The number #1 reason tenants give for not renewing their lease is maintenance. Poor quality maintenance. Nothing is fixed, phone calls don’t get returned, so they move. That’s the number reason nationally. We don’t see this issue with our tenants, because we have an effective maintenance management system.
Here’s how our process works. When the tenant has a repair request, they submit their maintenance request online. We review the request directly. Many property management companies have third party maintenance services that take maintenance requests and immediately send someone out. Because we receive the requests directly, we are able to review, and conduct any troubleshooting first.
So, say the tenant says the garbage disposal isn’t working. We’ll first walk through some troubleshooting tips – like, pressing the reset button. We have troubleshooting for a ton of maintenance requests. Garage doors not opening, GFI’s not responding, refrigerators not cooling, toilet clogs, the list goes on. If we get through the troubleshooting and it’s still an issue, then we dispatch for maintenance accordingly. We also have an emergency line for after hours. So, the furnace goes out on a cold Saturday night, we can take that call and dispatch a vendor if needed.
We are very particular about vendors that we use. We qualify them on pricing – typically getting below market price since we are a property management company, quality of work, and making sure they can address issues in a timely manner. All of our vendors must be insured and have any applicable licensing.
Once the maintenance work order is dispatched, the vendor goes out to the property to make the repair, and we follow up to make sure the job gets completed in a timely manner. The vendor then sends us the invoice, we review the invoice, and then we pay the vendor. For all of this, we charge a 10% maintenance oversight fee.
It is going to be very rare for a property management company not to charge some way or another for overseeing maintenance. And yes, this includes property management companies in St. Louis and St. Charles. Some property management companies have their own “in house” maintenance company that they will profit from. Which sounds great, but if they are making an hourly rate off maintenance off your property, what’s the benefit to them to troubleshoot first and try to avoid sending out someone for maintenance?
Other management companies may elect not to have in-house maintenance, but rather receive a kickback or rebate from their vendors. So, for example. You have a maintenance invoice for $100 for a kitchen faucet leak repair. When you receive the invoice, it’s the actual vendor’s invoice, so you think the property management company is directly passing on that cost to you. That’s probably how they market to you – “No upcharge on maintenance – you pay only for what the vendor charges”. But, low and behold, at the end of the month, the property management company receives a kickback on all of the maintenance they dispatched to their vendors. That could be 10%, 20%, that’s whatever they negotiated with the vendor. Any “discount” they negotiated is put into their pocket, not yours.
And one other thing to keep in mind on these rebates and kickbacks. Not all vendors are going to offer to do this. It’s hassle and headache and a lot of extra bookkeeping on their part. So, instead of basing their vendor selection on pricing, quality, and timeliness (like we do), property management companies with the “kickback system” are also selecting their vendors based on which ones are willing to follow their kickback rules.
Some property management companies will even “double dip”. They’ll receive a rebate from the vendor, and they’ll still upcharge on maintenance. So if you have a $100 service call you’re paying for, the management company might get a $10, $20 rebate from the vendor, and still upcharge you 10-20%. They just made up to a 40% profit on maintenance at your property.
Another thing I’ve seen in the past is property management companies who will take the invoice from the vendor, create their own invoice, and mark it up on their own with no transparency to the landlord. So the invoice from the vendor may have only been $75, but the property management company creates their own maintenance invoice for $100, and bills you for that $100.
So, why do we charge a 10% markup? We value the transparency of our services. We aren’t “hiding” anything from our owner clients, or out to nickel and dime on other fees to make up for costs associated with managing maintenance. We have already negotiated pricing with our quality vendors, and more times than not, that discount we receive is more than 10%, so you’re still receiving discounted rates on the maintenance. We aren’t out to take all of those discounts from you, we are simply charging for our time of overseeing the maintenance on your property.
I hope this helps shed some light on how maintenance works with property management companies. No company is the same, and it’s important to not only do your homework, but to understand what you’re paying and why. Need help with property management? Call us – 636-707-2000.