Before we get started I do want to mention that this post has an example discussing fees. The fees are only an example and if you’re looking for property management services you should negotiate these amounts. It would be a violation of anti-trust laws to suggest “common” or “general” commission rates, management fees, etc., as these are all negotiated. The examples provided are solely for a math breakdown, not suggestions.
Every industry has its not-so trustworthy individuals. Property Management is no different.
In this post I’m going to highlight one of the ways a Property Manager or management company may work against the property owner to help themselves. Be on the lookout for:
Property Management companies all tend to offer various rates on bill payment. Some charge a flat rate for processing your bill and others charge a percentage of the bill. Be careful and read the fine print in the contract concerning bill markups.
Now, let’s be honest – Most of us who professionally manage properties are using specialized property management software that handles the majority of the work. We use Buildium. This online tool allows me to handle financials for multiple properties and includes reporting for each individual property and/or owner. While the software doesn’t do the work for me, it does lessen the financial accounting time. The amount of time it takes me to process a $30 electric bill is exactly the same as a $15,000 tax bill (Looking at your, Illinois).
I see bill payment costs as the cost of doing business. We bulk order checks and envelopes (1,000 at a time) and mail them with a first class stamp. All in, our check mailing cost is about 85¢. And time? That’s what the management fee covers. It’s not just a retainer.
Simply: Bill markups are another way Property Management Companies nickel & dime property owners. Truely the dark side of the property management business.