Monday, October 23, 2017

Pitfalls of Poor Property Management



When searching for a property management company, be sure they have the qualifications necessary to properly manage your investment asset.  Here is a short guideline of some pit falls that owners fall into when hiring the wrong property manager.

1)  Improper or Failure to Execute Property Management Agreement.
If the company you are thinking of hiring does not have a formal Property Management Agreement, they are not following the law.  Nobody is permitted to perform property management functions without the owner giving them authorization to do so.  That is what a Property Management Agreement is for.  It outlines a time period, cancellation provisions, the Broker responsibility and the owner responsibility to the relationship that is established to manage your property.

What Top Notch Does:  We have a formal Property Management Agreement which outlines the relationship and the duties of each party involved.  We do not manage property without this Agreement.

2)  Lack of Training or Knowledge of the Law including that of staff members
Does the company you are interviewing have knowledge of the law to protect you?  If not, run! A property manager and it's staff members should understand many laws including discrimination and fair housing, American Disabilities Act (ADA) guidelines, contract law including leasing laws, security deposit funds rules and regulations etc..

What Top Notch Does:  We have continual educational office meetings, webinars, in addition to cross-training.  We go to outside classes and conferences to network and learn best practice of property management.  Understanding Arizona Statutes and Residential Arizona Landlord Tenant laws is imperative so that we can protect you.

3)  High Turn Over of Staff Members
If you got used to dealing with one person in the office and then that person is gone, then you get used to the next person and then they are gone, this is concerning.  High turn over in staff is a reflection of the management or ownership staff.  Sure, people also leave good paying jobs, but the majority of turn overs is due to lack of respect, lack of a decent wage and micro-management.  This should be a red-flag.  If the management or ownership staff is unwilling to take care of their staff and have high turn over, how is your property getting cared for.

What Top Notch Does:  We treat our staff with the utmost respect.  We understand that everyone has a level of input that can help make the office run smoother.  If an employee feels appreciated and that their input is valued they feel like they are part of a company that cares.  We allow staff to be independent workers with their own style.  We are always open to new ideas and betters of improving.

4)  Poor Client Relationships (with owners and tenants)
If you are having a relationship with your property manager that is volatile, maybe you are just not a good fit.  Personalities clash.  Expectations were not established therefore not met. Why stay where there is frustration?  No respect for you or your tenant can lead to vacancies, expenses and added stress. 

What Top Notch Does:  We treat all parties involved with kindness fairness, respect and authority.  We have business relationships by setting expectations from the owner as well as the tenants.  We pride ourselves in conflict resolutions that are pleasing to both parties, but if we are unable to find a common ground we understand that maybe we are not a fit and make a mutual agreement to part friends.  We do not want to have hostile relationships with any owners or tenants.  This is not fun for anyone!

5)  Failure to document and organize files. 
If the company you are checking into or currently using cannot provide written documentation, photo documents or financial reports about your property, this is not good.  Property managers job is to help protect you.  They cannot do this thoroughly if they do not have proper documentation. 

What Top Notch does:  Document, Document, Document is our philosophy.  We use a software that has notes sections, email documentation and texting documentation capabilities.  This helps use keep record of all communications. 

6)  Lack of Proper Book-keeping Methods including trust accounts
Every month you should also receive a owner statement outlining any income and expenses for that month.  This helps you keep track of your expenses.  Arizona Department of Real Estate has strict guidelines for trust accounts, if they are not properly handled they are at risk of losing their license to operate.

What Top Notch Does:  Monthly the owners receive an owners statement including any work orders for work that was completed, outlining any income and expense for the property.  This will help you keep track of your income and expenses.    Per Arizona law all security deposits are held in a separate Trust Account.




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