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Updated over 4 years ago,
PM collects utilities & takes a cut
We bought a small multi-family bldg out of town, & have a property manager that we've used for other properties. Some tenants are holdovers from the previous owner. There are some small utility charges we pay in each unit that the tenants are billed for. The amounts are not included in the rent amount stated on their leases. Also, there's a coin-op laundry room that generates a small amount of income.
I just realized that the PM is including these utility charges & laundry income in the "rents" that are used to calculate their management fee. The management agreement states that the fee is XX % of RENTS collected. Clearly, reimbursement for utilities isn't really income. it's a wash.
Before I call the propty mgr, I wanted to check on this:
Is there a standard practice among property managers regarding taking a % of non-rent money collected?
Thanks