Who keeps the tenant protection commission under a 6% of gross deal?
An owner I've been talking with has a 42,000 rentable square foot facility, about 310 units, grossing roughly $560k. He's decided he wants out of the day-to-day and asked me to read the two management proposals he's holding. Both national platforms quoted 6% of gross revenue with a $3,500 monthly minimum, and one adds a per-unit technology fee on top of that, which works out to another $900 a month before card processing.
The part I can't get a straight answer on is the tenant protection program. Both proposals say the manager "administers" it and the revenue share is "per schedule A," and schedule A isn't attached in either one. On a facility that size the protection revenue could plausibly be $2,500 to $4,000 a month, which is a real slice of NOI, and if the manager keeps most of it the effective fee is closer to 12% of gross than 6%.
Two other things I want to understand before I tell him anything. First, does the management agreement give the manager unilateral control over the rate increase cadence on existing tenants, and is the owner able to override it? With length of stay running long right now that schedule is most of the revenue growth. Second, both agreements have a 12-month term with auto-renewal and a 90-day termination notice, and one of them has a clause that survives termination on the branded website traffic.
For anyone who has read these agreements from the operations side, which clauses actually matter and which ones are boilerplate that nobody enforces?