Answers to Your Property Management Questions
Find answers to the most common property management questions.
CB Properties initiates an ACH deposit into your checking account on the 5th of the following month. We pay in arrears to have funds to carry your maintenance cost without asking for a contribution on expenses less than your rent.
To be a property manager in Arkansas and Tennessee, you must hold a broker's license, which we do.
The property management agreement is a contract between the property manager and the owner. It lays out the services we will provide, the charges for those services, and our expectations from the owner.
On the surface, it looks like there are a lot of fees within the property management agreement. A well-organized, efficient property management company requires team members dedicated to individual roles that provide a service tied back to a fee.
Our fee structure charges for the services performed that allow us to scale our business operations cost to the amount of overhead of each service we offer. Your most significant expense is the 8% management fee, which we keep below local market standards.
An investor once came to us saying another property manager outside of the markets we operate only charges 8% with no other fees. However, the average rent of his four properties was $1,900 a month, while ours is around $1,000.
While we would love to have that simplicity in our fee structure, the rents in our market are not high enough. We aim to run a property management company that provides exceptional customer service to our investors and tenants while charging fees proportionately for our services.
Building trust is essential to building relationships, so transparency is one of our core values. Here is a breakdown of all of our fees and what they include:
8% Monthly Management: Covers overhead related to office expenses such as:
- Portfolio manager’s salary
- Collecting and processing rent
- Software systems
- Office overhead
- Health insurance
- E&O insurance
- Various business insurances
- Local and state taxes
- Continuing education
- And more!
80% Lease Up Fee: Covers expenses related to leasing activities, including:
- Self-showing platforms
- 3rd party marketing websites
- Leasing manager salary
- Leasing agent commissions
- Field employees who check on vacant homes
- VA support for phone services
- Budget tracking
15% Maintenance Markup: This is probably the biggest pushback and the largest expense we carry. When we perform maintenance, we essentially become a maintenance company, which comes with significant expenses. This fee is to pay for:
- Project managers
- A fleet of vehicles
- Auto insurance
- Worker’s compensation and general liability insurance
- Construction software
- Office Maintenance Managers
- A/R & A/P
The maintenance fee is our stamp that we stand by the work, so if there are any issues and the vendor does not take accountability or is no longer our vendor, we will resolve the issue at our cost. Property management that advertises no maintenance markup because they have in-house maintenance is misleading as they are profiting from the markup of their labor and operating expenses.
Fixing a leaking faucet may cost them $75 in overhead, but they charge $115. At CB Properties, if we outsource a job and the bill is $100, you will see the original invoice and 15% markup on your Rental Owner Statement. We believe this is complete transparency.
Lease Renewal: A portion of this is going to the individual obtaining the lease renewal as an incentive to keep the tenant in place. You would be amazed how often we can talk a tenant into staying. Any amount left over goes towards general overhead.
Late Fees: When a tenant does not pay, we turn into a full-time collection agency, so we retain these fees to cover potential expenses, including:
- After-hour calls
- Home visits to put notes on the door (which is more field personnel overhead)
- Going to court if we have to file for eviction
At any amount of less than $400, we can't provide exceptional service to our residents, and it could drive up the cost of your maintenance.
A scenario where it would drive up your cost would be if we have to send a maintenance technician such as a plumber, HVAC tech, or electrician, and they have the proper materials to make the repair, but do not get approval. They'll leave, costing you an unnecessary trip charge. From the resident's position, they do not care why something does not get done—they just want it done.
Not making the repairs as quickly as possible can lead to a resident getting emotional and potentially calling code enforcement, which is something you certainly do not want. A simple repair could become a much larger issue if they find something they can pick apart.
Also, remember that certain items are considered essential services by the Uniform Residential Landlord Act and must be acted upon ASAP.
CB Properties outsources all work except for a portion of rent-ready properties. We use negotiated pricing with our vendors to ensure wholesale pricing.
For a typical turnover, the cost is roughly $2.25 a square foot. This would cover paint, carpet cleaning, yard cutting or leaf removal, utility bills, and other minor details.
Occupancy ranges from 95% to 97% consistently. The average resident stay is 40 months.
We only accept a 24-month lease with a rental increase on average of 5% in the second year.
If a resident signs a lease with us on January 1, 2022, for $1,000, Year 1 of the lease would be $1,000. Beginning on January 1, 2023, the lease amount would increase to $1,050.
This is excellent for reducing vacancy while capturing an increase to cover any operational cost increases, such as taxes or insurance, and adding to your bottom line.