A good property manager can be enormously beneficial for your real estate investments. He can keep you from becoming overwhelmed with taking on too many responsibilities when you’re looking for passive income in your investments or if investing isn’t your full-time job. She plays a vital role for investors buying real estate as a method for diversifying their over-all portfolio. Many invest in real estate for passive reasons and they really have no desire to be an actual hands-on "landlord."
Property managers can handle a lot of the stress and day-to-day dealings that go on in an investment property, freeing you up to focus on the big picture. Their primary focus has to be handling all of the details that go into making a real estate investment a successful one - from renting, managing and maintaining an investors properties.
Unfortunately, not all property management companies are built the same way. Not all property managers have the same focus or desire for being in business. Many lack the core competency to be a great property manager because there are so many moving parts and so many different tasks that have to be done really well in order for a management company to be any good. There may come a day when you have to fire your property manager. Firing someone is never fun.
Recognize the Warning Signs
If you start to notice that your investments aren’t going as you want them to, don’t waste time identifying the problem. You have goals, and you need to be sure that your property manager understands your expectations. If those expectations aren’t being met, you need to see to it that they are.
Your goals aren’t being met.
As an investor, you have goals. You have a vision. From the get-go, your property manager needs to be aware of what you expectations are in terms of vacancy rates, rent collection and cost control and agree to meet those expectations. If performance is lacking for no other reason than the property manager is not doing his or her job correctly, they you may have a problem.
Lack of follow-through.
Watch out for someone who promises to deliver... and then doesn’t. You need a property manager who is going to be responsible and do what they say they’re going to do, period. While there are things that will come up that are beyond your property manager’s control, a day-to-day lack of follow-through is a big problem. You need a manager for your investment properties who is responsible and reliable in their work.
Reports are incomplete or lacking.
Don’t trust a property manager who doesn’t give you full disclosure in reports. Your employees must be thorough and consistent in reporting to you. When reports are missing or have holes, then you may have to worry about a property manager hiding something from you.
If it’s not a disreputable act, it may just be that your standards for reporting aren't aligned. You shouldn’t have to keep pushing your property manager for the full picture — it just creates more work for the both of you.
This one isn’t always easy to spot right off the bat. It could take years before you realize that your property manager is incompetent. While hiring an inexperienced property manager could be a risky move, it’s not necessarily bad. Hardworking people can learn and acclimate — everyone does need a chance.
Incompetence is something else entirely. You shouldn’t put up with a property manager who makes constant blunders — and doesn’t work to improve. You need to be sure your property manager is knowledgeable or eager to learn all that he or she needs to be the best asset to your investments.
Even though one or two mistakes in these categories can be forgivable and not all infractions may warrant a firing, be prudent. Use your judgment — if a property manager doesn’t seem to fit your needs or otherwise mess with your vision or is hurting your investments, taking steps to try to correct the problem. If that doesn’t work, let that person go and look for a better fit.
Don’t wait around for your investments — and your bottom line — to take a big hit before you take action.
Have you ever had to fire a property manager? Tell us why in the comments.