So you’re about to sign on with your chosen property management company to help maximize your rental’s profits. Congratulations! This is the first exciting step towards making the most out of your rental property with the least amount of effort and headache. But before you can get started with your new property manager, you must first review your property management contract.
A property management agreement is a legally binding contract. That’s why it’s important to pay close attention to its terms. You may have the ability to customize your contract to suit your individual needs. But first, you must know the basics. We strive to give our clients the tools to understand their property management contract as we begin our partnership. Here are a few things you should keep in mind before you sign your name on the dotted line.
What Does A Property Management Contract Do?
A property manager can’t act on your behalf without your express permission. In a business as complicated as managing rentals and tenants, a property manager’s duties are often very complicated. In short, a property management contract goes into detail about all the actions a property manager can carry out on your behalf. It also defines the amount of money they can spend on maintenance without consulting you, the amount they charge in fees, and more. Like any legal document, a property management contract covers a lot of ground and details. As tempting as it can be to skim past them, it’s essential to read carefully.
Overall, a property management contract gives you confidence that your properties will be well-maintained. It also allows you to step back and focus on other aspects of your business.
Why Do You Need A Contract?
Though it seems tiresome to wade through the technical language, don’t let anyone convince you that it isn’t important. A property management contract protects your money and your property. It also lays out precisely what you should expect from the partnership with your property manager and what they can expect from you. This is an essential foundation for a productive business relationship.
When you sign on with a property manager, you’re putting a valuable asset in their hands. Trust is a huge factor, but trust alone isn’t enough. You also need the protection that a solid and comprehensive contract offers. You can relax with a good contract knowing your property manager will carry out your wishes exactly as specified. It removes the element of uncertainty, both for you and a property manager.
What Should A Good Property Management Contract Contain?
There are a few basics to look for when first reviewing your contract.
First off, the agreement should contain the names and signatures of all the parties in this agreement. Namely, you and the property manager. It should describe the property and specify the agreement’s duration. The contract should also include a specific procedure for cancellation and conditions for renewal.
Property Manager Obligations
A property management contract lays out the obligations that your property manager has to you. Usually, an agreement specifies that the property manager will act in good faith to the principal. They also promise to perform their duties with skill, care, and diligence. The contract also ensures they will disclose all relevant information to you, and keep their finances straightforward and available. Another clause to keep an eye out for is how your property manager will maintain the funds relating to your property. Often your property manager will keep that money in a trust account under your name. Then, provide periodic updates (usually every month) on how your property’s finances are doing. This ensures transparency, so you know exactly what’s happening with your investment.
Property management contracts also provide some critical financial guidance. An agreement might list what types of accounting functions your manager will provide, the procedure for paying outstanding bills, and the property manager’s authority to pay for essential maintenance. For example, a property management contract might limit the amount of work a manager can pay for without your specific approval. Or it might determine their ability to contract out for repairs.
And of course, the contract will also tell you precisely what you will pay your property manager. Standard fees include a management fee, which will usually cover payment for duties like accepting rent payments and handling repairs, and a leasing fee to cover advertising costs. Some managers might charge a flat rate. Others collect a percentage of the rent each month. This percentage can vary widely, from as low as one percent on a large structure to twenty percent in a resort area with high turnover. The manager’s fee reflects the scope of services provided and expenses covered. A higher cost might mean that a property manager will offer more services, such as financial asset management and the development of long and short-term budgets.
Lastly, your property management agreement will lay out how to manage your tenants. It should establish guidelines for handling any potential problems, such as late rent payments, property damage, lease violations, and evictions. By laying out these details on paper, you can know in advance how to address any unexpected hiccups in the renting process.
Overall, the terms of a property management agreement allow you to continue running the rental the way you see best without having to worry about the day-to-day details.
Sign On With Portland’s Premier Property Management Company
If you’re getting tired of dealing with property management’s ins and outs and are ready to partner with an agency you can trust, look no further than Rent Portland Homes by Darla Andrew. Our years of experience in the Portland metro area give us an edge in the Portland rental market. We conduct a free evaluation of your property before signing, professionally market your property, take care of maintenance and rent collection, and more.
A property management company gives you an edge in a competitive business where experience and attention to detail can make all the difference. When you sign on with us, you’ll have an entire team of professionals at your back to keep your property in the best shape. If you’re interested in partnering with us or have any questions, text or call us at (503) 515-3170 any time, or reach out through our website’s contact form. You can also follow our Facebook, YouTube, and Instagram pages for helpful property management tips.
We look forward to hearing from you!