As a property investor, your property manager is your trusted partner. They ensure your property is well-maintained, tenants are satisfied, and your investment is profitable. But what if they’re not acting in your best interest? Unethical or unprofessional behavior from a property manager can damage trust, damage your investment, and leave you scrambling for solutions.
This blog highlights key red flags that may indicate your property manager isn’t delivering, and offers actionable steps to address these issues or transition to a new manager.
Red Flags to Watch For
1. Recurring Vague or Unexplained Charges
A sudden uptick in maintenance fees or charges without detailed explanations should raise concerns. While maintenance is essential, reputable property managers provide invoices, breakdowns, and reasoning for all expenses. Frequent “miscellaneous” fees or large, unexplained deductions could indicate padding of costs.
What to Do:
- Request a detailed breakdown of all charges.
- Ask for copies of invoices, receipts, or contractor agreements.
- Compare charges with market rates to spot inconsistencies.
2. Lack of Communication and Transparency
Good property managers keep you informed. If emails go unanswered, reports are delayed, or you’re left in the dark about tenant issues, it may signal neglect, or worse.
What to Do:
- Set clear expectations for regular updates (e.g., monthly reports, prompt responses to queries).
- Use written communication to maintain a record of interactions.
- If silence persists, consider it a warning sign.
3. High Tenant Turnover or Frequent Vacancies
Excessive tenant turnover can erode profitability. While some turnover is normal, a pattern of frequent vacancies might point to poor tenant screening, subpar property maintenance, or unprofessional interactions with tenants.
What to Do:
- Review tenant feedback and complaint histories.
- Evaluate whether your manager is adequately marketing the property and maintaining good tenant relations.
- Conduct periodic inspections to verify the condition of the property.
4. Poor Financial Management
Are you noticing inconsistencies in financial reporting, late payments to you, or errors in monthly statements? Sloppy or dishonest financial practices can jeopardise your investment and create legal headaches.
What to Do:
- Audit financial statements regularly.
- Request clear documentation for rent collections, expenses, and fees.
- Consider hiring an independent accountant to review the books.
5. Resistance to Owner Involvement
If your property manager bristles at your desire to inspect the property, meet tenants, or understand processes, they might be hiding something.
What to Do:
- Assert your rights as the property owner to access information and inspect your property.
- Trust your instincts; if the manager seems overly defensive, dig deeper.
Solutions to Address Concerns
1. Address Issues Head-On
If you suspect mismanagement, schedule a meeting to discuss concerns. Use specific examples and request immediate changes. A professional manager will respond constructively and work to regain your trust.
2. Document Everything
Maintain written records of all communications, invoices, and reports. This documentation can protect you legally if the situation escalates.
3. Seek Feedback from Tenants
Your tenants can be a valuable source of insight into your manager’s performance. Conduct anonymous surveys or reach out directly to understand their experiences.
4. Consider a Third-Party Audit
Hiring an independent property management consultant to audit processes and finances can provide an unbiased assessment of the situation.
5. Have an Exit Plan
If red flags persist despite your efforts, it’s time to find a new manager. Follow these steps:
- Review your agreement for termination clauses.
- Provide written notice of termination as required.
- Vet potential replacements thoroughly by checking reviews, certifications, and references.
Choosing a New Property Manager
When selecting a new manager, prioritise transparency, communication, and professionalism. Key questions to ask during the interview process include:
- How do you handle tenant screening and retention?
- Can you provide sample financial reports?
- How do you approach maintenance and repairs?
- What tools or technology do you use for communication and reporting?
Final Thoughts
Your property manager should be your advocate and a reliable partner in growing your investment. Recognising the signs of poor management and taking proactive steps to address them ensures your property remains a profitable, stress-free investment. If issues persist, don’t hesitate to make a change – your investment’s success depends on it.
