Once you get into the habit of doing things a certain way, its easiest to just keep doing that same thing. We’re all creatures of habit, and the same can often be said about landlords working in the rental industry.
Landlords might not even realize when to change property managers because the work they are paying for just isn’t up to standard. Do you want to be constantly losing money on lackluster management? Do you feel like things aren’t being done the way that they should be done?
You should never be afraid to make a change in your property management to improve your business. While it can be hard to know how to change property managers, fear of change should never stop your business from growing. To achieve success, consistent growth is key.
To help you get over that hump, we’ve put together a complete guide on what to do when you need to change property management companies or employees.
A Table Of Contents For Changing Property Managers
- When Is It Time To Change Property Managers?
- Pros And Cons Of Changing Property Managers
- How To Change Property Managers?
- What Happens To Your Leases When Property Managers Change?
- How Much Notice Is Needed To Change Property Managers?
Have you ever noticed that your property manager doesn’t seem to be as invested in your business growth as you are? While no one is going to be as committed as you are, your property manager should have some level of enthusiasm for helping you to consistently improve your bottom line. If that drive is lacking, it might be time to move on.
How do you know when it is time to change property managers?
We recommend asking yourself these questions to determine if the relationship can be salvaged or should be abandoned altogether:
- Are repair costs reasonable when needed?
- How is non-payment of rent handled? Quickly and efficiently?
- Are you given regular performance reports?
- Does the manager fill vacancies with urgency?
- Are the fees they charge reasonable?
- Is the manager liked by your tenants?
- Are the costs affordable and practical for your business?
- Do they communicate with you regularly?
- Do tenants have to track you down because management isn’t helping them?
Take time to work through these questions and other points that the questions bring up for you. Once you’ve answered them honestly, you will probably have an idea of whether or not your management is doing a good job.
If you are still borderline about whether or not changing your property manager is a good choice, check out these brief pros and cons lists to help you to decide.
- Reset tenant expectations about rules, payments, and more
- Improve cash flow
- Improve property turnover
- Fresh start with a new face can be beneficial
- Improve efficiency
- Can update your systems during the transition
- Extra stress during transition period
- Tenants may be upset if they liked the management
- Need to transfer many documents and paperwork
Usually, the simple fact that you are thinking about changing your property management is enough of a tell that you should probably change your management. If they were doing a great job, you wouldn’t even be thinking about this at all.
Changing property managers doesn’t need to be complicated. The main thing that you need to do is time things well. If you let your property manager go suddenly or you let them go right when rent is due, you will have some problems.
1. Decide When You Will Make The Change
Instead, we suggest making changes to your property management after any late rental due dates. If rent is due on the 1st and tenants have until the 7th at the absolute latest, you would want to start changing your management on the 7th.
Once you begin the transition, you will then have three full weeks to make sure that everything is properly transferred. In particular, you will want to make sure that all rental payments are redirected and all mailing addresses are updated.
2. Choose New Management
Do some research and find a new management company or employee before you end your contract with your current management. By shopping around, you will be able to get a complete picture of what you are lacking and find the perfect fit. Be sure to ask lots of questions so that you don’t have to repeat this process anytime soon.
3. Check Your Contracts And Leases
It is important to review any contracts you have with the management company to ensure that there isn’t a set amount of notice that you need to give to terminate the contract. If there is, you may need to wait until that period is over unless you are incredibly displeased with their services.
4. Notify The Management
You will want to notify the management by phone and in writing about the changes that you are going to make. Let the company know the following information:
- Why you are moving to different management
- When the change will take effect
- What you expect them to do
- The new company’s contact information
Keep the lines of communication open during this period. Both you and the management company can learn from the experience even if your formal business relationship is ending.
5. Let The Local Authorities Know
Some states and cities may require that you let them know when you change management companies. This is for tax purposes. Make sure that you send the appropriate information to all taxing divisions and departments of revenue so that you will not be faced with any unnecessary fines or fees.
As with most things in the rental world, every state has a different set of rules about what information they need to be given and how property management is monitored. Do some research into your local rules and regulations to be sure you have it right.
Many people want to know what happens to your leases when your property manager changes. Often, nothing will change at all, but that will depend on how your leases are written.
If all of your leases are strictly between you and the tenants, nothing about the lease will change. Instead, the changes will occur in the contract between you and the manager who oversees the enforcement of your lease.
If, however, your lease mentioned the management company or employee specifically and by name, you will need to sign an addendum or have the lease modified to continue the rental period legally. We recommend always having an easy-out clause for this type of situation or to avoid including your management in the lease at all.
When letting a property manager go, we suggest giving two-to-three weeks’ notice to both the manager and the tenants. The manager needs time to wrap up their work for you, and the tenants need time to find out where to send their rental payment and who to talk to about any problems in the future.