Why Do Property Management Companies All Charge Different Rates?

 
 

Why Do Property Management Companies All Charge Different Rates?

If you are looking for professional property management you may have experienced the confusing world of property management pricing.  Unlike real estate, no two companies charge the same fees in the same manner.  It can be time consuming and frustrating just to learn the facts about the fees.  Why is that?  The simple answer is, “It shouldn’t be that way.”, but I do have some guesses why it is:

  • Property management has traditionally been a very local, small family-owned business. The fees they charged and the manner they did business varied greatly from city to city.  There was no “standard” pricing.  There was no industry organization to guide property management companies. Where real estate agents belong to the California Association of Realtors which has been in existence for over 100 years, property managers do not have anything similar.  Each property management company in each city was left to their own devices.
  • Since the margins are typically thin for property management companies, they have been very creative over the years to find additional revenue from their “doors”. The list and description of fees can boggle the mind.  A typical business strategy has been to offer a low monthly management fee and make as much, or more, on other fees.  Here is a list of potential fees an owner may be forced to pay:
    • Filing fee
    • On boarding fee
    • Vacancy fee
    • Lease up fee
    • Tenant acquisition fee
    • Mark up or Override fee
    • Application fee
    • Notice fee
    • Late fee
    • Cancellation fee
    • Marketing fee
  • Property management by its nature involves many people. There are operations, leasing, facilities management, property managers, bookkeeping and support personnel.  It was traditionally time intensive and laborious.  To compensate for these costs, property management companies tried to “nickel and dime” their clients to generate a profit.  But of all the industries that have benefited from the advance in technology, property management has been a big beneficiary of the information age.  There are fewer phone calls and most interact now occurs via email.  Contracts can be electronically signed, rents paid and disbursements made electronically.  We do more with fewer people and newer companies have passed those savings to their clients.

 

I have tried my professional best to help owners find the right property management company with my Comparison Charts.  I want the total costs of property management brought out into the light.  We as an industry should be proud of what we do and the value we bring to our clients.  The easier we make it for others to understand our service and the costs associated with them, the more owners will decide their time is too valuable to be spent on the 3 T’s: Toilets, Tenants and Troubles.