PM Contract has no services listed, only permissions granted
I'm starting with my first LTR, and I just received a PM contract that looks like it gives them a ton of permissions, but doesn't actually say what they promise to do. Also, is 13 months with a 60-day termination a standard term? It seems like they are ensuring they get locked in for a second lease. And at 100% of the rent amount for new leases, 50% for lease extensions, and 10% monthly, I feel like I should know their criteria for finding a tenant, where they will advertise, that professional photos will be taken, their promised service turnaround, etc.
Although they don't say what they WILL include, they do state what is NOT including advice about new construction or renovation, which is part of why I want their expertise.
If someone is happy with their PM and willing to share their contract with me, can you DM me?
#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
- Investor
- Austin, TX
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#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
- Investor
- Austin, TX
Reach out to them and express your concerns, we can't change the contract for you.
Quote from @Chelsie Hall:
13 month term? Yes, they are locking you in so they can earn another leasing fee!
Every business is different. I charge high fees, but I like to explain what I do to earn those fees. If a PM can't show me - in writing - what they will do for me, then I won't sign.
You can talk to them about your concerns and see if they have an Owner Handbook or something on their website that explains what you are paying for. If not, I would keep looking for another manager.
Remember: cheaper doesn't mean you'll make more money.
Start by going to www.narpm.org to search their directory of managers. These are professionals with additional training and a stricter code of ethics. It's no guarantee but it's a good place to start. You can also search Google and read reviews. Regardless of how you find them, try to interview at least three managers.
1. Ask how many units they manage and how much experience they have. If it's a larger organization, feel free to inquire about their staff qualifications.
2. Review their management agreement. Make sure it explicitly explains the process for termination if you are unhappy with their services, but especially if they violate the terms of your agreement.
3. Understand the fees involved and calculate the total cost for an entire year of management so you can compare the different managers. It may sound nice to pay a 6% management fee but the extra fees can add up to be more than the other company that charges 10% with no additional fees. Fees should be clearly stated in writing, easy to understand, and justifiable. Common fees will include a set-up fee, leasing fee for each turnover or a lease renewal fee, marking up maintenance, retaining late fees, and more. If you ask the manager to justify a fee and he starts hemming and hawing, move on or require them to remove the fee. Don't be afraid to negotiate, particularly if you have a lot of rentals.
4. Review their lease agreement and addenda. Think of all the things that could go wrong and see if the lease addresses them: unauthorized pets or tenants, early termination, security deposit, lease violations, late rent, eviction, lawn maintenance, parking, etc.
5. Don't just read the lease! Ask the manager to explain their process for dealing with maintenance, late rent, evictions, turnover, etc. If they are professional, they can explain this quickly and easily. If they are VERY professional, they will have their processes in writing as verification that policies are enforced equally and fairly by their entire staff.
6. Ask to speak with some of their current owners and current/former tenants. You can also check their reviews online at Google, Facebook, or Yelp. Just remember: most negative reviews are written by problematic tenants. The fact that a tenant is complaining online might be an indication the property manager dealt with them properly so be sure to ask the manager for their side of the story.
7. Look at their marketing strategy. Are they doing everything they can to expose properties to the widest possible market? Are their listings detailed with good quality photos? Can they prove how long it takes to rent a vacant property?
This isn't inclusive but should give you a good start. If you have specific questions about property management, I'll be happy to help!
#2 Managing Your Property Contributor
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#2 Managing Your Property Contributor
- Property Manager
- Royal Oak, MI
@Chelsie Hall we don't do business outside of metro Detroit, so this isn't in anyway a solicitation. Go to our website www.LogicalPM.com and surf our service buttons to read how we execute the services we provide.
Our management contract does include what we must do for an owner.
Suggest you keep looking and compare PMC's, their websites & contracts.
Even if someone give you a referral, what meets their expectations, may not meet yours.
In our experience, the #1 mistake owners make when selecting a Property Management Company (PMC) is ASSUMING instead of CONFIRMING.
It's often a case of not doing enough research, as they don't know what they don't know!
Owners mistakenly ASSUME all PMCs offer the exact SAME SERVICES and PERFORM those services EXACTLY THE SAME WAY, so price is the only differentiator – and they often select the first PMC they call!
So, the first question they usually ask a PMC is about fees - instead of asking about services and HOW those services are executed.
EXAMPLE: PMC states they will handle tenant screening – what does that specifically mean? What documents do they require, what credit scores do they allow, how do they verify previous rental history, etc.? You’d be shocked by how little actual screening many PMC’s do!
This also leads owners to ASSUME simpler is better when it comes to management contracts.
The reality is the opposite - if it's not in writing then the PMC doesn't have to provide the service or can charge extra for it!
We have a 14-page management contract that we've added our real experiences to over the years, with the intent of protecting both us AND the landlord. Beyond the Monthly Management, Placement & Maintenance fees, all other fees in our contract are IF EVENT -> THEN fees.
We don’t know any PMCs to recommend in the area mentioned, but since selecting the wrong PMC is usually more harmful than selecting a bad tenant, you might want to read our series about “How to Screen a PMC Better than a Tenant”:
We recommend you get management contracts from several PMCs and compare the services they cover and, more importantly, what they each DO NOT cover.
EDUCATE YOURSELF - yes, it will take time, but will lead to a selection that better meets your expectations & avoids potentially costly surprises!
P.S. If you just hire the cheapest or first PMC you speak with and it turns into a bad experience, please don’t assume ALL PMC’s are bad and start trashing PMC’s in general. Take ownership of your mistake and learn to do the proper due diligence recommended above😊
Please send us any feedback via email, as we do not use the DM feature here.
These recommendations were so very helpful—THANK YOU ALL! I am just so grateful at the time this community is willing to give to help other investors.
Here's what happened. I asked two other companies for PM contracts and sample leases. I reviewed it all. One company called (and emailed) right after my inquiry. We talked for 45 min and never once did I feel dismissed or SOLD, just informed. He then came out later that day and again we talked for an hour. Although his fees are the same, he is part of a franchise that has sophisticated systems in place, so reporting and such is available 24/7 for both owner and tenant. It felt more like a hospitality company than a real estate agency and that really resonates with me. My tenants can opt-in to convenience options at no additional cost.
I signed on with Keyrenter yesterday and I have my first showing today. This might just work out after all!!
I think one thing to note is point of contact. I would worry about some big company where a salesman is real good at talking to you and selling you. The problem I think most people will have is maintenance. Tenant quality is often based on asset quality so that can be messed up by big or small companies. Maintenance though vs a small company is something I hear a lot of negatives about. If the pmc is hundreds of people there is a good chance they have some voice automated way of dealing with it where very few people take any accountability. If you have a place that doesn't need a lot great but if you do I hope it isn't a nightmare for you and tenants to have maintenance done. Small companies have a point of contact. I really hope that this works out for you. I would read about who is responsible for updating licensure requirements as well.
Tim, you were exactly right! They were great salesmen but dropped the ball so badly on maintenance requests that he left me open to a lawsuit regarding a cracked glass door that he took so long to fix that a child ended up putting their hand through the glass. Thank God no one was hurt and no lawsuit was filed. I'm now self-managing using RentRedi. The tenant is happy and I'm enjoying the added cash flow. I'll probably self-manage until my numbers demand I hire someone.