Suggestions on how to improve property management agreements

One of the complaints with property management agreements is the incentive structure is not always consistent with the landlord. Here are some common fees and whether they have property manager and landlord interests aligned:

• A monthly fee based on the rents collected. The landlord and property managers interests are aligned. 
• A maintenance oversight fee. The property managers interest is to achieve the highest fee which could lead to inflation of the repair price. 
• Resigning fee less than the advertising fee for finding a new tenant. In this scenario, the financial motivation would be to find a new tenant as the property manager could potentially get the advertising fee as well as the oversight fee for repairs (if any). An unscrupulous property manager could promote turnover leading to increased maintenance and repair costs. 

A goal would be to have property management agreements align interests with landlords. For example, an incentive based bonus based on the year over year operational costs would provide additional incentives for reducing repair costs and turnover.