Property Management Question

[Kyle Wells]

Good morning BP community,

I have a scenario that I wanted to bounce off other investors as I need to set a precedent with my property manager and curious what others do in similar situations. Currently, I pay my PM a 50% new lease fee, 8% management fee, and $250 lease renewal fee. I have 9 doors under management with this PM. They recently placed a tenant in a C class property of mine and after 3 months they allowed the tenant to break the 12-month lease if they left the property in good condition/clean and he returned all but $200 of their damage deposit (used to change locks/clean property). My PM was able to re-rent the unit without any vacancy, but had put a 50% new lease fee on the monthly accounting. None of this was communicated to me and so I naturally questioned why a new lease fee was added. He offered to reduce it to a $250 lease renewal fee without me asking.

I can see how this can get out of hand and eat into my cash flow if it were to continue happening, so I'm looking to nip this in the bud with my PM. I would love to hear your thoughts on a good solution/process for the future.

[Drew Sygit]

They should have informed you and discussed UPFRONT before acting. As @Scott M. pointed out, they might have acted in your best interests in letting the tenant terminate early, but you ALWAYS deserve communication.