Are these property management fees legit?

Question

Greetings,First time landlord here who decided to utilize a property management team since I am military and won't be in the local area to oversea operations. I chose one because their contract that I signed with them said that they charge a 79/month flat fee, with no leasing fees and a $395 initial setup fee. It goes on to list...-Fee Details:-The full management fee is immediately due and payable upon execution and approval of the lease but is collected monthly as a courtesy to Owner.-Management fees charged to tenants include, but not limited to,are the following: NSF return check fees, non-refundable deposits, lease renewal fees, and collections fees.-Services are usually performed by internal staff or preferred vendors that provide rebates, commissions, and discounts, to management company.-A $50 charge will be assessed for each returned check submitted by the owner to the management company.-Manager may charge tenant monthly administrative fees to offset certain administrative costs incurred by manager.-Late fees paid by tenant are the full property of manager.-Three percent of the gross sales price is due if tenant purchases the property. After the property sitting empty for 1.5 months, I found out that they also charge the tenant 4% of the rental price as a "rental tax plus administrative fee" each month. This effectively made my asking rent price ~50 over market value which is why it sat empty for so long. After lowering my price by 50, I immediately had a tenant.The property company charged the tenant an unspecified $300 non refundable fee, which they kept, a 400 non refundable pet fee which they also kept, they charge them 20/month as a pet rental fee, which once again they are keeping. I am also being charged a $4 direct deposit fee, which while 4 is small, it isn't listed in my agreement and they claim that they don't mail checks and the direct deposit is their only option that they offer.Maybe I'm just new to this, but all of these additional fees seem ridiculous, and underhanded, especially considering things like charging the tenant 4% extra is not mentioned anywhere in the agreement that I signed with the management company. -Any thoughts?

Matthew Paul · Answer

Sounds great ..............................................if you are the management company .

Bill B. · Answer

I pay 8% of rent, I get half of late fees, they charge the “average tenant” for nothing other than application fee. (They do charge nsf fees and eviction/collection fees) they just changed over this year from pet deposit to pet rent which I “assume” I will only pay 8% on but it hasn’t happened yet as most tennats stay years. A new tenant usually costs me a $300 referral fee to the realtor (who is usually but not always one of their’s) re-newing a lease is $150 Fee.

Sam Shueh · Answer

Often it is a flat % of rent collected. If the properties are not rented some will not charging you. As for charging tenants a fee they will have a cow and file complaints to local housing dept.

Patrick Liska · Answer

They are making a lot of money with all those fees, i never heard of a PM charging a tenant for administration fee and the direct deposit fee ? all my properties get direct deposit from my PM, it does not cost them anything, what exactly do they do for the flat fee, collect rent? those pet fees should be going to you, that's your property that is taking the risk of having pets in it. properties should be inspected by your PM any way, there is no extra work for them because the tenant has a pet. Find a new PM otherwise you will find out that this PM will be making more money than you on each of your properties.

Ross Denman · Answer

@Bob Anderson There is a mix of more common fees and unusual fees here. We have found these fee heavy PM's are usually reduced or flat fee PM's. A good PM is going to be upfront and more transparent about their fee structure. They may not be charging a leasing fee, but they are getting paid even earlier with their start-up fee. We have a $79 start-up fee for our cheapest service, but all of our other services have no start-up fees. Most PM's in my area have little to no start-up fees, but they do have leasing fees. These range from flat fees of $450+ to a full months rent. It is a concern that they are charging a monthly admin fee to the tenant. That seems to misalign their interest. For instance... A $1000 rental would net an extra $40 monthly from the tenant, whereas if they charged 10% to the owner, it would only net an extra $21 to them. They are making more money and putting an undo hardship on the tenant. Good luck keeping tenants for multiple years. NSF fees are standard as they get charged by the bank. I did find it odd to charge you for your direct deposit. We charge $5 to send a check in the mail, but part of that is printing costs, paper and envelopes, and postage. Keeping late fees is pretty standard. We send out notices via mail, daily emails, daily calls, and daily texts to late tenants. Because of this, we are very successful in collecting rents and keeping our late accounts to a minimum... But we keep the late fees to cover the costs of the extra activities. Our company splits pet fees with owners. You are the one taking on the liability of having a pet in the home, you should get paid more. We inspect the properties to find unauthorized pets, look for pet damages, pest control issues (fleas,) and problematic yards (feces or digging,) so we keep a portion of this as well. If they are keeping all of the pet income, I would mandate that the home be marketed as pet free.