large portfolio of properties. Here is where everything starts to spiral, and this is exactly what has happened to my current manager (in my opinion).

The individual who manages a handful of properties, along with his whatever other kind of work, does such a great job that word starts spreading about how awesome he is. More and more investors call him up, ask him to take on their properties. He does, no big deal, and life continues as normal. Eventually, however, he’s going to end up with more properties than he can efficiently take on by himself.

His first move is to hire a young part-timer to help him with emails and phone calls. She (or he) becomes in charge of getting owners’ statements out to them each month, emailing about maintenance approvals, and taking all the calls and messages for the manager. This sounds fine in theory, but a couple problems start in with this:

  1. This super-nice, friendly secretary knows absolutely nothing about how statements really read or what should or shouldn’t be on them or anything about what the repairs consist of and can’t answer questions about them.
  2. Messages seem to not always get to the manager, which makes the already-frustrating issue of no longer being able to call the manager directly even worse because you start having to chase down the manager yourself.

But it doesn’t stop here. The next wave, once the manager starts taking on even more properties than he was already swamped with, is now it’s gotten harder to push out that many Word or Excel statements each month. So what better for the manager to do? Buy some property management software! As I said before, I’ve yet to meet one statement produced by property management software that was even half-readable.

Here’s the thing with property management software running the statements: Software can’t always explain or account for the real-time issues of tenants and money-flow. A lot of times quirky things happen, and the software just can’t drift outside of its algorithms to accommodate the oddity. I swear, I think property management software has to be some of the least technologically-advanced of all software out there. Maybe there are some out there that are great, but I sure haven’t seen them yet (nor has my current manager apparently). I will say my current manager did get a software program that is significantly better than other ones I have seen, but it’s still horrible when it comes to trying to figure out what is going on with my properties.

With the property management software supposedly running everything, the secretary chick really doesn’t know anything when you ask her! Bunk (yes, bunk, not bank) statements are constantly coming out and causing more confusion (and stress) than good, and then getting any information about what the statement is saying becomes a game of phone chain and phone tag.

So now you have the new, busy manager scenario painted — he’s hard to get ahold of, and you are getting confusing statements each month that you are having a hard time getting answers to. There are some other things that are now happening. That monthly inspection of the property you used to get to make sure the property is still standing bright and shiny and no meth labs have moved in? No more. You’ll be lucky if you even get a notice that your gutters are full! And regardless of whether the property is being inspected or not, things aren’t getting checked on much anymore. This is bad for the condition of your property. Air filters, gutters, trees growing into the front windows… all bad.

Related: Easy Ways Homeowners Can Protect Against Unethical Property Managers


There are two ways to remedy the situation of your property manager sucking because he can’t handle all the business that has been sent his way.

  1. Fire him and hire a new property manager. Take it from me — don’t wait too long or listen to too many promises before deciding to cut the rope. Promises do nothing if they don’t remedy the problem almost immediately, and the longer you wait, the more money (and sanity) you are likely to lose.
  2. Hire an already-big property management company. I’m not suggesting all big property management companies are bad (although I would argue towards the majority). Feel free to interview bigger companies, but if you do, really ask them how they handle the masses. What can you expect for communication, can you see a sample monthly statement, are the inspections guaranteed, etc. Just know going into it how they operate, and decide then if you are down with it. It’s really when you start with someone small who grows big, often quickly and unexpectedly, where the problems with size really matter.

I’ll tell you one thing as I finish this article. The whole reason I hire property managers to run my properties is so I can be headache and stress-free. It’s the whole point! Why else pay someone monthly? My current manager, unlike past bad managers, isn’t costing me any money other than over-charging me on my monthly fee to him — because I have always paid more for the higher-tier services, and now I’m certain I’m not getting jack for higher-tier. But in terms of vacancies, tenant issues, turnovers, evictions — he’s good on that front… which almost makes it harder to ax him.

But I have been stressed for quite a while because of statement issues, communication issues, statement confusions, and now I recently found out one of my properties severely needs the gutters cleaned out, and there is a tree nearly protruding through the front door. I only found this out because a friend drove by the property the other day and let me know, which tells me my manager hasn’t been to the property like he should have been AND that property just turned over and none of those things were taken care of. Sheesh. Nevermind all of the rest of my properties he manages — who knows what condition they are in! Just don’t forget the stress aspect of having a property manager. No amount of money they save you is worth the stress. So don’t settle!

Tell me some good property management horror stories! It will take my mind off having to get rid of my used-to-be favorite manager. And property managers, if you are good, chime in and say so!

Leave a comment, and let’s talk!

About Author

Ali Boone

Ali Boone is a lifestyle entrepreneur, business consultant, and real estate investor. Ali left her corporate job as an Aerospace Engineer to follow her passion for being her own boss and creating true lifestyle design. She did this through real estate investing, using primarily creative financing to purchase five properties in her first 18 months of investing. Ali’s real estate portfolio started with pre-construction investments in Nicaragua and then moved towards turnkey rental properties in various markets throughout the U.S. With this success, she went on to create her company Hipster Investments, which focuses on turnkey rental properties and offers hands-on support for new investors and those going through the investing process. She’s written nearly 200 articles for BiggerPockets and has been featured in Fox Business, The Motley Fool, and Personal Real Estate Investor Magazine. She still owns her first turnkey rental properties and is a co-owner and the landlord of property local to her in Venice Beach.


  1. william d.

    Great article. I own a property management with my business partner and we are bordering on the exact transition you reference in the article. I am going to consciously make an effort to not lose what makes us attractive as we grow.

    From a property manager’s perspective, I think being very clear on what you want in the reports is important. We have all different types of clients. Some want very specific reports at very specific times, such as vacant unit status (i.e., showings/status of turned units) first thing Monday morning. Other clients could care less and just want monthly updates.

    Another driving factor is profitability, we have one client that we bid too low on and their attention and time they require is candidly not profitable or as profitable as other clients. Sure, it is our fault as we bid them but we are definitely not as eager to get them their 3rd quote for maintenance on a $1500 project. This is definitely a strain on the business relationship. I think the lesson is that the deal needs to work for both sides. If you are getting lower price than most of the competition you likely will get lower service in the long run.

    Anyway, I like the article. Gives me something to think about with my own business and how to improve.

    • Ali Boone

      Great feedback William, and I’m glad to hear you are going to tread lightly on how you grow! I think big growth and quick, in any business, can be detrimental if not handled correctly. And i agree on your point about it working for both sides!

    • Dean Simmons on

      You write: …..being very clear on what you want in the reports is important,

      Sorry William, I’m not buying that. First of all, reports need to be straightforward and easily understood by all. If a particular client has specific needs, then so be it.

      Rent is due by the 1st, late by the 5th and eviction papers are filed by the 22nd (or so) … oh an please don’t try to charge me $1200 for an eviction.

  2. William Morrison

    Dang Engineers. (Retired Mechanical Engineer here)
    I had to laugh at your comment on Software, Spreadsheets and Word Documents.
    I have one firm in one state that uses Word Documents.
    The math is never correct. Ugh.
    The small firm I have in another state uses software.
    And yes I have to call to confirm what I think I’m reading.
    But they are excellent at communication and all the things you stated about the small firm.
    The first firm is bad at about all that’s on your list.
    I’ve changed firms several times but haven’t found a good one in that state.

    I wish there was a better way to find evaluations on Management Firms.
    The few sites I have found generally only have a couple posts and those from clients that were really fed up by the time they posted.

    • Ali Boone

      I agree William. And ha, retired engineer (aerospace) here! Well, not retired, more like- quit. But I still have some of my engineering tendencies, for sure! Which is why I’m baffled no one can come up with decent PM software. Oh well. And yep, I hear you on all.

  3. Terrence Arth

    Hi Ali, Nicely said. I never thought of an agent “moonlighting” as a manager but that is a great angle. I just recently started looking at PM’s as I am in the initial phase of buying a small multi-family that I won’t be managing. I read every post or blog on BP concerning PM’s and it always seems to me that property managers are either great or horrible, like there are only a few inhabiting that nether world of mediocrity. And much like your storyline, once the good one’s are “discovered” they grow, unfortunately into poor companies. I spoke to one property manager and asked how often they visit each property as part of their service–meaning included in the price. The silence was deafening. He finally said something like “we visit properties upon owner’s request for a $50 fee. I get it that it is expensive to just travel around a metropolis to see one property but if a route was developed they could probably run a few dozen in a day. I don’t know but I thought every property manager would visit and walk the grounds at least once or twice a year to get a feel for the condition and needs of the property. So call me naive. Anyway, apparently I am hot on the trail to nowhere! Thanx for reminding me that even after selection, monitoring and managing them is of utmost importance and that property management is NOT on the list of check and forget.

    • William Morrison

      Terrence, I’ve asked that same question about frequency of visits.
      I have some experience in the Charlotte and Raleigh area and the question was not foreign to the Management firms I talked to. They visit regularly.

      Not the same answer from my experience in the 270 corridor in Maryland near Washington DC. It’s more along the lines of the response you received.

      Bad news, how often can you change Managers? Not a real question. It’s just tougher in some areas than others.

    • Ali Boone

      Oh, it’s definitely not Terrence. The scary part about it all is truly, in my experience, the fate of your investment lies in the hands of the PM managing the property. Whatever you do, don’t settle! I literally interviewed PMs for an entire year in Atlanta before I found the one that worked. A whole year. And I had similar responses, and some even worse. My favorite one was when a guy told me the reason he charged what he did, after listing out the very mediocre level of service he provided, that something had to fund his office materials and printer paper and such. I was like, THAT’s what my monthly PM fee is going to pay for? No thanks. Unbelievable. Anyway, just keep scouting! You will find one. And don’t settle, whatever you do.

      (what market are you in that you are looking for someone?)

  4. Andrew Syrios

    This is a very good point. We manage in house, but when we have too many construction projects going on a new purchases or are adding too much inventory at one time, our management suffers. It would make perfect sense that that would happen to a property management company that grew too fast as well.

  5. Matt R.

    Good info. I think you laid out the expected challenges for most smaller LLs. I read somewhere anything less than 100 doors it can be hard to find consistant great property management. It is probably a good idea to be ready to self manage at moments notice. With all the online tools, screening, online payemts, cloud software, email, voicemail and digital locks available, it is not as complicated as it was preweb. Some of these online companies specialize in management tools for 10 rentals or less. It is really automated with maintenance tickets and whole 9 yards if you choose those options.

    The time is the issue. They say it takes 4 hours per month per door. I assume that includes everything from sewers to vacancies. If you can find just one good handyman and one good realtor or rep to show the place you are 90% there. Sometimes a handyman can double or triple up on that stuff and more.

    You got to figure tenant selection is key. I used mysmartmove and it works great. You post the ad on craigs and you are up and running. Now I had staff do that at my direction but anyone could do this. The four hour per door part is mostly handyman and general jobs stuff so you cut the actual time way down on your end to phone calls. Especially, since yours is turnkey already. I doubt you will ever have to make a call to a contractor unless something huge comes up. Calling tree trimmers and occasional plumber yes. The landlord assocaition will have a list of known responsible tradesman if anything gets hairy.. or lawyers etc.. The handyman becomes your property checker ace in the hole. At least you will be able to get ahold of the manager anytime:) Then once you find that diamond PM hand it back over. The good news would be you will spend less and make more.. Try it with one maybe and see it goes. Good luck!

    • Ali Boone

      Good info Matt! I won’t be trying it anytime soon, as even only 4hrs/door/month is way more time than I care to spend on my properties. And money-savings wise, it actually cost me more to hire a PM than to not. Let’s say a PM fee on one of my properties is $100/month, that’s $25/hour (assuming the 4hrs/month) I spend on having him run it. Instead of spending that time on the properties myself, I go do my fun side gig of flying airplanes, for example, I make wayyy more than $25/hour. So in fact I wouldn’t be spending money landlording myself…I’d be losing way more! And nevermind the stress of having to do all that. Properties are stressful (to me) and flying is awesome. BUT, good info for anyone in a pickle with PMs, or who want to try their hand at landlording, for sure. Thanks for sharing.

  6. Peter Crisp

    I’m up in Canada but we run into the same thing here. I see great deals that can’t happen because there isn’t a reliable property management firm available, particularly in small towns. I can’t see why a combination of reliable contractors/trades (perhaps an existing handyman franchise system link-up) combined with part-time stringers to take on the tenant management side (e.g. people who are retired and want additional income, or people who want side income in general) and a central website (also virtual / home office based) can’t be sliced together to create a low-cost, high quality property management firm for smaller owners and properties. I’m game to contribute to the idea if someone else out there is because I don’t have the time or background on my own to make this work.

  7. Garrett May

    Great information for me Ali. I just purchased my first rental unit and hired a property manager that my banker recommended. I will certainly keep those thoughts in mind as I begin my real estate investment journey. Thank you.

  8. Jason Miller

    Agreed and rental property software. I hope propertware, appfolio or buildium creators are reading this. I’ve had all 3 from property managers and all three are terrible to read from the owners perspective. I care what I made and what I spent as an owner, not what is a negative cost to the PM company.

    As far as PM companies go, I’ve been burned to the tune of 15k from decent mom and pop PM companies that got in over their heads. I’ve yet to find a PM company I would rate higher than a 7 out of 10. My best luck has been with larger firms, but I set the ground rules going in with a mutually agreed upon and signed set of criteria. Inspections every 3 months, drive by’s at least monthly, minimum tenant criteria, response time to tenants and myself, eviction timelines etc etc.

    • Ali Boone

      Oh, interesting Jason. With the bigger firms, how has communication been with them? That is really the part, it feels like for me, that is non-existent with the big guys. That and they only want to call contractors (like the unnecessarily expensive ones) rather than handymen who do things cost effectively. How has your experience been on those two fronts with them? And if you care to share any of that criteria you lay down?

      • Jason Miller

        I have fired my fair share of property managers. It all depends on how they run their business. I find out who handles my properties and make sure they know who I am. If there is no real structure on who handles what property, I find another firm. If they have a maintenance manager, i work with them on larger items, but mostly its the property manager I deal with. Even with PM, its best to have systems that help you follow up on what you expect them to do. I usually send a quick email to follow up on the key points

  9. Dean Simmons on

    I know this is an old article but I am compelled to leave a message because this topic is very near and dear to me.

    I think the most frustrating thing is the fact that something so simple is being unnecessarily complicated. Rent is due by the 1st, late by the 5th and eviction papers are filed by the 22nd or so.

    Managers should thoroughly screen tenants and record a video of the premises prior to a new tenant moving in. Then, they need to be very proactive. The property must be visited regularly, calls must be answered promptly and reasonable repairs need to be tended to immediately.

    If you run a tight ship, everything falls into place. If things are allowed to “wander” tenants starts bellyaching for attention, owners feel they are being taken advantage of and the manager is stuck in the middle of a bad situation.

    I would manage my properties and have even considered starting a property management company but I’ve decided my dislike for moronic people outweighs my need for a higher income. I’d much rather make less and have my peace and quiet than to deal in the endless sea of excuses, finger-pointing and lies.

    If anyone from Florida is reading this, PLEASE start a decent, simple, straightforward, NO BS, property management company in this state.

    • Jana Hristova

      Ali, I wish I disagree with your post because we own a property management company but I can’t. Real Estate brokerages used to have property management departments because it brought them leads not because of the money. This has changed and we now see brokerages that specialize in property management only.
      When a company grows too fast it may have hard time creating and perfecting all the systems that are needed to thrive and be effective. Unfortunately, if you only rely on property management income only you have to grow fast in order to survive.
      I think that the future maybe in providing only the services that are needed.

  10. Craig Kalucki

    This is unbelievable stuff! I stumbled across this looking to help out Property Managers, as I have a podcast that is geared towards helping the, along with commercial building owners:) They are impossible to get a hold of, and I’m trying to help them. Would anyone on this thread, either as a Commercial Building owner, Residential property owner, or Property Manager want to be a guest on my show, and talk about ways that Property managers can improve the industry?

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