Do you have one or a a few income properties and not happy with your property manager or are thinking about hiring a property manager?
We are not property managers nor ever intend to be one so the points below are are for you to consider in an unbiased format. We do help our clients find tenants, screen and prepare a lease and even offer names of trusted trades people but the day to day, month to month management, we do not touch!
This is probably the most important clause you can have in a management agreement. In it the management company promises to do its best when managing your property. It is a legal term, which, among other things is defined as "that amount of diligence which a reasonable and prudent person would exercise under the circumstances."
The professional property manager has an extra duty of diligence, since it has implied, by taking on a management contract, that it is expert in rental property management.
Communication and Notification
Here they are obligated to tell you what's going on in the management of your property, as necessary.
Ask to see a copy of a spreadsheet or past client sample accounting for expenses and revenues, both monthly and year end one.
One thing to watch out for is when will they send the money? How? By cheque or direct deposit. By what day of the month will your cheque be mailed to you? Will the cheque be for that month, or will the management company hold back a month? What happens to the security deposit they collect from the tenant?
Termination of the Agreement
Every agreement will have a provision for its termination. The question is how long does it take to terminate and is there a cost or penalty to you if you do so before a certain date?
Just about every management agreement will provide for the management company to handle repairs. Usually they hire contractors or other companies to handle them. What you will find in the agreement is a "hold-harmless" clause, saying that the management company is not responsible for the "acts, defaults and negligence" of the people they hire. What you also want to see in the agreement is a statement that they will use "reasonable care" when they hire anyone to work on the property.
Certainly they are not responsible for people over whom they have no control. But they are responsible if they hired someone who has a history of shoddy or dangerous work and they knew or should have known that he did.
Evictions and Terminations of Tenancy
Believe it or not, some agreements don't provide for the management company to handle evictions. What are you hiring them for if not for their ability to deal with problems in the property? And what bigger problem is there than a tenant who must be evicted?
What you want is their expertise and their willingness to use it. Always make sure that the property management company will use due diligence in terminating the tenancy of any tenant who must be removed.
Will having all these clauses in a management agreement guarantee a smooth relationship with the property management company you hire? Absolutely not. You need to interview and get references from several before you commit to anyone. But not having these clauses in the agreement will almost guarantee you problems.
Note To Property Managers
Constantly I am asked by our clients to refer a property manager for them, either a single family house or condo to multi-family properties. If you feel you have the ability to be an above average property manager and have similar principles that we have, I would be very interested in sitting down with you.
The long term potential for those who excell , as with any profession, is outstanding and I only work with those who are above average. Average companies have average people who receive average incomes providing average service and products to average clients .
Average is easy and boring!
If you feel you and your company are above average, perhaps we should meet.