Changing PM is going to be expensive

[Zach Adams]

Good morning BP Nation - 

I'll try to be succinct with this post.  I'm changing PMs because I'm incurring non-stop maintenance and have had issues with tenant turnover, and a decrease in quality of tenants.  My current PM is an agent too and now that the market has turned around, I think PM is an afterthought.  He's already told me that he's gone from 90 to 30 properties - I see the handwriting on the wall!

So I've networked on here and found a PM that only does management.  The references of existing clients seem to be good.  They've got a handyman for small stuff but sub out anything large (HVAC, plumbing, etc).  I read my existing PM management agreement and I will owe them 1 month rent upon termination.  I have 2 properties at ~$1200 rent/ea.  

Here's where it gets tricky.  1 of the properties is in the process of getting a new tenant.  Existing tenants are leaving but it's not vacant yet.  I expressed my displeasure with this turnover to my existing PM (who takes a full month's commission for new tenant placement) and he agreed to waive the commission and I cover the marketing/placement expenses.  I don't know what this will be, maybe $300-400.  

I told the new PM about this arrangement and told him I'd like to get the new tenant in for the least amount of money (he too will take a month's rent for commission of placing new tenant).  He understood why I'd want my existing PM to place for a much less amount.

Scenario 1:

Property 1 has tenants in place and I'd pay the existing PM $1265 (rent) to get out of that one. Property 2 has tenants on the way out and I'm going to pay existing PM $300-400 (mentioned above) to get new tenants and then turnaround and change PMs, incurring $1200+400 = ~$1600. Total gross loss = $2865. Total net loss (2 x PITI) = $1370. This doesn't assume turnover maintenance.

Scenario 2:

I terminate immediately and let new PM place tenant.  By being upfront with existing PM about leaving and not having him place tenant (and turning around and firing him), maybe we can reach a deal? Also, the new PM will take first month.  

Scenario 3:  

Stay put with existing and hope things settle down.  

I don't see anyway around it, I'm going to have 2 months vacancies when I switch.

Any feedback would be appreciated. 

Zach