I'm in the process of purchasing a property that is currently tenanted and managed. I've been in communication with the current PM and received a sample management agreement. Since this is my first property purchase, I'm not sure what I should be concerned about and what is reasonable in an agreement.
The agreement is 8 pages, so I'm hesitant to copy/paste the entire document into this post. If it's suggested to have a lawyer review the agreement, would anyone have recommendations to whom I could reach out to?
Appreciate any assistance.
The one thing that I did not pay enough attention to was when can I switch the PM if I'm not satisfied with them and how much will it cost me. For the rest, I would just read through it and try to figure out if it all somehow makes sense to me. If you really want to be sure, you will probably have to hire a lawyer that can explain it all to you.
@Steve Johnson I've had PM transitions before and I've shopped around quite a bit to find someone to manage my portfolio. I'm familiar with most PMs in the area. Feel free to connect with me and we can have a quick call to answer your questions.
I am typically very cautious with property managers who expect you to sign a long term agreement. I have learned the hard way, that its best to go with property managers who aim to earn your business every month.
@Steve Johnson Most of it shouldn't be legalese... If you have questions about sections, just ask them.. I own a property management company, and some stuff is in there just to CYA...
Our contract is for a year, but I have been toying with the idea of just making it month-to-month.. Most of the time I fire the client or we both agree it's time for them to go. What I generally tell my clients is "If I am doing something wrong, give me 30 days to fix it, and if we can't I will let you out of the agreement..." Never had anyone use that clause, but it's out there..
Piece of advice: since you are a new investor, everything you have read about property management and what to expect.. It may not be true... Kind of like all the advice about having kids, most of that goes out the window when you actually HAVE kids.
Trust your gut and use common sense.. Do NOT expect the PM to be perfect... Expect that you will not stay with this guy/gal/company forever.. Hell, expect you won't stay with them for more than a year.. You are going to expect certain things from them, and they may not meet your needs. It's ok to switch companies, just like they may ask you to go elsewhere... It's almost a partnership/marriage... You both have to like each other.
There is BAD PM's out there. Definitely do your due diligence. The old adage about you get what you pay for is true. Ask for referrals and CALL them. Find someone you can work with, and USE COMMON SENSE when dealing with them.
Make sure you get copies of your leases, and make sure you can get a ledger if needed. If something goes south and you need to bail to a different PM you want the transition to be as easy as possible.
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