Subjects To Address In Any Property Management Agreement

It's not like hiring an employee to manage your commercial real estate investment property. Direct hires allow you to set parameters and have them agree to or negotiate terms. A property manager or management company will most likely have its own method of doing things.

Signing a contract is one of the best ways for everyone to be on the same page regarding business. What should a contract contain? While you should consult a lawyer, these are the basics.

What Property Management Services Does The Company Offer?

This may sound obvious, but there are many needs and services between builders and managers. Are you expecting a management company that will do minor repairs or hire someone to handle billing? Would you rather manage the building work yourself? Who will handle evictions? These issues can be identified and avoided so that you don't get any unpleasant surprises later.

What Fees Will A Property Management Company Charge?

Sometimes the cheapest option may not be the best for your business. While some property management companies may have higher fees, they might also be more experienced and can handle potential problems more effectively.

If there are any problems, it is worth putting all the information in the contract. Pay attention to the overall fee. You don't want the company to take 7-10 percent of the total rent.

What Are The Responsibilities Of Property Owners?

Although there is no standard here, you can put any information that you wish to be able to write down as a building owner. You can also indicate if you want the firm to make that change.

Also, you should ensure that they don't violate any local or national laws regarding discrimination or the Fair Housing Act. Your property's laws will vary depending on how it is used. This includes whether the building is rented exclusively to businesses or whether it also contains rental living spaces. You can get help from a good lawyer, and the property manager should be familiar with these issues so they know what they can and can't do.

How Long Is The Contract?

It might be worth a trial period of several months to ensure that it is a good fit. You might then renew your contract for one year. A termination clause should be included that allows either party to terminate the agreement after giving notice of 60 or 90 days. This gives you both protection and allows you to search for a replacement if needed.

What Are The Termination/Cancellation Terms?

If your property management partnership is unable to be completed, stating the major deal-breakers in your contract will give you both more legal standing in the event of a dispute. If you want to end the relationship before it ends, the management company may ask for an early termination fee. You might also specify the specific circumstances that will trigger your right of withdrawal, including legal issues. You might be able to terminate your lease early if the property manager doesn't hold the deposit in an interest-earning account or violates fair housing law.

How Will Cash Flow Look?

When will rents start to be collected? When will you, the property owner, receive the money? When will additional fees and charges be levied? Is there a way for property management firms to access an emergency fund? When and how will the management company get paid?

These questions should be included in the contract. There are bills that you have to pay, and you need to know when the money is coming in. This will help you make sure that your property management company is on time with your tenants. You should also request a monthly report. Set a due date and specify bullet points.

A relationship with potential property managers should flow smoothly if you have a good understanding of their business model and how they work together. To remind everyone of the terms and conditions, you can refer to the contract that you signed together if there are any problems.