Late Fees For Property Managers

[Tariq B.]

Ok, so here is my question. Every time I have a tenant late on their payment. The property manager will charge them a late fee should it be after the grace period. Now when I finally do receive payment the property manager takes a cut of the late fees. Is this normal practice or not?

[Steve Rozenberg]

If the PM is doing their job then they should be doing everything they can to get that money for you.  It all starts with the person that goes in, if the rules are established at the beginning of tenancy and the agreement is followed this should not be a regular thing or the tenant should be evicted.

From an investor point of view it hurts the cash flow and can make an unknown expense seem to become a normal thing sometimes. 

From a PM point of view, as a business there is time and expense to try and retrieve the owners money. Essentially they become a debt collector  calling, sending emails , sending certified letters and even to the point of send staff to the property. As you can imagine there is time and expense involved in doing that. We do keep all the fees and we feel this should not be a profit center but a way to cover the costs of trying to collect the money owed.