Real estate investors with large portfolios, or those who own properties in distant locations, rely on professional property managers. These firms typically market the properties, screen tenants, collect rents, and handle maintenance. However, things don’t always go as they should. If a formerly smooth operation becomes choppy, you may notice one or more of these signs you need a new rental property manager.
Maintenance Costs Are Rising
A good property management company takes care of tenant maintenance requests promptly and at a reasonable cost. They maintain cordial relationships with a variety of trades to ensure prompt responses to electrical, plumbing, roofing, or carpentry needs. They should also be equipped with a viable plan to respond to emergencies. If you notice an increase in maintenance costs, your property manager should be able to explain why you are suddenly paying more for painting, plumbing, or landscaping services. Require regular inspection reports—maintenance costs go up when neglected small jobs turn into big headaches. If your manager isn’t conducting regular inspections, you need a company that will do it routinely and report the results to you.
Property managers should get your approval on estimates for work. If there are discrepancies between the estimate and the final invoice, they should be able to provide documentation about the cause of the increase.
Poor Record Keeping and Lack of Communication
A reputable property management company should maintain clear lines of communication. They should be responsive to your inquiries. Having trouble getting ahold of anyone, unreturned messages, and poor reporting are all big red flags. If your manager won’t call you back, how well are they serving your tenants? Perhaps they are simply in over their heads, having taken on more properties than they can reasonably handle. Worse, it could be that they simply don’t care about customer service. If a lack of communication is chronic, it’s time to look for a new property management company.
Increasing Vacancy Rate
A good property management company is devoted to maintaining a high occupancy rate for your properties. Their reputation and yours are on the line. Prospective tenants are wary of properties that have been vacant for a prolonged time. It makes them wonder what’s wrong if there is something about the location that isn’t attractive, or if there are recent changes to schools or services that no one has told them about.
Another possibility is that the property management company is skimping on marketing costs or failing to list the rental on sites used by real estate agents to locate rentals for their clients. Your property management company should excel at marketing your property and locating qualified tenants quickly.
If you have a growing vacancy rate, your property manager may be inexpert at calculating an appropriate rental rate. If rents are too far out of line with nearby properties with similar amenities, tenants will look elsewhere.
Improperly Screened Tenants
Problem tenants cause damage, disturb other tenants, and may end up involving you in costly and prolonged eviction proceedings. Screening tenants properly in the first place can avoid these headaches. If your property manager fills vacancies quickly, but fills them with unqualified or incompletely screened tenants, it could end up costing you more money in maintenance, repair, and even legal fees than another week or so of vacancy.
Interruptions in Cash Flow
Your property manager should promptly remit all monies due to you as the property owner. If the cash flow falters, that’s a big red flag. Your manager may be failing to enforce rental deadlines and late fees or mishandling your money. Managers have a duty to ensure that all monies due to you are remitted promptly into the identified account and to provide a full accounting when you ask for financial information. Real estate investors get into the business to make money, maintain a steady flow of income, and watch their well-maintained properties increase in value. A bad property manager thwarts these goals with improper money management, poor maintenance, and sub-par tenant services.
Unhappy tenants will make their opinions known in online reviews. Consumers rely on reviews to make choices about everything from restaurants to vacuum cleaners to rental homes. A property manager who accumulates and mass of one- and two-star reviews filled with comments detailing poor service, delayed maintenance, or lack of communication can wreck your real estate business.
Some tenants will always insist on writing a check, but most others expect a more streamlined method of paying rent. Not only that, but tenants now expect online services to include forms to request maintenance or give notice about their intentions to renew their lease. Your property manager should keep up with rental management software that makes it easy for tenants to contact them, pay rent, and communicate concerns. Likewise, the software should provide you as the property owner with a portal that compiles reports and allows you to monitor cash flow, vacancies, marketing, and maintenance expenses and inspections.
One of the most serious concerns about property management companies is their knowledge of applicable housing laws and regulations. They must understand and comply with all deadlines, notice, and non-discrimination requirements. A property management company that misses deadlines to alert tenants about when they must indicate their intention to renew a lease or comply with late payment policies will cost you money and eat away at your profits. Barging into a tenant’s home without sufficient notice or—even worse—engaging in a pattern of behavior that creates the suspicion of housing discrimination, can embroil you in lawsuits and undermine your business. The same is true of retaining security deposits for improper reasons or failing to document the reasons for deductions from security deposits.
Sloppy financial management is a compliance issue not just for you as the property owner but for tenants as well. A property manager should maintain a separate, interest-bearing account for security and pet deposits and return deposits promptly to departing tenants who leave the property in good shape.
Investors with properties in the Metro Atlanta area seeking new Roswell property management or representation for properties in the city and surrounding suburbs should contact Excalibur Homes. Our experience, knowledge, and reputation for excellence will keep your real estate investment business running smoothly.