I recently bought 64 units. It already had property management in place and I signed a year long contract with the company for 6.5%. I just got my first property statement, and included is my "share" of the company's software (Yardi). They evidently pay $9,157 a year for this, and my share is $763. I was under the assumption that hiring a PM included this sort of thing. I also see I am paying for 2 cell phones at $180/month. Is this normal on larger units? I certainly have not run into this on my smaller units.
You have to pay for their software? I haven't heard of that before. Is that in addition to the monthly property management fee. I don't think I would be ok with paying for that. I also wouldn't pay for the cell phones but hopefully you will get more answers because I have only worked with property managers for smaller units. To me, this should be included in the monthly property management fee. If you are paying for the cell phones I would need a monthly statement for both phones to outline all the calls made and how many were for my property and the total amount of the bill. I really think those fees are going overboard but it probably states it in the contract.
It is not in the contract. I am meeting with her on Friday, but I wanted to find out the norm before I meet with her. That is a good idea about asking for copies of the cell phone bills.
If they didn't outline the exact fees, I don't see how you are under obligation to pay them.
Also, I can understand the need to have this software and the cell phones - but I don't see how they can bill you a portion of it (I assuming the total is split over the total number of clients currently under management??)
What if one or several of their clients uses a much larger portion of the software? How do they delegate % owed per client?
Still...! If 6.5% isn't enough to run the business without hidden fee's, then they need to charge more -- not surprise you at the end. That leads to both parties being heavily unsatisfied.
It seems like they lowballed you on the management fee's to get your business and have to make it up in the backend.
6.5% is pretty low, you should be weary of such low fees because you see what happens... If its unsustainable, they cut corners and/or make it up some other way.
While I don't think their process is correct, calculate the amount of fees you'd pay if they charged 8% or 10%. Add the software and cell phones to the 6.5% and see where you would be in comparison to a full service fee structure. Maybe that information would temper your viewpoint; but the way they are going about it is wrong. Lastly, the charge for cell phones are exorbitant. You shouldn't have to pay for their stupidity.
I don't necessarily think 6.5% is low for a larger unit like this. If they were to start charging me 8 or 10% I would simply hire my own fulltime manager. I am already giving up one apartment unit for them to have an office on-site, and I pay for utilities for that plus office supplies.
I understand 8-10% may be par for smaller units, but they are getting a significant monthly fee from me every month, and now it appears that I'm paying for their business expenses also. IMO, business software, printer cartridges, and cell phones are things they should pay for out of the monthly fee. I was not made aware of this prior and I'm wondering if it's something new since the last owner (it's not on the prior income/expense sheets.)
If it's not in the contract - don't pay it! The contract is the contract.....
I work in the property management software industry, and I can tell you that it is VERY common for 3rd party management companies to pass along the cost of their software to the properties. To my knowledge only two of the 80-90 PM companies I work with don't do this. Granted, this may be the nature of stepping up into larger properties and larger mgmt companies. In this arena, a 64 unit building would be considered small, and the company likely manages 1,000+ units.
I can also tell you that the price paid is relatively small based on industry standards. You are certainly not being ripped off at this price. The value you get in return is knowing your manager is using the best tools available (Yardi is an industry standard for a reason) to manage your asset.
What do I mean by this? A sophisticated accounting system like Yardi has robust security measures put in place to safeguard from employee theft, and in the case of fraud, to quickly identify the employee who's been dishonest.
I hope this helps.
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