Property Management Fees: Conflict of interest?

[Leon Green]

As a property manager I'm familiar with many trends in fees/revenue generating practices that property managers charge. Some of these practices do not align the property manager and property owner's interest. For example, when a property manager keeps late fees instead of passing on those late fees to the property owner, the property manager benefits when the property owner potentially incurs fees for not being able to pay their mortgage on time. I'd like to hear your thoughts on what property manger fee practices you think are fair and which practices you think create a conflict of interest.

[Filipe Pereira]

We charge 10% for property management, one month's rent to place a tenant, and don't have any other fees @James Ma. Almost any other type of fee can be twisted into a conflict of interest, or the "perception" that we are doing something just to make an extra buck. 

I don't want that misstrust, or the perception that we may be doing something one way merely to benefit us, so we just don't use a fee based model. There are plenty of property managers here in Connecticut that do, however.

"Beware of PMCs that don't upcharge maintenance / repair items" @Bob Collett? LOL, that's a good one. The PMC should just send the invoice that their contractor supplied. Problem solved. 

As for late fees - here's a suggestion. If the PMC collects a late fee on a tenant they placed, the owner keeps it. If it's an inherited tenant, the PMC keep it. 

Fair is fair, but beyond that life circumstances can change from when a tenant was placed to the current day. Job loss, medical issues, etc. There is risk in REI and if you're concerned about not getting the $75 late fee, don't be. Be glad that the PM was able to actually collect the rent!