Property Management Co., is this a red flag or normal?

Question

If the rent I collect is $975, instead of the PM co. taking its $97.50 (10%) cut, it rounds it up to $98, since it's only 50 cents more each month, is this normal?

If this PM co. rounds up its management fee, I wonder if it does the same for repairs.

By the way, this PM co. is highly recommended by a member who writes articles on BP.

Michael Seeker · Answer

Just like with contractors, banks, tenants, etc.  - your personal experience with them can differ greatly from that of somebody else.  I always like to get recommendations, but they're only as good as the person giving them.  If I recommended a PM company to you, how would you have any idea if they were any good or not?  Me being active and having over 1000 posts on BP doesn't tell you anything about the PM company other than there is some reason I endorse them.  Maybe my cousin owns it, maybe I get a kickback from referrals, maybe the owner takes me on fishing trips with him, or maybe they actually do a great job.

Bottom line is unless you know me and know my motivation for recommending somebody, you need to do the same due diligence as if you found them through some other random source.

In my very limited experience with PM companies, you will probably be overcharged depending on what your perception of "fair" is.  I don't think it's fair to charge me an hour of labor and $10 materials to replace a light bulb.  But just like a plumber or electrician, everything is by the hour.  If they are a great PM company and you don't have to worry about anything, then maybe it's worth it.  As others have said, if you're already starting out on the wrong foot, you'll be inclined to watch every charge like a hawk and in the end it'll be a lot of stress on you.  If that's the case, why pay somebody else in the first place?

Angelo Behar · Answer

Would you mind sharing the name of the property management company?

Sandra Han · Answer

I'm at due diligence stage, just wanted to find out if this normal or not but thanks for all the input all the same. To me, this is a big deal because this PM co. is also the seller of the property.

Stephen Masek · Answer

Do you remember grade school math?  Round up or down to the even number if half-way.  That said, their software ought to be able to handle pennies.

Bobby Narinov · Answer

I think you should avoid this management company. Not because they are bad but because you have lost your thrust in them. It is not a pleasant investment if you constantly question the honesty of your management company.

You would sleep better with one that you thrust more even if they are crooks. (or at least until you find that out).

On the other hand this is not how you pick a management company. There are plenty of posts here and on the web that give you a list of questions to ask your management company before you jump into bed with them.

Here is a link I got from one of the previous posts(I don't remember the post but I saved the link):

http://www.jmbgrouppm.com/blog/item/23-questions-to-ask-a-property-manager.html

Good luck.

Sandra Han · Answer

Thanks, Michaela, I'll.

Michaela G. · Answer

So, that is not an objective recommendation.  I would ask the PM for some references of present clients and contact them.

Sandra Han · Answer

No mention that she is an agent.

Michael Noto · Answer

@Sandra Han  Does the BP member get the 3% on the sales because they are a realtor for the properties that are being sold?  If so, that would be normal, no?

Sandra Han · Answer

I forgot to mention, that BP member gets a 3% commission on property sold by this PM co., no, she made no mention of this here or on her website, I found that out after some digging.