Most owners sign a management agreement without really reading it, and then get surprised later by fees and terms they never noticed. I’ve read a lot of these contracts, including the ones my competitors use, and there are a handful of traps worth knowing before you sign anything.
Watch the termination terms
Some managers charge a steep fee to cancel, sometimes hundreds of dollars per unit. Some hold your rent payments the moment you give notice. Some won’t release your files and keys until you pay up. Read the termination section first, because it tells you how a company treats you on the way out, which tells you a lot about how they’ll treat you while you’re in.
Find out who keeps the money
Late fees are a big one. Most management companies in Chicago quietly keep the late fees your tenants pay. Those are your fees, charged on your property, and they should come to you. We return 100% of late fees to the owner. Ask any manager you’re considering where the late fees go, and watch how they answer.
Then look at maintenance. A lot of managers mark up every repair invoice, so a $300 repair becomes $360 and they pocket the difference. Ask if they mark up vendor invoices.
Look for the hidden recurring fees
Annual technology fees, inspection fees, statement fees, the little ones add up. A good company will show you the whole fee schedule upfront without you having to dig. If you have to pry it out of them, that tells you something.
The best test of all: can you read the full agreement before you ever pick up the phone? Ours is posted on our site for exactly that reason. You should know what you’re agreeing to before you commit to anyone.
Questions about a management agreement, ours or anyone else’s? Call Mike Fisher, Licensed Illinois Real Estate Broker, M Property Group LLC (New Lenox, IL), at 708 719 0977.
