When property owners decide to hire a property manager to oversee their rental properties, they typically enter into a management agreement that outlines the responsibilities and duties of the property manager. This agreement is a crucial document that helps protect both parties and ensure the successful management of the property. While each management agreement can vary depending on specific needs and circumstances, one common provision is the authorization given to the property manager to act on behalf of the owner.
The management agreement may allow the property manager to collect rent and security deposits, handle tenant complaints, evict tenants, and make necessary repairs or improvements to the property. However, some property managers may also be given additional authority and responsibilities, depending on the terms of the agreement.
One important aspect that property owners should consider is the property manager`s authority to set rental rates and negotiate lease agreements with tenants. This provision can be particularly beneficial for owners who are not well-versed in the rental market or who do not have the time to conduct tenant screenings, showings, and lease signings themselves. A property manager with experience in the local rental market can help set realistic rental rates that maximize income while also attracting high-quality tenants.
Another important aspect of the management agreement is the property manager`s authority to sign contracts and enter into agreements with third-party service providers, such as maintenance workers, landscapers, or utility companies. This provision can save time and effort for property owners who do not have the experience or resources to manage these service providers themselves.
Property owners should also consider whether the management agreement allows the property manager to make decisions regarding major repairs or renovations. While some agreements may require owners to approve any repair or renovation over a certain dollar amount, others may give the property manager more leeway to make these decisions independently. Property owners should carefully consider their investment goals and financial constraints when deciding how much authority to give to the property manager in this area.
In addition to these considerations, property owners should also ensure that the management agreement includes provisions that protect their interests, such as liability insurance requirements for the property manager and a clear termination clause that outlines the process for ending the agreement if necessary.
In conclusion, the management agreement is a crucial document that outlines the duties and responsibilities of the property manager. By carefully considering the authority given to the property manager in the areas of rent collection, lease negotiations, service provider contracts, and major repairs, property owners can ensure that their properties are managed effectively and efficiently. With the right management agreement in place, property owners can focus on their investments and enjoy the benefits of passive income from rental properties.