Property Managment contract question

[Matthew Rinaldo]

I am about ready to rent out my first LTR. I feel more comfortable with a property manager for the first one at least. The cost doesn’t seem that bad and won’t hurt cash flow that much. In the contract they state that basically I have to keep them as a manager for the full term of the one year lease. If I choose to not use them in that year I have to pay $500 fee plus remainder of the management fees. Is this standard practice?

[Nathan Gesner]

Yes, it's pretty standard. You should be able to fire them without penalty if they fail to perform, but firing them without cause usually involves a penalty. A property manager does a lot of work up front, particularly with a new owner. Then they make 10% of the rent, which doesn't pay for their time. In my company, I have to manage a property for 3-4 months before I really starting earning any profit.