Leaving a property management company.

[Jose Remor]

Hi all,

I'm new and found the bigger pockets after reading "How to Invest in real estate" book from Brandon and Josh. Very good book, thank you both for writing it!

I started long ago with no education in real estate. Started with a condo in construction, sold it when done and bought a beach land, sold the beach lend and bought 2 rental townhouses for rental in Greenville. Then got a new better job in Atlanta area and rented the house I was living in Greenville.

Up to here I had no education on real estate. Now I have a little and its time to take actions. First my units are  managed by a local company that charge me between 8% and 10% monthly. High price for low quality service. Slow answers. Let one Tennant hanging with defective outlets in the kitchen for 2 weeks when the townhouse was it was under warranty. Lied saying they contacted the warranty.

Managing it myself will save me 500+/ month which is a lot. But I'm somewhat scared. I have some web design skills (I'm an engineer, so easy to learn new programming languages) and I'm currently testing my new system to manage the tenants. Make sure ill share it here with others for testing when fully ready. Maybe one day I can sell this system, but right now is for my use and under testing.

Since the houses are occupied and the first is reaching its contract limit of a year, its time to renew, increase the rent and I don't even know how to.

I would appreciate any ideas on

1) do a smooth prop management transition with proper Tennant communications.

2) I don't want to move all properties all at once, so I can build experience and also allow time for my contract with this prop manager to expire. Is that dangerous?

3) how to manage the contract renewal and define the new rental value. As this was my first rental and was priced really low. I'm thinking a 3% increase is a fair number, knowing this is what companies are giving their employees yearly. Thoughts?

thank you all in advance!

[Ryan Konen]

Congrats on your journey!

1. Transition smoothly- Notify tenants of the change professionally, provide clear contact info, and collect all records from the property manager.

2. Gradual transition Moving one property at a time is smart so you can learn as you go and avoid service gaps.

3. Renewals and rent increases- Research market rates; 3% is fair, but adjust if you’re far below market. Provide at least 60 days' notice and explain any increases clearly

[Casi Rice]

Quote from @Ryan Konen:

Congrats on your journey!

1. Transition smoothly- Notify tenants of the change professionally, provide clear contact info, and collect all records from the property manager.

2. Gradual transition Moving one property at a time is smart so you can learn as you go and avoid service gaps.

3. Renewals and rent increases- Research market rates; 3% is fair, but adjust if you’re far below market. Provide at least 60 days' notice and explain any increases clearly

I agree with Ryan. Along with the price increase, do a market survey where you find comparable homes (on rentler for example) and see what their rents are. This will give you an idea of where you can be priced at with factual data rather than guessing a 3%. 3% could be sufficient but the data will help you be confident in your decision. Hope this helps. 

[Jose Remor]

Hi Rayn,

thank you for the insights. I'll kick off the notifications tomorrow, starting with the property management company, starting by asking them to let the tenant know this is coming. I'll do one at a time, hoping for no retaliations.

Hi Casi,

thank you as well for the rent increase insight. Instead of a % increase I'll do a market research and see how off I am. I know I'm off, just need to bring it to a fair value.

I really appreciate you both taking time to give me some insights. I'll post here how it went.

[Michael Smythe]

@Jose Remor 8-10% is industry norm, but you've only given one example of "low quality service".

How do you know the tenant wasn't part of the reason for the delay?
- We deal with this all the time! Tenants start a maintenance work order, then want someone to come on a Sunday at 7pm for the service call.

Warranty companies are also notorious for built-in system delays.
- How do you think they make money? It's NOT by jumping on every service request. EVERY insurance company has deliberately designed their bureaucratic systems to frustrate claimants to make them go away.
- Many PMCs will NOT deal with home warranty companies for this reason!

Since you admit you know very little, why don't you analyze what's gone wrong with this PMC and interview new ones to address your concerns?

[Jose Remor]

Hi Michael,

I have evidence. I was contacted for the required service and provided all the information to them on how to ask for warranty as well as use the electrician direct contact that is printed in the kitchen cabinet. Two weeks later they email me saying they tried to work with the warranty team and the electrician and got no answers. The email was also saying that the South Carolina law forces them to give an answer in two weeks and that was the last day! I couldn't live with the risk. Contacted the warranty and as you mentioned they are experts in delays (nothing new here), but I also went ahead and contacted the electrician.

Both later mentioned that they never received any call about this issue. By the way the electrician was mad when telling me he was never contacted. He demonstrated to be very concerned about his image and answered very fast, scheduling a visit for the next day directly with the tenant. 

My contract with PMC doesn't state anything about them not working with warranty - if a PMC does it, this is a mistake in my opinion. Not because it's hard you should not do. If they are providing a service of managing my property, they must manage it no matter what is needed and charge me for a service under warranty would be even worse.

I also had an interesting event. When the rental was published, they added a mechanical lock with the house keys inside. Two weeks later I stopped by the unit (was passing by and decided to take a look) and found that someone was using the shower and leaving food and clothes in the house with visible intent to return. Initially the only person with a key was the responsible manager from the company but we found youtube videos showing how to break it - can't assign blame but something was not smelling good. I changed the lock to a digital lock. This person got let go weeks later of this incident. I called the CEO of the prop management company but he didn't want to tell me the reasons, just stated that they have high ethical standards.

This person that got let go was really fast on answers and I enjoyed working with him, reason why I was confident this management company was a good one. The person that replaced him was and still is really bad on communication. Slow on answers and have hard time to address my concerns by not understanding simple questions. The person hired a company to clean up my 3rd house and gave me a surprise of 400 USD bill for the cleaning when it should be at maximum 150/200. No communications in advance about the cleaning which I believe was not needed.
As we were living in it, we left the house very clean. The person probably never visited the house and just sent cleaning services without asking me if that was necessary.

I think I have reasons enough to stop using them, other than the money I'm saving by doing their work anyways.

To answer your question about interview new PMCs, I believe I have a chance to become a PMC myself. Not sure yet, but will learn from these 3 units and the new ones I plan to add soon.

Thank you for the insights!

[Troy Gandee]

@Jose Remor These are great suggestions here. I would recommend you really take your time selecting the right software. Do some demos and make sure you feel very comfortable with the one you ultimately select.

If you're unsatisfied, it's a huge hassle to have to transition later when you have multiple properties under management. Don't choose something overly complicated. You want it to be easy for your tenants to use to avoid non-payment or technological issues on their end, too.

[Josh Bowser]

Hey Jose - here is my unsolicited two cents :)

1) KISS (Keep it simple stupid) - could you set up a new email address and direct all inquiries to that? This might be a good option to streamline communications and you can start building SOPs based off the types of inquiries you're getting. I would not overthink this, but would start by building a solid professional relationship with your tenants. Tenants are your customers and relationships are EVERYTHING in real estate.

2) I'd do one at a time personally. For me, start with either the property who's lease expiry is furthest out in the future OR property that has seems like it will be easiest to manage.

3) From what I have heard, rent has really moved upward in GVSC - I'd call a couple RE Agents or property managers that have rental listings in the area and tell them your situation / ask them to send you closed rental comps. If you call 5-6 folks there should be one that is going to tell you everything you need to know! As long as you're slightly under market you shouldn't get much pushback on rate increases (just blame it on taxes). Most of the time, you're not doing anyone any favors by keeping rents too low - you're running a business and taxes / insurance / HOA / Maintenance are likely to continue to increase. Moreover, if you sell or the tenants want to move and their rents are well below market - they might be in for a shock/lifestyle adjustment/unable to afford current market rents. Last part might be a hot take, but that is coming from several long time investors I've spoken too over the years.

Hope this helps!

[Nathan Gesner]

Quote from @Jose Remor:

Yes, you can save $500 by managing yourself, but you can also lose a lot more than that with some rookie management mistakes. If you are going to do this, you need to learn how to do it well. If only someone had written a book to help people like you.

I prefer you spend some time educating yourself before jumping in, but that depends on how bad the PM is and how quickly you can educate yourself and take control.

If you choose to terminate, read your PM Agreement carefully to see if there are any termination penalties. Give the PM a written notice of termination 30 days in advance. That gives them plenty of time to collect and transfer everything to you. Be very clear that they must transfer the deposit along with a complete set of tenant records (application, lease, payment ledger, etc.). If possible, notify the renters simultaneously and do it in person. Bring documentation to prove ownership.

[Jose Remor]

Hi @Troy Gandee,

I have prepared myself for this for a while and build myself the system to manage the rentals. The flexibility of being able to fix it when I find an issue will help me a lot. Maybe one day I could sell this system as well, we never know. Right now it's simple and does the job by solving issues on typical systems. I'm myself a tenant right now and I see what are the pin points from the tenant perspective. I'm solving all those points with extra stars :).

Hi @Josh Bowser

Yes GVL market is not bad but it has some downsides. Tax is to blame, inflation as well. Specially in South Carolina taxes are a killer. Coincidence I received the tax statements yesterday and there they come with increases and worse services. This is crazy.

Sent you a connection request, I'm in Atlanta area now and looking to add soon another property to the portfolio.

Hi @Nathan Gesner

I agree with you and I have started with The Self-Managed Landlord and will take a look at the book you suggested, very likely will read it as well.

I'm not relaxed right now. That's good fear to have and it's driving my need for education. Thank you for the list of things they need to transfer. I added some points to my list now.

[Laura Stayton]

Quote from @Jose Remor:

Hi all,

I'm new and found the bigger pockets after reading "How to Invest in real estate" book from Brandon and Josh. Very good book, thank you both for writing it!

I started long ago with no education in real estate. Started with a condo in construction, sold it when done and bought a beach land, sold the beach lend and bought 2 rental townhouses for rental in Greenville. Then got a new better job in Atlanta area and rented the house I was living in Greenville.

Up to here I had no education on real estate. Now I have a little and its time to take actions. First my units are  managed by a local company that charge me between 8% and 10% monthly. High price for low quality service. Slow answers. Let one Tennant hanging with defective outlets in the kitchen for 2 weeks when the townhouse was it was under warranty. Lied saying they contacted the warranty.

Managing it myself will save me 500+/ month which is a lot. But I'm somewhat scared. I have some web design skills (I'm an engineer, so easy to learn new programming languages) and I'm currently testing my new system to manage the tenants. Make sure ill share it here with others for testing when fully ready. Maybe one day I can sell this system, but right now is for my use and under testing.

Since the houses are occupied and the first is reaching its contract limit of a year, its time to renew, increase the rent and I don't even know how to.

I would appreciate any ideas on

1) do a smooth prop management transition with proper Tennant communications.

2) I don't want to move all properties all at once, so I can build experience and also allow time for my contract with this prop manager to expire. Is that dangerous?

3) how to manage the contract renewal and define the new rental value. As this was my first rental and was priced really low. I'm thinking a 3% increase is a fair number, knowing this is what companies are giving their employees yearly. Thoughts?

thank you all in advance!

There are so many misconceptions about what a property management company "should do"  The fact is, if it isn't in the management agreement, they aren't responsible to do it.
I agree if they're not being truthful about contacting the electrician etc that doesn't foster trust in the relationship. 
But there is ALOT more to management than most people realize.  You have to know how to screen tenants well, know the landlord tenant code thoroughly, know how to send proper notices, when you can charge late fees, what to do if a tenant doesn't pay etc.
I can't tell you how many owners have come to us over the years who thought they could manage on their own and got all the way to court, only to find they didn't follow proper protocol with notices or the late letter etc and have the case thrown out and have to start again.
Also, are you local to do inspections?  Handle all maintenance in a timely manner (know how much time you have to respond and correct problems)?  
I am not saying you can't do it, but it isn't as simple as having someone move in and finding a good software program (there are tons now) for them to pay.  
The laws/code change frequently as well.  We have a legal team who alerts us to changes and makes sure we remain compliant.
Definitely educate yourself.  But in the meantime, if you aren't happy with your management company, I would suggest interviewing others until you have a firm understanding of all the facets of managing on your own.

Good luck!

[Ryan Spath]

Property management is often an overlooked responsibility that can seem deceptively simple. On the surface, it appears to be a straightforward role, but it becomes far more challenging when faced with issues like non-paying tenants requiring eviction or broken systems that haven't been properly followed.

As a self-managing property owner, it is absolutely doable—but success depends on treating it like a business. The key is establishing strong systems and processes.

As mentioned earlier (KISS—Keep It Simple, Stupid), there's no need to overcomplicate things. Simply document everything you do and create your own Standard Operating Procedures (SOPs). This will provide consistency and clarity in how you handle your properties.

Start by reviewing your current Property Management (PM) agreement. Make sure there are no automatic renewals or hidden fees that could catch you off guard. Have a conversation with your property management company well in advance of any transition to ensure you are fully aware of all terms and conditions. If you have only 2-3 rental properties, I would recommend taking full control of management at once rather than transitioning one at a time. Once you commit to this, it can actually be quite rewarding to provide housing to tenants.

For contract renewals and rent increases, the first step is to familiarize yourself with local laws. Once you’re informed, we typically give tenants a 60-day notice for renewal, along with the new rent amount if there’s an increase. If a tenant chooses not to renew, we start marketing the property 30 days before the lease ends. We ask for a decision no later than 30 days before the lease expiration.

When it comes to rent increases, the market largely dictates what’s feasible. Your property type and location are key factors in determining this. For instance, if you are renting homes at $2,200 per month and decide to raise the rent by 3.99% (bringing it to $2,287.78), the likelihood of tenants moving out is generally low, especially if the market supports that price.

Best of luck in your property management journey!

[Krystyna Schexnayder]

Hi Jose, 

Congrats on your progress so far! 

I want to add to the sentiments of @RyanSpath and @LauraStayton! 

Is self management attainable, yes... Is it underestimated, yes. 

It is super important that you are very knowledgeable about your state landlord and tenant laws, to best prepare yourself for how to conduct your communications, and the essential do's and dont's that will save you in legal fee's if there is a simple mistake made. 

Self-managing can be a great way to stay directly involved, but it’s also important to consider the demands it can place on your time, resources, and expertise.

I'm certain, you have experienced some real frustrations with that PM company, but a strong property management company that can align with your overall needs, can sometimes be a priceless investment when it comes to staying compliant. 

The transition is going to be key... the less confused the tenants are, the better of a start you will have in gaining their trust moving forward. 

Either way, you have a great resource of industry professionals her on BP, so I'm sure you are going to be fine! 

All the best to you! 

[Drew Sygit]

@Jose Remor you PMC should have phone records to prove they made the calls they claim.

We track EVERY call, text and email for this reason!

Tenants & contractors always claim no one called them or they called and no one got back to them.

[Max Yuan]

Management company only really become useful when you reach economy of scale. With a small portfolio, it will eat away at all your cashflow. Manage it yourself until you cannot anymore.

[Arn Cenedella]

@Jose Remor

Hard to find a good property manager. 

If you DM me I can provide a referral in Greenville SC where I live and invest. 

Arn

[Heath Sizick]

Quote from @Jose Remor:

Hi all,

I'm new and found the bigger pockets after reading "How to Invest in real estate" book from Brandon and Josh. Very good book, thank you both for writing it!

I started long ago with no education in real estate. Started with a condo in construction, sold it when done and bought a beach land, sold the beach lend and bought 2 rental townhouses for rental in Greenville. Then got a new better job in Atlanta area and rented the house I was living in Greenville.

Up to here I had no education on real estate. Now I have a little and its time to take actions. First my units are  managed by a local company that charge me between 8% and 10% monthly. High price for low quality service. Slow answers. Let one Tennant hanging with defective outlets in the kitchen for 2 weeks when the townhouse was it was under warranty. Lied saying they contacted the warranty.

Managing it myself will save me 500+/ month which is a lot. But I'm somewhat scared. I have some web design skills (I'm an engineer, so easy to learn new programming languages) and I'm currently testing my new system to manage the tenants. Make sure ill share it here with others for testing when fully ready. Maybe one day I can sell this system, but right now is for my use and under testing.

Since the houses are occupied and the first is reaching its contract limit of a year, its time to renew, increase the rent and I don't even know how to.

I would appreciate any ideas on

1) do a smooth prop management transition with proper Tennant communications.

2) I don't want to move all properties all at once, so I can build experience and also allow time for my contract with this prop manager to expire. Is that dangerous?

3) how to manage the contract renewal and define the new rental value. As this was my first rental and was priced really low. I'm thinking a 3% increase is a fair number, knowing this is what companies are giving their employees yearly. Thoughts?

thank you all in advance!

Lots of great responses on this. Many people want to self-manage because they only think about cash flow. It is unfortunate you have had a bad experience with a few PM's there. A few of the best things PM's can provide are marketing, screening tenants, & maintenance. Most self-managers don't want to deal with headaches of maintenance calls at 1 a.m.,  keeping compliant with local & state laws, & evictions. 

Two things I would encourage you to ask yourself & ponder (essentially count the cost): 

1. What level of engagement do I really want with my properties?

2. What is my motivation to self-manage?  

I am sure you have done some level of this already. Self-managing is a big job. When things are good they are good, but thinking thru all the scenarios (evictions, laws, marketing, maintenance, etc.) you will run into & asking yourself is it worth it will go a long way. 

Like so many others said, take your time for sure. And it may be worth spending a few hours deep diving into other PM's - talk to other investors, look at Google reviews...surely there have to be a few quality PM's near you. 

Best of luck to you in whatever you choose. 

[Jose Remor]

Quote from @Drew Sygit:

@Jose Remor you PMC should have phone records to prove they made the calls they claim.

We track EVERY call, text and email for this reason!

Tenants & contractors always claim no one called them or they called and no one got back to them.

Those are the types of events we have one shot to not lose trust. I'm not going to ask them for proof, if we get to this point something was done wrong before. Having a PMC myself (probably will never happen and I'll just manage my stuff) I would never allow my clients to have to ask for proof.
thank you for the insights!

[Jose Remor]

Quote from @Max Yuan:

Management company only really become useful when you reach economy of scale. With a small portfolio, it will eat away at all your cashflow. Manage it yourself until you cannot anymore.

Completely agree. I started without enough knowledge to decide not to. I think I know better now.