Hidden Costs in Rental Home Maintenance
July 20, 2018
At Austin Fleck Property Management in Gilbert, AZ, we recently welcomed a new vendor as part of our maintenance and landscaping teams. While completing paperwork and discussing training for the AZ Landlord and Tenant Act, this new vendor asked how we wanted to handle the 10% allowed on their bills for property management companies. We asked for an explanation, since we hadn’t heard of the concept.
Here was the vendor’s reply: if they bill $300.00 for their work on one of the rental properties we manage, we are only required to pay them $270.00, and they will consider the invoice paid in full.
We asked why they wouldn’t just bill for $270.00, if that is the actual cost of the work they’ve done. Their explanation? Other property management companies they work with bill the rental homeowner for the full amount and keep the difference.
In legalese, that is known as taking a kickback. It’s illegal, and Austin Fleck Property Management won’t do it. When we told this vendor our stance on the subject, they were shocked. They work with three other property management companies in the Phoenix Valley who use 10% allowed in their billing practices.
Hidden Costs and Ambiguous Language
It’s true. Some management companies have found ways to add ambiguous disclosure language into their management contracts, in order to allow them to keep that discount. Here are actual examples of phrases used in their property management agreements:
- “Vendor discounts receipted will be the property of the Agent as additional compensation and Agent will not be responsible to account for such items to Owner.”
- “Broker may charge a service fee of 10% to coordinate and oversee repairs.”
- “$50/hr for non-management services, including but not limited to …..capital improvements, restorations, refurbishments,… Broker charge for in-house services; limited maintenance, repair and cleaning services at $20/hour + parts & materials.”
- “Agent may collect from vendors: any applicable discounts. Said charges, fees and/or discounts will be collected by and belong to Agent.”
Keeping it real
These are just a few examples, and we can show you many, many more. We want you to understand the shenanigans that go on behind the scenes. And we promise, though other property management companies in the Phoenix Valley use confusing language and hidden fees, we will not. At Austin Fleck Property Management, we work for our clients’ benefit. We are trusted to take care of their investments to the utmost of our ability, and it is our joy to see the value of those investments increase. That’s why we continue to educate and speak out on issues that seek to compromise good business relationships. We will strive to find the best vendors, the best tenants, and the best owners, through honest, hard work and full disclosure—with nothing hidden.