What's a Fair Markup for Handling Maintenance?

Question

So, you hire a Property Management Company (PMC) to manage your rental property(s).

What are you experiencing or expecting them to charge you for their time spent managing maintenance issues?

In our experience, the cost most PMC's charge for this really isn't transparent because it's included in either:

1) Their hourly charge for maintenance

2) The invoices they send from their company or a maintenance subsidiary.

If a PMC was to share with an owner their true cost, what would an owner feel is a fair markup for handling maintenance issues?

Jeff Copeland · Answer

As the owner of a property management company, I can tell you that many maintenance coordination activities operate at a loss.

Let's say our in-house maintenance tech responds to a toilet leak:

He/she might spend a half hour trying to get the tenant on the phone to confirm what is going on (is the toilet running, or is it overflowing? Two very different problems), then visit the property to determine it's the flapper valve (a $5 part). The part is not on the truck, so he has to visit the hardware store (and stand in a socially distanced line for 30 minutes while waiting to get in), then drive back to the property to install it.

At this point, let's say I owe him an hour's worth of labor ($20) and spent $5 on materials.

Now, at the end of the week, I get his invoice, and the receipt from Home Depot. I have to bill the owner for his labor and the materials cost, in addition to running payroll for the maintenance tech (which comes with its own overhead costs).

Even if I bill the owner $25, plus a 10% markup of $2.50. I'm losing money on this job. I spent a half hour just paying the technician and billing the owner (and my time is worth way more than $5/hr.). But if I billed at a break-even rate (say $50), the owner would freak out because we charged her $50 to replace a toilet flapper.

Now multiply this times a few hundred doors.

Maintenance coordination can be a frustrating and thankless task. Many PMs do it because they must, not because it's a profit center.