How much should we pay the Property Management?

What a great question. I have been asked many times, “What is the standard management charge for an office building or a condominium?” Quite simply put there is no fixed formula to calculate the property’s management cost. The reason for this is that nearly every single property is different and nearly every single landlord or owner’s committee service requirements are different.

The easiest way to understand what is a fair price for management is to understand what you require and who you are asking to provide it. For example in all lines of industries there are service providers that operate in various niches. In property management it is no different. Some providers may have focused departments that specialize in providing qualified management teams to mid-range and high-end properties (residential) and Grade A to Grade B Office properties. These will usually have a proven track record with international brand recognition. There will be other service providers that operate more in the local property scene usually in older or less prestigious properties these may provide the bare essential services required and usually not be as focused as the specialist management providers. There of course will be a pricing difference between these two types of service providers.

Once this is understood you can go further and start to list down what is required from your property management company. If you have a new building the best thing to do is go out to tender and clarify what is actually required. By doing this you are inviting the property management companies to bid on the same scope as each other.

When tendering, it is advisable that you specify the level of qualifications you deem suitable for the staff provided by the management company as this will determine management costs also. If one company offers less qualified or less experienced staff than another it will reflect in their pricing and sometimes may not be picked up by the landlord or committee.

If you are looking to replace an existing management company or want to reevaluate your current service provider you may consider the following as good practice:
   1. Make a SWOT analysis of strengths and weaknesses of the current service provider.
   2. Ask for their current list of references and then go and visit those sites.

Once this is done you will have a better picture if your current service provider can continue to provide you with the required service or if it is time to ask other providers to submit proposals. In the instance that you ask for proposals please be transparent with the property management companies to which you send requests. The reason for this: It starts any relationship off well to know exactly what the landlord or committee is requesting. Some times we have been asked to send a proposal of what we think the client would need. This is not a practice that we would recommend because the property management companies may have vastly different ideas to what the landlord or committee require and then everyone is on the back foot. It is always better to say what you would like and then explain the rough scope. Then it is up to the property management firms to illustrate how they can provide those base services and what they can do to add value to those services and how they will support the property in any other ways.

So how much should we pay the property management company? Understand what is required, understand who you are asking, and understand what is being proposed and then it will become clearer.

About the Author:
“From The Property Manager’s Office” is a series of articles provided by Dexter Norville, who is Head of Estate Management at Jones Lang LaSalle Thailand. He can be contacted at อีเมลนี้จะถูกป้องกันจากสแปมบอท แต่คุณต้องเปิดการใช้งานจาวาสคริปก่อน

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