Research Question - Red Flags when interviewing Property Managers?

[Nathan Gesner]

What are some red flags to watch for when interviewing Property Managers?

[Robert Ashton]

Would you consider a Management Agreement with these characteristics to be a red flag?

General Contract Language

- Broad language allowing PM to receive and collect fees from tenants so long as it doesn't explicitly conflict with said agreement (meaning any additional fees can be added even if not in contract)?

- Broad language excusing PM from any responsibility (including that of anyone they subcontract out to)

- Charging the owner additional "convenience fees" if they "fail" to perform according to an agreement (with broad language about what that means)

- Making the owner pay for any mediation / attorney fees for both parties (with no cap specified)

Specific fee structure:

- Management Fee: 10% scheduled rents (up to 3 units); 8% up to 15; 6% up to 35

- New tenants placement (not renewals): 50% first month rent

- 10% mark-up on all service fees (no receipts required)

- 15% mark-up on total cost for any capital expenditures

- Flat turnover fee

- Flat evictions fee