Thank you for your interest in our company.  We are pleased to provide a copy of our property management agreement for your review.

Please allow us to introduce our agreement with some context.  First off, our preference is to use a handshake.  We believe in transparency, honesty, and old-fashioned “your word is your bond”.  Unfortunately, we are pretty old-fashioned in that regard, and that approach is not widely accepted in our society.  Hence, the property management agreement (PMA).

There are some important aspects to a PMA that you should be aware of, and they may not be the ones you are thinking of!

1. How Easy Is It to Cancel the Agreement?

Our PMA has you locked in for the first 12 months, and then cancellable any time after that with 30 days’ notice.  The reality is that if for some reason we screw up or things change in your life then we are not going to hold a gun (or contract) to your head.  We’ll terminate the agreement.  We want your success as much as ours!  We have the 12-month language in there because not once but twice we had an owner use our services to find a good tenant, and then immediately canceled the contract!  We don’t operate that way, nor do we want to work with people who operate that way.  So we added that clause.

If we screw up (and it happens — fortunately not very often), then we’ll just let you out.  If things change in your life such that you need to cancel after signing the PMA (it happens also!), then we will assess the situation.  We may or may not charge you a cancellation fee.  Each situation is different.  We want to be fair.  

Ultimately, property management is a relationship business.  It is about treating everyone (owners, tenants, vendors, etc.) professionally and respectfully.

2. Are Your Fees Hidden?

You can (and should) expect your company to charge fees for its services.  If the fees are buried throughout the agreement then that may be a sign that they are not as transparent as they should be.

Our fees are out there on page 1 for all to see.  In addition, we use the KISS method.   We don’t “major in the minors” — meaning we focus on earning you thousands of dollars, and not worrying about the pennies.  View our fee structure at: https://www.fullservicepm.com/pricing/

3. How Much Money Do I Need to Place In Reserve?

First off, you may be asking, “What is a reserve?”  A reserve is money that a property management company holds on account for expenses that may arise, such as utility bills or repairs.  If the reserve account gets depleted in one month, then it will get topped off the following month from the rent that is paid.  The reserve allows your property management company to manage your rental property efficiently without bothering you every time a bill comes in.

A typical reserve amount is between a couple hundred dollars to one month’s rent.

We require an escrow reserve of $500, to be paid shortly after you sign the PMA.

4. When Can I Expect to Receive My Owner Check?

Rent is always due on the 1st.  It is late on the 2nd.  By law, late fees must be waived through the 5th.  Mortgage payments, like rent, are typically due the first of each month.  But unlike rent, banks don’t typically charge late fees until after the 15th of each month.  We recommend funding your rental account with at least one mortgage payment so you don’t have to worry when the owner’s check arrives.

To give some leeway for late-paying tenants, we spend the 5th and 6th meticulously going over every account for errors.  We press “the magic button” on the 7th of each month to deposit your funds electronically into your account.  The banks will spend several days with electronic “handshakes” to make sure the transactions are secure.  In 14 years, we have never had a bad one!  Pretty amazing!

5. When Will I Be Notified of Maintenance Repairs?

Every company has a ‘trigger’ below which it will simply take care of the matter without your knowledge.  Anything above that trigger point will require your notification and/or approval.  These trigger points can range anywhere between $300 to $1,000.

Our trigger point is $500.

6. What guarantees do you provide?

First off, there are no guarantees in life.  Late-paying tenants and evictions are a part of property management.  The difference between good and mediocre property management is the frequency.  If someone is guaranteeing rental income or no evictions, then you should look carefully behind those claims.  A company cannot stay in business long paying off lots of guarantees.

During COVID, our delinquency rate never got above 8% while other companies were reporting rates in the teens, twenties, and even the thirties.  Before COVID, we had zero evictions. Since then, we have had four.   We will pay up to $1,000 in legal fees for an eviction.  It isn’t much relative to the cost of an eviction, but fortunately, we have not had to deal with many evictions.  Click here for details.

 

What the Property Management Agreement Can’t Tell You

Because Property Management Agreements are written by attorneys to outline the legal relationship between the property owner and the property management company, they can’t tell you what you need to know most.  Property management is a relationship business, no doubt about it.  But it should be a professional relationship and not a legal one!

PMAs can’t describe the most important parts of your new relationship– things like expertise, integrity, honesty, professionalism, communication response time, compassion, wisdom, and the list goes on.

These are the most important things to consider before entering into a relationship with a property management company.

You are NOT entering into a transaction, as much as you are entering into a relationship. You should have confidence and trust in the person and the company who will be keeping the keys to the front door of your valuable real estate asset.

 

I hope this information helps you choose a property management company that will fulfill all of your property management needs.  Please consider me a resource in helping you make an informed decision.

CLICK HERE TO VIEW OUR PROPERTY MANAGEMENT AGREEMENT 

Peter Nelson, CEO & Founder, Full Service Property Management / [email protected] / (206) 604-8747