Including Management fees in NNN?

[Evan Saab]

I talked to someone who told me an ideal lease agreement would be a NNN lease that includes 2-3% property management fees, so the owner doesn't have to pay for them. Is this realistic? I am planning on offering property management services, specifically for single-tenanted industrial properties.

Any thoughts?

[Russ Kitzberger]

Some leases do include management fees passed back to the tenants.  The parties can agree to many things.  Not sure if it will work on your proposed asset class.  I won't comment on the %, that is a business decision. 

In some areas; if there is a disagreement about a lease term, many managers will become a party to the litigation or arbitration, or atleast a fact witness, and that will take some stress and time and perhaps legal fees, even if you no longer manage the property.  You need to determine what the cost of doing business is vs the reward and set your pricing accordingly.