Fair rate and fee increases from your PM
My PM firm is located in NC and we manage just over 800 doors. Our management fees have gone basically untouched for the better part of 10 years. Our firm has a very simple fee structure that includes 8-10% of RENT COLLECTED and a set-up fee at signing of $125. That's it. Nothing on top of maintenance, no leasing or renewal fee, and no fee for inspections. We do, however, have 1 maintenance tech that owners can use at a rate of $40 per hr plus materials. Below is a list of services provided that are currently covered by our monthly commission:
Tenant Application & Screening
Rent Collection
Evictions Including Court Fillings and Appearance
ACH Owner Payments
Monthly Statements
Property Marketing
Move In / Move Out Photo Documentations and Reports
Maintenance Coordination
24/7 Emergency Call Center
Access To Preferred Vendor Pricing
Lease Renewals
Online Tenant & Owner Portals
Online Rent Payments For Tenants
Online Maintenance Request
Financial Reporting
While we have continued to grow our doors, this also requires us to grow our staff. It has become apparent to me that we need to find new revenue aside from simply adding to our doors. I would like to know how the BP investors/property owners feel about fees outside of the monthly commission rate. I would appreciate any feedback or positive/negative experience you have had with the following fees:
-Leasing Fees: PMs work harder to secure a tenant than any other time during the tenancy but receive the same commission rate after a unit is rented without this fee. Also, during this time, you are in essence "working for free" while you show the unit, run apps, keep an eye on the property, and sign the new lease.
-Lease Renewal Fee: While the renewal is not has much work as the initial lease up, still there is some chasing to do which includes letters to tenants, new lease sent out, and possible inspection of the property. Without keeping renewals up to date, the owner has a big liability hanging over their head since a tenant could move at any point once the lease goes month-to-month.
-Annual Property Inspection: A full interior/exterior inspection of the property. This is to ensure there are no ongoing, unreported maintenance items that could be causing damage to the property and/or the general condition the current tenants are keeping it in. These inspections also help us to confirm there are no unwanted pets or occupants living in the property. This inspection also comes with a full report with photos sent to the owner electronically.
-Vacancy Turnover Oversight Fee: Owners typically want a PM to manage the unit turnover in between tenants. This includes move out inspections, managing utilities, getting quotes on work needed, and scheduling vendors. During this time, the PM is not able to collect a fee if the contract is based solely on a percent of rent collected. Similar to the lease up, the PM is working for free.
I know I have not listed the proposed amount of these fees but the point of this post is to gauge initial reaction to additional fees on top of a monthly commission rate. I also understand that every dollar counts for property owners bottom line. However, the reason an owner hires a PM in the first place is do those things which they do not want to bother with. These things take resources on the part of the PM and resources cost money.