Value versus price: How lower property management fees could cost landlords money!
As an owner, you want to make sure your property is in the best possible hands. While the cost of the fees paid to the property manager is a good benchmark to assess the most suitable service, it's important to note that not all property managers were created equal.
If you're looking for an agency to manage your investment property, here are six reasons to compare more than just the cost of ongoing fees or risk paying out more in the long term.
1. Hidden added extras
Monthly payments should cover service fees, inspection fees and callout fees. In addition, the cost to draw up contracts and offer consultation across developments in the local market should also be included.
If the monthly fees are significantly less than local competitors, you should ask yourself why. You'll likely be charged an extra rate for services that should be included as standard.
2. Quality of staff
If a monthly property management fee seems too good to be true, there's every chance that it is.
Property management income should cover not only the cost of basic wages but also professional development. If the income is reduced because of low fees, the staff might not be as experienced or trained as highly. Less commitment to staff's development might lead to a higher turnover or a compromise in the quality of service for owners.
3. Larger rent roll
Lower fees are likely to attract more property owners giving the management company a bigger rent roll than local competitors. This can mean less attention to you and your property and a lower quality of service.
4. Market value
A property manager who charges lower management fees may also want to rent the property out at a higher value to make up for any shortfall in income. If a property isn't advertised at the appropriate market value, it might be left sitting vacant for longer, leaving the shortfall in the owner's income.
5. Less resources
It costs money to invest in the technology and advanced equipment required to offer a competitive service. Fees should reflect the agency's commitment to investing in its resources.
6. Lack of sustainability
If a property manager's fees aren't high enough to cover any slow periods or downtime, this can result in them having to cut corners to get through harder times when the market is slow. If fees are too low, the long-term future of the business might be unsecure.
At ManageMe Property Management, we recommend you always do your research before listing a property with a management team. Find out exactly what's included and what the downfall of lower property management fees will be. To find out more, contact us today.