Are you looking to hire a property management company for your persona property or commercial building? Do you know what to look for in property management agreements? This is a great question, as every company seems to do things a little bit differently.
In this article, I would like to cover the essential elements and what to look for.Keep in mind, I am not a lawyer and this should not be construed as legal advice. This is for informational purposes only. Laws vary from state to state, and you should hire a competent attorney to review any contracts before signing.
One very important point before we dive in…
You are the owner. And you are the CEO of your property investment.
Take a moment to read that again.
Act like the CEO and be the Asset Manager of your property. Your Property Management Company is not going to be the Asset Manager. They will handle the day-to-day operations, but do not hand everything over to them and expect them to maximize returns for you.
This is one of the biggest mistakes investors commonly make. Be sure that you are working on the important items as the owner. Focus on maximizing returns and increasing property value. Do not sacrifice one for the other.
OK great. Let’s dive in.
Here are the basics of what to look for in the property management agreements. By no means is this a comprehensive list, but we will cover the high points.
Appointment of a Managing Agent
As the owner, you are authorizing the Property Management Company to be your property manager. Be sure to choose a reputable company that you trust. Take the time to do your homework. You’ll be glad you did.
Length of the Agreement
Just like a Lease Document, there will be an initial term described, and subsequent terms of the agreement. In the apartment property business, you will find many times that the length of the agreement will be from year-to-year.
Typically the Property Management Company will handle all of the transactions for the property. They receive the rent, pay the bills, and cut you a check for the difference.
Rental of Units
The Property Manager has the authority to advertise, show, and rent the units. This is where hiring someone you trust comes into play. Your Property Manager has complete access to your property as well as to prospective buyers and renters. You want someone who will represent you in a positive and professional manner at all times.
The Property Manager has the authority to hire maintenance folks – either on staff or subcontractors to take care of any maintenance issues. In this section, be sure there is a dollar amount stipulated and if repairs go above this stated amount they must be approved by the owner. Never give your Property Manager a blank check to the repairs on your property.
Of course, the contract will stipulate the Management Fee. Typically this is a set percent of collected revenues from the property.
The last section to cover is the Termination section. It will describe why and how either party may terminate the agreement, any penalties, etc. In this section, it would be a good idea to have a 6-month trial period where you could terminate the agreement without penalty. This will save you if you are not happy with their services.
Property Management services are super convenient and can save you lots of time, money, and headache when it comes to caring for your properties. Just make sure that you are comfortable with the terms that are outlined in your agreement as well as with the individuals themselves before turning over the keys. Make sure all documents are properly notarized as well if notarization is required.
Coast2Coast Signings is a global signing service dedicated to providing the most convenient, efficient and professional signing services. Our goal is to provide our clients’ with excellent customer service, a knowledgeable staff, and the ability to find experienced notaries wherever and whenever they are needed. Our team is on staff 24/7 to fulfill any of your signing needs. With a combined 50 years of experience, our mission is to help fulfill our clients’ needs with the utmost respect and adaptability. Coast 2 Coast is the only signing company proficient in completing signings on a global scale, on any coast and in any country.