Changing property managers can be a hassle, but sometimes, it is a necessity. Whether your current property management company is charging too much, leaving your tenants without the connections and resources that should be provided by a property manager, or they’re otherwise just not cutting it, switching property management companies may be your best option.
What to Consider When Changing Property Management Companies
Before starting the search for a new property manager, you should look at what’s wrong with your current property manager. Understanding all the problems that are leading you to change management companies will help you begin your search for a new managing agent on the right foot.
Keep It Professional
The first thing to keep in mind when you look for a new company to manage your real estate investments is remaining professional. It can be easy to let your emotions get the best of you, especially when your previous property management company is very difficult to deal with.
However, you don’t want your new property management company to get a bad first impression.
It’s also important to keep hidden costs in mind with both your old and new property management company. For example, you should check for a termination clause before you change property managers.
It’s also a good idea to go over what to expect in your monthly statements before you sign a new property management contract.
Whenever a landlord decides that changing property managers is a good idea, it’s usually for a good reason. However, you should take steps to manage your expectations and any potential risk of switching to a new property manager.
Be sure to give an adequate notice period to your current property manager via certified mail before signing on with a new management company. Also, take time to gain a full understanding of the process used by the new manager and the services they provide.
Make a Time Allowance for Fund Transfers
Property management companies in Toronto require different amounts of time to transfer rental property to a new manager, so you shouldn’t expect the change to occur instantly. It might be a good idea to review your management contract to find out how long it will take for this transition to be completed.
Property owners should also think about when would be the best time to transition from their current company to a new property management company. It’s not a bad idea to keep your tenants in mind, too when changing to a new manager for your rental properties. Additionally, if there’s a termination fee, you might need to wait a little longer before signing a contract with another property manager.
Keep Your Options Open
Depending on what kind of investment property you own, whether it’s a commercial property, residential, or some combination of both, you’ll want to avoid locking yourself into a particular management company for an extended period.
Before making the switch, review your current management agreement to find out how much of a notice period is required to end their services after the contract period is done.
What to Look for in a Property Management Company
When seeking another property manager to oversee your real estate investment, you don’t want to make the same mistakes that you did when choosing your last one.
First, owners of rental property will want to look for a property manager with experience managing the type of property they own. A landlord will also want to find someone they can have an excellent business relationship which works well with them.
Reputation: Testimonials and Reviews
When considering a new property management company, a landlord might want to look at testimonials from both clients and residents. After all, a property manager serves not only the owners of the properties they manage but also the residents of those units.
Look Out for Red Flags
There are also some warning signs to keep an eye out for before signing any agreement with a property management company. For example, high vacancy rates suggest the manager might not be doing their job. Other potential red flags include being too busy to take your calls or address your concerns, poor communication, constant tardiness, and distraction.
Finally, you might want to think about the possibility of buying more properties, which means having a versatile manager is a wise idea.
Five Reasons Why it’s Time to Switch Property Management Companies
If you aren’t sure whether it makes sense to change property management companies, you might want to think about these top five reasons landlords switch to new managers.
1. Slow Response Time
If your current property manager takes an unacceptably long time to respond to your questions or concerns or is slow filling your vacancies, you might want to think about switching. In some markets, every landlord might find that it takes longer to fill their units than during other times, but sometimes it is the manager’s inattention that causes this issue.
2. Poor Maintenance
If your residents constantly have open maintenance requests waiting for the manager’s attention, you might want to consider switching. A reputable residential management company will perform regular maintenance, respond to requests in a timely fashion, and provide inspection reports on your units regularly.
3. Excessive Charges
A review of the financial reports for each of your properties should provide some insight into the fees charged by the management company. It’s a good idea to review each of these charges with your manager and weigh them against the fees charged by others to determine if those fees are warranted.
4. Bad Advice
Part of a property manager’s job is offering insight on the market, which properties might make good rental properties, and how much to charge for each unit. If they are consistently providing bad advice, it might be time to move on.
5. Confusing or Unclear Fees
Your management agreement and the leases signed with your tenants should spell out each and every fee clearly. If you’re seeing fees that weren’t in the original contract, you might want to give the manager notice and move on.
Property Management Transition Checklist
When making the switch from one property manager to another, you’ll want to make sure you do all these things:
1. Review your existing contract and ensure that you provided the required notice to your last property management company so that you can avoid any hidden penalties.
2. Ask for a copy of each lease, last month’s rent, the interest on last month’s rent to be paid prior to the change, and copies of keys. If your current property management company is remitting non-resident tax withholding on your behalf, make sure they provide you with an NR4.
3. Inform your tenants of the switch and either introduce us or provide us with their contact information.
4. Make sure you don’t repeat the same mistake again. Select a property management company with an impeccable reputation and track record.
5. Don’t automatically choose the management firm that charges the lowest advertised price. You may be surprised with hidden fees and fine print that you didn’t notice when you signed the contract. Select a company that’s transparent and will share with you all the information upfront.
Responsibilities of a Good Property Management Company
An excellent property management firm will be responsible and do what it takes to find the best tenants and make it easy for them to pay their rent and contact the office without any hassle.
The company should also have an easy, transparent process for collecting security deposits and getting lease documents signed. They should also track the cash flow for all your units and advise if an adjustment in rent payments would be wise based on the current market and any increased expenses.
Four Ways a Bad Property Management Company Can Cause Difficulties for You
A bad management firm can cause all kinds of problems for you, including:
1. Placing a bad tenant on your property due to a poor screening process
2. Not acting quickly enough to find a tenant, keeping the property vacant for an extended period
3. Not maintaining the property and/or poorly addressing tenant issues and requests
4. Encouraging bogus expenses, such as suggesting major renovation when you do not need it
Having the right property manager in place will make a world of difference for you and your tenant. If you’re not sure whether to switch companies, the simple fact that you’re considering it might be enough of an indication that it is time to do so.
Keeping all of the above information in mind when making the switch will help you choose wisely and make the transition go as smoothly as possible.