Vendor Upcharge by Property Manager

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Vendor Upcharge by Property Manager

Kwame Koom-Dadzie
Investor · Humble, TX · Member since 2016 · 54 posts · 22 votes

I just had an awakening by my property manager.I had issue at property , property manager stated preferred vendor (they will not give vendor contact info out) came to assess and costs $2500. I called around to get second opinion, some how by chance called this same vendor , they sated he we cam to the property , but the quote was $2000. 

I'm not sure if this is a usual practice in your area for property managers to make extra buck by up charging costs of third party vendors   

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John UnderwoodPro Member
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
6y

PMs really upset me. They are making money already for accepting rent. Then If they have to do something they want to gouge you  and charge more fees.

I'd fire them.

Make sure you know what your agreement is and don't just agree to everything in their contract.

This is a big reason I self manage.

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  • Peter TverdovBusiness Member
    Developer · New Brunswick, NJ · Member since 2015 · 1k+ posts · 2k+ votes
    6y

    Ooof that's pretty bad but there might be something missing in your story. The properties we manage we have the freedom to make any repair up to $500, after that we have to call the owner. Do you have anything like that in your contract?

    Additionally, it is very common for PMs to upcharge on repairs. It takes time to call and schedule and build a relationship with a vendor. We don't personally do it but plenty of companies do. 

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  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    6y

    PMs really upset me. They are making money already for accepting rent. Then If they have to do something they want to gouge you  and charge more fees.

    I'd fire them.

    Make sure you know what your agreement is and don't just agree to everything in their contract.

    This is a big reason I self manage.

    2Reply
  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    6y

    Sorry, but the PM is already being paid to manage your property and most months that means simply collecting the rent.  If mine upcharged me for repairs, I'd find another PM.

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  • David de Luna
    Rental Property Investor · NorCal · Member since 2018 · 399 posts · 222 votes
    6y

    The percentage they charge out of your rent is intended to cover the cost of administering repairs and providing them with a fair profit. I would replace them. Not cool at all, in my book.

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  • Kwame Koom-Dadzie
    OP
    Investor · Humble, TX · Member since 2016 · 54 posts · 22 votes
    6y

    @Peter Tverdov, thats all the story , i have in contract to call me anything over $500, which they did. I gave them ok to get vendor estimate. I had no prior experience with this issue . But I think close a $500 surcharge quite surprising & disappointing .

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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    6y

    Pretty standard. Property management is a razor thin margin business.  Most upcharge from what the contractors charge if they dont have someone on their own staff to complete the task. 10-15% upcharge is pretty typical. 

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  • Anna Sagatelova
    Property Manager · Cleveland, OH · Member since 2019 · 446 posts · 566 votes
    6y

    Most PMs will put a markup on third party vendor services. However, the markup should be clearly disclosed in your contract and also on the estimate.

    I think you just need to have a closer look at any documents you've signed and have a conversation with your PM about exactly how they came to that $2500. 25% is a steep markup, but I don't know what's in your contract or the scope of their coordination/oversight.

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  • Zachary Ray
    Investor · Tampa, FL · Member since 2017 · 589 posts · 251 votes
    6y

    Read over your management contract and see what they are charging you. Each manager has their built in costs to stay profitable. If possible avoid management that charges maintenance fees as those can get pricey. 

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