What PM would you pick in this scinario?

Question

Granted there is a lot of questions I ask Prospective PM's, I have 2 companies that I am considering, leaning more toward company A, but wondered what the community would pick...

Both companies are strong with platform, referrals, and management style / structure. and how they handle the inner workings of business. Their main difference is the financial structure.

My rents are: $775,$875,$925, my tenants tend to be long term and I don't really have a high turnover rate.

Company A: 8% monthly fee, Half first month rent for placement and 25% for lease renewal (essentially the 2% diff would cover the cost of renewals) zero up-charge on maintenance.

Company B: 10% Month fee, 25% placement, $100 lease renewal. zero up-charge on maintenance.

what would you go with and why....

Greg Weik · Answer

If you're shopping based on price primarily, the biggest differentiator will be company culture. What do the companies value?

We pick up clients often from our competitors.  Those clients who shopped initially based on price or name recognition realize down the line, that other things were more important to their experience as a client of a PMC.

Reviews are important, but the truth is far more nuanced in most cases. Many companies pay 3rd party reputation management firms to flood Google with 5-star reviews.

Some examples of things that might not make it to a spreadsheet analysis:

-How do they treat tenants?  Any extra fees for paying rent online, maintenance requests, etc.?

-How responsive are they to clients?  Can you text them, call them, email them, and expect a human to respond or answer quickly?  Will that human have answers or will it be an answering service?

-How clear is their accounting?  This is a big one.  When clients have questions about their accounting, it seems that a lot of PMCs give the brush off or "we'll get back to you" and this can be a huge pain point when working with a PMC.

As @Nathan G. said, marketing is a big part of this equation as well.  Have you looked at the marketing methodology and media used by each company?  I would assume they are probably very different.  Do they both do in-person showings, or does one or both companies utilize unattended showing technology?  What about video virtual tours?  Tenant application fees and "admin fees" for tenants to lease a property?  You need to know not only where they market, but how they respond to prospective tenants and how they conduct showings, as well as their screening criteria.

California is a lot like Colorado.  It's easy to put tenants in a property (usually), but hard to get rid of them.  Marketing and screening are big parts of the puzzle.

Patricia Becker · Answer

@Nathan G. Much appreciated, and yes all the other metrics for turnover/ market rates and quality is really hard to judge because all companies interview well and I couldn't find bad news on either of them in any of my searches. looks like I am right to go with Company A. I Put in some worse-case scenarios and came up with the following.

Nathan Gesner · Answer

I suspect there's more to each company than just these numbers. How long does it take them to fill a vacancy? Is one better at getting market rates? What's the quality of their team? Who has happier owners/tenants, better reviews, fewer complaints? How good is their portal, owner statements, communication, etc?

Build a table like the one below and plug in a few different scenarios. I would look at a six-year period with turnover every year, every two years, and every three years. See what the cost is when you consider leasing fee, management fee, and renewal fee. Is it significant enough to sway you one way or another?