Reasonable Property Management Agreement
I have just purchased my first rental property, and I would like to have a property manager manage it. I am reading the agreement that I received from a PM that was recommended to me, and there are things in that make me nervous. I feel like I am signing away all of my rights as an owner to them. I’d love to know what is reasonable and what isn’t.
Here are some of the things in the agreement that I find questionable:
- Term is 12 months. Can be cancelled with 60-day notice with a cancellation fee equal to 1 month’s rent. If tenants are in the home upon cancellation the agreement will be extended as long as the tenants are in the home. (This doesn't sound like a cancellation to me.)
- They will make any repairs under $250 (from funds I provide) and call me for repairs over $250 except for emergencies. They will make emergency repairs without notifying me. (I don’t have a problem with this in general, but in the beginning I’d like to be notified of everything in advance until I have worked with them long enough to develop a trust. Is that unreasonable?)
- Is it typical to charge extra for showing the home?
- Is it typical to charge for advertising the home in addition to the leasing fee?
- It says that they have the right to offer lease discounts for early payment of rent. (I'd like to know about this in advance.)
- It says the Property Management Agreement can be assigned to another Broker or Property Manager without my consent.
- It says if the property is sold to the tenant that they get a 5% commission on the sale and this provision shall survive any termination of the Agreement.
I have heard horror stories about property managers, so I am nervous about signing something that ties me to one so strongly. And trusting someone I don't know with the “unknowns” of repairs is scary. Thanks for any input!