NEW PROPERTY MANAGEMENT BUSINESS MODEL GARY GEIST
Maintenance Fees - These charges
are for maintaining the property. Most
management companies will send
their own employees to the property to
handle
maintenance
issues.
Sometimes they use contractors who
will be paid by the property manager
with the bill being passed to the
investor.
the
For services performed by
management
company,
the
property manager bills the labor and
material cost for each task and
deducts this bill from the collected
rent. If the bill for work is more than
Current Property Management Business Model
the
collected
rent,
the
property
manager will bill the investor for the
Property management companies today have various control
balance.
mechanisms that are billed as one of three types of fees
These fees are not all
This process can work well, but this is
inclusive, but do describe how the current business models bill the
where a lot of problems develop
investor for management services.
between the property manager and
associated with managing property.
the investor.
Many management
•
Management Fees
companies only have one labor rate
•
Maintenance Fees
and they charge all their staff this
•
Other Fees.
labor rate for all tasks, no matter what
employee performs the work. Usually
Management Fees - The most widely known fee colleted by
this rate is set to cover the cost of
management companies is the management fee. Generally, this
their most expensive staff member
fee is a percentage of the collected funds each month and can run
and when the work is performed by
from 8% to 15% of collections. This fee covers the company's
junior staff members, the investor gets
general operating expenses and to gives the property manager a
billed at the same rate and not at a
satisfactory profit margin. There are other fee structures in use
lower rate.
like the flat fee which is a single fee per property per month no
technicians making $10 an hour work
matter what the monthly rent. No matter which system is used,
on your property, you get charged as if
these fees are deducted from the collected monthly rent before
a
the investor gets his check from the proceeds.
technicians did the work.
highly
So when low salaried
skilled
$30
an
hour