Are you watching the signs, or are you justify their actions? Here are some signs your manager (or management company) may be the issue:
Auditing
Property audits should be a monthly occurrence. These should be unannounced and very detailed. If your Regional Manager is not looking at files, cash, deposits, vacant and occupied space, video footage, cleanliness, repair issues, etc.....you've got a big issue. Things can get out of hand quickly. They should care about this more than you, the investor!
Not Acting Like Your Partner
It is very important to find a manager (and management company) that treats the asset like their own. Someone that is just focused on collecting minimums, is worthless! A manager (or management company) should run the asset like a true business partner, come up with ways to increase revenue, and think everyday on how to improve the product.
Reporting
If you are not getting reports on time, you should be scared; very scared! Your weekly, monthly, quarterly, and yearly reports should come, virtually, at the same time....every time. In addition to them being in on time, they need to be accurate. If something is off, consistently, you've got issues. Either the CFO (or accounting team) is not paying attention to detail, or something more sinister may be going on. Checks and balances need to be in place. You should also have full access to the accounting software as well!!
High Controllable Expenses
For the most part, your managers (or management company) cannot control property taxes, utility costs, and insurance costs, but they can control most other things. If your managers are not working, I don't be working with, I mean working to get the best value for services, you should be concerned. Managers should be getting new bids for services every year on items like landscaping, HVAC serving, trash services, etc.
Vendors get comfortable with companies who they think are "asleep at the wheel". We believe that all vendors should sign in, and out, and that sheet be sent to accounts payable, with the invoices to match up billing. Many times we catch vendors padding hours. The problem typically comes from their service people telling their boss that they worked (for example) two hours on a job that took 45 minutes. They don't want their boss to know they messed around for over an hour. They have to account for their time too!
Cash Fluctuations
If this area of management is fluctuating too much, without forecasting, justification, or forewarning, you've got issues. This is a red flag! Either it is a problem at the property, or in the Home Office. Either way, it is bad, bad, bad!
Follow through Lacking
It is expected that both parties will follow through and keep to their promises. Property management companies which lack accountability and reliability about deadlines are demonstrating a lack of respect for your time, for your investment and of your tenants. Trust must exist between a property owner, tenants, and property managers to have a solid foundation of accountability and reliability for any business to be run or managed effectively.
Employee Turnover
Employee turnover is expensive. Not only from a recruiting and training aspect, but from a lost opportunity aspect. High turnover is a result of poor hiring, poor training, poor employee development, poor leadership, or a combination of all of the above. Get to the bottom of this. If you are not happy with the answer, look for another company.
These are just a few of the flags that should concern you! If we freaked you out a little, just call us. Maybe it is not as bad as you think....or maybe it is worse!
Brian Byrd