Tenant has trouble with payments month #2 after PM took over

[Peter Ceo]

BP-

I turned my property over to property management in May of this year. Took 2+ months to find tenant. Selected tenant is now botching payments in month #2 of lease. 

In essence, PM has managed for 5 months- I have not received a dime. 

Should I be worried? angry? patient with the process? 1st experience working with PM. Thanks so much.

[Nathan Gesner]

@Peter Ceo it's hard to answer the question without knowing your market. Is there demand? Is the PM marketing the property correctly? Are they communicating with you about why it's not renting, what efforts they are making, etc?

Our market took a turn and single-family homes are almost impossible to rent. This has never happened before so I'm explaining to owners why their properties are not renting. If an apartment sat vacant, I wouldn't be able to justify it because they're still renting like crazy. You have to communicate with the PM and see if it's justifiable.

As for the late rent, I hope your PM has policies and procedures in place to deal with the non-paying tenant quickly, professionally, and efficiently.

Do you need a new PM? 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!