How much should you charge for quarterly inspections?

Question

My wife and I have taken over a property management business and are wondering how much property managers usually add in to the monthly rent percentage for quarterly inspections? Or do you charge a flat fee the month of the inspection? Thank you!

Nathan Gesner · Answer

Most professional Property Managers include 1-2 inspection per year in their management fee. This is what I do and this is what makes sense. How can you claim to be managing a property without regularly inspecting it?

Some property managers charge a separate inspection fee for each inspection. Or they include one inspection a year and then charge for additional inspections. Some of them do this for extra money while others do it so they can hire an outside inspection service.

As for the number of inspections, one a year should be the minimum. Twice a year is better. I don't do more than two a year unless there are red flags (poorly maintained lawn, regularly paying rent late, etc) that may indicate a problematic renter. I try to do my first inspection 90 days after occupancy to catch problems early on. I do the second one after 8 months to determine whether or not I want to offer the tenant a renewal. If the inspection goes well, then I contact the owner 90 days prior to lease termination and discuss options for renewing the tenant, price rate, etc. Once that's done, I offer the tenant their renewal options 60 days prior to lease termination. My intent is for the tenant to sign a renewal 30 days prior to the end of their lease. If they don't want to renew, then I give them a 30 day notice of termination.

Tracy Streich · Answer

@Joe Splitrock and @Zachary Ray are spot on.   We do semi annual preventative maintenance inspections.   Tenant think we are coming to change filters and change smoke alarm batteries.   The check list for the inspector is much more  in depth looking for items that need attention, potential lease violations and evidence of pets.  Pet may be approved but we only check that once back at the office if there was evidence.   Some PMs charge a little more on management and include it.   Others charge less monthly and charge for each inspection.  I find it usually all ends up about the same.   Do not tell your owner you will drive by monthly.   This is not scaleable.   What would you do if you managed 300 homes and not 30.   Set you systems to be able to keep up at 300.

Preston Porter · Answer

Depending on the size, scope, location, and feasibility.....

As a former PM company owner and current rental property investment owner I would expect my PM to at least drive by the property once per month.  Interior inspections may not be necessary, but would be smart to do at lease renewal (annually) and maybe more frequently if you have allowed a pet.

So to answer your question, some base level of inspection would be assumed by the customer paying you.  You could also charge a flat fee to send a report from the inspection or something... but I wouldn't think it should be more than a few points.

Joe Splitrock · Answer

Quarterly inspections seems a little excessive. Was the old property management company doing this and what were they charging? Two ways to handle inspections, either you charge ala carte or offer it in a package. Give your clients three options for monthly management fees, like a bronze, silver and gold. The bigger package would have the inspections in it. I still think quarterly is excessive and hard to scale. On top of inspection time, you have travel time and coordination time. You also have follow up after the inspection for any lease violation fixes. @Nathan G. would be a good person to share his thoughts on this subject...

Zachary Ray · Answer

Every property management contract is different. If they charge you a low monthly fee then most likely they will charge you for things like inspections and lease renewals.

Jason Hudson · Answer

Through my research I’ve found that most PM companies do these inspections whether it be annually, semi-annually, quarterly, or seasonally. They mainly do this to catch problems for preventative maintenance before something becomes a major issue. More so wondering what the average rate for these inspections are and how much PM companies add in to the monthly rental fee. I was thinking 1% for semi-annually and 2% for quarterly. This would be added in for every month to equal up to the cost.

How much should you charge for quarterly inspections?

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