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Starting a Property Management Company: Pricing Structure
If you are thinking about starting your own company, or looking to improve processes and organization, you will need an effective property management pricing structure in place so you can continue running your business that's fair to you and your clients.
Our special guest today is a property management guru and the property management coach – literally. She’s Kathleen Richards, "The Property Management Coach" and she provides guidance to other property management company owners on topics like this to help them with business and to be successful. She is also the broker/owner of an awardwinning property management company in Santa Cruz, CA, Portola Property Management. We felt that someone with her pedigree is perfect to talk about setting an effective pricing structure for their company.
The Different Property Management Pricing Structures
If you’re a new company starting out and you’re growing your business organically versus buying a company that might already have a pricing structure in place, look around and see what your competitors are doing in the area. Figure out how you can differentiate yourself.
FlatFee Pricing Structure
Sometimes people do a flatfee and for a new business owner that may be a great way to go. You can build your business quickly that way, just make sure you don’t overcommit to all the things that will fall under that set price, otherwise you’ll be doing a lot of work for free.
Percentage of the Rent
It’s also common to do a percentage of the rent. You need to decide what will be a good range. For example, if in your area you find out by doing your own research that all you competitors are charging X amount, maybe you charge a percentage below that.
Hybrid
Then there are hybrids where you can charge a percentage for the monthly management and then you have other valueadded services with set prices so when the owner needs that service, you charge at the time the service is provided.
If you’re buying a property management company with an existing price structure but they’re lower than you’d like to charge, you have to make strategic changes. So maybe you keep the prices at first so the new owners can see how great you are. Then, you can educate them about what you do and then roll out new services or start increasing prices.
Can Packages Work for Your Property Management Company?
When Kathleen bought Portola Property Management 15 years ago, the pricing model was set at one price with everything included. After a year, she set out clearly what the management fee covered, and started charging separate fees for valueadded services. That allowed different revenue streams to come in.