Terminate contract with property management
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Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
4yQuote from @Anna L.:
The PM Agreement should include instructions for termination notice, along with any potential fees. If it doesn't, then you're pretty free to do what you want. I would be very clear and don't leave anything open for misunderstanding.
Give them 30 days notice of termination, a specific day and time. Instruct them to:
1. Notify tenants of the pending change, in writing;
2. Transfer the deposits to you, separate from any other income owed you
3. Make your final owner payment
4. Send your final owner statement
5. Transfer all tenant documents and communication records: applications, leases, payment ledgers, addenda, emails, texts, etc.
6. Transfer all spare keys and any other personal property belonging to you
If they attempt to fine you for terminating, push back and let them know this is an "at fault" termination and you're not paying a penalty when they failed to perform. If they push back, threaten to file a complaint with the State commission and that will typically get them to back down.
At the same time, send a letter to the Tenants so they know the change is coming. Your letter should include a specific transfer date, time (e.g. "Management will transfer to me at 12:01 AM on September 20, 2022"). Provide them with clear instructions on how to pay rent, communicate with you for ordinary questions or concerns, and how to deal with emergencies.
The DIY Landlord Book4.7248 Reviews
27 Replies
- 4yBjorn AhlbladPro MemberInvestor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
@Anna L. My contract did not have termination spelled out either, I gave them a 30 day cancellation.Then iInformed the tenant with new bank info for ACH, and we amended the lease which I got from the PM. I already had the security deposit in my own account. It all went pretty smoothly. All the best!
- 4yAnna L.Twin cities, MN · Member since 2021 · 24 posts · 4 votesOP
Thank you for your response.
Do you manage the property by yourself then?
How do you handle the late fee?
When you need to ad your property for rent, how do you screen the tenant?
- 4yTheresa HarrisPro MemberMember since 2019 · 15k+ posts · 11k+ votes
Give them 30 days' notice if the contract doesn't specify anything. You need a copy of the lease and the deposit transferred to you. Let the tenant know who to contact in case of problems as well as who to pay the rent to.
- 4yBjorn AhlbladPro MemberInvestor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
@Anna L. We had a local PM manage OOS properties when we lived in Ca. We retired and moved to where our rentals are (PNW) and no longer needed the PM. Yes we manage out own properties and we screen our own tenants. Credit and BG screening is done by the LL association we belong to.
I have never liked late fees, they are more of a pain than collecting rent on time in the first place, and for a pittance. Our tenants are mostly MTM and if they start paying late they will get a 30 day notice of non-renewal and they know that.
The problem we found when we invested OOS was inspections, if they get skipped you have no clue what is going on. Good luck!
- Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes4y
Quote from @Anna L.:
The PM Agreement should include instructions for termination notice, along with any potential fees. If it doesn't, then you're pretty free to do what you want. I would be very clear and don't leave anything open for misunderstanding.
Give them 30 days notice of termination, a specific day and time. Instruct them to:
1. Notify tenants of the pending change, in writing;
2. Transfer the deposits to you, separate from any other income owed you
3. Make your final owner payment
4. Send your final owner statement
5. Transfer all tenant documents and communication records: applications, leases, payment ledgers, addenda, emails, texts, etc.
6. Transfer all spare keys and any other personal property belonging to you
If they attempt to fine you for terminating, push back and let them know this is an "at fault" termination and you're not paying a penalty when they failed to perform. If they push back, threaten to file a complaint with the State commission and that will typically get them to back down.
At the same time, send a letter to the Tenants so they know the change is coming. Your letter should include a specific transfer date, time (e.g. "Management will transfer to me at 12:01 AM on September 20, 2022"). Provide them with clear instructions on how to pay rent, communicate with you for ordinary questions or concerns, and how to deal with emergencies.
The DIY Landlord Book4.7248 Reviews - 4yAnna L.Twin cities, MN · Member since 2021 · 24 posts · 4 votesOP
- Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes4y
Quote from @Anna L.:
That's kind of you to say. My contact information is in my signature if you ever want to look this direction or if you are passing through and want to meet for a coffee or stiff drink. ;)
The DIY Landlord Book4.7248 Reviews - Rental Property Investor · Orlando, FL · Member since 2017 · 56 posts · 33 votes4y
@Anna L. I am looking for a PMC company in Memphis too, to replace the current one that we tried for 1.5 year and is hurting our business since. I believe for similar reasons to yours.
Would you mind sharing the company's name you are moving away from, just so I don't make the same mistake and end-up going with them.
thanks in advance.
- 4yAnna L.Twin cities, MN · Member since 2021 · 24 posts · 4 votesOP
I am using the Adv****** PM company and not happy with them.
You may need to search and find good PM company.
I found one general contractor recently, you may interview with him if you want.
- Member since 2020 · 28 posts · 9 votes3y
Could I ask what pm you are replacing? I'm looking for a new manager, rather not make the same mistakes I have with current manager. They actually told me things that they do, like inspections, that they do not do unless I ask multiple times and then they still don't do them. Until now, my rentals get annual inspections minimum and better - every 6 months. I have found so many things in inspections. DM if you don't want to post the name of the company. I'll let you know who I'm leaving as well.
Thank you @Anna Lee I know which pm you are talking about.
Lisa
- Memphis, TN · Member since 2022 · 40 posts · 17 votes3y
Anna Lee...I know you may have lost faith in finding a good PM company and I can understand why - but they do exist!!!! I hear so many horror stories like yours and just cringe inside. When small PM companies that are local don't have national resources and manpower to help investors (like yourself) - they will find ways to charge you for every little penny that they can find. Having an entire team of Real estate and PM professionals backing you with your investment makes all the difference in the world. You deserve a good partnership! I would love to connect - just let me know!
- Member since 2020 · 28 posts · 9 votes3yTerez,
Quote from @Terez Jones:
Anna Lee...I know you may have lost faith in finding a good PM company and I can understand why - but they do exist!!!! I hear so many horror stories like yours and just cringe inside. When small PM companies that are local don't have national resources and manpower to help investors (like yourself) - they will find ways to charge you for every little penny that they can find. Having an entire team of Real estate and PM professionals backing you with your investment makes all the difference in the world. You deserve a good partnership! I would love to connect - just let me know!
Does your company place a lock box on the property for prospective tenant showings?
Lisa - Memphis, TN · Member since 2022 · 40 posts · 17 votes3y
Quote from @Lisa Waldman:
Terez,Quote from @Terez Jones:
Anna Lee...I know you may have lost faith in finding a good PM company and I can understand why - but they do exist!!!! I hear so many horror stories like yours and just cringe inside. When small PM companies that are local don't have national resources and manpower to help investors (like yourself) - they will find ways to charge you for every little penny that they can find. Having an entire team of Real estate and PM professionals backing you with your investment makes all the difference in the world. You deserve a good partnership! I would love to connect - just let me know!
Does your company place a lock box on the property for prospective tenant showings?
LisaHey Lisa,
Yes ma'am...we use Tenant Turner with great success. Do you have a preferred method or does it matter?
- Member since 2020 · 28 posts · 9 votes3y
Terez,
It matters a lot. Having been in this business many years & shown property myself most of those years, there's a lot missed by skipping this step. Cost for owners is not much less by having boxes so there's not enough benefit and more concern/liability for owners about squatting and theft during vacancy. Most people would not steal but there are enough that would. Managers are moving to them as a cost and time saving measure for their business. Prospective tenants complain about them being glitchy as well as no one in person to answer questions. Wish I could say they will be short lived but the ball is in the manager's court
- Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes3y
@Anna L., Mr @Nathan Gesner is spot on per usual, so I will not waste time reiterating what's already been perfectly laid out.
I would add some advice for any potential self-managing going forward. I suggest checking out the free info on Landlord and tenant rights and responsibilities from MN Atty. Generals office at https://www.ag.state.mn.us/con... While a property may be in a different market, MN is one of the strictest of markets for Landlords, meaning what a person can learn and gain from proficient operation and measure of protection in MN market for a landlord, will almost certainly apply elsewhere.
The MN guide is updated every year and it's got very good info for all sides, it's not just pro tenant, it's pro contract law if anything. Success starts with good tenant placement and is assured with a good thorough contract. You'd be shocked how many PM's use a sub-standard lease.
Step 1 to self-managing is having commanding knowledge of all the applicable laws and statutes. Keyword is "all".
- Investor · Miami, FL · Member since 2015 · 1k+ posts · 390 votes3y
Anna, honestly, I think that if you take the time to outline all the issues you are having with the manager, confront them, and just ask them to terminate the contract, they may simply concede as a good business decision. Clearly, as you stated no good business decisions are being made, so the logic tree ultimatley goes to my first statement sounding like a waste of time, however, I think even the worst landlords know when they may be in the wrong and willing to concede. The next few questions you placed, will somply be more complex to solve, most important is not only the money being collected, but also making sure you stay in compliance with the municipality, this could mean many or very few administrative items. Good Luck on your journey!
- Memphis, TN · Member since 2022 · 40 posts · 17 votes3y
Quote from @Lisa Waldman:
Terez,
It matters a lot. Having been in this business many years & shown property myself most of those years, there's a lot missed by skipping this step. Cost for owners is not much less by having boxes so there's not enough benefit and more concern/liability for owners about squatting and theft during vacancy. Most people would not steal but there are enough that would. Managers are moving to them as a cost and time saving measure for their business. Prospective tenants complain about them being glitchy as well as no one in person to answer questions. Wish I could say they will be short lived but the ball is in the manager's court
Lisa,
You make some great points. The issues that you mentioned are valid and we have gone above and beyond to address and solve them. Our team, we check vacant properties regularly to make sure we don't have squatters. We require potential tenants to have a DL and credit card on file - just incase there is damage to the house. We moved to our new lock box company because the old one had glitchy equipment. We have an A plus leasing team that are absolute rock stars when it comes to customer service. I know sometimes the ball gets dropped, but there are companies out there (like my company) that are not only trying...but doing it right. I would love to connect one day. tj
- Member since 2020 · 28 posts · 9 votes3yTerez,
Quote from @Terez Jones:
Lisa,
You make some great points. The issues that you mentioned are valid and we have gone above and beyond to address and solve them. Our team, we check vacant properties regularly to make sure we don't have squatters. We require potential tenants to have a DL and credit card on file - just incase there is damage to the house. We moved to our new lock box company because the old one had glitchy equipment. We have an A plus leasing team that are absolute rock stars when it comes to customer service. I know sometimes the ball gets dropped, but there are companies out there (like my company) that are not only trying...but doing it right. I would love to connect one day. tj
It's really good you all request credit cards also as I'm finding many pm"s are not. Not having cc gives the owner no protection. When it comes down to it, owners are liable for many decisions we have little control over. Trust in pm is so important.
If it weren't for the lock boxes I'd call you but will keep you in mind.
Lisa - Memphis, TN · Member since 2022 · 40 posts · 17 votes3y
Lisa, you defiantly know what you are talking about because that is a very very true statement... "owners are liable for many decisions we have little control over." - but when you have the right partner...that liability risk can become almost non existent! Not saying that problems won't come, but with smart management, smart maintenance, and a smart team backing you...we will get the ball across the goal line! With the lock boxes... all I can say is that we have been very successful with them and we are always working to improve and make our processes better. Thanks for keeping me and my team in mind...hope to connect soon!
- Real Estate Broker · Memphis, TN · Member since 2020 · 202 posts · 203 votes3y
@Anna L. how far are you from Memphis? Unfortunately, property management is one of the hardest parts of your team to find. Sometimes, even if they start off amazing, the company grows and the quality decreases. Out-of-state investors are sometimes the last to get priority and the first to be taken advantage of given the proximity.
Depending on the area, managing from a distance in Memphis won't be an easy feat. I'd recommend networking as much as you can with others who invest in Memphis. That will be your best chance of building the right team if you are not going to look for another property manager. All the best!
- Real Estate Broker · Memphis, TN · Member since 2020 · 202 posts · 203 votes3y
@Lisa Waldman would you be happy paying a higher management fee (10-12%) for a "personal touch" property management company, or would you rather pay 7-8% to a company with systems in place to increase efficiency? Just curious your thoughts.
There are likely some smaller companies/people who manage 100 or so units that would have the personal touch, but they'd obviously be harder to find!
- Member since 2020 · 28 posts · 9 votes3y
Quote from @Reed Rickenbach:
@Lisa Waldman would you be happy paying a higher management fee (10-12%) for a "personal touch" property management company, or would you rather pay 7-8% to a company with systems in place to increase efficiency? Just curious your thoughts.
There are likely some smaller companies/people who manage 100 or so units that would have the personal touch, but they'd obviously be harder to find!
It looks like I've found a manager. They actually answer their phone, and we seem to be on the same page. They are more $ but that's ok for peace of mind that my tenants and properties are being looked after. And as you said above, I found them by talking to another investor. BTW, I haven't found any managers that charge 7%. 8-9% with added fees seems to the norm and probably is compatible with 9-10% in the end. I didn't find any companies that had 100 doors. It's pretty difficult to find a good manager in Memphis, but I've looked in a couple other states too and seems to be similar. Many have gone to self show lockboxes, so that eliminates a lot companies for me. I talked with one manager that admitted that they were having growing pains, and were in the midst of restructuring. I can see how restructuring for growth may be something that needs to happen regularly. That's probably one of my current manager's issues, that they just can't keep up.
- 3yDrew SygitBusiness MemberProperty Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
@Lisa Waldman self-showing issues are typically a reflection of the overall standard of service any PMC offers.
A below average PMC will approach self-showings the same haphazard way they approach the rest of their services and have issues.
Regarding theft, vandalism and squatters - they occured before self-showings became popular. We've not seen any difference in their frequency since we went to self-showings.
@Terez Jones what did you use before Tenant Turner?
Logical Property Management4.9451 Reviews - Memphis, TN · Member since 2022 · 40 posts · 17 votes3y"Rently"
Quote from @Drew Sygit:
@Lisa Waldman self-showing issues are typically a reflection of the overall standard of service any PMC offers.
A below average PMC will approach self-showings the same haphazard way they approach the rest of their services and have issues.
Regarding theft, vandalism and squatters - they occured before self-showings became popular. We've not seen any difference in their frequency since we went to self-showings.
@Terez Jones what did you use before Tenant Turner?
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