Who Should Pay Management Fees During Vacancy?
Today, I want to discuss a common and often debated issue among property owners and management companies—should you pay management fees during a vacancy?
Understanding the Issue
If you've been hunting for the right property management (PM) company, you may have encountered this dilemma. It's an age-old question: Should your PM company charge management fees when a property is vacant? This topic often goes unasked or unexplained and I’ve seen many new clients initially bewildered by this concept.
Why Management Fees Exist During Vacancy
At Emerson, we charge management fees during vacancy just as we do when a property is tenanted. Now, you might be wondering, "What is being done during a vacancy that justifies this fee?" Great question. Here’s what we do:
We perform bi-weekly property inspections to ensure security and maintenance standards.
Ensure all doors and windows are locked and secure, preventing any unauthorized access.
Regulate temperature controls within the property to prevent mold growth during summer or pipe bursts during winter.
Conduct checks to prevent any negligence left by agents, such as water left on which may cause damage.
Shut off water supply to avoid potential leakages or bursts, with bi-weekly inspections to catch any issues early.
The Reality of Costs
Let’s break down the cost aspect. Suppose your monthly management fee is $100. That essentially covers us visiting your property for $50 each time on a bi-weekly basis. Given the geographic expanse of Houston, there's a significant investment of time and resources just to ensure everything is in order.
Addressing Concerns
You may raise the concern that agents could inspect the property during viewings. However, agents excel in negotiations and sales strategies, but they might not be attuned to detailed property checks, like verifying water shut-off valves or securing the premises entirely.
We've encountered many scenarios involving vacancies that last longer than expected, sometimes up to 30 or 60 days. In these cases, consistent checks become not just beneficial but necessary to mitigate potential risks and damages.
A former client believed another PM company performed these tasks free, but mathematically, offering such a service without cost recovery elsewhere is unsustainable. It would mean either higher management fees once the property is tenanted or hidden charges elsewhere.
Concluding Thoughts
When choosing your PM company, it's crucial to ask about their protocol during vacancies. Understand what tangible benefits you're receiving in exchange for these fees. Our process at Emerson is designed to protect your investment, meticulously tackling potential risks upfront.
If you value peace of mind and proactive management that can prevent costly scenarios, then fees during vacancy become a worthwhile investment. Otherwise, alternative options with varied levels of oversight are available, but it’s essential to know precisely what you’re getting.
I hope this has shed some light on the topic for you.
