Mo Hashem with Flat Fee Landlord DC Metro, we are a third party property manager for individual landlords, investors, and homeowners that rent out their single-family homes, condos, or row houses to renters. We are hired by Landlords to manage the process for them so they can do other things in life. We serve the Maryland, Washington DC, and Northern Virginia markets.
Today I talk about a search that I come across quite frequently when I'm googling other property management companies and that is the great debate of a “flat fee” model versus the “percentage based” fee model that a Fairfax property management company charges its landlords. Obviously the name of our company is Flat Fee Landlord, so we charge a flat fee each month to manage rental properties for our landlords. There are other companies out there that do the same type of thing; however, there's also another segment of property management companies that we call “traditional” property management companies that charge a percentage of the monthly rents as their management fee. I will quickly go over the differences and how they apply in real world examples; however, at the end of the day as a landlord and a homeowner it's up to you to make the decision on what model really works for you. We will also discuss outside of the model itself. I'm going to talk about what the big secret is between the two and other things you may want to focus on when making the decision of who to hire.
For a flat fee model, it's pretty simple to explain. At our company, we charge a flat fee of $99 a month to manage rental properties in the DC metro area regardless of your homes monthly rent income. For example, if your home is in Manassas and the rent may be a thousand dollars a month, we still charge $99 a month even if that rent increases or decreases throughout the time that we're managing it. Let's say we picked that property up and we moved it to downtown DC and it is now, because of the location, it brings in more money. The amount of rent you collect as a landlord has increased; however, your management fee has not. It is still $99/month to manage the property. This is the big difference when it comes to a flat fee model vs. a percentage fee model.
On the flip side, we discuss the percentage fee based model. These companies are the “traditional” property management companies that charge a percentage of the monthly rent that you charge your tenant. These management fees typically range anywhere from 8% to 10%. They vary by company, but for this example let's just keep the math simple and use 10 percent. Lets use the same example as before, property in Manassas Virginia and the management company is charging 10 percent on that thousand dollar a month rental. This property management company’s management fee is $100 a month because it's 10 percent of that thousand dollars per month. Let's say we move it to Downtown DC or Dupont Circle- where the rent for that same property is now three thousand dollars a month. Now that 10 percent management fee is based off of three thousand dollars as opposed to a thousand dollars. The management fee changes from being a hundred dollars a month to three times that at three hundred dollars a month because 10% of three thousand is three hundred dollars a month. Typically nothing changes in terms of the level of service that you receive or what services you do receive in that management fees, it's just really if you have a property that's in a higher rent area and you're penalized as a landlord for it because you're bringing in more rent. Because the fee is a percentage of the rent, your cost fluctuates.
So that's our take on the debate and our philosophy for where we stand. It’s also why we charge a flat fee - same house different location; however, because of the different location the rents are higher or lower. It’s no different for the management company to manage each property so our cost shouldn't vary for what we charge. A traditional percentage fee management company charges more if your home rents for more.
My advice for Landlords is to really look at this great debate of flat fee versus percentage fee and realize that the only thing we are debating is cost. We are not debating level of service or services being offered by the company. A Landlord should do their research and certainly consider cost; however, also see what services are included with it. Based off that you should make a decision on which property management company to hire. If you have any questions regarding what we just went over, or property management in Washington DC, Maryland, or Northern Virginia areas, please feel free to reach out to us by going to our website at www.FlatFeeLandlord.com or calling us at 703-261-9414.
