How to Switch Property Management Companies in Florida

If you're thinking about switching property management companies, chances are something isn't working.

Maybe communication has become difficult. Maybe your property has been sitting vacant longer than you expected. Maybe you're looking at your owner statement every month and still don't understand where the money went. Or maybe you're starting to discover that things you thought were being handled simply aren't being done.

We've helped plenty of owners transition to KNR from another property management company, and the first thing I tell them is usually the same:

Don't get mad and fire your property manager just yet.



First, figure out exactly what the problem is. Then pull out your management agreement.

Before You Switch Property Managers, Read Your Management Agreement

This is probably the least exciting advice in this entire article, but it may save you a lot of money and frustration.

Your management agreement and your tenant's lease are two completely different contracts.

The management agreement controls the relationship between you and your property management company. Before sending a termination email, look for:

• Required termination notice
• Early termination or cancellation fees
• Automatic renewal provisions
• Outstanding maintenance invoices
• Owner reserve funds
• Security deposits
• Requirements for transferring records, leases and keys
• Any other obligations that survive termination

We've seen management agreements that are relatively easy to terminate and others that make leaving extremely difficult or expensive.

We have actually advised owners to wait before switching because they were approaching a point in their agreement where terminating would be much easier.

There is rarely a good reason to make an expensive contractual decision out of anger.

Make Sure Your Property Manager Is Actually the Problem

This may sound strange coming from another property management company, but sometimes the problem isn't that the property manager is doing a bad job.

Sometimes an owner and property manager simply aren't a good fit.

Property management involves a lot of communication, and owners have very different expectations. Some want us to handle the property and send their statement. Others want to understand every repair, invoice and decision.

Neither is necessarily wrong.

The important thing is finding a property manager whose communication style works with yours and who has enough time to help you understand what's happening with your investment.

We've had owners become frustrated about expenses that weren't caused by property management at all. An HOA bill is still an HOA bill.

An air conditioner can fail. Insurance and taxes can increase. A slower rental market can affect how quickly a property leases.

Years ago, we had an owner who became convinced something was wrong with his distributions. Month after month, we would sit down with him and walk through the statement.

Here's the rent that came in.

Here's the HOA expense.

Here are the other property expenses.

And here's what's left to distribute to you.

Eventually he became frustrated enough to leave and signed with another property management company.

About three months later, he called wanting to come back.

Unfortunately, the new management agreement he had signed made that extremely difficult. He was essentially committed to the new company for the next several years.

The lesson wasn't that the other property manager was bad.

The lesson was to understand the problem you're trying to solve before signing another contract.

Sometimes, Though, It Really Is Time to Switch

There are also situations where an owner has every reason to start looking at other options.

Poor communication is a big one.

So is discovering that work you approved wasn't actually completed.

We recently had an owner move several properties to KNR after experiencing multiple bad move-ins with her previous management company. She had approved work and believed the properties were being prepared.

Then she stopped by during the vacancy.

The properties were still dealing with fleas, and work she thought had been completed hadn't been done. Meanwhile, the recommendation she continued receiving was to lower the rent.

That's a very different problem from simply disagreeing over rental pricing.

We've also encountered an owner with a larger rental portfolio who discovered that a resident at one of his properties hadn't paid rent in approximately ten months. He discovered the problem when he went into the account to pay property taxes.

That's not a minor communication-style difference.

If you don't know whether rent is being collected, approved work is being completed or what condition your property is in, those are reasonable reasons to start asking serious questions.

Can You Change Property Managers With a Tenant in Place?

Yes.

You do not need to leave a property vacant simply because you're changing management companies.

In fact, we regularly take over occupied properties.

The existing lease doesn't disappear because the management company changes. We review the lease when we enter the resident and property into our system, and then we manage the property under the agreement that's already in place.

Sometimes we inherit leases with language we wouldn't have used ourselves.

My very technical response to that is: too bad, so sad. The lease is the lease.

We can't simply rewrite an existing agreement because we prefer our lease.

We manage under the current lease. When renewal time arrives, if the owner and resident both want to renew, that's when we transition them to KNR's current lease.

A change in management also doesn't create an opportunity to simply change the resident's rent in the middle of an existing fixed-term lease. The existing rental agreement remains important after a management transition.

What Happens to the Tenant When Property Management Changes?

This is one of the biggest concerns we hear from owners with good residents.

They don't want changing property managers to create unnecessary chaos for someone who is paying rent and taking care of the home.

Neither do we.

When KNR takes over an occupied property, we contact the resident immediately. We don't rely on one email and hope they see it.

We communicate through multiple channels so they understand:

• KNR is now managing the property
• The change is legitimate and not a scam
• Where future rent should be paid
• How to access their AppFolio resident portal
• How to submit maintenance requests
• How to contact our office when they need us

Then we tend to overcommunicate during the first few months.

Something interesting often happens after that introduction.

The residents start talking to us.

Once they realize we're responsive and actually want to know what's happening at the property, they'll often mention maintenance issues or concerns that have been sitting unresolved.

We then work with the owner to determine what needs immediate attention and what can become part of a longer-term maintenance plan.

A management transition doesn't have to be disruptive to a good tenant. Done correctly, it can actually improve their experience.

What Happens to the Security Deposit?

Florida law specifically addresses what happens when there is a change in the designated rental agent.

When the management of an occupied rental transfers, security deposits and applicable advance rents being held for the tenant are transferred to the new owner or agent along with the applicable accounting.

At KNR, we also communicate the change to the resident so they know we are now holding and accounting for their security deposit.

Nothing about changing property managers should make a resident feel like their deposit disappeared into thin air.

What Records Should Transfer to the New Property Manager?

In a perfect world, when we take over an occupied rental we'd love to receive:

• The current lease
• Resident contact information
• Resident ledger
• Security deposit accounting
• Keys and remotes
• Move-in inspection and photographs
• Previous property inspection reports
• Maintenance and work-order history
• Open work orders
• Pet or assistance-animal documentation
• HOA information
• Other property records that may help us manage the home

In reality?

Sometimes we get the lease, security deposit and a set of keys.

That's about it.

I can count on one hand the number of times we've received really comprehensive inspection documentation during a management-company transition.

That doesn't necessarily mean the former company never inspected the property. They simply may not have records organized in a way that gets transferred.

At KNR, we believe those records matter. If one of our owners leaves, we provide the move-in photographs, inspection photographs and other documentation we have that can help the next property manager successfully manage the home.

Ultimately, the property still belongs to the owner, and continuity matters.

What If There Was Never a Move-In Inspection?

Unfortunately, we encounter this frequently.

We can't go backward in time and recreate the condition of a property on the day the resident originally moved in.

What we can do is begin documenting from the point we take over.

We work newly acquired occupied properties into our quarterly inspection rotation. During the inspection, we photograph the property, document its condition, verify items such as keys, HVAC filters and safety equipment, and look for maintenance concerns.

That gives us a starting point.

What If the New Property Manager Finds Deferred Maintenance?

This is another reason I don't like pretending a management transition is just paperwork.

Sometimes we walk into a property and find years of deferred maintenance.

We've inherited homes with HVAC systems that haven't been serviced, missing smoke detectors or fire extinguishers, active roof leaks and properties that simply haven't received the attention they needed.

One property we took over had water staining between the upstairs and downstairs that had reportedly been an issue for roughly 18 months.

We brought in a plumber, opened the ceiling, located the slow leak, repaired the problem and then repaired and repainted the damaged living-room area.

That's what I mean when I talk about actually getting eyes on a property.

When we discover a list of deferred maintenance, we don't necessarily expect an owner to tackle every cosmetic issue tomorrow.

We prioritize it.

First: emergency and safety concerns.

Next: necessary repairs and items that could cause additional property damage.

Then: cosmetic and capital-improvement items.

When appropriate, we can help the owner create an 8- to 12-month plan to work through the remaining items without trying to do everything at once.

What Happens to Rent During the Transition?

Residents need clear instructions about where to pay, regardless of what point in the month the transition occurs.

If a resident accidentally pays the former management company during the transition, the funds can be transferred and reconciled between the companies.

At KNR, we typically collect rent during the first part of the month, reconcile the property's accounting and aim to make owner distributions between the 10th and 15th.

The important part during a takeover is communication. The resident shouldn't be left wondering where rent goes, and the owner shouldn't have to chase everyone around trying to figure out where the month's payment landed.

How Quickly Can KNR Take Over Management?

Once the owner has signed the necessary documentation and the former management company has acknowledged the termination and transition, KNR can generally establish management within 24 to 48 business hours.

The biggest variable usually isn't setting up the property in our system.

It's how quickly the owner completes their documents and communicates with the outgoing management company.

And KNR does not charge an additional takeover fee simply because an occupied property is transferring from another manager. Our regular management fee begins when we begin collecting rent under our management.

Do You Have to Wait Until the Property Is Vacant?

No, and I wouldn't intentionally create vacancy simply to make changing management companies easier.

Taking over a vacant property does give us one advantage: the next resident starts on the KNR lease from day one.

But vacancy costs owners money.

We're perfectly comfortable taking over an occupied property and managing under the existing lease until renewal.

What If the Property Has a Difficult Tenant?

That's not automatically a deal breaker either.

We take over properties with unpaid balances, difficult resident situations and significant deferred maintenance.

Sometimes an owner specifically hires us because they need help resolving an existing tenancy before the property can move forward.

Those situations can involve additional costs depending on what's required, but a property doesn't have to be perfect before we'll talk to you.

Sometimes that's the entire reason you need professional management.

What Should You Ask the New Property Management Company?

Before leaving one company for another, make sure you're not trading one set of frustrations for another.

I would ask the prospective property manager:

What will I actually pay?

Understand the fee structure during both occupied and vacant periods. Ask about management fees, leasing fees, renewal fees, maintenance coordination, inspections and any other charges that could apply.

Do you perform move-in and move-out inspections?

Ask what gets documented and whether photographs are taken.

Do you inspect occupied properties?

At KNR, quarterly inspections are an important part of how we manage. Whatever company you interview, ask whether inspections occur, how frequently they happen and whether you're charged separately for them.

Can I see the management agreement before I make a decision?

You should have adequate time to understand the agreement you're being asked to sign.

KNR provides our management agreement with our initial information and fee structure so an owner can review it and ask questions before moving forward.

I'd rather answer ten questions before you sign than have you discover something you don't understand six months later.

How to Make the Transition Easier

If you've decided it's time to switch, my advice is pretty simple:

Keep your emotions in check.

I understand that rental properties involve money, and money makes things emotional very quickly.

But an angry email rarely makes a transition easier.

Read your agreement. Follow the required termination process. Ask for your records. Give the outgoing company reasonable time to prepare the transfer. Let the incoming manager coordinate the operational pieces.

Most property managers are professionals and will work together to make the transition happen.

And remember that losing a large portfolio may understandably feel different to a company than losing a single property. That's another reason to keep the communication professional and focused on getting the transition completed correctly.

Switching Property Management Companies Doesn't Have to Be Dramatic

Switching property management companies sounds intimidating, but it doesn't have to be.

With good communication, a clear transition plan and an office that knows what needs to happen next, the process can actually be pretty painless for both the property owner and the resident.

The goal shouldn't be to create drama with the company you're leaving.

The goal should be to put your rental property in a management relationship where you understand what's happening, trust the people handling it and feel comfortable asking questions.

If you're considering changing property management companies in Gainesville, North Central Florida or one of the Florida markets KNR serves, start by reviewing your current management agreement.

Then let's talk.

We'll tell you what our process looks like, what we charge, what we would need to take over the property and whether we think KNR is actually the right fit.

Because sometimes changing property managers is the right move.

And sometimes what an owner really needs is a better understanding of what's already happening.

It's worth figuring out which one applies before you sign anything.

This article provides general property-management information and is not legal advice. Rental agreements, management agreements and individual circumstances vary. Property owners with questions about their contractual or legal rights should consult a qualified Florida attorney.