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I recently moved close by 1 of my rental properties. There is currently the same family living there for 3 years. They want to remain there. The lease is up on 4/30. I can't really justify having property management now that I can do that myself. Previously I was several states away.
I notified the property manager that I want to regain control of the property. This was to occur when the current lease runs out.
Now here's the rub. If the tenants remain, the property managers want 12 months worth of property management fees. If the tenants move out, then I end the management agreement and get the keys back.
So it looks like my choices are:
1. Kick the tenant out. End the management agreement.
2. Regain control and pay several thousands of dollars for that privilege.
3. Let the current people continue to manage the property and pay the fee out of the monthly rent. The current tenants would do a new 1 or more year lease.
Is this a standard practice for other management companies? Has anyone else faced a similar situation?
I'd like to keep the current tenants. But I can't justify paying what seems to be what amounts to a shakedown fee.
"If the tenants remain, the property managers want 12 months worth of property management fees."
So....#1- assuming they are going to be managing the property for those 12 months, it sounds like they were expecting 1 year's notice before you quit them?
OR
#2- Do they want a 12 month "shakedown fee" while NOT managing the property?
I couldn't tell by your description if #1 or #2, or something else.
If it's #1, why fight it? If you've been happy with them all these years and it's in the contract, enjoy your last year not being a property manager. If #2, then get a magnifying glass on that contract.
"If the tenants remain, the property managers want 12 months worth of property management fees."
So....#1- assuming they are going to be managing the property for those 12 months, it sounds like they were expecting 1 year's notice before you quit them?
OR
#2- Do they want a 12 month "shakedown fee" while NOT managing the property?
I couldn't tell by your description if #1 or #2, or something else.
If it's #1, why fight it? If you've been happy with them all these years and it's in the contract, enjoy your last year not being a property manager. If #2, then get a magnifying glass on that contract.
It's very likely this contract language is put there to deter bad faith landlords, who are looking to get a discounted tenant placement, then cancel the PM contract. For me, I charge a significantly lower placement fee on managed units than I do for placement-only deals. I want the long term client, so that's why I do it this way. If I know a client is living close to the managed unit, I usually won't take them on as a client, since it can sometimes mean they're going to be nitpicking my management and oversight of the unit, leading to unnecessarily frequent communication. Ultimately for the OP, they agreed to this term in the contract, upon signing it, so if they want out, then they owe what they agreed to pay.
OP, why do you want to manage the property now? What makes you a good property manager? Is it worth saving the small percentage of the monthly rent to now be the sole point of contact for all things at the property? Do you have another complaint about this PMC, other than they have a sticky contract?
Let the management company handle this property for the next 12 months. But raise the rent to market at renewal if you have been below market.
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