How to switch management companies?

[Peter Tavolacci]

Hello Team - what is the best way to switch management companies? We currently have two management companies covering our rental properties and we are thinking of consolidating all into only one of them and halting business with the other but are not sure the best way to do this. We believe it may open us to risk during the transition since the one company may be offended, there are things in their name that would have to switch, and so on. Any advice is much appreciated. Happy holidays!!

[Mike Dymski]

I am currently switching management companies.  Couple of recommendations:

1 - As others have mentioned, check your contract termination terms.

2 - I have seen a very manager-friendly clause in a number of management agreements where the manager is contractually entitled to current and future commissions on leases they fill; so, ensure you don't have that clause or be prepared to negotiate a mutually acceptable termination.

3 - Ensure the surviving manager is ready and able to absorb your additional units right away in case you have unexpected (or current) vacancies or an unprofessional termination

4 - Discuss with the surviving manager the transition plan prior to termination so you are prepared for the exit conversation and plan with the terminated manager

5 - Manage the manager tightly during the transition period as they do not have a vested interest in the performance of the properties

6 - If there are good reasons for termination and you have been managing and holding them accountable, it may not be a big surprise

7 - Be professional and respectful (even if they are not).  Meet them in person for the termination.

8 - As others have mentioned, there are benefits to having two managers (backup, competition, learn best practices)

Switching management companies is no picnic both on a personal and professional level and it gets more problematic the more units you are transitioning.  Many managers work very hard and are good people...some just can't get it done, have different standards or are a better fit for certain types of owners and properties.  Good luck and keep us posted.