How & When to Fire Bad Property Management Clients

For most property managers, adding doors and growing revenue go hand in hand. In some specific cases, however, the opposite can be true. Yes, removing the wrong doors from your portfolio can actually increase your revenue.

Nobody likes to fire a client, but when push comes to shove, it’s important to make decisions that set your business up for success. Dealing with a problem client can take up immeasurable time, resources, and emotional energy, leaving you with very little leftover. When you come to this crossroads, it’s important to prioritize the health of your organization and your team over the discomfort of letting go of a client.

In this post, we’re exploring how to know when it’s time to fire bad property management clients & how to go about doing it in a way that minimizes the impact for your company.

When to Fire Bad Property Management Clients

Bad behavior tends to snowball with time. A single bad interaction typically isn’t enough to merit ending a partnership with a client. On the other hand, If you’re working with clients who are repeatedly causing issues, it’s worth reconsidering your working relationship.

Chances are better than not that if you’re wondering whether it’s time to fire a client, you already know things need to change. Some of the most common reasons to consider letting go of a bad client include:

• The Client is Not Willing to Invest in the Property
  Stuck with a client who is unwilling to invest in the upkeep, repairs, or renovations of their properties? When clients neglect essential maintenance or refuse to invest in necessary repairs or renovations, it not only compromises the integrity of the property but also reflects poorly on the property management company. The ripple effect has a far reach, as poorly maintained properties make tenants upset; then, you might find yourself drowning in bad online reviews that could have a hugely detrimental effect on your bottom line. One of your jobs as a property manager is to convince your clients of the importance of reinvesting rental profits into ongoing care of the property. If you encounter a client who isn’t willing to play ball, it may be time to fire them.

• Unrealistic Expectations & Pressure
  Firing property management clients with unrealistic expectations becomes necessary when their demands consistently exceed reasonable boundaries and compromise the ability to deliver satisfactory services. Recognizing the signs that a client’s expectations are unrealistic is crucial for property managers to maintain professionalism, preserve resources, and safeguard their reputations. Clients with unrealistic expectations often expect immediate results or demand services that are outside the scope of what can be reasonably provided. You know the kind. They want you to obtain $500 more per month than the market value of the home and don’t want to pay for professional marketing. They are convinced they know better than you when it comes to operational practices like maintenance coordination and accounting. They may also be unwilling to accept market realities or legal constraints that impact their property’s performance. Clients who are constantly dissatisfied despite efforts to meet their demands may indicate an unbridgeable gap between expectations and reality. If repeated attempts to manage and communicate with the client fail to resolve the issue, terminating the client relationship may be the most prudent course of action.

• Your Client is Monopolizing Your Time & Attention
  Time is an invaluable resource in property management, and clients who consistently consume an inordinate amount of your time without providing commensurate value can hinder your overall productivity and profitability. When client demands become excessive, they begin to impede on your ability to effectively serve other clients and manage your business. Signs that a client is monopolizing your time include frequent and lengthy communication, constant requests for immediate attention, and an inability to respect boundaries or adhere to agreed-upon protocols. As a property manager, you need to evaluate the impact of a client’s time-consuming behavior on their ability to meet the needs of other clients and maintain a healthy work-life balance. If attempts to establish boundaries or manage the client’s expectations prove ineffective, it may be necessary to terminate the client relationship to protect your time and preserve the quality of service you provide to other clients.
• The Client Mistreats You & Your Team
  Some people are just toxic and letting that toxicity into your business isn’t just frustrating, but it can seriously bring down morale. Are the wrong people controlling what happens on your team? Are you screening calls preemptively or actively trying to avoid interacting with one of your clients? Clients who can’t be professional or treat your team in a condescending way are more hassle than they’re worth, plain and simple.

How to Fire Bad Property Management Clients

Once you’ve made up your mind and you’re ready to let go of a client, it’s important to develop a thoughtful strategy to minimize any backlash. This process should look something like this:

1. Refer to Your Management Contract

   In the same way you build leases to protect the interests of the property owner, you should always be sure to create management contracts that make it easy for you to terminate your working partnership. If necessary, you can remind the client of the terms of the contract when ending things.

2. Choose the Right Communication Channel

   Nobody wants an unexpected breakup text from a partner, and a business relationship is much the same. It’s typically best to schedule a phone call to discuss the end of a management relationship. Stick to the facts and explain that you don’t believe your business offers the right fit for the client’s goals.

   If you’re dealing with an aggressive or uncooperative client, sending a letter may be a better option. If you opt for written communication over a conversation, take the same approach. Outline the reasons behind your decision and be firm in the choice you’ve made. Remember, you are not negotiating here. This needs to be a clean break and you set the tone for how things will be terminated.

3. Provide A Clear Gameplan

   It’s important to provide a clear plan of action for the next steps in the process, which will ensure that both you and your client are able to make the right preparations moving forward. Outlining these steps in detail will help to ensure things are as smooth sailing as possible.

Ending a client relationship can be awkward and uncomfortable, but when the partnership is no longer effective, it doesn’t serve you or the client. By taking decisive action, you’ll not only protect your company and your team, but you’ll also eliminate the challenges associated with trying to juggle this relationship.

Looking for more operational help for your property management business? Learn how our property management coaching can help you to achieve impressive returns.