Bad Property Management Is a Liability: Here's What To Do To Avoid It

Property management is difficult and time consuming. Which is exactly why people hire property management companies — to make life easier. In theory, that is. 

Not all home management operators are equal and the wrong property manager can end up creating more problems than they solve. If the company breaches their contract or tenant rights, you could end up being sued by tenants for their mismanagement. This makes getting the relationship right an all-important decision for your rental home. 

Learn what red flags to look out for — and how to fix things if you think you’ve hired the wrong property manager. 

Quick Answers:

Can I be held responsible for bad property management?

Poor property management can lead to legal battles, vacancies, and tenant claims — all of which can become costly headaches for homeowners.

How can I get out of a contract with a property management company?

Read the fine print and keep careful records of issues. Documentation can help prove a breach of contract and avoid costly termination fees.

How do I report a bad property manager?

Local city departments and the HUD can be contacted to report misconduct with your rental home. 

Is property management difficult? 

Managing a rental home is not always an easy and straightforward process. It’s like running a business — your home is the product and your customers are the residents who live there. Yet many property managers seem to forget this and the way they deal with tenants leaves a lot to be desired. 

But failing to please a paying resident is far from the biggest problem here. The risk of poor property management can include serious legal consequences. Whether you take the job on yourself or hire a less-than-diligent property management company, common ways that landlords can land themselves in hot water include:

• Violating Federal Fair Housing laws and/or state regulations

• Entering the property without adequate notice

• Failing to disclose hazardous living conditions like mold issues and lead from paint
  
  
• Failing to take action on poor behavior including noise complaints and criminal activity

• Failing to repair damage quickly, affecting the health, safety or security of the tenants

• Refusing to return the security deposit in the statutory time limit or making unauthorized deductions

Any of these violations could result in a legal battle and claims paid to the tenant could wind up being double the damages or more. 

What are the red flags I should look out for?

Frustratingly, the biggest warning signs don’t often appear until after you’ve hired a substandard property manager. But there are red flags that could signal a company that is less than trustworthy. 

If you come across any of these before signing a contract, keep researching your options. If you encounter them as a customer, keep records of their management to protect yourself if you need to end a contract. 

Property management red flags:

Poor communication

Sometimes companies take on more homes than they can handle, which leads to bad service. If your property manager is slow to respond to you or tenants are constantly emailing them about a maintenance issue — this is a red flag. Unhappy tenants are unlikely to renew their lease and leave your home with more vacancies. 

Late payments

When hiring a property management company, you should know exactly what you will be paid in rent and when. Any property manager who can’t keep to this schedule is bad news. 

Late payments could signal that they don’t have adequate bookkeeping practices in place. Or they can’t get tenants to pay on time. We’ve even heard horror stories of companies that use rent payments to float their own expenses, leaving homeowners hanging. 

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Hidden fees

Before signing any contracts, it’s worth finding out how much property management services will really cost you. What services are covered in the monthly fee? It’s common for low-cost services to upcharge for services that you may assume are essential, such as inspections, rent collection, tenant communication, renewing a lease, and support during evictions. 

Unrealistic or over-quoted pricing

It’s easy to be persuaded by the promise of high rental yields. But over-quoting what you can earn on your home is a red flag. Not understanding your local market or pricing homes too high leads to higher vacancy rates, earning you nothing. 

Inflexible or limited hours

One of the things that makes property management difficult and time consuming is that it’s not a 9-5 job. Life at home happens after hours, which is also when residents will need the most support. You don’t need to be on-call 24/7 when handling maintenance requests — but it helps. Problems need to be addressed quickly and someone should always be available in case of emergencies. 

Belong is available 24/7. Not just for handling maintenance requests and not someone who will pass on a message. Belong gives both homeowners and residents access to a dedicated concierge service that is available whenever you need them. 

Learn More: Discover Belong PRO, the best alternative to Property Management in Seattle, Redmond, Oakland, and many more cities across California, Florida and Washington State.

Above-average eviction or vacancy rate

One of the most difficult parts of managing a rental home is finding good tenants. This is what property management companies should do best, using tenant screening to verify employment, finances, references, and weed out potentially bad tenants. 

Before choosing a management company, find out what their history is like for finding (and keeping) residents. You can ask for their eviction rates and success rates to assess how they compare in the market. 

No inspection reports

The only way to know your rental home is in good condition and residents are complying with their lease is through inspections. Without them, you could be in for a surprise when the residents move out. 

How to deal with a bad property management company

Whenever contracts are involved, documentation is your friend. If you believe your property manager isn’t acting in good faith, keep detailed records of their actions. Keep emails, take notes of conversations and record tenant complaints.

This will help you have a conversation with the company about how to rectify the situation. If you need to fire the company, accurate records can help prove a breach in their contractual obligations. This could be the difference between walking away easily or paying costly termination fees. 

Property management is regulated differently from state-to-state. If you believe your property management company needs to be reported, you can contact your local city department in the first instance. 

If you need to take the matter further or believe that the company is acting illegally, you can make a report to The US Department of Housing and Urban Development (HUD). The HUD will perform an investigation to see if a fine or other disciplinary actions need to be taken against the company.   

How to fire your property manager in 5 steps

If you need to end your contract with a property management company, you’ll need to take these steps:

1. Check your contract for a cancellation policy and notice periods
2. Provide records of any contract breaches or tenant complaints if they’ve occurred
3. Provide written notice to end your contract, under the terms you have agreed to
4. Determine if you will self-manage the home or hire new representation
5. Ensure the tenant receives notice of any changes in process and who will be managing the property going forward

Discover Belong PRO: The best alternative to Property Management in Seattle, Redmond, Oakland, and many more cities across California, Florida and Washington State.

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Visit our homeowner's page to find out more about how Belong PRO services are helping people to ditch property management in Seattle, Redmond, Oakland, San Francisco, San Diego, Los Angeles, Tampa, Orlando, Jacksonville, Miami and many more.