Inquiry About Receipts and Fees from PM Company

Member since 2023 · 8 posts · 5 votes

As a new real estate investor, I recently bought a SFH and hired a PM company to handle it. I'm wondering if it's common for PMs to provide detailed receipts for each project, and if it's reasonable to request them. I need to prepare for tax filing and potential audits, but I'm unsure if receipts for every expense are necessary.

I had an incident where the PM mentioned a referral fee of $350 for a tenant, but the bill showed $400. They later corrected it after I pointing it out, but now I'm unsure if the referral agent actually exists. Should I request a receipt for this charge, even though it's below $600 and may not require a 1099 form?

Any advice would be appreciated. Thank you!

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Herley Beliard
Member since 2018 · 2 posts · 0 votes
2y
Quote from @Ryan Sun:

As a new real estate investor, I recently bought a SFH and hired a PM company to handle it. I'm wondering if it's common for PMs to provide detailed receipts for each project, and if it's reasonable to request them. I need to prepare for tax filing and potential audits, but I'm unsure if receipts for every expense are necessary.

I had an incident where the PM mentioned a referral fee of $350 for a tenant, but the bill showed $400. They later corrected it after I pointing it out, but now I'm unsure if the referral agent actually exists. Should I request a receipt for this charge, even though it's below $600 and may not require a 1099 form?

Any advice would be appreciated. Thank you!

Ask for it all, everything. And have an expert look through them. If it takes you pointing out a problem for it to be resolved, then there may be more you have not seen yet. If you’re having doubts already then it’s best to take action to make sure you’re not getting played.
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Herley Beliard
Member since 2018 · 2 posts · 0 votes
2y
I’m in the process of learning about property management, that’s how I came across this post. Just from what I have seen already I can assure you, it is not unreasonable to ask for detailed receipt.
As a matter of fact they are a must for proper bookkeeping, PMs are supposed to send the property owner detailed reports to show how the property is performing.
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Michael SmytheBusiness Member
Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
2y
@Ryan Sun what does your management contract say about this?
Typically, a PMC issues monthly owner statements. They also provide year-end statements and are required to provide a 1099 for tax purposes, but many charge extra for these.
Having an actual receipt won't help you with your taxes, but as you have learned, can help you track expenses. You should require that your PMC send you ALL expense receipts or make them available via an online owner portal.
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Lynn McGeein
Real Estate Agent · Virginia Beach, VA · Member since 2012 · 2k+ posts · 1k+ votes
2y
Mine emails me monthly statements if no work done but also snail mails me the ones that have had any maintenance or repair along with copies of paid contractor receipts for my files. They do charge a small yearly admin fee, like $200 inclusive of up to 10 properties. Seems a very efficient way to handle it.
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Theresa HarrisPro Member
Member since 2019 · 15k+ posts · 11k+ votes
2y
On the monthly statements it should have an itemized bill. That includes their fees, the rent payment and any bills you may have. You should have a copy of bills for repairs that they got from the company that did the repairs. My bills sometimes take a month or two to show up (and be paid), but I always get them. At the end of the year, I also usually get an annual statement summarizing all of the fees by category for my taxes. My PM changed accountants and now I have to ask for this vs it automatically coming, but they still provide it. I'm in Canada, but I claim everything on my taxes, including advertizing costs which may be $50. They are all costs associated with the rental.
I'm guessing the referral fee is for placing a tenant in the property?
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Nathan GesnerBusiness Member
Moderator
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
2y
Not all property managers are equal. In my office, we provide a scanned copy of every invoice charged to a rental, even when it's paid by the tenant (e.g. turnover carpet cleaning).
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Calvin Thomas
Developer · New York City, NY · Member since 2015 · 812 posts · 718 votes
2y
Quote from @Ryan Sun:

As a new real estate investor, I recently bought a SFH and hired a PM company to handle it. I'm wondering if it's common for PMs to provide detailed receipts for each project, and if it's reasonable to request them. I need to prepare for tax filing and potential audits, but I'm unsure if receipts for every expense are necessary.

I had an incident where the PM mentioned a referral fee of $350 for a tenant, but the bill showed $400. They later corrected it after I pointing it out, but now I'm unsure if the referral agent actually exists. Should I request a receipt for this charge, even though it's below $600 and may not require a 1099 form?

Any advice would be appreciated. Thank you!

The referral fee is usually what they charge to place a tenant. This should be specified in your agreement. In terms of receipts, they would have to give you a receipt from their letterhead (Property Manager, Inc.) on the work, not what the contractor does for them on your property and others.
Most likely, there is an upcharge from the contractor to them since it costs money to run a business, set up the appointment, and confirm with both the contractor and the tenant. Doubtful the PM will give you a direct receipt so then a client can go around them and go directly.
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