Belong’s Essential Guide To Property Management, Chapter 2, Part 2
Written ByBelong on Dec 29, 2021
In Chapter 2, Part 2 of Belong's Essential Guide to Property Management, we pull back the curtain on the way property managers charge.
Google just released its most searched terms for 2021 . As always, they provide a fascinating insight into the American psyche, but what interests us most at this moment is another frequently-asked question:
That’s a pretty basic inquiry, at least on the surface, but the answer is more complicated than you might think. The reality is that “property management” describes a broad set of activities, and it’s impossible for you to make an apples-to-apples comparison.
In many ways the question is no different than how much should a contractor cost – or how much should a nice hotel room cost. There is no definitive answer, except to say, “It depends.”
What we’ll do in the rest of this section of our book on property management is provide some parameters, to help you assess what you should pay for a property manager based on how much you are getting for your fee.
The reason this basic understanding and framework is so important is that far too many homeowners do a Google search, and then hire the lowest-cost property manager who pops up. The results are typically unsatisfying, and often, tragic. That’s why there are so many Google searches for the question “How do I fire my property manager” and “How do I get out of a property manager contract.”
Let’s start with the top-line number
Most property managers charge between 8% and 12%. It varies by geography and by the nature of the services the property manager provides, so it behooves you to take a very close look at the services on offer and then make an objective comparison.
We’ll start by making it easy: if a property manager wants to charge based on the rent that’s due – rather than the rent that’s collected – don’t even consider them. It’s bad enough to be struggling to collect the rent: it’s a disaster if you have to pay fees on income you don’t even have!
You own a home.
We have someone to ❤️ it.
Now let’s look at the tricky extras
There is a lot of fine print – some of it very fine – embedded in property manager contracts. We’ll walk you through the red flags, starting at the beginning: when the house goes to market.
Even at this early stage, there are often hidden expenses and charges to look out for. Two of the classics are initial set-up fees and inspection fees. Together, these can be as much as $650 or more.
The next step in getting the property listed is usually a video tour – which usually costs as much as $1,000 to produce. Even if you don’t opt for the 3-D tour or video walkthrough, you’ll need to write a check for about $500 for traditional photography.
Once the property is rented, most managers charge a move-in fee (they’ll most likely charge a move-out fee, too). That runs homeowners about $250 on average.
There are other buried costs that you need to surface in order to compare the cost of property management companies. For example, there are often “maintenance markups .” When a property manager arranges for any kind of maintenance – routine or otherwise – they tack on an additional amount, usually 20%, to pad their pockets.
As you can probably imagine, all this can really add up. What’s more, it disincentivizes property managers in terms of finding the most cost-efficient solutions for their clients. In fact, on the contrary, they often try to make you pay more.
In short, their interests are not aligned with yours; that’s a fundamental disconnect.
When landlords face challenges
Being a homeowner of a rental property inevitably involves challenges along the way. Vacancies are a big one . Most property managers continue to charge their standard fees during vacancies, so be alert to this reality and make sure you choose a manager that doesn’t.
Another trap is the cost of getting out of a property management contract if you are dissatisfied with the service you are getting. As indicated earlier, this is far from uncommon. While termination fees vary, $500 is the industry standard. That’s a lot to pay as a penalty for being let down by the very people who are supposed to be serving your needs.
Last and certainly not least is the “Big E” – for eviction. This last-resort measure is also a costly one – as much as $5,000 to $8,000, depending on the circumstances.
Meet Belong. When Others Say Charge, We Say “No.”
Belong is the 21st-century property manager who is reinventing everything about the way business is done. For essentially the same base-level fee as the industry, Belong provides extraordinary value. All the extra costs described above are either included gratis in Belong’s overall services. Or, like an early termination fee, they don’t exist at all.
And the absence of costs is just the beginning of what Belong provides, benefits which include a 24-hour concierge, and the availability of Belong Pros – the neighborhood’s best contractors – available without the mark-ups described above.
To learn more about the people dedicated to giving you more, click here .
Back-of-the-Napkin Math On Choosing Belong.