Management Contracts - What do owners want?
I am a property management company based in Minnesota and simply wanted to learn what owners really want in a management company. We are simply trying to be the best that we can be and to do so try to take a step back and listen to suggestions. This isn't meant to be a solicitation, but rather an open discussion of what owners expect, like or don't like in a management company.
We basically manage at a set percentage of gross income, but do have to run payroll and other property expenses through the property. This is always hard to explain to owners, but obviously we would be working at a negative return if we covered all of this in our percentage. Normally we manage properties that are 20 plus units if that helps. As an owner how would you like this illustrated in a contract or simple conversation?
To start a discussion, what do you love about your management company? what do you hate? AND what do you wish or think they should do?
Honesty and transparency are imperative. Straightforward, reasonable pricing is a huge part of this. If I'm hit with extra fees or unreasonable expenses I'm going to lose trust and I'll do it myself. We understand that everyone has to make a living, but most importantly - that includes us. As long as you're percentage is low, then charging a payroll or other expense may be reasonable. If you're charging 8-10% and then still adding other fees, then we've got a problem. I also want to know how tenant maintenance (encouraging long term tenancy), apartment turnover and building maintenance is handled. How is this managed and priced? What is and is not included?
I don't use property management companies, but I can echo some of what Alan said. I do not accept the 'Renters Warehouse' definitions of fair pricing. Every investor wants someone who is known for 'getting after things'. Be proactive. Be affordable. Add on fees for evictions, late notices, new tenant fees are such a turn off. Make a simple fee structure. Also, be on the lookout for your investors. They always want good investing opportunities.
I completely agree with you David. I also find it a bit much to charge one months rent and mark ups on everything else. We normally manage larger properties so our management fees are well below 8-10%.
These responses make sense, I have very few connections that want regular management so every project I have taken on usually involves a full renovation/repositioning. More work on our end, but I think that is what gives our company the most value. We also keep everything as simple as possible.