Property Management Fees

[Shawn Dandridge]

I have a Class A condo-townhouse in Frederick, MD. Built in 2013. I'm moving soon and an exploring the idea of  hiring a PM. The first agreement I read had the following fees, I'm just trying to see if these fees are standard in most PM agreements:

1. 65% of first month's rent and an additional 35% of the current rental income on each succeeding anniversary of said lease.

2. $85 a month when the unit isn't rented

3. $15 yearly banking fee

4. Financial Condition of Property Disclosure (asking about mortgages on the property and bankruptcies of owner)?

5.

The following clauses I'm iffy about. It seems to be giving up a lot of control to the PM:

In the event that the Property is not leased within sixty (60) days of the execution of the Agreement, or if the Property is not re-leased within sixty (60) days of the termination of a tenancy created hereunder, either the Owner or the Agent may terminate this Agreement. If Owner exercises this right to terminate this Agreement, Owner shall pay to Agent the sum of $300.00 as compensation for Agent’s efforts to lease the Property and shall pay the advertising and other costs actually expended by Agent in attempting to lease the Property. If Agent terminates this Agreement, Owner shall pay to Agent only the advertising and other costs actually expended by Agent in attempting to lease the Property.

Any late charges, returned check fees or other fees collected by Agent from the tenant under the lease shall be retained by Agent as compensation for the additional work time and administration expense involved.

Agent shall use its best efforts to collect said rents as and when the same become due and payable without recourse to legal action. However, Agent has the right to hire an attorney at no cost to it to institute legal action in the name of Owner or Agent, at Owner’s sole expense, for rental and other expense items due from tenant and/or for repossession of the Property occupied by delinquent tenants or tenants in violation of lease covenants. When expedient and in Owner’s best interest, Agent shall settle, compromise and release such actions or lawsuits or reinstate such covenants.

[Nathan Gesner]

I am a member of NARPM and agree you should start there. Try to find several managers and compare them to see what is "normal" for your market. Some of those fees and clauses seem questionable, but if you check with other managers and they are charging the same, then maybe that is your market. 

Remember: fees don't tell the whole story! What if they charge more but they get better results? I am the most expensive property manager in my area, but I am far more than a glorified rent collector and my owners make more money...even after paying my fees. 

Compare fees, compare contracts and forms, intervkew them about how they handle specific problems, and talk to some of their Landlords and Tenants. The bottom line is that you should never sign up for something unless you understand it and are comfortable with it.