What should a property manager be responsible for based on the % of rent collected fee?

7 Replies

I have a 4unit and have agreed on paying my property manager 8% of rents collected. My understanding with this is they are generally responsible for rent collection, tenant management, repairs & maintenance (small landscaping, supervision of subcontractors - which I approve and the bill is then send to me), maintaining records and such. Being my first month with my first property I was a bit surprised to see the 8% fee in addition to- Meet electrician for repairs and updates to fire alarm. 1.5 hours- $50 Trip and installation charge for unit 1 window (without cost of materials) - $35 Repair broken handrails (without cost of materials) - $30 Cut and trim, clean loose debris - $35 Unit 4 late rent collection (time contacting, travel to meet) - $25 This adds $175 to the 8% ... my question is- what then is the 8% for? I figured outside of paying for material cost and contractors for work, the items above would be a normal part of managing the property. Maybe I'm wrong. Definitely new to this, so looking for some guidance on what is really included in the recurring fee. (Sent from mobile, please forgive any spelling or grammatical errors)

@Aref Shehadeh

Unfortunately, the 8% most likely only covers routine administration of the property. That would be collecting rent, answering the phone, sending statements, maintaining records. It's likely that anything else is going to be an additional charge. This is the primary reason that I do not and will not use a management company. They tend to make more profit from the property than you do, unless you pay all cash.

I agree with you that normally I would expect late payment collection to be covered under administration. This seems a bit greedy to me. You should read your contract with them and explore other options. 


P.S. Wait until they charge you a month's rent (or more) to fill a vacant unit. This is the charge that bothers me the most. Pay for poor rental unit performance. 

@Aref Shehadeh

Some of the items look like they are possible make-ready items where the property manager is doing some minor repairs to get them up to code or ready to rent.  The fees that bother me are the late rent collection fee and the other "trip" fees.  It is the property managers job to get the rent in a timely manner so they should not be getting paid extra to be bad at their job.  The "trip" fees are also just bad planning on their part.  They should be coordinating their repair crews or providing them access to maintain the property, that is built in to their management fee.  To me it seems like they are just padding their fees. 

I would shop around the area a bit more and see what other property managers are charging in your area.  Check your agreement with them and see if these fees are clearly listed in there or not.  There is usually a fee if the repair person cannot get access to the house but not for the manager to let them in.

I am looking at your charges and wondering if the items that look like repairs are actual repair labor charges or their markup on the repairs on top of the repair guy (which is often marked up as a percentage of the repair cost by PMs. If this is your PM markup I like it a little better then a straight %   I would be inclined to talk about the late rent charge with them because essentially they get rewarded for poor paying tenant. Some people let them keep the late fee.  The debris removal is also unclear to me what this is. If there is an exterior repair that a landscape or other provider takes care of and this is the charge for the PM being on site I would question when do they need to be onsite and when is it ok for your trusted provider to just do the job.    Read your contract to see what is in it. 

 If you prefer to use your own trusted handyman and give that person access without the PM then you may eliminate the little charges and only get PM specific charges for a big repair. 

Aside from collecting and accounting for rent they should include some inspection frequency in the fee.   determine what that is.

Often additional fees apply if they: make  additional trips to the property, place a tenant, co-ordinate a repair.  Asking your tenants about the property management performance occasionally is also a good idea.

It should be explained in your management contract what any additional charges are for.   If it's not detailed already, you should ask for specifics.  For example, one management company I use charges me a yearly inspection fee if the tenant renews, plus they state that they will charge me $40 per hour for anything outside of normal property management duties, like meeting an appraiser for a refi.  If those extra charges are their handyman charges in addition to material costs, then it makes sense, except the one about meeting the electrician as if it is the manager just allowing entrance for a repair, it is their job to arrange access.   

Most of the property managers I've used keep the late fee charged to the tenants for late payment of rent, saying it's because they have to post the notices and mail the letters, etc.  

Charging you to collect late rent seems kind of shady. The PM is already charging the tenant a late fee. Sounds like he's double-dipping.

To answer you question, the 8% covers the basic administration of your property: collecting rents, accounting, reporting, dealing with minor issues as they come up. If they have to do extra work for repairs, maintenance, etc., they will charge you an extra amount.

The bigger question is why are you having to ask these questions? If you were my client, I would never want you scratching your head wondering about charges. Everything should be spelled out in your agreement, and your PM should keep you informed about everything that is going on with the property. There should be no surprises at the end of the month.

I would not be happy with this arrangement at all.

Although I am not particularly happy with my property management company, their billing does make more sense.

They charge 8%. No turnover fees. This includes meeting any contractors or maintenance for access, even to get bids. 

I have never been charged extra for any type of rent collection or anything associated with going to my unit for any reason.

I do think they inflate costs of routine maintenance, which is one reason I don't care for them.

So you have what appears to be the perfect property management arrangement.

8% monthly fee

no charge when the tenant moves and they re-lease the property

no extra charges for anything

And you're STILL not happy?

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