What do you charge? Or, how much does it cost to have property manager manage my property?
First of all, let me start by saying that is a legitimate question. I validate the importance of that question. But I want to tell you, that is a horrible first question to ask when you call a property management company. When you’re shopping around, the worst thing that you can do is start the conversation by asking, “How much do you charge?”
Let me give you an example of that. There are many different ways to run a property management company and there’s many different services that are involved with managing a property. Some property management companies offer more of a white glove service, more of a full-featured set of tasks that they offer their clients. And others are more of a bare-bones, “let’s just barely do the minimum, and we’ll charge what’s appropriate for that.”
So, let me start by saying, I know that this rent rate is not a typical rent rate across the board. You’re going to have some rent rates that are higher. You’re going to have some that are lower. But let’s just take the rent of $2000 a month. We’re going to use some calculations on that. For every 1% difference in a property management fee on $2000 a month, it’s about $20 a month. So, for every 1%, up or down, the difference is really $20 a month, which is really $240 a year.
So, what you should be asking is not, “How much do you charge?” But, “What do you do and what do I get for the fees that I pay?” Based on that, you can make a decision of, are the services that I want in line with what the property management company is offering. Again, to use that $2000 a month or $240 swing on a 1% difference in property management fees, that $240 really equates to about just barely over 3.5 days worth of vacancy. So, your daily rate, if your property sat vacant for an extra 3.5 days, that’s going to equal about the $240 on a $2000 month rent rate.
So, using those calculations, you and say, “If my property sits vacant with one property manger versus another an extra 3.5 days, that’s going to eat up the difference on that $2000 a month rental. And that 1% is going to eat up that difference for an entire year. So in the grand scheme of things, none of us want to pay more that we have to, right? We all want to get the best value.
But there are different service offerings at different prices, specifically because people are looking for different levels of service and that’s not just in the property management industry, that’s in all industries across the board.
So, a better question to ask is not, “How much do you charge?” But, “Is the property management company service offerings in line with what I’m looking for? And if it is, is it a good value? Am I getting what I want a price that I’m willing to pay?” Is it a good value? The better questions to ask are, “What do you do to market my property? How do you handle maintenance?” As an example, a botched maintenance request from a tenent, that can easily eat up that extra $240. If you hire a vendor that’s not been screened, or isn’t a part of your approved vendor list, and the go out and the over-charge, it doesn’t take long to have a maintenance item or two to eat that extra additional percentage that you’re paying.
Really, what you want to look at is, “How do you handle maintenance? What do you do to market my property when it’s vacant? What do you do for rent collections? How soon do I get my rent proceeds?” These are the questions you want to ask. And then, once you’ve figured out that they’re a good fit, now you can start talking about pricing and understanding what fees are associated with their services. Do they charge a monthly management fee? Do they charge a leasing fee? Do they charge a lease renewal fee? If they do, how much are those fees? In addition, do they do quarterly inspections? If they do, is it included? Is it an extra fee?
While I totally understand that nobody wants to pay more than they feel they should on anything that they purchase, starting out with, “How much do you charge,” actually puts the property manager or the property management company that you’re calling in charge of the conversation that you’re having, because now they can craft their message around why they’re the most expensive, or why they’re the cheapest. And really, they’re driving the conversation, as opposed to you finding out what the management company actually does to protect your asset.
At HomeVault, we say that there’s really only two things that you hire us for; the first thing is, you hire us to assist you with minimizing the risks associated with being an investment property owner, and the second thing that you hire us for is to assist you with maximizing the long-term returns associated with being an investment property owner. In both cases, we really are there to secure your asset now and to secure your asset in your financial future, in the future.
Everything that we do comes back to one of those two things. All the services that we offer really come back to those two points. If you’d like more information about our services, feel free to reach out. I’m Tony Cline with HomeVault Property Management. You can get more information at HomeVault.com. Or check out our Facebook page or check out our YouTube channel. Alright, thanks. Take care.