If you are considering changing your property management company then you are in the right place. This is a guide on how to change your property management company.
The correct way to change property management companies
Date Published: Dec 11, 2019
When you begin a relationship with a property management company, you always hope that it’s going to be for the long term. However, this isn’t always the case. You might find over time that your management company is no longer a good fit because your needs aren’t being met.
When this happens, you need to find a company that works better for you. But, there are a few things you should keep in mind when switching property management companies.
What to consider when switching to another property management company
Hiring the wrong property management company can be a headache. Even more stressful is switching to a new company. Most agencies require 30 days’ notice, via certified mail, email, or fax. You must also ensure that unit owners are properly notified and secure lease documents, deposits, and keys from the previous property management company.
If all of this sounds like a lot of work and information to remember, here’s a checklist of things to tick off while going through this process:
Keep it professional
Before you switch property management companies, talk to your current service provider. If you’re experiencing communication issues or a lack of clarity on financial reports, there may be a bigger problem at play.
Once you’re ready to break the contract, discuss it with them professionally. Express your dissatisfaction and inclination to make a change. That’ll make it easier for them to come on board with your decision.
Most importantly, try and keep your emotions out of the whole process. While you might feel understandably upset with your property management company due to some wrongdoing, it’s not a good idea to take things personally.
Focus on the process at hand and the new chapter awaiting your association.
Dealing with a company cordially improves your chances of experiencing a smooth transition. The more collaboration your new property management company has from your previous agency, the better.
Study your agreement
Before you jump into a partnership with another property management company, read the agreement you have with your current agency. Look for the termination clause specifically to see what your options are.
You may need to pay certain fees and undergo a lengthy process depending on what your agreement entails. Some companies have a notice period of 30 to 60 days or longer for canceling a contract.
Either way, there are always consequences to terminating a property management contract and it helps to educate yourself about those consequences so that you can take the right steps forward.
Look out for hidden costs
Your property management company may charge you an extra termination fee even though you followed the termination clause. Before paying this fee, make sure that it’s included in the contract. Once you’ve confirmed that the fees are legal, pay what’s required.
Inform unit owners about the change
Part of switching to a new property management company involves transitioning your unit owners or tenants as well.
As soon as you sign on the dotted line to welcome the new property manager, inform residents about the change so they’re surprised when someone else is collecting their dues or answering maintenance requests. Encourage them to reach out and ask questions if they have any so that they’re able to cooperate with the new property management company.
Get all the relevant documents from your current property manager
To guarantee a proper handover from one property manager to another, the new service provider must get all the relevant documentation from the former. This includes financial records, leases, renewals, and applications, as well as spare keys and photos. It’s a good idea to store all your documents in a digital file library so nothing will get lost during the transition.
The new agency will also need copies of your leases, information on where the security deposit is being held, and any other notes you have such as inspection reports, maintenance histories, and payment records.
With the right documentation on hand, the new property management company will have a much easier time running your property efficiently from the get-go.
Timing the transition from one property manager to another is crucial. It’s best not to introduce a new manager at rent collection time or at the beginning of the month. You may not want to switch managers in the middle of a major renovation either, or during an eviction.
Plan the transition when you know that everything can be handled professionally and efficiently so that there’s no stress on your unit owners.
You may also ask your new property manager about the best time to step in. Ideally, you’ll be working with a company that has dealt with this before.
Keep your options open
Now that you’re free to look for a new agency, take your time and consider a variety of options. Search for some of the best property management companies in your area and make a list of your favorite ones. Approach them either through a phone call or email.
Ask about the type of services they offer and how they handle issues like repairs, screening tests, and rent collection. Gathering information about your top candidates will make it easier to find one that speaks to your needs.
You obviously don’t want a repeat of the issues that made you switch property management companies in the first place so make sure to your due diligence this time around. Ask specific questions that’ll help you satisfy any concerns that you might have.
To avoid experiencing the same issues you had with your previous property management company, communicate your expectations clearly from the beginning.
Tell your new property management company why you’re switching so they understand the problems you had with your previous agency.
Then, let them know what your expectations are and what the consequences of wrongdoing are.
Consider setting a probation period of about 90 days or more. This would allow you to evaluate the new company’s performance and address any issues you’re having so things don’t spiral out of control.
It’s better to make sure that everyone is on the same page before you commit long-term to minimize the risk of experiencing problems in the long run.
Make a time allowance for fund transfers
It might take a while for rental deposits from your old property management company to reflect in your account. In most cases, it can take about one or two months.
What to look for in a property management company
Switching property management companies can feel emotionally stressful. You owe it to yourself and your unit owners to work with a company you trust and one that can help your property reach its peak potential. Here’s what to look for in a property management company:
You want a company that has been around for 10, 15 or 20 years. They’ll most likely have a large portfolio of clients that they’re managing which means they’re experienced.
So many property managers are just concerned about the day-to-day operations of an association. They’re only there to put out fires. But, a good property management company is one that’s going to keep in contact with you and help you understand changes in property values so you’re able to sell units at the right time. Your property manager must also understand exit strategies so they can help you craft one that is perfect for you.
Look out for red flags
So, let’s say you’ve hired a new property management company for a probation period of 60 to 90 days. During this time, your maintenance costs start to increase rapidly.
You should know that it’s not uncommon for a property management company to send its clients’ bogus fees and charge you for things that aren’t really broken.
They might also try to charge you exorbitant management fees and try to upsell you things like eviction protection just to make an extra buck.
What you want to look for in a property management company is honesty. Interview multiple agencies and look at how much they charge for things like lease-up fees, inspections, etc.
In addition to asking about fees, find out what their philosophy is when it comes to property management. This includes how they manage inspections, repairs, damage, and maintenance, for example.
You should also find out if they have an in-house maintenance team and how they plan to reduce maintenance costs. You should also get a list of referrals from each prospective candidate, preferably from current clients.
Don’t forget to ask the following questions as well:
- What is their tenant screening process?
- What methods do they use to manage repairs?
- What processes do they use to collect dues or rent?
- What is their management technique?
- What services do they offer?
Yes, this is a lot of work but it’s important to do your due diligence in order to pick at least two top options; one as your first pick and the other for backup.
Are you ready to give your property management company their marching orders? This is no easy task especially if you’ve never done it before. We hope our guide will make things easier for you as you enter this new chapter in the history of your association.