Indonesian Property Investment Guide

Whether you are an owner or a manager a contract is a must for both. Both the owner and manager need to know the rules, and a contract outlines these rules. A management contract gives the property manager sole rights to the management of the property. When an owner is reluctant to sign a contract and the owner wants to save fees by telling a manager that if the manager rents the property first, then the owner is willing to pay a fee, confusion usually occurs. The owner and the manager have to continually compare notes, there is duplicate advertising and many duplicate prospective tenants. Both Owner and Manager should think about the problems that can arise when the Manager is not given exclusive rights.

First the contract contains the property manager's company name, the owner's name, the property address or name of property that will be under the contract. Next the contract should contain what the duties of the owner and what are the duties of the property manager. Typically, the duties of the property manager include but not limited to, advertising the property, screening applicants, collecting rent , collecting deposits, keeping all records of the rent received, payments from the collected rent, preparing the lease, and whatever else the property manager and the property owner want in the agreement.

Next would be the compensation for the manager. This would most likely be in two parts. The first part would be the fee for finding the tenant. This fee is usually based on the amount of one months rent, usually anywhere from one-half months rent or one months rent, for a 1 year lease. This covers the cost of the property manager advertising the property, screening prospective tenants, preparing the lease and collecting the security deposit. The second part would be the monthly fee, which is usually a percentage of each month's rent.

The management contract will show the effective dates, the start and end of the contract. This could be for 1 year or it may be for 1 year and renew itself, that is, until one of the parties cancels the contract.

The owner's duties might contain stipulations such as insurance coverage, that the owner will have the necessary insurance for the property. Also the contract might indicate that the property owner must keep the property in good repair and up to building code standards. Other expectations could be added, based on the property manager and the property owner's needs.

Both the property owner and the property manager must know what is expected of them for any property to be managed smoothly and both parties to be happy.