Tenant Turnover: The Shocking Truth About Property Management Fees
Hey there! Cameron here with Emerson Property Management. Every week, I dish out tools, tactics, strategies, and lessons that have helped me build and manage a sizable property portfolio over the years. Today, I want to dive into a topic that's crucial for anyone dealing with property management: the number 39. Trust me, this seemingly random number is a game-changer when it comes to tenant retention.
The Magic Number: 39
So, what's the big deal about the number 39? Brace yourself: 39 is the average number of fees that property managers are charging tenants. Yep, you heard that right. It's almost blasphemous, isn't it? Let's break it down.
The Fee Frenzy
When you think about rent, you might just be considering the base cost. But oh boy, there's so much more. We're talking about:
Resident Benefit Packages
Admin Fees for Move-In
Admin Fees for Move-Out
Fees for No Insurance
Pet Fees
Fees for Paying Online
Fees for Paying via Check
And the list goes on. I’m floored by the sheer number of fees. Every time I attend property management conferences, there's always chatter about "fee maxing," which essentially means squeezing out as many fees as possible from both owners and tenants.
As an owner, you see your monthly management fee and maybe a few other charges. But what you might not see are all the fees your property management company is charging your tenants. This lack of transparency can lead to several issues, including high tenant turnover.
Tenant Turnover: The Hidden Cost
Ever wonder why tenants are moving out? Why you can't get them to renew leases? While fee maxing isn’t always the culprit, it's a significant factor. Let's face it, tenants hate being nickeled and dimed. When every little thing has a fee attached, it adds up and makes them want to pack up and leave.
The Changing Market Dynamics
After the 2008 financial crash, the rental market saw a huge shift. With low-interest rates, homeowners were buying properties left and right. Now, with interest rates between 6.5% and 7.5%, affordability has taken a hit, pushing more people towards renting. This has created a surplus of rental properties, giving tenants more options.
More Choices, Higher Standards
Tenants now have the luxury of choosing between multiple properties. If they move into a place and get feed to death, they're more likely to move out when their lease ends. And guess what? States like California and Oregon are already cracking down on these so-called "junk fees."
Transparency is key. Tenants need to know what they're paying for. Ridiculous fees for moving in, moving out, and everything in between can drive them nuts. If you’re an owner, it's crucial to understand what your property management company is charging your tenants.
On average, our tenants stay between 3 and 4 years with us. Last year, we had an 85% renewal rate. Why? Because we don’t fee our tenants to death. We take care of maintenance and keep things transparent. If you're seeing high turnover, take a closer look at those fees.
Future Trends: The Crackdown on Fees
I strongly believe that in the next few years, we’ll see a crackdown on tenant-related fees. As private equity gets more involved in property management, the focus on maximizing fees will likely increase. Transparency will become even more critical.
The Real Cost of Turnover
High turnover can wreck your cash flow. A month and a half to two months of vacancy can wipe out a year's worth of cash flow. So, it’s in your best interest to keep tenants happy and minimize unnecessary fees.
Conclusion
The number 39 might seem insignificant, but it holds a world of meaning in the property management realm. If you're working with a property management company, understand what fees they're charging your tenants. Be cognizant of fee maxing because it impacts tenant retention and, ultimately, your revenue.
I hope you found this helpful. If you did, let me know. If not, I’d love to hear your feedback. Just be aware of what your property management company is doing. Thanks for reading, and I'll catch you next week!
