Property mgmt fees question

[Steven Mitchell]

Hello,

We recently bought a property we need to be managed.  When signing the contract, we noticed they charged 10% of gross and 50% when they find a new lease, which we agree with.  However, if we fire them before a year is up, we owe them 675$.  When asked about this, they said its because they usually charge 100% of the lease fee, so if we fire them they need to recoup that.

Is that a standard provision?  I feel like this is giving them all the leverage, so if things go south I wont fire them due to stiff financial penalties.  But we also dont want to be unreasonable.  

If they dont work out, what 5 questions would you ask a property management company to vet them?  If we have to find another.  

Steve

[John Warren]

@Steven Mitchell I wouldn't say that is "standard", although many PM's want to protect their downside built in. I personally would not have signed that, and depending on the size of your project, would not consider 10% reasonable. I am paying 5% on my 20 unit currently, with a 1/2 months lease up fee. That is more in line with what I am seeing for small apartments. 

I would ask the following:

-How many maintenance people do you have compared to the amount of units you manage. 

-How much does a "service" call cost me?

-How many property managers do you have?

-What is the average turn over costing your owners?