Landlords: How to Deal with a Negligent Property Manager

I have to admit that the words Property Manager cause my heart to skip a beat or two.  Since the beginning of time, the landlord/property manager relationship has been one of trial and tribulation, punctuated by moments of true cashflow actually getting to the landlord.

For first time landlords who choose to use a property manager, the questions they ask and the decisions they make regarding selecting a property manager, will make the difference between their success and failure.

A very intensive discussion over on the BiggerPockets Forum is what got me thinking about property managers: New landlord, problems already, need help!

The story goes something like this… a new landlord hires a property manager.  The property manager claims to be legit, finds good tenants (yeah right), claims tenants aren’t paying the rent, and then it goes down hill from there.

Back in February of this year I wrote an article that focused on hiring property managers, titled Landlords: 8 Tips for Hiring the Best Property Manager.  Please read the entire article and the comments; they are a wealth of information.

While this article might have assisted this new landlord to select a more effective property manager, that doesn’t do much to assist this new landlord now.

The discussions on the forum post above provide a great source of information for any landlord, regarding what to do if they find themselves in a similar situation.  And, while I don’t want to diminish in any way the insight offered via the many posts, there are a few additional recommendations I would like to add to ensure you as the owner/new landlord get control of the tenant and their actions immediately.

How to Deal with a Negligent Property Manager

1. Fire the property manager as soon as you are convinced that they are NOT doing their job.  To do this follow your agreement with the property manager; it BETTER provide very clear guidance on how to get out of that agreement.  Send the notice via both First Class and Certified Return Receipt Requested mail.  Be sure to require your newly fired PM to provide you with all of the files on every tenant they are managing for you.
2. If you are going to take over the management of these tenants, send them a letter identifying yourself as the new property manager.  (You can introduce yourself as the owner, but sometimes it is better to have the tenants believe you are the new property manager).  This letter gets sent First Class and Certified.  Make sure to inform the tenants where future rents should be sent and when those rents are due.  Follow the lease to the letter.
3. If you are going to hire a new property manager, (first be sure to read the article managed above) ensure that your new manager executes just like you expect.  These actions start with number 4 below.
4. Don’t assume the old PM has performed any of their duties.  Everything should be up for review, including total rents paid, all agreements, all inspections, and so on.
5. Schedule an onsite Safe and Clean inspection as soon as possible.  It is imperative that the tenants put both a name and a face with the new manager.  Again, follow the existing lease regarding access to the property.  This inspection allows for that critical first meeting and allows you or the property manager to see the existing condition of the property as well as it gives the opportunity to convey critical contact information to the tenant.
6. If the tenant is behind in their rent take action immediately to inform them that their rent is late.  This would include posting a Quit or Pay Notice and filing in court to commence the eviction process.  If you are unsure how this process works hire a lawyer immediately!
7. Expect the tenants to play you or your new PM against the old PM.  Unless everything is in writing and the tenants can produce properly executed agreements follow the lease to the letter.  Don’t deviate and don’t allow exceptions at this point in time.
8. Remember that your number one task is to fill the vacuum that could exist if your property manager was not doing their job, by letting the tenant know who is in charge and what is expected of them going forward.

One last item: the new landlord who is now getting some fantastic advice on how to proceed on the BiggerPockets Forums has every right to go after the property manager for fraud.  With that being said, I would not recommend that you take that action until… and this is critical… until you are convinced through consistent cashflow that your property is operating at its highest potential. Of course, you’ll need to confer with an attorney to verify that you have standing.

Remember your number one job as a property owner and landlord is to ensure your properties are performing at their highest potential, and chasing down a negligent property manager will only delay your cashflow.

Best of luck!

Photo: Cincy Project

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.