Difficult Property Management company

[Preethi S.]

Hi there,

I have an investment property in Atlanta and over the past year, the property had major challenges due to squatters. Though my property management company eventually took care of the eviction proceedings and repaired the property to prepare for a new tenant, I feel they were negligent in their duties. They've especially been inconsistent in their communications and sometimes respond to messages only after I press them for an answer (sometimes they are responsive). Needless to say it's been difficult and I've wanted to sue them. I consulted with a real estate lawyer a few times this year who said it's very hard to sue for negligence and they advised against taking legal action, especially since the property manager at least followed through on the eviction and repairs.

I've now asked the property management company to apply a $4k credit for all the challenges I've had working with them. Not sure it will come through but I wanted to check in this forum how others have handled issues with incompetent property management companies.

Thanks,

[Nathan Gesner]

Two years ago I had an open-and-shut case of negligence against a CPA. I wanted to sue them for $27,000 and couldn't find any attorney to take it on. These are good attorneys, one of them even spent over 45 minutes on the phone talking to me about options, as well as a personal discussion about fishing, so he clearly wasn't trying to dismiss me.

If you have a case, you can file a complaint with the state commission. They will investigate and see if any rules were violated. If the property manager feels guilty or wants to make the problem go away, they may negotiate a settlement with you. But it's a risk.

If the PM is that bad, I suggest you do some research and find another manager.

Remember: cheaper doesn't mean you'll make more money.

Start by going to www.narpm.org to 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. You can also search Google and read reviews. Try interviewing at least three managers.

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

2. Review their management agreement. Make sure it explicitly explains the process for termination if you are unhappy with their services, 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 6% management fee but the extra fees can add up to be more than the other company that charges 10% with no additional fees. Fees should be clearly stated in writing, easy to understand, and justifiable. Common fees will include a set-up fee, a leasing fee for each turnover or a lease renewal fee, marking up maintenance, retaining late fees, and more. 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, particularly if you have a lot of rentals.

4. Review their lease agreement and addenda. Consider 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, late rent, evictions, turnover, etc. 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 policies are 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. A tenant complaining online might indicate that the property manager handled them appropriately, so be sure to ask the manager for their side of the story.

7. Look at their marketing strategy. Are they doing everything possible to expose properties to the broadest possible market? Are their listings detailed with good-quality photos? Can they prove how long it takes to rent a vacant property?

This isn't inclusive but should give you a good start. If you have specific questions about property management, I'll be happy to help!