Property Management Fee Query

[Cliff Earle]

Hello BiggerPockets!

I am negotiating my very first property management agreement. This management firm has a strong reputation, and I spoke with not only the firm itself at length, but also two of their customers (one of the two references was not provided by the firm). However, in reviewing their contract, some of the fees made me curious, and I was therefore hoping to solicit some feedback:

Base: 10%. Seems normal to me. One suggestion I heard was to base it off net rather than gross rent, but I suspect that would be a fight. However, what about basing it off collected rather than scheduled rent? (It also looks like they collect even if there is no tenant, which I’d like to remove –- but I think the prior sentence will address this and more.)

Leases: new tenant one month, renewal half-month. My understanding is that “normal” rates are half of the first month, not the full month. Someone suggested adding a clause to bar against high turnover, such as prorating this fee if a tenant is there for less than X months. There is also a fee in there for “acceptance of existing lease,” and I was not sure what that meant.

Pets: 100% of monthly fee. Why not 10%, as with the rest of the rent? At the very least if should be shared.

Eviction: 25% of cost. I hear this is within normal limits, but should I request a cap?

Setup fee: $200, discounted for additional properties. While this company only manages properties they rehabbed themselves, and as such is already familiar, I’m less included to question this one than the recurring fees, which will add up to far more money over time…the whole “pick your battles” thing.

NSF: 100%. I don’t follow the logic…the harm from a bounce is more to me than them, right?

Late: 100%. Seems like it should be split, as while they have to do extra work, 90% of the delayed money goes to me.

Key: $6. Fine by me.

Utility fees: 100%. Not sure what they mean by this, unless it is for vacancy periods –- any ideas?

Coordination fee: 10%. Not sure what they mean by this either –- any ideas?

Many thanks for your time and suggestions!!!