Best practices to change a property mgmt company (Huntsville, AL)
Hi, I am considering changing my property management company. I reviewed the PM agreement and also talked to him. The catch is that once they get a tenant in, they are entitled to receive property mgmt fees for as long as the tenant stays there. I can see the logic: the PM company does all the showing, tenant screening etc, and incur costs. They don't make any money from these activities. Once the tenant is in, that's when they start making money. But there must be a way out?
Any advice on how you have changed the PM company while their tenant is occupying the house?
Nav.
Negotiate a better agreement next time. I too was caught up in a PM nightmare of fees and recently did a pay out (as to the specifics of my agreement) to get out of the contract. My agony was paying a months rent for each property as a "cancellation" fee.
Yes, I read the contract prior to signing and I "thought" I understand the ramifications at the time. Now, I know better. EVERYTHING is negotiable!
You may have to feel the pain to get away from them but at least it won't be for a long while. Hopefully, your lease agreements are coming due soon and are not a 2yr or 3yr term as some have for tenants.
Are the terms of your lease(s) coming to an end soon? If your tenants don't renew, or better yet you can not renew their lease and it would absolve you of your PM.
I decided to cut the cord and pay the fee to get out. Services greatly declined and the fees stayed the same. They were also unwilling to negotiate and it was killing my business.
Yes makes sense. That's a learning - to negotiate the PM agreement next time.
My first tenant lease should be 1Y, and the second tenant is not yet in (the property is a duplex). Looks like if I have to cancel the agreement now, I will have to negotiate a cancelation fee.
Thanks @Daria B.
I went to an attorney to get a 2nd opinion other than my own and he gave me some advise based on the "wording" of the contract. He even said some parts were vague, I think purposely done by the PM.
For the 2nd tenant, if they have not finalized the paper work yet, can you get another PM to manage that side of the property? Just a thought.
Your 1st tenant, are you saying they have a year from now and was just placed?
How long have you used this PM? For what ever your reasons on firing them, the next one you may want to take time to talk to a few to see how negotiable they are and know what you want before you talk to them.
Thanks @Daria B. I think having 2 PM's for 2 units might require too much coordination. The first tenant started on Jan 1st.
I agree that I should take some time to talk to a few PMs before I finalize anyone.
I see. yes, if they were just placed and depending on the wording of your contract you may need to wait til the lease expires.
The coordination between managing property would be the same as if you owned separate units and had another PM managing that property.
Prior to getting out of the last PM agreement, I decided to hire another PM when I purchased future property IF my existing properties were still under the 1st PM. So in essence, my properties would have been managed by two companies. I have SFR properties. Even if I had duplex or a quad, it could still be done because it's per unit. But yes, it would mean breaking up the units to 2 PMs.
I decided to not wait and severed my agreements and pay the cancellation and am still looking for my next property. The nice thing is that when I do acquire it, it will go to the new PM that would have been the PM of choice.
Good luck wit your decision.