Is there an Indianapolis Prop Mg. Comp. w/o full first month fee?

Question

I am looking to find a PM that does not charge full 1st month rent for tenant move in. It seems so generic. If rent is $1600 or $900, they all seem to take first month to market, find and place tenant. Is that the norm here?

This PM I'm considering now does Turn key on side. So assume they have Handy man and all set up inhouse. Reason I consider them is that they manage my rentals neighboring house rented at same rate as I would consider mine rented at $950 priced.

*They take 10% and full first month.

*If lease is renewed, stays at the 10%.

*Any late fees collected stays w agent. Not shared?

*Do I ask if they upcharge maintenance or at cost or in house?

*What are standard terms for lease renewal, at what rate would they be allowed to take 50% again?

What else is really important to ask/ consider?

This new CV times, can I make sure they rent to someone w a job so i dont get stiffed rent as soon as they move in?

Thanks,

RD

Harvey Levin · Answer

@James Wise  Thank you for adding your perspective. It always helps to hear from someone without a vested interest in the answer.

I have been getting contacted the last month from many Investors who are wanting to fire the PM they have to switch to us. When I ask why they most often are saying very long vacancy times. When they tell me the current PM it almost always is a PM who discounts fees so low there is no way that PM can afford to provide quality service. Overhead is at an all-time and operating a quality PM company is expensive. Keeping the late fees, for example, doesn't even cover the cost to chase past due rents. The management fee is usually a breakeven on fixed Overhead.  The average rents in Indy (and the midwest) are less than many other areas of the country...)that's why we have such a hot market, low rents = low purchase price). a 10% management fee in a market of 1500 - 2500 is a lot higher than 10% of a market with rents 500-1000.  Now, with the new bill being passed many PM companies will not earn any fees as tenants are not required to not pay rent for 120 days plus the 30 days new required notice prior to evictions. (yes rent will be due at the end of the period but very unlikely it will appear.) No late fees allowed, no evections allowed = no rent for investors and no fees for PM.   I fear you will start to see under-financed PM's dipping into the Trust accounts to keep their heads above water and many just closing the doors. Many of the PM's and investors who began in the upmarket are not prepared for the downturn.  High leverage investing only works in the upmarket, not the down.    I am NOT a doomsday person, after 40 years I have seen and survived successfully in many downturns. The key is to be properly capitalized for both the PM and investor. When I want the best results I hire the best and am happy to pay the price for the best results.  Sorry for the rant!!!

James Wise · Answer

If the market norms are to charge 1 month's rent as the leasing fee, do you really think going with a Property Manager who's only ability to compete is by not charging market prices is the smart play? Don't lose dollars by picking up pennies.

Ric Ernst · Answer

@Rijm D. there are no standards when it comes to any PM fees. You'll need to talk to several to get a sense of the range but many take 100% of the first month while others charge a flat fee of perhaps 50% of the first month. Some will spend money marketing your property while others market without spending a dime. Either way, they are putting time and resources into renting your property and, like you, deserve compensation for work performed. They are in business to make money like the rest of us and they aren't exactly making a killing on 8 - 10% of monthly rents. If they aren't doing maintenance themselves then yes they will mark that up and deservedly so. They are spending time fielding calls from tenants and then chasing down vendors to handle any issues which takes the time of someone earning a wage. More important than fees is your PMs communication skills and how they click with you. If you are feeling taken advantage of, it's going to be a poor relationship. Best of luck to you!