NEW PROPERTY MANAGEMENT BUSINESS MODEL GARY GEIST
Many property managers tout the benefits as being
a one-stop-shop for maintaining property, saving
the investor money. But experience working with
different management companies has proven
otherwise. While it is true management companies
can perform general maintenance tasks, there are
questions about the quality of this maintenance
and what the real costs are for these simple tasks?
For the more difficult maintenance tasks, the
property manager's staff may lack the skills or
experience to perform, and if they do perform the
work, they take too long. And because they lack
skills, training and experience, they can not
properly diagnosis the problem to determine what
needs to be fixed. Thus, when the management
company staff tries to fix the problem and can't,
you will have to hire the "expert" in the end. In
you will be buying many unnecessary parts, paying
for larger quantities of material, and not getting the
advantage of local sales on many components and
materials.
Always
using
the
management
company's staff to handle maintenance because you
are a "captive client" can be very expensive.
either case, it will cost you more.
Other Fees - There are many other fees a
When the management company performs the
majority of the maintenance, you have a single
source supplier with no competition. This eventually
leads to over pricing on not only labor, but also
material costs on the work orders.
In addition,
because of the maintenance staff's inexperience,
management company can charge depending upon
their business model. Here we will only address the
most common one including: Leasing Fees, Check
Writing Fees, Parts Handling Fees, etc. These fees
are deducted from the collected rent each month and
paid to the management company.
•
Leasing
Fees
-
These
fees
cover
the
management company's cost for leasing the
property and can be a flat fee or a percentage of
monthly rent. This fee is generally charged when
a property is leased the first time and is not
charged the second time if the property has to be
re-rented
within
management
the
first
companies
year.
have
a
Some
reduced
"leasing fee" for all subsequent times the
property is leased.