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Is a flat fee management company better than a percentage fee management company?

Mo Hashem with Flat Fee Landlord Houston, TX! We manage single family units for individual landlords and investors in the Greater Houston area. Today, I talk about a topic that I see quite often when searching google for property management companies, which is: a flat fee management company versus a percentage based fee management company.

Obviously our name is Flat Fee Landlord so we charge a flat fee when we manage rental properties for homeowners and investors; but the traditional way of how to charge for managing your property is the percentage fee base model. This is also what people tend to call the “traditional” way of charging for property management. I will quickly discuss the differences between the two and then you as a homeowner or landlord; if you are in the market for hiring a property manager, can make your own decision on how you want to move forward. A flat fee property management company is pretty simple to explain. The charge is in the name, we charge a flat fee on a monthly basis to manage your rental property. For example, in Houston we charge just a flat fee of $79 per month and that is going to be regardless of what you charge your tenant for rent. Regardless if your rent is $700 a month or $4,000 a month, the fee that you are charged by your property management company as a landlord does not change; it is still that $79 a month or whatever another flat fee property management company may charge you. On the flip side, for a percentage fee management company, the “traditional” or “old” way of charging for management, the fee is going to fluctuate based off the rent you charge. For example, same scenario as before - let's say you have the traditional fee management company that charges anywhere from 8 to 10 percent. Let's keep the math simple and say there's a property management company that charges 10% to manage your property on a monthly basis. Let's say the rents that you charge your tenant it's $1000 a month, well 10% of that it's going to come to $100 a month; which is what the property management company will charge for managing that property. Now let's take it up a bit more, let's say that same property is located closer Downtown and has a few more amenities. The monthly rent is a bit higher, let's say the rent for that is now $2,000 a month versus $1,000 a month. If you're the landlord for the property in Downtown, you're now being charged double by your property management company simply because the amount of rent you're charging changes. The fee you are being charged as a landlord is tied directly to what you charge your tenant on a monthly basis for rent. In that same example that property that now your rent is $2,000 a month well your fee from your property manager is now $200 a month.

I would say for you, as a landlord; when it comes to the great debate of which is better, a flat fee property manager versus a percentage based property manager, I want you to realize all we are talking about is the price being charged by the property manager. As a Landlord, you should take it a step further than just price and also consider the level of service provided by the property manager; as well as, the services being provided by the property manager. Based off all of this knowledge you should make a decision on what property management works best for you and your property’s needs.

If you have any other questions regarding property management or want to talk to the best property management company in Houston, please visit our website at www.HoustonPropertyManager.com or call us at 281-972-4566.

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