Can I change property managers mid lease?

[Jeremiah B.]

I've found myself in a pickle that I hoping for some guidance on. The long-and-short of it is that we own a property that was recently leased, using a property manager. At this point, we would like to change property managers one month into a 12 month lease, but I'm not sure if I can do so, or how difficult it might be.

As some context, we 6 months ago we purchased a rental property in Portland and decided to try a new (low cost!!!) PM. Getting the place rented was nothing but problems, including many issues that the PM could have managed (poor pictures, incomplete sourcing, very very very few showings, etc.).

When we agreed to try the PM, our contract specified that we would stay with them for 6 months or pay a fee. So, while we seriously considered leaving them 2 months ago, we decided to go another route and aggressively cut the price in exchange for a short-term lease. This would get us out from all contracts/leases in the summer, at a time that we are not 8 months pregnant.

To do this, we cut the price to ~25% below market and explicitly (by email, verified by PM) asked for a 6 month lease. All parties seemed to agree. However, the lease that was presented to the tenant and is now signed is for 12 months.

This is a big deal to us - both for the cost issues (~$250/month in lost rent for 6 months, coming vacant at a bad time, etc.) and trust issues (I don't want a PM that can't create a contract at my instruction, they did a poor job getting it rented, etc.).

We plan to cut ties with the PM. If needed, I feel that we can show a material breech of the contract, though I think that I have annoyed them as well, so I hope that we could find a mutual agreement without demonstrating a formal "breech."

With that said, I've reviewed the lease and that document does not have any statements about changing PM. In fact, the document clearly states that the agreement is between the tenant and the PM, and that tenant owes the PM directly the rents due. Frankly, the tenant has not acknowledged that the PM has the authority to change the administrator of the lease...

Our contract with the PM is also fairly silent on the topic. It does specify that the PM must notify the tenant of the term within 30 days.

My hunch is that the lease is set-in-stone, and barring agreement from the tenant can not be modified to a 6 month lease. But I'm wondering how changing PMs mid-lease works. Will another PM be able to administer the lease? How high is the risk of rents being sent to the wrong person? How disruptive is this for the tenant? Do I have legal recourse to rectify lost rents?

As an aside, the wife and I are 8+ months pregnant, so we do not plan to learn new skills, and hope t avoid getting into a sticky/involved legal battle right now.

What do you think? I welcome any thoughts or advise that you might have.

[Joel Owens]

This is why you never hire a PM based on cheap cost alone. If any investor can take away from this wanting to rent it is that you factor in retail rates for property management when you buy a property.

You may or may not land a great PM at a discount from market rates but the odds are NOT in your favor. I am talking one or two properties that are houses and not big apartment buildings or giving a PM a large portfolio of houses to manage. In those cases the scaling is easier and you can find some quality PM's that give a better contract price for volume.

I would run from PM companies that say they just do it for the money. There really isn't that much money in PM work so you have to enjoy that type of thing. Someone just doing it to pay their bills and get by is also bad answer.

Many part time PM's where there level of interest and commitment dealing with tenants and processes ebbs and flows from quality to crap. I have heard countless stories such as yours from investors across the country. I hope you are able to get your property on back soon with minimal problems.