Inside T&H: Terminating Your Contract
I’m sure you’ve heard the saying, “all good things must come to an end”, and as we wrap up our “Inside T&H” series, that’s exactly what we want to talk about.
While we hope to remain your partner for years and years to come, there will inevitably come a time when we part ways.
Terminating a contract is never something we look forward to, but we understand that it’s a natural part of the investment process.
And when it’s time to end your contract, we want to make sure you are handled with the same care as we provided when you began the relationship with us.
We have identified 3 main reasons why you may want or need to terminate your contract and the process involved in each.
- You want to sell your property – By far, the number one reason we lose Clients is when it’s time to sell. Selling is a very common aspect of the investment cycle.And with that, there are various reasons why you may want to sell.
Maybe you’re just tired of being a Landlord. We get it. Being a Landlord isn’t for everyone… especially if you suffer through a difficult event like an eviction or high-cost turnover.
Or maybe the home is worth significantly more than what you paid for it and you feel like it’s a good time to cash out.
Whatever the case may be, we have the staffing, experience, and resources to help guide and advise you on if, when, and how much you should sell your property for.
As most of our Clients know, we have a large list of investors who LOVE, LOVE, LOVE to buy occupied homes. And usually multiple times a month, we sell homes within our Client network.
Selling an occupied home makes sense for a lot of our Clients, as they avoid turnover costs and other costs associated with vacancy including lost rents along with utility and lawn maintenance expense.
In some cases, when the home is worth more on the retail market than it is on the investor market, it makes sense to sell the home vacant.
Whatever the case, we can advise you accordingly and help you with every aspect of selling the property.
- You want to move back into your rental property – While the majority of our Clients are investors and have never lived in the home we manage (and never plan to) we have a decent amount of Clients who use us to lease and manage their home while they are away. This includes military families, or executives who take on a job assignment overseas for a few years. Eventually, they come back and want to live in the home again.
In these cases, once the Tenant vacates, we’ll conduct the walk-thru and advise you of any Tenant-related damages that exist. We can even help with non-Tenant related improvements as well.
- We’re a bad fit – While we certainly strive to exceed your expectations, we are just not the best fit for everyone.We’re very upfront about this and work hard to vet our Clients heavily before signing a Contract.
But, while everyone generally has good intentions at the outset, sometimes things just don’t work out.
In cases where a Client initiates a termination and the home is empty or will be empty, there are no termination fees.
However, if a Client terminates the contract during the term of a Lease, we do charge nominal termination fees.
Why do we charge termination fees? As you may know, Real Estate commissions and fees center around the “procuring cause” philosophy.
Here’s a scenario: We sign a Property Management Agreement with Joe Investor and Lease Joe’s property for $1,200 per month on a 24- month Lease. Joe receives a postcard in the mail from a new Property Manager in Indianapolis that’s offering a $9 per month management fee for 12 months if Joe fires us and switches.
In this scenario, we procured a Tenant that will pay Joe $28,800 in rent by contract and, further Joe has a better than 50-50 chance of renewing the Lease for an additional year or two, or three, or four.
Since Joe is still profiting off our work, a termination fee is justified.
We aren’t like a cable company, who may cancel your service and still charge you a fee. We only charge a fee when income that we helped generate is still being produced a property.