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Charlotte Property Management Blog
Do Charlotte Property Management Companies Charge for Maintenance?
Matthew Tringali - Monday, February 19, 2018
Most management companies are going to charge a fee for property maintenance. They need to cover their own costs, and some property managers will use maintenance and repairs to make a profit. Owners sometimes ask why we charge maintenance fees on top of the property management fee we already charge. It’s a fair question.
Charlotte Property Management and Maintenance Costs
The property management fee needs to be enough to cover the fixed costs of running a business. Those fixed costs are the same every month, and include things such as employee salaries and office space. That management fee does not cover the variable costs. Those expenses fluctuate every day. One day, there may be 10 work orders to manage and on the next day, there could be none. The only way to budget for these variable expenses is to bill customers a variable amount.
Charlotte Property Management: How to Handle Maintenance
A management company can handle property maintenance in one of three ways: Have an in-house maintenance team to perform all, or most, of the work; Outsource the maintenance to outside vendors, mark-up the price of the invoice, and disclose that cost to owners; or, Use outside vendors, mark-up the price of the invoice, and avoid disclosing it to owners.
Charlotte Property Management: The Benefits and Costs of In-House Property Maintenance
There really isn’t a right or wrong way to do it. For example, the advantage of an in-house maintenance company is that property managers theoretically have more control over the maintenance process. I would not need to ask an outside vendor to fix something – I can simply send a maintenance employee to take care of the problem. However, this can also be seen as a conflict of interest. If I own a maintenance company, I stand to benefit from things breaking at the properties I manage. And, if I have a contractor sitting around on salary all day, I may be glad to give him something to do.
There’s no way to know how much an in-house maintenance company will charge a landlord client. Each work order will be different. I might bill a landlord $100 for work that was done, but I won’t know if I made any money until I subtract my costs, including labor, transportation, tools, insurance, and other expenses. I may not know how much I made until the end of the month, when I’m reconciling my profit and loss statements.
Charlotte Property Management: Outsourcing Property Maintenance and Disclosing Mark-Ups
The advantage of outsourcing the maintenance work and disclosing the mark-up is transparency. If I send out a vendor who charges $100, and I put an invoice in the owner’s portal for $115, the owner can see there is a 15 percent mark-up. No property manager is going to get rich charging an extra $15, but hopefully that will come close to covering the cost of receiving the work order from the tenant, troubleshooting the problem, dispatching the correct vendor, ensuring the work is complete, and following up with the tenants to make sure they are happy. That mark-up would also cover hiring and firing vendors and making sure they have the correct insurance.
Charlotte Property Management: Outsourcing Property Maintenance and Not Disclosing Mark-Ups
A property manager might mark up an invoice arbitrarily at different amounts. Perhaps the owner will never see the original invoice from the vendor. Or, the manager might get a rebate from the vendors who are happy to get the work. If you are talking to a property manager who says that there is no mark-up on maintenance, it’s not necessarily a free service that’s being offered to you. The cost is simply not being disclosed.
Property managers do charge for maintenance, and it’s usually in addition to the regular property management fee you pay. Make sure you discuss this when you’re looking for a property management company in Charlotte. If you have any questions, or need any help, please contact us at Group 15 Real Estate.
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