Property Management Costs

[Chris Mooney]

Hi all,

I'm an out of state investor with a portfolio in Cleveland, OH. I'm on my third property manager, and wondering if the PM specific expenses I've seen in Cleveland are standard everywhere. Fees such as visual inspection fees or visit fees to look at a maintenance request that was raised, or giving 30 day notice to a tenant that we're not offering renewal, or installation of a lockbox on a vacant unit.

5 years ago when I first started investing, it felt like I was being nickel and dime'd, but now I've seen this across multiple PMs, wondering if its just industry standard? The little charges here and there add up over time and eat away at margins, but I've decided to really dig deep into numbers and metrics and learn how to be a more profitable operator.

[Richard F.]

There really are no "Standard" fees OR contracts for Property Management or Rental Agreements, among others. You can search for "sample residential property management contract" and find a lot of formats, with varying detail, and varying "fill in the blank" sections for customizing to an individual transaction. In other words, ANY contract is "negotiable". Some PM's are less flexible than others, but the fact is they all need to profit. They, in theory, look at the man hours involved for each aspect of PM, and the condition of the property, and the apparent quality of any Tenants. Usually there is a percentage of gross income as a baseline, then there may be "ala carte" items, or areas where you can require certain constraints. All of which, is negotiable. BUT, it takes time to review the actual contract, discuss with the PM their actual processes, strategies, and guidelines to see if they mesh with your needs/wants. 

You should have a list of questions to ask regarding various processes and charges, how late fees are handled and WHO GETS the late fee, among many other points. @Drew Sygit has posted numerous times with a decent list of questions you should consider, as have I under similar topics.