Property management fee question

[Barry Cohen]

Hi all,

I hope I can get some input here. What are the reasonable services I should expect from my property management company for the 10% fee they charge a month. My company seems to find a lot of extra service fees each month which is starting to get a bit unreasonable. Also, whats the thought on the fee being collected off of stated rented vs. collected rent.

Thanks so much for the input.

[Tim VandenToorn]

@Barry CohenI run a property management company in Grand Rapids overseeing approximately 500 units. Our company charges between 8 and 10% based on the rental price and the amount of units we manage for a client. Our base rate is 10%.

We charge this 10% rents collected, so if your unit is vacant or the tenant is not paying rent, we also are not making money. I have heard of managers charging a management fee to owners who set their own monthly rate. In other words if an owner insist that their house is worth $2000.00 a month and they are requiring you to rent it for this amount (when it is actually only worth $1500.00 then they would get charged when vacant because ultimately holding a vacant property cost us money as well. We currently do not do this as we try to set owners expectations up front, but have run into this once or twice.

For 10% we collect rent, offer owners 24 hr access to their account with live information including a dozen or more reports, information on open or closed work orders including what was done to remedy the issue. We send 7 day notices on unpaid rent, file court paperwork, handle the court process, handle tenant complaints, enter work orders, provide accounting services, pay contractors, and handle city issues. We also will pay the insurance, pay the mortgage, and city taxes. We directly deposit rent into owners bank accounts, offer advise of property updates, supply market analysis on rent, and most of the time can make owners more money on rent because of our marketing and availability. We also coordinate the turn over, and market the property immediately upon a 30 day notice to keep the vacancy low in order to make the owner the most possible money.

We also have a placement fee which pays for the advertising, screening, showing the unit, completing a back ground investigation on the tenant, taking move in pictures, drafting the lease, and explaining the process to the tenants. We provide this service for 60% of one month rent. We also guarantee our placement for the length of the lease. In other words if the tenant breaks the lease, moves out early, or gets evicted, we will place another tenant for free.

We also offer an on staff attorney and a licensed collection agency in the event things go south. We are the only management company in West Michigan offering this service and collecting money on outstanding judgement for our owners and other management companies.

I hope that information helps. If you have more questions on management please let me know.