Management co. no contact agreement

[Brandon Obrien]

I'm trying to choose a rental management company for my first investment property. I was told by one company that they have a requirement that the owner cannot contact the tenant.  Its seems odd first to give up the ability to check in on what is really going on with the tenant manager relationship and second I sure would want to be able to inspect. I have not seen their contract yet. I only spoke on the phone. I may meet with them when I fly into FL for more detailed info. They didn't seem open to emailing the agreement to me ahead of time and that seems odd as well. Reasoning being they wanted to explain the details face to face. I would sure like to contact the tenant and find out if the management company is treating them well. Is this common? only thing that comes to my mind is they don't want me to find out if the tenant is not being taken care of. Being my first property I want to know as much as I can about how things are going. Should I even meet with them or move on?

Thanks,

Brandon

[Greg Weik]

Hey @Brandon Obrien, the "no contact with the tenant" clause is reasonable and common.  We have one and we will cancel with a client who does not abide by those terms.  I've been doing this a long time and any client that goes behind our back to talk with the tenant is throwing a wrench into professional property management.  Here's what goes down if the landlord and tenant can talk:

-Tenant tells the landlord how wonderful the tenant is.  Tenant indicates "improvements" they've done to the home and how they want to stay forever. 

-Tenant likely tries to throw PM under the bus - not because PM is doing a bad job, but because the tenant knows that landlord is far likely to be sympathetic to things like late rent, adding a puppy, breaking the lease later, etc.  Tenants often try to pit the landlord against the PM.  

-Landlord may tell the tenant they can do alteration(s) that tenant requested, even though said alterations are high-liability actions, such as repairing a deck, finishing a basement, etc.  The tenant may have convinced the landlord they are a "contractor" and happy to do these things.  The landlord has no idea what the implications are from a legal standpoint, what the lease says, etc.  The landlord just sees "free improvements" and gets excited. 

-Tenant tells the landlord they are going to be late, landlord "forgets" to tell the PM, who has to go post a demand notice and PM has to follow up with the tenant only to find that the landlord "allowed" this lease violation, undermining the property management company. 

There are so many instances like the ones above that I've personally witnessed that it's not worth typing all of them here.  If you want to self-manage, then self-manage.  But don't hire a professional PM company and then try to backend the process by communicating with your tenant. 

As for not providing you with their management agreement, that's very suspect.  They should be proud to send it over to you even without your requesting it.  Transparency is extremely important in the property management world - find a PM who shoots straight and has nothing to hide and who isn't just trying to "sell you" on the spot.