Property Management Fees

[Ben Traxel]

In the process of buying a 12 unit apartment building and will be my first time hiring a property manager. They say their standard rates are 10% of income, 1/2 of first month’s rent for all new tenants, and they charge and keep a $45 application fee. They do have 24 hour maintenance. Does this seem high to anyone?

[Davartay Miller]

@Ben Traxel This will definitely bring about a great conversation! I would say this is not high – only if the team you are hiring has the appropriate systems in place to protect your investment. Now, is this the cheapest? Of course not! But run away from the cheapest. I can not stress the importance of doing your research. Now, if you find someone cheaper, feel comfortable, and think you will rest well at night with them protecting your investment – then go for it! I recently shared with someone in the BiggerPockets community: I can not stress the importance of quality. You can not sacrifice quality for a company that’s “cheaper.” Price is often the deciding factor in a consumer’s choice to buy, but if asked many will not agree this is the case. Customers don’t want to seem ‘cheap’ nor do they always want to buy ‘cheap’ items. They generally want value for money or a less expensive item. It’s funny when some claim they are cheaper and when you get into the “nitty-gritty” of things.... they are actually more expensive. Always remember everyone can do it cheaper but not everyone comes through on their promises! Some companies can’t be real and they make fake promises – “to keep up with the Joneses”. I often tell clients, respectfully, we do not proclaim to be the cheapest. If you want cheaper.... yes you can probably find cheaper online! But unfortunately it’s not us and that’s okay. Perhaps we are not a great fit. Our goal is to make life easier for our customers. All to say, when you are interviewing theses companies . . . Do not compare based on prices. Compare companies based on the service they provide, what’s all included, how many years they have been in the game, and most importantly the KPI’s (Key Performance Indicators). Remember the salesman can sound good on the phone, his cheaper prices has you thinking, but what proof in the pudding does he/she have? 

Best of Luck!