I’ll be honest: firing my first property manager was one of the hardest decisions I made as an investor. We’d worked together for three years. They seemed nice. But the numbers were screaming at me that something was wrong.
After replacing them, I recovered $8,400 in the first year alone through better vacancy management and controlled maintenance costs. That’s when I realized the emotional attachment wasn’t the problem—the lack of objective data was.
If you’re sitting on the fence about your property manager, this post is for you. I’m going to walk you through the exact framework I now use to evaluate every PM relationship, complete with the metrics that actually matter.
The True Cost of a Mediocre Property Manager
Before we talk about firing, let’s talk about the financial damage a C-grade property manager does to your portfolio.
Consider a 10-unit property in a mid-sized market with an average rent of $1,200:
Scenario: Your PM vs. Market Average
- Market average occupancy: 94%
- Your PM’s occupancy: 89% (just 5 percentage points below market)
- Monthly revenue loss: $600 (5 units × $1,200 × 5%)
- Annual revenue loss: $7,200
Add in these common PM failures:
- Time-to-fill vacancies 10 days longer than market average (costing $400/vacancy × 3 vacancies/year = $1,200)
- Maintenance costs running 15% higher than comparable properties ($8,000/year more)
- Monthly statement errors requiring 2-3 hours of your time to correct (75 hours/year × $50/hour value = $3,750)
- Delayed rent collection causing cash flow issues (one late payment per month = $14,400/year in working capital drag)
Total annual cost of a mediocre PM: ~$26,550
And that’s before accounting for the opportunity cost of managing a manager instead of scaling your portfolio.
Now, a good PM might cost you $150/month more. That’s $1,800/year. The ROI on replacement becomes crystal clear.
The PM Performance Scorecard: Measuring What Matters
Stop evaluating your property manager on vague feelings or anecdotal evidence. Here’s what a performance scorecard actually looks like:
1. Occupancy Rate vs. Market Benchmark
This is the single most important metric. A good PM keeps your units occupied.
- A-Grade PM: Maintains occupancy within 1-2% of market average (or better)
- B-Grade PM: Occupancy 2-4% below market average
- C-Grade PM: Occupancy 5%+ below market average
How to track it: Pull data from CoStar, local rental market reports, or Zillow. Compare your PM’s occupancy to the neighborhood average for similar unit types and rent ranges.
2. Time-to-Fill Vacancies
This reveals operational efficiency. A PM who screens carefully but moves slowly loses money. A PM who fills quickly but with problematic tenants creates bigger problems later.
- A-Grade PM: Average 7-10 days from move-out to move-in
- B-Grade PM: Average 11-18 days
- C-Grade PM: Average 19+ days
What drives this: Marketing efficiency, application processing speed, and decisiveness. A PM who takes two weeks to return a completed application is costing you money.
3. Maintenance Cost Per Unit (Annual)
This one trips up a lot of investors. Higher isn’t always bad—an older building legitimately costs more to maintain. But comparing your properties to comparable properties reveals whether your PM is controlling costs or letting vendors run wild.
- A-Grade PM: Within 5-10% of comparable properties
- B-Grade PM: 10-20% above comparable properties
- C-Grade PM: 20%+ above comparable properties
Red flags: Recurring repairs (same unit, same issue multiple times), vendor relationships where the PM’s brother-in-law does all the plumbing, or emergency service calls on routine maintenance.
4. Financial Statement Accuracy
An underrated metric. Your PM’s monthly statement is your window into property performance. If it’s wrong, your decisions are wrong.
- A-Grade PM: 98%+ accuracy (you find 1-2 errors per year if any)
- B-Grade PM: 95-97% accuracy (you catch 2-5 errors per year)
- C-Grade PM: <95% accuracy (rampant errors, missing deposits, reconciliation issues)
What counts as an error: Late rent not recorded, maintenance invoices posted to wrong line items, tenant ledgers that don’t match deposits, utility charges not properly allocated.
5. Communication Responsiveness
This one’s both measurable and revealing.
- A-Grade PM: Responds to questions within 24 business hours; proactively communicates issues
- B-Grade PM: Responds within 48 hours; communicates reactively
- C-Grade PM: Takes 3+ days to respond; goes silent on problems
Track it: Start a simple spreadsheet. When you email your PM, note the time and when they respond. Do this for three months. You’ll have data.
6. Fee Structure Reasonableness
This is context-dependent, but wildly overpriced PMs are common. The rule of thumb:
- A-Grade PM: 7-10% of collected rent (varies by market and unit type)
- B-Grade PM: 10-12% of collected rent
- C-Grade PM: 12%+ of collected rent, or fees not clearly disclosed
Note: A PM who charges 12% but delivers A-grade results (higher occupancy, lower costs) is better value than a 7% PM delivering C-grade results. The real question is: Are you getting value for what you’re paying?
Building Your Scorecard
Here’s how to systematize this:
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Assign a weight to each category based on your priorities. Occupancy is usually most important (40%), followed by maintenance costs (25%), time-to-fill (20%), accuracy (10%), communication (5%).
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Score each metric on a 1-10 scale based on where it falls in the A/B/C framework.
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Calculate a weighted average. A PM scoring 7.0 or above is generally A-grade. 5.5-6.9 is B-grade (time to improve). Below 5.5 is C-grade (start planning the exit).
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Revisit quarterly. Property management isn’t static. Markets change, PM staff turns over, systems fail. A good PM from two years ago might be coasting today.
The Sunk Cost Fallacy: Why “We’ve Been With Them for 3 Years” Doesn’t Matter
I hear this constantly: “We’ve been with our PM for five years. They know our properties. It would be disruptive to change.”
That’s the sunk cost fallacy talking.
The time you’ve already paid them is gone. It doesn’t factor into today’s decision. What matters is: Will this PM deliver better value than the alternative for the next 12 months?
If your PM is scoring C-grade, replacing them will cost some disruption—yes. You’ll need to transfer files, brief the new team, address any transition issues with tenants. But this disruption is temporary. The financial drag of a bad PM is permanent.
The Transition Process: How to Fire Your PM Cleanly
When you’ve decided it’s time, execute this plan:
Step 1: Review Your Contract (30 Days Out)
Most management agreements require 30-60 days’ notice for termination. Find that clause. Understand what happens to:
- Tenant security deposits (they must be transferred in writing, usually within 7 days)
- Operating reserves (your money, not theirs—demand a full accounting)
- Tenant files and lease documents
- Maintenance records and vendor contracts
Step 2: Provide Formal Notice (Day 1)
Send written notice via certified mail and email. Be professional and unemotional. Example:
“Effective [date 30/60 days from now], we are terminating our property management agreement for [property address]. Please prepare a full transition package including: tenant files, security deposits ledger, operating reserves calculation, maintenance records, and vendor contact information.”
Step 3: Line Up the New PM (Days 1-20)
Don’t wait until day 29 to find a new manager. You should have already identified and vetted your replacement. Check references. Run through your scorecard framework with them.
Step 4: Conduct a Full Audit (Days 20-25)
Request a final accounting:
- Total security deposits held
- Operating reserves balance
- Tenant ledgers
- Any outstanding maintenance invoices
- Explanation of any discrepancies
This is often where bad PMs are exposed. Missing deposit documentation, commingled funds, unexplained charges—this is why you’re leaving anyway.
Step 5: Notify Tenants (Day 25)
Tenant communication matters. Send a professional letter explaining that PM services are changing, but nothing else changes. Provide the new PM’s contact information. This reassures tenants and ensures continuity.
Step 6: Execute the Handoff (Days 25-30)
- Have the old PM transfer all tenant files to the new PM
- Verify security deposit transfer (in writing)
- Confirm operating reserves are returned to your account
- Have tenants confirm they’ve received new PM contact information
Step 7: Review Everything (Day 35)
Don’t just accept the transition as complete. Audit it:
- Do tenant files match the lease count?
- Does the security deposit total match your records?
- Are all operating reserves accounted for?
Discrepancies discovered here are much easier to address than six months later.
Red Lines: When to Fire a PM Immediately
Some issues don’t require a performance scorecard. If any of these apply, start the termination process today:
- Tenant complaints about lack of maintenance response – This is liability risk
- Commingled funds or missing deposit documentation – This is illegal
- Unexplained charges or financial discrepancies – This is your money
- Failure to communicate on significant issues – You’ve lost control of your property
- Vendor kickback arrangements – This is fraud territory
What to Look For in Your Next PM
Once you’ve decided on a replacement, use your scorecard framework in the vetting process:
- Ask for three client references and actually call them – Ask specifically about occupancy rates, maintenance costs, and communication responsiveness
- Request a sample monthly statement from a current client
- Understand their fee structure completely – no hidden charges
- Assess their technology platform – Can you access data in real time?
- Evaluate their systems for tenant screening, maintenance management, and financial reporting
The goal isn’t to find a perfect PM (they don’t exist). The goal is to find one who consistently delivers A-grade performance on the metrics that matter to you.
Making the Data Visible: Why Tools Matter
Here’s the problem I ran into after replacing my first PM: I had no consistent way to track these metrics. I was juggling spreadsheets, monthly statements in different formats, email threads going back months.
This is exactly why tools designed for investor oversight exist. Platforms that aggregate your PM’s data—occupancy trends, maintenance costs, payment velocity, statement accuracy—make it impossible to miss a failing PM. You’re not operating on intuition or memory. You’re operating on real-time visibility into performance.
If you’re currently evaluating your PM, or suspicious that something’s off, the first step is to get the data out of the PM’s statements and into a system where you can actually see trends and benchmarks.
The Decision Matrix
Here’s your simple decision tool:
If your PM scores 7.0+: Keep them. Invest in your relationship. Pay them fairly. They’re adding value.
If your PM scores 6.5-6.9: Have a direct conversation. Show them the data. Give them 90 days to improve on specific metrics. If they don’t move the needle, plan the transition.
If your PM scores below 6.5: Start looking for a replacement. Don’t fire until you have someone lined up, but begin the process. The financial damage is too high to wait.
Final Thought
Firing a property manager stings emotionally. You might feel guilty. You might worry about disruption. You might question whether you’re making the right call.
But here’s what I learned: the only question that matters is the financial one. Is this relationship profitable? If it’s not—if the numbers are clear that you’d keep more of your rent, own units that stay occupied longer, and maintain lower costs with a different PM—then you already have your answer.
The data doesn’t lie. Trust it.
Ready to get real visibility into your PM’s performance? DoorVault’s health score system tracks the metrics that actually matter—occupancy rates, maintenance costs, financial accuracy, and communication responsiveness—in one unified dashboard. Stop guessing whether your PM is worth keeping. Get the data.
