Property manager pocketing late fees

Michinori Kaneko · 2019-07-19T15:47:33-07:00

Hi BP,I have used my property manager for about 9 months now, so far i've been happy with what they have been doing. I signed a contract with them back then, and every property which I have acquired and managed has been added onto this first contract i signed back from 9 months ago. Yesterday, out of blue, they have changed their policy and reverted to having contracts signed for each property. That in itself was not too surprising to me, because i thought that's how it should be in the first place. However, what DID really get to me is that they have actually increased fees, added new fees, extended period which you can cancel the contract them without paying fees. This was NOT COMMUNICATED in anyways to the investors, and they simply say I now need to sign contract for each one. Within the list of property which I got notice for was one property which they have been "managing" already from more than month ago (it's just that they haven't found a tenant for it yet), as well. There are many things wrong and unprofessional about this, but what caught my eyes the most is there was a line saying that any late fees collected from late payment of the rents will be kept by the property manager. This does not make any sense to me. As an investor, I am liable for all expenses. If the tenant does not pay on time, 1) I am still paying all the expenses so I am the one that's hurting, and 2) the reason we have a tenant that doesn't pay on time is the managers fault to begin with (although i do get no matter how much diligence you do you will always have few bad ones). I wanted to ask to the BP community if it is a common practice for PMs to keep late fees on rents? If there are increases in fees or changes in agreements, do your PM property communicate to you BEFORE you sign a new contract? Thank you for your feedback in advance!

Jeffrey Bower

Member since 2019 · 94 posts · 50 votes

7y

I spoke with a PM friend and yes, they also collect late fees. If you feel uncomfortable or think there's a better PM out there for you, that might be a good step in the direction. You can also self-manage your own properties like @Al Pat said above and use software like Buildium or Tellus.

1 Reply

James Wise

Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes

7y

Originally posted by @David Stumpf:

i forgot to mention I did not really expect a PM to actually pay rent from their pocket if they wanted to keep the late fee. It was more of A Modest Proposal solution meant to be satirical, but it is interesting that someone does have a PM that does that.

Check back in a couple years. That PM will have long 86'd that policy or gone out of business. That just a ridiculous and stupid business decision.

1 Reply

Jim Campbell

Specialist · Buffalo NY (buffalo, ny) · Member since 2019 · 42 posts · 32 votes

7y

@Michinori Kaneko

1 Question... are you working for them or are they working for you??

The way they are dictating terms I'm not sure ???

2 Reply

Tony Kim

Rental Property Investor · Los Angeles · Member since 2018 · 844 posts · 1k+ votes

7y

Originally posted by @Michinori Kaneko:

@Irina Belkofer if you were to self manage, wouldn't you charge a late fee to your tenants for not paying rents on time? wouldn't that mean making sure you collect the rent (whether or not its collected late or on time) part of managing the property? In your mind, why would that extra work not fall into what we are paying for the property management fee? Not all tenants are easy to manage, not all properties are easy to manage. I don't pay just to manage just the easy ones. i pay a flat fee to manage for good and bad because there will be some that are easy and some that are bad. If they get to keep fees just for the bad ones, then i shouldn't be paying them flat management fee for tenants that don't ask much and always pay on time? Have you heard of PM giving a fee break because the tenant was so easy to manage? then why should they get to get compensated additional for the hard ones?

PMs aren't going to go around "making sure" tenants pay on time. We aren't talking about a live-in PM who goes around putting post-its on your door reminding you that your rent is due tomorrow. A professional PM has hundreds of properties under their management and either the payment arrives in time or it doesn't. If it doesn't, the PM will then follow-up and collect the rent and pocket the late fee as compensation for the extra work they do.

If you think this policy warrants a PM giving a fee break on tenants that are easy to manage, I don't think you realize just how razor thin the margins are on each property being managed. I honestly don't know how my Midwest turnkey PM stays in business. 10% of $700/month for my property? Seriously? $70 friggin dollars a month for responding if I have any questions, running the owners packet and then ACH'ing me my funds? I would say that my PM would have to manage at least 250 properties to break even. Let's say they aggressively grow their business and add 50 more SFR's. Then their monthly gross would increase by $3,500. Yippee.

I think the bottom line is that you have to accept the fact that PM's collecting the late fee is an industry standard. And if you happen to find a PM that doesn't charge that, you'll be getting very substandard service.

1 Reply

Wesley W.

Rental Property Investor · The Vampire State · Member since 2013 · 2k+ posts · 2k+ votes

7y

Originally posted by @James Wise:

Why do you think your opinion of what is overpaying a Property Manager applicable to anyone? I am not arguing whether or not the Property Management Company keeping the late fee is a justifiable fee. My opinion on the matter is irrelevant, as is yours.

Well, with that philosophy, BP should close the forums and we should all go home.

2 Reply

Account Closed

Rental Property Investor · Central, FL · Member since 2016 · 950 posts · 821 votes

7y

Lucky I guess. My PM doesn’t and wouldn’t be in business if they took the late fees.

To the OP I’d go back to them and say they can keep 10% of all gross rents and late fees collected. I’ve said it pages ago that my business is buying and owning the property and the PM is there to manage it. Not my fault they can’t scale their business to X amount of units to be more profitable. If you have to raise your prices then you lose customers. A PM’s customers are the owners, not the other way around.

There is no where anywhere that is “industry standard”. The Only people saying the PM should keep the late fees are surprisingly PM’s. It’s laughable.

One day I’m sure I’ll scale large enough to run my own PM business or at a minimum hire a single employee to rent out and manage the units. I’m here to make money not spend my time bickering with some other businessman of how I have to give up more of my pie to them because they dropped their pie on the ground and now want to take my piece. Get a grip, the PM needs me way more then I need them.

4 Reply

Ian WalshBusiness Member

Lender · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes

7y

It's common for the manager to keep late fees or split them with the owner. It sounds like they are growing their operations and learning. It's a change of policy and it's your choice to stay or go.

1 Reply

Account Closed

Rental Property Investor · Greensboro, NC · Member since 2018 · 32 posts · 10 votes

7y

We always kept late fees -- justified as payment for the extra work to collect. But we had a strong screening process and some pretty lofty hurdles, so late rent was less common. It doesn't make for much alignment between PM and owner.

For lease renewals we actually charged a 50% fee. Which at first seems exorbitant, but it's probably the most aligned fee in the game. You get more time/money for your last turnover cost, and no vacancy. They get paid sooner, and have (more of) a reason to keep your tenant happy and actively pursue a renewal.

0 Reply

Steve Vaughan

Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes

7y

Originally posted by @Account Closed:

We always kept late fees -- justified as payment for the extra work to collect. But we had a strong screening process and some pretty lofty hurdles, so late rent was less common. It doesn't make for much alignment between PM and owner.

I'd be good with the PM keeping the late fee after 12 months. Stand behind your tenant choice and do the extra work (lol, mine are usually a friendly text reminder) for choosing a slow pay tenant.

A main reason I continue to DIY is because poor tenant selection has no consequence for you PMs. On paper, you benefit and it's also less work for same pay to accept the first mirror fogger to come along.

Place a bad tenant and owners on the other hand are screwed.

Stand behind your tenant choice by eating slow pay work and spread the placement fee over the 1st year of tenancy already.

2 Reply

Anthony Rosa

Rental Property Investor · New York City · Member since 2019 · 703 posts · 538 votes

7y

Just curious to know if PM's bend the rules on keeping late fees with a top client who owns many units.

0 Reply

Account Closed

Rental Property Investor · Greensboro, NC · Member since 2018 · 32 posts · 10 votes

7y

@Anthony Rosa PMs will bend most rules if you're significantly adding to their management portfolio.

0 Reply

Bill F.

Investor · Boston, MA · Member since 2015 · 1k+ posts · 3k+ votes

7y

@Michinori Kaneko

1. They disclosed the changes in their terms...in the contract which they sent you for your review and signature. This is business, where every party has the goal of shareholder value maximization and no one has the responsibility to look out for your best interests besides you.

2. C'mon man, you are rationalizing. Why do you care about what type of offices chairs they sit in or your PMs employment circumstances with her boss? You don't and you can't. All you care about is the level of services they provide you at a given price point. As long as they aren't doing anything illegal or immoral what you believe about their new hires or offices is inconsequential.

I'll circle back to my previous comment, PM services are not a commodity. If this is a good PM, you will have to pay more for their services. Just like it is possible they are overcharging with the new contact, it is also possible they were undercharging before and now have raised their prices to market.

Given the fact that you both have the stated goal to maximize shareholder value, the question hen becomes, how to you best align the two parties stated goals? I believe a flat fee structure does that better than the a la carte system you see a lot of places. You may not. To each their own.

Best of Luck

1 Reply

Account Closed

Rental Property Investor · Greensboro, NC · Member since 2018 · 32 posts · 10 votes

7y

@Steve Vaughan Totally agree with you. This was all from when I was a PM years ago. Happy to see the industry from the inside, managers do an often hard job and I believe they get paid accordingly (as I hope you pay yourself!)

Alignment is a tough cookie. You want to be able to rely on the PMs reputation being on the line, but isn't always enough. Money is a good driver, but hard to posture without leaving some loophole or perverse incentive. I liked the lease renewal fee, because at the very least we were both aligned in trying to get more time from the same tenant...which hopefully means the PM would be more rigorous when picking a resident.

1 Reply

Anthony Rosa

Rental Property Investor · New York City · Member since 2019 · 703 posts · 538 votes

7y

Originally posted by @Account Closed:

@Anthony Rosa PMs will bend most rules if you're significantly adding to their management portfolio.

Id agree with that. PM is a business, the better the client the better the treatment.

1 Reply

Michinori Kaneko

OP

Rental Property Investor · NY · Member since 2018 · 571 posts · 332 votes

7y

@Irina Belkofer you say extra work and extra time. I work for a salary. i don't get extra pay for staying late to do a project or covering someone else work while they are on vacation or something. that's part of the job. I may get a year end bonus, but i also send a gift to my PM (not the company, the person that's actually managing my properties) numerous time during the year. You are a RE broker. you do lots of showing for "free", until one of them actually goes through and you get paid the commission. it's the same concept to me. I pay a flat fee for management, that includes rent collections. I think it's just a rationalization that "i should get paid for extra work". Some properties are easy, no maintenance, no late rentals, you don't spend any time on some of the property and you are still collecting management fees (it doesn't even have to be in A or B neighborhood for that). So in my mind, that's like saying i'll take full compensation when there's no work needed, but i'll take more $s when its a little harder. that just makes me question why i'm paying the management fee then? isn't the flat fee to even out the easy and the hard ones?

My opinions may be biased as i am an investor trying to maximize my returns, and as yours, as a PM defending your fee structure. it's a free market so i can go wherever i want sure, but the reason i don't want to because my manager is good. i don't like the management style of the company and it's owner. If i didn't think my PM was awesome i would have left in a heart beat. Maybe a flat fee structure like Bill mentioned is the easiest and simple way, that ways you can avoid some of your investors complaining or disliking certain parts of your agreement.

in any case, i was thinking i would get a vast majority of people saying PM do not pocket late fees, but this thread was a little eye opener. guess i need to look at it from every angle when i expand into a different market.

0 Reply

Joe Hermanson

Rental Property Investor · Naperville, IL · Member since 2015 · 46 posts · 13 votes

7y

I agree with the original poster and most people on the thread. The late fees should not go to the property manager, they should go to the Owner. The property manager needs to increase their percentage if they aren't making enough money for the scope of work being performed. This is clearly in the original scope of work. If rent collection was easy and didn't take any phone calls, site visits, etc. we as landlords would do it ourselves. Finding/evaluating renters and collecting rents are the two primary job duties of a property manager and why we pay for the service. Also, there's too much of a conflict of interest for them to keep the late fees. In most cases, they've selected the renter, so they shouldn't profit when the renter defaults and "causes them more work". It was built in already.

Additionally, the vast majority of renters pay on time and have minor interactions with the management company on a daily/weekly/monthly basis, so the workload to profit ratio should be pretty good. If they have too many problem tenants, then it's incumbent on the property manager to either; work with late payers (like having them pay weekly rent, on the day they get paid), replace the late payers when their leases come up, and/or help the landlord understand that they need to up their repairs/capex budgets so the properties are in better shape so tenants are happier, not complaining as much and paying on time. All of which was in their scope when they agreed to the 8-10% management fee.

Just my $.02.

0 Reply

Account Closed

Property Manager · Northeast Indiana · Member since 2013 · 46 posts · 38 votes

7y

I worked for a PM company that charged a "posting fee" in addition to the late fee. We kept the posting fee. So, if we had to send staff to post a 3 day (or 10 day) notice or any notice for non compliance of the lease, and additional fee was added that the PM kept. The actual late fee went to the owners. So, if a tenant was 1 day late, and we had not yet posted a notice, they paid a late fee and we kept nothing since we didn't really have any manhours in it. I still employ this in my business especially if the "posting day" is a weekend or holiday - the late tenant is paying for my / my staff time

1 Reply

Irina Belkofer

Real Estate Broker · Cleveland, OH · Member since 2017 · 719 posts · 658 votes

7y

@Michinori Kaneko it’s fine with me if you don’t agree with the market - I’m not your PM and I won’t be.

Just negotiate the terms of your PM agreement and move on to the next PM.....what the problem?

You asked a question, I answered: you don’t like the answer - too bad.

Market is what it is. I don’t have to take anyone under management, especially C-D areas. For B an A I won’t even charge 10%, leave alone late fees - there is no such thing.

If you want someone to manage your properties where late fees might be potentially incurred - get ready to part with the money.

My best Tenants direct deposit rents well before the first of the month and there is nothing to discuss.

I don't take on rentals in certain areas at all because I don't have to - it's my business and work only for the clients who bought properties with me. I do not advice to invest in 25-30% ROI areas and that's where all the money grow: late fees, eviction fees, 1&last month rent+Sec.dep. If owner wants to risk - it's his problem.

Your comparison with your job is not relevant - you get paid for the job done, I don’t even have to take any client with attitude I don’t like. Too bad.

There are plenty of PMs - choose these you like and be happy!

Market will beat anyone - that’s why new PM changing the agreement - they can’t pay their employees to do the job.

3 Reply

Yvonne H.

Rental Property Investor · Atlanta · Member since 2019 · 23 posts · 27 votes

7y

I self manage. But when my tenants are late I have to spend time talking to them, writing and properly mailing legal notices in case i have to evict and its a lot of work. I dont want the stupid late free. I want my tenant to pay on time. But you can bet your boot I'm collecting that late fee to cover my extra time. If you have to do all the work yourself when a tenant is late than you should get the late fees. That's what the late fee is for. I think its fair that it goes to the person who does that extra work.

0 Reply

Stephen Willis

Rental Property Investor · New York, NY · Member since 2019 · 42 posts · 13 votes

7y

Managing fee means they have to manage the property. It doesn’t mean they can collect rent from tenants. They need to notify the tenants to pay rent sometimes.

0 Reply

Maya Roberts

Rental Property Investor · Sunnyvale, CA · Member since 2019 · 60 posts · 40 votes

7y

There were a few issues in regards to property management fee structure I simply could not get comfortable with, including late fees. I simply let my contract expire so I did not have termination fees. Now I self-manage. It's more work but I also earn more.

If you can't get comfortable, change.

0 Reply

Ricardo R.Pro Member

Property Manager · Michigan Ctr, MI · Member since 2016 · 661 posts · 581 votes

6y

@Michinori Kaneko industry standard. It's an effort by the PM to save you money while still providing services. Let me explain... I'm sure the management fee you pay monthly is based on 'rents collected' and not based on 'rents due'. Which means that your PM will not charge YOU for the services they are providing to you if rent is not paid - something many PM's offer as a courtesy.

Property Management is a service not a financial partnership. Would it be better if the PM put it on you and instead based their fee on 'rents due' instead of 'rents collected'? ... Now I know many on here will fuss at the thought of paying for a service they use (go figure)... but you do this in every other aspect of your rental... the mowing guy, do you withhold payment from him until you receive rent?, the appliance repair tech, do you withhold payment from him also until your tenant pays rent?... your mortgage, do withhold it until your tenant pays? --- of course not... a company providing you with a service and being paid for that service has nothing to do with whether or not you receive rent , a service is still being provided - hurts to hear but true - again it's not a financial partnership... if it was, your partner would collect allot more than 8%/mo. and would likely require equity as well - Property management is a service and although your tenant may not pay rent (there is no crystal ball) the service is being provided, i.e. calls are being made, notices are being sent, notices are being filed, inspections are being conducted, maintenance is being conducted, etc. etc. etc..... so, is the expectation that the PM provide this service to you for free until your tenant pays rent? ... sorry but that's delusional... don't know of any successful service business that would operate or agree to that.

So, again, in an effort to save YOU - the owner - money (which is a courtesy in a service business) instead of charging YOU - the owner - for the services being provided when your tenant is not paying rent and to help an owner financially while still being compensated for the services they are providing, the PM charges the Tenant for that service. The argument of the PM aiming for or wanting to collect late fees is mute, honestly as an investor do any of us count on 'late fees' to make our investment property numbers make sense? No... and neither do PM's, especially not PM's because honestly, there is A LOT more work involved in tracking down late fees - with no guarantee of the PM collecting that late fee.

So to recap the PM has attempted to save you money by not charging you when the tenant doesn't pay rent and instead charges the tenant with no guarantee of being paid for the service... not sure how that is not a win for you, again the alternative would be charging you on 'rents due' or try to find another PM or managing yourself, not sure many would like that.

Okay, easy... I'm ready for the furry of the other side.

@David Stumpf, @Caleb Heimsoth, @Michinori Kaneko, @Account Closed

[email protected]810-844-1104

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Timmi Ryerson

Property Manager · Ketchum, ID · Member since 2016 · 277 posts · 132 votes

6y

Ok @Ricardo R. I will bite. I have been a landlord for 35 years. I have used property management and managed for myself. I have help probably thousands of investors and property managers to develop best practices in property management to maximize their profit. That being said, I will not fault you on you comments. You can run your business the way you see fit and do what works for you and your owners. Property Management is a very complex job. When an investor buys a property they do so with the expectation of profit. So here are my comments relevant to what you posted.

1. Property managers have the responsibility to choose the best possible tenant to occupy the owner's valuable property. One of the criteria is that the tenant is able to pay rent and has enough money left over at the end of the month for life's necessities. Therefore, if a tenant does not pay rent on time, it is up to that manager to make sure that it never happens again. I felt that your attitude was that you are not responsible to collect rents. In my opinion, you are misguided there. It IS your responsibility to get money to your owner on time. He has to pay a mortgage payment, insurance and taxes for that investment and if you allow tenants to learn that they do not have to pay on time, you are putting him at risk.

2. You keep a late fee from the tenant. In my opinion, that is an more of an incentive to you not to collect rents on time. In my opinion, if a tenant pays late and that rent payment to the owner is late, the owner show receive that late fee as interest on the late money. That is the original purpose of late fees anyway. If I were a property manager, I would pay the late fee to the owner. I would also use every tool at my disposal (3 day notice, 30 notice to vacate after 2 months of late rent etc) to train the tenant to get rent paid on time. I do have a conversation with my tenants when they sign the lease agreement that their rent payment is the most important payment that they make. It guarantees that they will have a home for the next month.

I use software on which I can set up grace days. If the tenant has not paid through the software (automatic rent collection) by the grace day, a late fee is automatically attached. The statement is resent. When the payment is made, the accounting in the software pays the late fee first and applies the rest to rent. So if they do not pay all due, there is a balance that gets another late fee. It works so well that my tenants rarely are late with a rent payment if ever.

3. Most property managers whom I have worked with hold a "maintenance account" balance for each owner. That way when there is a bill to be paid for a repair, there is money reserved to make that payment. They then request that the owner put in enough to bring that maintenance account up to minimum. But it does not burden the owner with not receiving enough to cover the basic costs of the mortgage. What I understood you to say is that you pay all costs even if there is no money from rents to do so. So in effect, you use your own money to cover any maintenance or repair bill and then reimburse yourself when a rent comes in. As an owner, I would not like that model. I would rather have a maintenance account balance so that I could at least depend on getting a level amount from rents every month so that I am not out of pocket for mortgage, insurance and taxes. But then again, I am not doing this to tell you how to run your biz. But I do think you are putting your owner at more risk of not making much money on their investment. Thanks for posting.

2 Reply

Kenny Dahill

Investor · Tempe, AZ · Member since 2018 · 1k+ posts · 731 votes

6y

@Ricardo R., I'll bite too.

Property Managers have power of agency. Last I checked, landscapers and appliance repair techs do not have power of agency. With that agency comes fiduciary responsibilities. While we agree that PM's are not financial partners, they're more than simple service providers.

PM's Don't Save Money! Where I think property managers go wrong is constantly advertising and pitching their capabilities to 'save money' for landlords. Every PM on BP who values themselves as a good PM has the same pitch: "good PM's will save you money". That sets up a false expectation. Even your post had 'save' in the first line.

A property manager can never save more than a competent self-managing landlord. It's not possible. Even if they get better pricing on repairs, there is no way that makes up for 18% of AGI PM's take. This is for small residential properties. Large MF or commercial is another story.

Where PM's have the most 'value add' is multi-family since they handle leasing. Even a minimal $25 increase in rents literally adds value to the property because of the CapRate. When it comes to residential, there is never a 'saving' or 'value add'. Simply because of the valuation methods.

Withhold Paying Vendors: What your statement failed to realize is the process of handling money. Property managers literally control and have access to landlords money. They're one of the few service providers who do. PM's have the luxury of taking out what they feel like they deserved and kindly send the remainder to the landlord. If there's ever a dispute, good luck! Cash is already exchanged. Unlike a landscaper who utilizes an Accounts Payable billing method.

Late Fees Impacting Deal ROI: I fully agree with you. Landlords should never bank on late fees to make a deal good. My concerns are not the revenue loss; it's the indication of management.

After all with power of agency, the PM selects the tenant. When the tenant pays late it is commonly a sign of: poor tenant screening, allowing a problem to continue or not being proactive collection. I am talking about constant late fees, the occasional is not a problem. I hate this saying but it's about the principal, not money.

Financial Partnerships Needing Equity. No landlord would ever give equity to a PM. I understand, not your point but you still suggested it as an alternative. Promote would be the proper tool.

Paying For A Service Regardless of Completion. A lot of law firms work unpaid until their case has been won. If that's the agreement, they know what they signed up for. Realtors work unpaid until they close a deal. Brokers work unpaid until they close a deal. Sales people work unpaid until a transaction. It happens more than you're giving credit.

If a PM owner decides to use 'rent collected' method to attract clients, then they too know what they signed up for. Risk, reward.

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Ricardo R.Pro Member

Property Manager · Michigan Ctr, MI · Member since 2016 · 661 posts · 581 votes

6y

@Timmi Ryerson

#1: Agreed. It is the property manager's responsibility to ensure the rent gets to the owner however, there is no guarantee that the Tenant will pay on time or at all - doesn't mean that the PM is not attempting to collect rent - which is why the PM will continue to 'service' the account continue to send out notices, continue to contact the tenant, etc. oh.. and don't forget the property must still be maintained, inspected, etc. etc.

#2: Agree to disagree. The late fee is imposed by the PM - so in essence it can be any fee the PM chooses (as long as it is reasonable and legal) or no late fee at all... again, imposed by the PM in an effort to ensure the Tenant pays the rent on time, so that the owner gets their rent on time, very important. We also do all of what you mention and actually go beyond - our PM has the capability of initiating payment on behalf of the Tenant so that there is no late fee.... AGAIN... we have the capability of initiating a payment on behalf of the Tenant so that there are no late fees and the owner receives their rent on time - so we actually have very few late fee charges - typically the only late fees we see is if the Tenant has closed bank accounts or payment methods, which is once in a blue moon and our late fees are caped to $140, and yes... we also have a grace period. So again, not it the business of making a profit off of late fees but we are in the business of ensuring our costs for #1 are covered.

#3. Agreed but I think we are talking about two different things. We also hold a property 'reserve' in which we use to carry out maintenance/repairs without having to worry the Owner about every little thing and no we also do not carry the costs of maintenance and repairs. I was referring to, your costs as a PM in carrying out those duties/coordination/scheduling and just about all other aspects of continuing to care for the property. Just because the rent is late doesn't mean that all the other services that go with management stop. Those services need to be compensated, unless the owner is fine with also stopping all management services until the PM receives the rent... which I'm not sure many would be.

@Kenny Dahill agree with most of your points. I was and still am an active investor first... but which also now also runs an awesome PM firm... I know what you' re getting at. You are correct a PM (at least a good one) should be screening and vetting tenants as best as possible -- but that's about where it stops, no one has a crystal ball and no matter what anyone tells you, you can't dictate if a tenant with a good track record will continue to have a good track record moving forward - so unless the PM completely abandoned the tenant criteria that was put in front of the owner on day 1 (fiduciary responsibility), then although unfortunate, the PM is responsible for a tenant's actions so long as they carry out their duties - some, like us however, do guarantee tenants, so that's out. In regards to ROI sure I agree with you, owner's should be making money, but there is a lot more to ROI that just property management - we provide a service - it should be factored in. It is not a PM's responsibility to not charge for services just because an owner decided to go all in at 100% financing and now has a hard time cash-flowing. Don't get me wrong I hope all owners are able to cash-flow but no one is going to manage your property for free just because you aren't cash-flowing - at some point it is just not a good investment - at which point an owner should cut property management... not expect someone to service their property for free. Again, it is a service industry. The last point on law firms working unpaid... different business and different price structure, you're talking about thousands of dollars not tens of dollars - different price structure, different incentives - and yes... your eviction lawyer will still bill you for an eviction regardless if the sheriff is able to remove the tenant or not or whether or not the tenant pays up. Service completed = payment completed.

Not too bad right?

[email protected]810-844-1104

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Property manager pocketing late fees

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