Flat Rate vs. Percentage Based Managment Fee

[Clare Pitcher]

Questions for the Property Owners using a Property Management Company: 

Would you rather have a property management company who has flat rate fees or takes a percentage of the rent? 

[James Hamling]

Hey @Clare Pitcher

Correct @Bill B., our current PM fee is $109mnth. Flat rate. That's for all "standard" Property Management "things". 

We then have an ala-cart menu for any 1-off non-standard things. So people know exactly what those billing rates are before hand vs after the fact. Stuff like if want us to do CRP, or if have us send someone to "babysit" and watch a vendor Landlord hired from Craiglist and doesn't trust. yeah, had that happen before. No idea why they worked with someone they feared trusting so much. 

As for the narrative of "if it's flat rate they won't care"..... 

If we do a bad job, our clients will fire us and go elsewhere. That's a lot of incentive I'd say. 

We don't sucker people into "handcuff" agreements. They stick with us because they choose to. They choose to because we earned it. We earn it with our results. 

Seems rather simple to me. 

And here's the thing about flat rate vs %, flat rate is integrity. 

Do you know what the difference is in PM operations on a $2,500mnth rental vs a $3,500mnth rental? 

Yup, not a dang thing. Nothing, zip, zero. 

So why is the $2,500mnth person paying $250 and the other one paying $350 ??????

Our $109mnth Pm fee is based upon math. The math of what our cost of operations comes out to, divided by clients, and a fair profit margin. 

Yeah, again, simple right.

Now doing a tenant placement, the efforts, advertising, the actions to get it best done DOES vary in relation to the rents. Generally the more it costs the more it takes. Not rocket science there. So, that's why it's a # of mnths rent. 

When I see a PMc charging % of rents that just tells me 2 things. (a) there looking to squeeze all the $ out of client they can. And (b) they don't really have much control or insight into what there operational costs are. 

Say what you want, call me bias because I'm at RW. 

Honestly, I don't pander for biz, I don't have to, I and RW are sought after for a reason. 

All this, it's my honest feelings about flat rate vs %  for PM fee's. 

I can see where a person thinks a % "forces" a PM to do there job. I think if you can't trust them to do the job, then shouldn't work with em in the first place. 

If you hired a GC to do some work, and thought that you had to be there, sit n watch them the whole time or else when not watched, they wouldn't do anything.... Would you hire them? 

Hell no. 

I say a Pm should do the best job they can because it's there dang job, end of story.