At what point would you terminate a property manager?

I'm quite new to investing and have purchased two properties. I've been uphappy with both PMs and have considered changing both.

First one got my property on the market straight away but took four weeks to find tenants. The tenants are not quality (they're quite dodgy actually) and I've had trouble with them. I was going to change management during the first four weeks but they offered me free management for a while (sorry, trying not to be too specific). Communication was very poor and they took several days to a week to process an application.

As I wasn't happy with the first, I wasn't going to use them again, so went with a different one. Second PM hasn't even placed my property on the market four weeks after settlement. They're finally getting around to it now but I'd already decided this week was my cut off. However, they're also offering me free management for a while... so I'm considering staying because I want a tenant quickly - but I'm not convinced they will manage that as they haven't been motivated so far. I regret not putting a new PM in place two weeks ago, the vacancy rate is low in the area and I think I would have a tenant by now.

So I'd like to know at what point people would change PMs. I'm talking about getting houses tenanted in areas with low vacancy rates, as well as other things like communication, finding quality tenants, etc.

 

What state are the props in? Different states have different notice periods.

Longer time to find tenants doesn't necessarily reflect on the PM though. Obviously sooner is better. What's the property like? How is it priced? What's the local market like this time of year ? What have been the quality of apps been like so far?

 

Both are in Brisbane. First property one quality applicant but they took a week to process the application then it fell through.

Second property (this is the one I'm more concerned about at the moment as I have no tenants) has no applicants so far, it's not on the market yet (as said, four weeks after settlement). As for pricing, I've been given three different numbers with a fair bit of variation. I'm not sure what the length of time on the market is for the area (I should look that up) but vacancy rate is 1.4% however, as I said, it hasn't even been placed on the market.

 

I've had vacancies of up to 5 weeks. It does happen.

In one case I didn't have a problem with it because the market was depressed and the property manager was actively working on it and communicating with me.

In another case I did fire the PM. It was obvious that certain things needed to be done, the property was advertised incorrectly and the PM wasn't really doing anything about it. The new PM got some repairs done, proper photos taken, dropped the rent to meet the market and had a tenant within a few days.

 

Whilst only one side of the story, those are the stand-outs to me. I wouldn't be impressed.
Also, imo, any business who feel they have to provide "free management for a while" isn't doing something right.
I wouldn't think @D.T. and @Xenia would do this.

Perhaps start a new thread asking others for PM recommendations in whatever area your properties are in.

 

Property no.2, this property should be advertised the day of settlement no excuses. A week to process an application is far to long also, although in some cases managers can be slow to give references for very good tenants to endeavour to hold onto the tenant. After sending off a rental reference request, if I haven't heard anything back after 24 hours I will then call and follow up. Speak directly to the principal about your concerns and if nothing changes look elsewhere.

 

Definitely at worst case and best case a few weeks prior to settlement if it was with the same agency that sold the property. Even if it's a different agent it can often be negotiated as part of the sales contract to get some lead time on letting to reduce vacancy. One of the only advantages of using the same agency for PM that sold the property is that 99.9% of the time they will use the "We will allow inspections prior to settlement" as a marketing tool to get the management. If you haven't negotiated this as part of the contract it's a way to get around it.

If a buyer's agent is used then they should have put that into the contract and helped follow up on the PM side of things too.

I'm sure it will be sorted....

 

While I'm all about value for money and the best deal.
However sometimes you get what you pay for.

 

Thanks everyone I've got it sorted now. I know, they've totally stuffed us over. Our bad for letting them do it for so long though.

 

This has nothing to do with it.
The agent is offering a compensation for stuffing up and they did stuff it up big time.

Not taking the compensation or throwing more money at the agent is not going to make them more competent.
Property managers should be competent at what they are doing irrespective of what they charge.

The higher priced ones should have more services on offer. Cheaper agents however should still offer basic services and there is no amount that warrents totally stuffing it up for a client.

You can still get a basic (not great) meal at a cheap restaurant but you can't justify getting food poisoning just because they are cheap. There is a level of competency expected.

 

There are vacancies caused by slow market conditions and then there are vacancies caused by incompetent agents.
Ie inadequate advertising, property not properly exposed, not chasing leads, not advertising quick enough.

The job of a property manager is to do all they can within the market conditions and not ever make themselves the reason for high vacancies.

They can't even advise landlords effectively about a plan of action to get the property moving if they ARE the problem.

Hope this gets sorted for you Hetty.

 

I like your kick arse attitude, good pm is critical.

Vacancies due to negligence by pm will kill your income, I have low tolerance for this, flick them off straight away

 

If everyone, incl pollies, gov workers, were on min award plus certain commission/performance bonus for their role, perhaps the country would be in better shape.
People in sales, on commission, get results, otherwise they don't get a decent income, have a job.

 

What!!!
Make people actually get results before they get paid?
Right now The people getting the results owe everyone else a decent living. That way no one else actually has to be responsible or think, they just need to demand their rights.

 

Absolutely true, there is always a basic level of competency expected (i.e. no food poisoning) but in reality I don't think that's how it works, which is why there are so many complaints about PM. The reality is that all people (employees) were simply not created equal which is why people go into many and different varied jobs. PM is customer service and administration so entry requirements are not high (which is the crux of the problem), but the level at which those aspects are done can vary greatly. For example...

You can get a $10 meal at a local pub or you can get a $500 meal at a Michelin star restaurant. It's still a meal without food poisoning but the the chef and staff at the MS restaurant get paid a lot more for a far higher level of competence so the results will be better and more consistent. If the customer refuses to pay for a $500 meal, the owner won't be able to pay the better chef and staff more money, they will find better paying jobs/careers and the the only option the customer will be left with is the $10 pub meal.

Supply and demand works everywhere.

 

In NSW, Developers terminate their associates

What is the case against millionaire property developer Medich?

 

Are you having the second one renovated during this 4 weeks time?

 

No, some little things were fixed, but only a couple of days worth of stuff. I moved the property to answer agency a week ago so hopefully it will be rented soon.

 

Sack them straight away...........and then get someone else who is asleep at the wheel (most likely) to take over so you can go through it all again.

 

Four weeks after settlement. They definitely don't have your best interests in mind at all.
I would be moving on with another PM company.

Next time you purchase a property have a clause in the contract that your managing agent can start to show the property on your behalf once it has gone unconditional.