Yes, it is sometimes necessary to fire a Client….
In fact, it is one of the best actions you’ll ever do for your property management business.
You work hard to earn Landlord business. You advertise your services, you interview, you scrap and scrape to retain your client’s when the proverbial SHTF (and it frequently does in the business of managing other people’s rentals.) You work excessively long hours. You even, sometimes, have to rebate back fees or stroke a check when someone in your company or a vendor screws up royally.
We’ve all done it.
But…..there comes a point where you grit your teeth with some clients when you wish you never wrote their business, isn’t there? Again–we’ve all done it. I certainly remember more than a few clients early on in our property management company’s history which I wish I would have terminated our services earlier rather than later.
The effects of a mismatch in property manager-to-landlord on a company can be a mosquito-bite annoyance all the way up to serious litigation, including these effects:
- Loss of Profits
- Loss of long term reputation amongst other investors/landlords
- Loss of long term reputation amongst other real estate professionals and our peers
- Distractions for staff
- Distractions for vendors pulled into the drama and circumstances
- Impairment of future growth plans due to resource misuse
- and finally, LOTS of stomach acid…
These negative consequences can be avoided, however, with some preventative measures.
- Well-written, comprehensive property management agreement
- Screen your prospective landlords almost as hard as you screen your tenants. You’ll likely have to only deal with a bad tenant for a year, but you’ll have to deal with a bad landlord long after you want to…
- Well-written and documented internal systems for staff to follow on how all landlord communications are to be handled.
- Training on #3 above for staff. Frequently. Repeatedly. Consistently.
Unfortunately, even with preventative measures, be on the lookout for these smoke events, as they signal a fire starting to burn. You’ve got to grab either the fire extinguisher and put the sucker out fast or evacuate the property immediately:
- Landlord fails to do what they say they are going to do when they say they are going to do it. Yes, this seems simple enough, but start monitoring the data points for a pattern.
- Landlord fails to pay in funds as required.
- Landlord goes around your staff and communicates directly with the Tenants without keeping you in the communication loop. This is setting you up for He/She said problems later on. It is also setting you up to be thrown under the bus by either the Tenant or Landlord, or both.
- Landlord fails to communicate with your staff in a timely manner on issues of urgency.
- Landlord does ANYTHING illegal or unethical. Zero tolerance here, folks. Your proverbial “posterior” is in danger zone.
- Landlord attempts or suggests doing ANYTHING illegal or unethical. Stop, drop, and roll…..
- Landlord is invoking new terms of the agreement or lease that don’t exist. In other words, they attempt to renegotiate your contracts.
Again, learning to look for the signs of trouble can keep you out of trouble or at the very least, keep you from getting burned.