Property Management Agreement

You’ve talked with a few management companies and you found one you like, now what? It’s time to review and sign the Property Management Agreement. This agreement outlines the legal terms, responsibilities and obligations of you as the owner and the property management company.

Below I highlight the most important parts of a Property Management Agreement to review before you enter into a relationship with the property management company. Please read to the end, as I also share the most important things that the agreement CAN'T tell you.


1. How Easy Is It To Cancel and Are There Fees?

We believe a property management company should not force you to work with them, lock you into long term contracts, nor should they charge you termination fees or penalties if you leave. Ideally, you want a month-to-month agreement from a company that has to earn your business every month and allows you to leave anytime you want – without penalty!

  • Our management agreement is month-to-month with NO termination fees or penalties

2. Are There Any Hidden Fees?

Are you having trouble finding the fees the company charges you? There are management companies that charge owners over 30 different fees! Yes, 30! Ensure you’re clear on what’s included in the monthly management fee and what’s an extra cost.

3. How Much Money Do I Have To Place In Reserve?

Most property management companies have a reserve per property to pay expenses that are incurred before or after you receive the rental income each month.

Reserve amounts vary, but you should expect this amount to be anywhere from a few hundred dollars, up to one full month's rent.

  • We require an escrow reserve of $400

4. How Fast Do I Get My Money?

How quickly does the property management company process the tenants' rent, deduct any expenses, then pay you?

You want your money ASAP! And no two companies are the same. Some companies make owner distributions in a couple weeks, some take over a month!

  • We close our accounting cycle the first week of each month and disburse funds through a secure ACH transfer directly into your bank account on the second Friday of each month.

5. What Is The Maintenance Trigger?

One of the reasons you hire a property management company is so that YOU don’t have to be bothered with the day-to-day issues and problems that happen – including routine maintenance and late-night repairs.

Eventually the toilet is going to back-up, the sink is going to leak, and the AC is going to go out.

For the protection of your property and to comply with health and safety laws, your property management company MUST have strong maintenance protocols in place, at reasonable costs.

Be sure you understand when you will have to become involved in repair requests and be wary of a company that gets you involved for every minor repair.

  • We handle all repair issues and don’t bother you for items under $400

6. What Are The Guarantees?

Two of the common fears we hear from owners are:

  • What if my property sits vacant?

  • What if my tenant does not pay rent and has to be evicted?

If either of those things happen, how will the property management company respond and will they share in the expense?

While it can’t be guaranteed that a tenant will always pay on time – will your property management company re-rent the property for free? Or better yet will they pay the legal fees on your behalf?

While guarantees like these are not common – ask “What DO you guarantee for me!”

  • Check out our full list of guarantees (HINT: we cover eviction costs, waive fees in the event the property sits and much more!)

7. Who Handles Evictions?

Although evictions should be rare, if a legal problem must be addressed, will the property management company do it for you? This is where you want to ensure you’re working with a professional property management company and NOT a realtor who does property management on the side.

You want to be sure that the company will handle ALL legal problems on your behalf including preparation and service of the legal documents required to initial the eviction process in Texas.

Beware of any management agreement language that requires YOU to involve YOUR legal counsel in cases of tenant eviction.

  • Although rare, if an eviction is necessary, we oversee the entire legal process from start to finish. We even prepare and serve the legal notices required for this process.

What the Property Management Agreement Can’t Tell You:

Because Property Management Agreements are written by attorneys to outline the legal relationship between you (the property owner) and the property management company, they can’t tell you the most important aspect when selecting a property management partner - care. 

Does the property management company care about you, your property and providing a quality service? 

Do they care about their reputation with residents and the Texas Real Estate Commission? 

Partnering with a professional property management company that you know is looking out for your best interest and will always do the right thing, is invaluable. 

I hope this information will help you make an informed decision for your property management needs. Please don’t hesitate to reach out for any of your real estate needs.