Options to deal with incompetent property management company

[Deepak Bhadauria]

Hello, my property management company has not been able to place a tenant for last 3 months. I bought this turn key property in Kansas City, MO, few months back. Property was previously rented but the tenant was evicted because of missing payments. I always get a lacklusture response from the PM company that they are actively marketing the property. They provide no details or insights in why they are not able to find a tenant. I personally feel that they dont care. My contract with them has $1000 fee for breaking early. Also, the property should rent around $750 per month. So it seems reasonable to find another PM company that can rent the property out. But without knowing the reason of not finding a tenant, I am not sure if others will be able to find a tenant quickly. Any suggestions from the experienced investors here?

[Nathan Gesner]

You should also start looking for a new PM. I'm not saying your current one is doing anything wrong, but if they are and you decide to go with someone else, maybe the information below will help.

You can start by going to www.narpm.org and search their directory of managers. These are professionals with additional training and a stricter code of ethics. It's no guarantee but it's a good place to start.

1. Ask how many units they manage and how much experience they have. If it's a larger organization, feel free to inquire about their different staff qualifications.

2. Review their management agreement. Make sure it explicitly explains the process for termination if you are unhappy with their services, but especially if they violate the terms of your agreement.

3. Understand the fees involved and calculate the total cost for an entire year of management so you can compare the different managers. It may sound nice to pay a 5% management fee but the extra fees can add up to be more than the other company that charges 10% with no add-on fees. Fees should be clearly stated, easy to understand, and justifiable. If you ask the manager to justify a fee and he starts hemming and hawing, move on or require them to remove the fee. Don't be afraid to negotiate!

4. Review their lease agreement and addendums. Think of all the things that could go wrong and see if the lease addresses them: unauthorized pets or tenants, early termination, security deposit, lease violations, late rent, eviction, lawn maintenance, parking, etc.

5. Don't just read the lease! Ask the manager to explain their process for dealing with maintenance or problem tenants. If they are professional, they can explain this quickly and easily. If they are VERY professional, they will have their processes in writing as verification that it is enforced equally and fairly by their entire staff.

6. Ask to speak with some of their current owners and current/former tenants. You can also check their reviews online at Google, Facebook, or Yelp. Just remember: most negative reviews are written by problematic tenants. The fact they are complaining online might be an indication the property manager dealt with them properly so be sure to ask the manager for their side of the story.

I hope this basic guide helps. If you have specific questions about property management, I'll be happy to help!