How to Deal with a Bad Property Management Company
Last Updated Dec 11, 2022
Working with a bad property management company is risky and can lead to serious issues. Learn how to deal with a poorly run company and what red flags to look for.
When you entrust your investment to a property management company, you deserve a skilled and responsive partner. Sadly, in the wrong hands, your investment can turn into a headache and a cash hemorrhage.
If you fear you’ve chosen the wrong property manager, here’s exactly how to tell and what to do next.
8 Property Management Red Flags
The wrong property manager can end up creating more problems than they solve. In many cases, you will be able to spot the telltale signals before deciding to work with them. Unfortunately, these red flags often don’t appear until after you’ve started working with a substandard property management company. Keep your eyes wide open for these warning signs, and if your property manager exhibits three or more of these, consider a switch.
Red flag #1: Poor communication
In today’s digital world, there is no excuse for flawed and irregular communication. A response within 24 hours is essential. If a property management company is non-responsive early in the relationship, it is likely they will be unable to meet tenant needs when it comes to repairs and other essential services.
If your tenant needs to be constantly emailing to follow up on a broken garbage disposal, you’ve obviously made the wrong choice in a property management company. Unsatisfied tenants are unlikely to renew and may terminate early, potentially costing you thousands.
Red flag #2: Poor knowledge of fair housing regulations
This seems screamingly obvious, but shockingly many property management companies are ignorant about the complexity of federal and state laws that have been put in place to protect the rights of renters and to maintain fair housing situations for tenants. A baseline standard for a property management company is to have a sophisticated understanding of the Fair Housing Act and follow these regulations to make tenants feel comfortable.
If for any reason, your tenant ever feels discriminated against, for any reason, this is a serious problem and can burden you with expensive and emotionally draining legal complications.
Red flag #3: Limited services
If you don’t live near your rental properties, have a large portfolio, or want to off-load the full responsibility to your property management company, it is essential that you choose one that has a full range of property management services.
Drill down deep into what services a management company provides and what tasks they will do for you: tenant screening, maintenance, repairs, and rent collection. Be sure to clarify what is included in your rental management fees as well; many property managers offer robust services, but charge extra for services that you might expect to be included.
Red flag #4: Above-average eviction rate
The hard truth is that one of the most difficult parts of being a landlord is finding good tenants. The best property management companies employ a thorough tenant screening process, using checks, referral checks, and employment verification to weed out potentially bad tenants.
Before choosing a management company, interrogate them about their capabilities in screening new tenants. You should also ask, directly, what their eviction rates are and compare it to the state’s average.
Red flag #5: High vacancy rate
High vacancy rates are another sign of failure. It could be that the property managers are overpricing properties to attract homeowners (while putting off residents), or that they’re not offering good value in terms of marketing and advertising.
High vacancy rates are not an issue for Belong, we enjoy 66% less vacancies by providing:
- Thorough screening of all applicants to reduce the likelihood of eviction or break-lease situations
- Industry-leading marketing and advertising, including virtual and 3D tours of the home and automated integration with top listing sites such as Zillow and Zumper
- Accurate pricing for the market, ensuring you are priced competitively for the local area and real-time demand for your home
- 24/7 concierge services to residents, ensuring they can always contact someone quickly and easily
- An in-house team of expert tradespeople who can solve maintenance and repair issues efficiently
Red flag #6: Limited hours
Renting is an around-the-clock service. So a leading-edge management company must offer 24/7 support.
Of course, not all issues need immediate attention, but the problems need to be triaged, with emergencies addressed promptly. If the company you are using doesn’t have someone available outside of regular business hours, that should be the end of the conversation, full stop.
Belong is available 24/7 — and not just with someone who takes notes, but with a concierge who can activate an emergency response immediately.
Red flag #7: Late payments
At Belong we hear many stories of property management companies that seemed fine, until the rents were due. This could be a sign that the company isn’t able to get the tenants to pay on time, or perhaps that there are poor bookkeeping practices in place. Or equally devastating, it could be a sign that your property management company is struggling itself, and is using rent payments to float their own expenses.
Any of these reasons is a sign you should start looking for a new property management company, pronto.
How to deal with a bad property manager
If any of these waving red flags are distressingly familiar, you have three ways to deal with them:
1. Negotiate a better position
Have an honest conversation with the management company to see if there is a solution. Make a list of the pros and cons of continuing to work with the current company to decide your next step.
2. Fire the property management company and take over
If the cons are more than you can handle, then it may be time to find a new company or take on the role yourself.
If you have the time and energy to take on the responsibilities and accounting related to managing your properties, then this could be the route for you. But in Belong’s experience, this is not always a long-term solution for anyone other than those who have time, patience, and skills to take this on.
3. Switch to a new property management company
If self-management isn’t for you, it’s time to find a replacement that will meet your needs. Your hard-earned, bitter experience will make you savvier about the standards your new property manager will need to meet.
5 legal consequences of discrimination and negligence
Beyond failing to satisfy a tenant, the downside of a property management fail includes serious legal consequences:
- Violating Federal Fair Housing laws and state housing regulations by discriminating against potential tenants or violating other rules
- Entering the property without notifying the tenant
- Failing to disclose hazardous living conditions like mold issues and lead from paint. This could lead to tenant claims of serious medical issues
- Refusing to quickly repair damage to the property that may affect the safety and health of the tenants
- Refusing to return the security deposit in the statutory time limit and making illegal deductions from the security deposit
Any of these violations could result in a legal battle and claim paid to the tenant for double or triple the damages.
How to file a complaint against your property manager
While each state regulates property managers in different ways, you can respond to a really bad apple by filing an official complaint with the following organizations:
- The company itself, motivating them to attend to your concerns and issues.
- The Better Business Bureau (BBB), who provides trusted ratings to consumers and other businesses. While this will not result in direct consequences for the business, it will warn other consumers in a public, reputable forum that there is a documented issue with the company.
- The US Department of Housing and Urban Development (HUD). The department will perform an investigation into your issue to see if a fine or other disciplinary actions need to be taken against the company.
- The City Department related to where your property resides. Failure to comply with city regulations can result in a company losing its business license.
How to fire your property manager
If you are ready to move on from your current property manager, you will need to take a few steps before kicking the company to the curb. First off, give notice according to your contract; most will require a 30, 60, or even 90-day notice.
Sometimes a company will also only allow termination after cause, which is why it is important to understand what constitutes a breach at the beginning of a relationship, and keep careful records. Depending on your contract, you may have to pay a termination fee unless you can prove a contractual breach. Make sure to have all communication in writing.
Once you make a change, let your tenants know who will be taking over, and how the tenants can contact the new company. This is an opportunity to reaffirm your commitment to your tenant’s satisfaction.
No need to go into detail, but feel free to collect tenant complaints if they were unsatisfied with the management company so it doesn’t happen again with the new company.
Post-termination, make sure to collect all documentation and paperwork the company kept about your property. They should have kept a record of security deposits made, lease agreements, and repair and maintenance expenses.
Ditch traditional property management and Belong instead!
If you are a homeowner looking for someone to love your home as much as you do, we invite you to join Belong. Belong provides a home management experience that is technology-enabled, with a human heart. Learn more and see if you qualify here.
About the author
Mel Kershaw is a Content Lead at Belong. With an extensive background working with technology companies including Eventbrite and Yelp, she’s always looking for ways to create educational and informative articles that simplifies tech and solves problems for her audience.