If your building or association is professionally managed, having some familiarity with the billing structures property management companies use with different client communities is key; that understanding can help you determine which one is the best fit for you and your residents. 

Finding the Best Fit

Property management companies usually bill client communities in one of two main ways: either by retainer, or à la carte. Which one a board chooses depends on the nature of their management contract, the size and complexity of their property, the breadth of services they expect the company to provide, and how accessible they want their manager to be at any given time of day or night. 

As with any major purchase of goods or services, your board should evaluate the scope of your needs before committing, weighing the pros and cons of paying a flat retainer versus paying piecemeal for individual tasks and services. While à la carte billing may allow more flexibility, it can also lead to fluctuating charges from month to month, which makes budgeting more challenging. Having management on retainer gives a clear scope of services, and enables your board to know exactly what you’re paying every month so you can then plan accordingly. 

According to Austin Pearson, managing director of Chicago-based property management firm PRG Management, “HOA flat fees make sense, because there’s no reason to incentivize from an investment standpoint, which often happens in rental management.” That said, he continues, “You don’t want to charge a high flat fee if the HOA is not going to render different items or manage additional services like special assessments, additional board meetings,” assembling leasing/purchase packages, payroll processing, or providing project management oversight. 

It’s important to understand what is included in a base fee versus what would incur additional fees, Pearson continues, noting that adding services should trigger a special evaluation—not an automatic increase or additional charges. “Additional services will require a special assessment,” he says. “Not all tasks should be bundled into the regular management fee.”

Pearson suggests that the per-unit pricing structure, commonly used in HOA management, makes the billing process clear. “Simplify it based on a per-unit basis,” he advises, adding that having a set plan ahead of time and knowing which way you want to bill can save a building time and money. 

Maintaining Transparency

No matter which billing structure you choose, management companies need to be transparent about fees to make sure everyone is on the same page. For example, says Pearson, “[Boards should] ensure that the office fees and times they are to be billed are clearly defined, and that all costs are built in, including any variables. You don’t want to nickel-and-dime. Try to make it as all-inclusive as possible.” 

Boards can also benefit from ongoing education when it comes to keeping up to date on management fees. Pearson points out that tech and real-time updates make it easier to resolve issues quickly. “We run seminars and town hall meetings to make sure boards are always up to date,” Patterson says, adding that “You will always find someone who can do it for less, but will they provide you with the same amount of time and experience?”