The idea of starting a low-cost Property Management Company

[Soh Tanaka]

I had a chance to review a few property management companies in a short period of time, and it made me wonder why they charge so much. 

Typically the monthly charge was between 8%-10% of the rent. If you rent is $1,000, they charge $1,200/year. But for what...? If you have a property management company who only manages in good A/B area, the phone calls you get per year is maybe a couple of times a year. That's $600 per phone call. If you only collect the rent online, you virtually do nothing. Bookkeeping should only take a few minutes. And higher rent does not translate necessary into higher management cost, so the fee should be a flat fee. 

Some companies add some extra % to the maintenance cost. I understand handling the maintenance takes time = cost some money, but that should be easily covered by the monthly charge.

Also, they charge lease renewal fee anywhere from $50 - $500! I understand that sending a renewal, have them sign it, and file it back cost some money, but I can't imagine costing more than $50, unless you go to the property, do some inspection, maybe change out the furnace filter and take pictures, then I can see the cost go up. But again, the monthly charge should easily cover this kind of activity. 

Finally the tenant placement fee. Usually $500 to half month rent to one month rent. I understand this is very time consuming. Receiving phone calls, screening over the phone, setting up an appointment, going to the showing (only to have a no-show sometimes), etc. But what if you can use a service like Rently or ShowMojo successfully? Can we cut some cost there? 

Summary:

• Flat low monthly-fee ($60?)
• No extra charge for the maintenance calls (the monthly fee should cover the handling of the occasional calls)
• No extra charge for the renewal (the monthly fee should cover the handling of the occasional calls)
• Use self-showing technology to offer low-price ($300?) to fill vacancies (I never used this technology but heard good things about it from different people. If people can successfully have strangers come into your furnished house and sleepover = Airbnb, you can have strangers come into your empty house for a few minutes, imo) 
• Collecting rent, requesting maintenance (except if it's an emergency), filling applications will done online only.
• Virtual office (depending on the regulations, a physical office maybe required.) 

 While I'm an experienced property manager for my own properties, I never managed other people's properties, so it's very possible that I'm missing something here. All your thoughts welcome!

[Kim Meredith Hampton]

Soh,
I personally invite you to my office any day of the week to see what property managers deal with on a daily basis, 24 hours a day, seven days a week. This is probably one of the hardest jobs I have ever done, and I have been involved for over 20 years.
You make it sound so simple, but far from it. Also our costs go up year over year, but I have not seen our fees for services raised in over all these years, we essentially work for dollars a day for managing millions of dollars worth of assets, just doesn’t make sense!!
Please, come visit and I’m positive you will change your mind