Property Management Fee - Gross Rent

[Jon Dorsey]

I have a smaller multi family property and have a PM company that I really like. Our agreement on fees states they get a % “of total gross rental income received on all rental agreements.”

They see that is taking a % of collections at 100%, what could be, whereas I see it as % of what was actually collected that month. Every month there are a few tenants who are late but catch up within the next 2 months. 

My concern is that the PM is taking payment on rents they haven’t collected. 

Two questions:

1) who is correct on gross rent definition?

2) am I making a mistake by addressing this bc the PM goes above and beyond and I eventually get that back rent?

[Jason D.]

@Jon Dorsey if it says, "10% of gross rent received" you should only be paying them for rent that is collected. If it says "10%of gross rent", that could be interpreted as you pay them whether that collect or not.

My PM only charges on rent physically collected. If the tenant doesnt pay, they dont get the 10%