Do maintenance Markups by Property Managers Make Sense?

[Brian Teeter]

I own a property management business in Little Rock, Arkansas. I wanted to open up a conversation around a topic that often stirs debate: maintenance markups. Should property managers charge them? I believe there’s a strong case that, when done transparently and fairly, markups are not only justified—they’re often essential to good property management. I am curious to hear from other PMs and clients on their views and whats common in their markets.

Here’s why I think markups make sense:

1. Coordination Takes Time and Experience
Coordinating maintenance isn’t just a quick phone call. It involves sourcing reliable vendors, negotiating pricing, scheduling with tenants, ensuring access, following up for quality control, and in some cases, managing rework. That’s real labor—and a big part of what investors are hiring us for.

2. Risk and Cash Flow Float
Property managers often front the cost of maintenance and wait to be reimbursed by the owner. This carries both financial risk and administrative overhead. A modest markup helps offset that burden.

3. Quality and Accountability
When property managers have a financial incentive to manage maintenance well, they’re more likely to build relationships with reputable vendors and ensure the job is done right. Good managers don’t profit from unnecessary repairs—they profit from efficient, reliable service that keeps tenants satisfied and properties in top condition.

4. Volume Discounts Still Save Clients Money
This is a key point that’s often overlooked: even with my markup, clients still pay significantly less than retail prices for labor and materials.
Because we manage hundreds of properties, we get volume pricing from vendors, suppliers, and contractors—discounts that individual owners typically wouldn’t have access to. In most cases, even after the markup, the client comes out ahead compared to hiring a vendor directly off the street.

5. Keeps Management Fees Predictable
Rather than increasing management fees across the board to cover the added workload of maintenance coordination, markups tie cost to activity. Owners only pay when there's work to be done, not for work that might happen.

A Question I Often Hear
I’m frequently asked, “Why do you charge a maintenance markup? Shouldn’t that be included in the management fee?”
It’s a fair question—but my response is simple: maintenance and remodeling coordination is active, time-intensive project management. If we built that into the base fee, it would need to be higher year-round—even when no work is needed. This way, owners only pay when services are actually performed.

Transparency Is Key
Of course, disclosure matters. We spell it out clearly in our agreement and openly talk about it with owners. 

I’d love to hear how others approach this:

• If you’re a property manager, do you charge a markup? How do you structure it?
• Investors—what’s been your experience? Do you prefer a markup model or a flat-fee structure?
• Have you found a hybrid approach that works well for your portfolio?

I think this is one of those areas where a thoughtful, transparent approach can actually build trust rather than erode it. Curious to hear how others are navigating it.

[Drew Sygit]

Owners want EVERYTHING included and/or for free!

#1 problem - they either don't properly value their own time or don't really understand how time intensive getting work done on a property is.

They incorrectly assume that either:
- PMCs have handymen that can handle everything for a $x/hour they got off Craigslist ad
- It only take minutes to call 3 contractors for bids, schedule appointment with the tenant(s) AND the contractor, meet contractor at the property, get bids, review all the bids for completeness, then schedule work, inspect the work to confirm quality & completeness, verify any warranty, etc.

They are only partially correct. 

In an attempt to address this "fairly" we have 3 categories:

Maintenance: small jobs our handymen can easily & quickly handle like faucet & drain leaks, caulking, snaking drains, tightening loose handrails, etc.
Since the list can be exhaustive to define, we capped this category at $x, which is also tied to our owner approval threshold for efficiency. 
Charge: actual costs, no markup

Repairs: standard RentReady jobs, coordinating replacement HWH, painting, replacing a window/door, etc.
Again, we categorize it by dollar amount, so starts from Maintenance Limit to $x.
Charge: actual costs, plus markup percentage

Renovations: major RentReady jobs where tenants trashed the property, rehabs, etc.
Starts from our Repair Limit.
Charge: actual costs, plus markup percentage higher than that we charge for Repairs.
- Every owner wants a "volume" discount on these jobs until we explain these jobs typically require several contractors and coordinating timelines can be a nightmare. One dealy on our end or a contractor getting delayed at another job can throw the whole timeline off, which often requires finding replacement conrtractors and negotiating prices again! Also, a GC would charge a whole lt more than we do.

It's not perfect and owners still complain it's not fair, but they also can't come up with a better system.

What we think is funny is the owners that actually believe PMCs that charge for maintenance by the hour do NOT charge a markup!
They fail to understand the PMC's hourly rate has a built-in markup for profit.