Whether you are a first-time landlord with just one property or a housing association with a wide range of homes, a property manager can be a welcome addition to the team. A property manager can result in better-maintained units, increased profitability, and higher-quality residents.
When you have fewer tasks on your plate, you gain the free time necessary to investigate new investments. You may even find ways a property manager can help with expanding your real estate portfolio.
No matter your reason for hiring a property management firm, once you’ve found your ideal match, it is important to know the next steps, your property management agreement.
What Is a Property Management Agreement?
Once you have found a property manager that suits your needs, you will need to sign a property management agreement is. In the agreement, both parties document their responsibilities and outline the partnership going forward, in writing.
This is a contract between the property owner and the property manager. It’s the perfect place to iron out the details of what will and won’t happen within your professional relationship.
Why Is a Property Management Agreement Important?
Documented agreements serve many purposes, the most important is the protection of all parties involved. As with other partnerships, it’s imperative to outline what each party is responsible for. The purpose of a property management agreement is to clarify the role of both the property owner and manager.
The agreement ensures everyone knows what to do daily and can minimise disputes later. You want to know that your investment is in good hands. An agreement also delineates the daily tasks of running a property, such as responding to tenant requests, handling routine maintenance issues, and filing time-consuming paperwork.
What Should a Property Management Contract Include?
While the exact language of property management agreements can vary quite a bit, there are a few key elements that should always be present.
Who: Parties to the Contract
The document should begin with the full legal names of all those signing. Include the name of the property owner or the rental portfolio business name as well as the name and contact information of the property management firm. Also, this section should include the date the contract goes into effect.
What: Property Management Services
This is the place to be as explicit as possible about what property management services will be included. While needs vary from owner to owner, typically property managers take care of one or all the following depending on client needs:
- Leasing Services
- Rent Collection
- Late Fees and Noncompliance
- Preventative Maintenance and Repairs
- Tenant Relations
- Accounting and Reports
When: Contract Term
You’ll also want to incorporate dates of the agreement and what to do if the worst should happen. This section often outlines a set date for the contract to end or renew, what events may bring the agreement to an early end, what to do if someone wants out of the contract early, and how those involved will complete any outstanding obligations in that event.
Whose: Owner Responsibilities
In addition to stating explicitly what property management services will be offered, a property management agreement lists owner responsibilities. Most commonly, an owner who wants to work with a property management company agrees to have:
- Reserve funds to plan for unexpected expenses.
- Landlord insurance, which is probably legally required in your state anyway.
- Final approval of tenants on all units.
- Right of entry to the property they own.
Of course, there are limits to what an owner is entitled to when their property is occupied. It’s best to familiarise yourself with a few of the things landlords can’t do.
How Much: Fees
Property managers generally charge in one of two ways: a monthly percentage of the rent or a fixed amount. Both are common practices and are accepted in the industry. You just need to discover what works best for you and your investment.
With all these moving parts to consider, the good news is that you don’t have to reinvent the wheel by creating a property management agreement from scratch. Beginning with a template and adjusting the language as needed to fit your situation is a time-saving step we highly recommend.
How R.A.D Property Management can help
R.A.D Property Management
is an independently owned bespoke property management company which uses local knowledge to serve landlords and tenants to the highest quality.
It’s vital that you find a management agent you can really trust. At R.A.D Property Management, we are truly passionate about what we do and this commitment to our work means we deliver a first-class service to both landlords and their tenants.
We offer a complete property management service which can be personalised to meet your unique needs. So, whether you are a first-time landlord with just one property or a housing association with a wide range of homes, we can help. If you’re a client who lives on-island or who lives overseas it is essential, you have a team on hand they can trust to take care of all aspects of the letting process.