A former property manager says she believes low property management fees are a recruitment problem disguised as a growth tactic.
Mignon Ahrns spent enough years inside property management businesses to know which owners pay for themselves and which ones cost the agency more than they bring in.
“The owners that demanded a 5 per cent fee wanted 95 per cent of your time,” Ahrns, a key account manager at Managed, told REB director and Managed co-founder Alex Whitlock in The Property Management Excellence (PMX) Podcast.
Ahrns said this warning is something many agencies have not heeded seriously. While there will always be operators who are willing to shave percentage points to retain or attract clients, the trouble is that discounted management does not produce a cleaner, easier portfolio, she said.
Instead, it attracts owners who question every cost, demand more attention, and are quicker to challenge the value of a service they are already paying less for. The fee discount becomes a magnet for the work the agency can least afford to absorb.
When an agency underprices management, Ahrns said, it narrows the margin needed to recruit well, retain experienced staff, and build the processes that maintain high service levels. The same business then wonders why the team is stretched, handovers are messy, and owners feel the service is reactive.
She pointed out that cheap management does not stay cheap. It shows up later as staff pressure, weaker retention, and a rent roll that looks healthier externally than it does in the P&L.
Noting that most agencies falter structurally rather than tactically, Ahrns said they look at fee percentages as if they are comparing identical products. But she highlighted that they are not. A stronger property management business offers clearer communication, better oversight, faster decisions, and fewer avoidable errors.
Making that value visible, especially during onboarding, is what allows the fee conversation to hold without descending into a percentage-point argument, according to Ahrns.
She pointed to one mechanism in particular. Some agencies’ onboarding workflows can run to 40 steps, and, in her view, the visibility of that process is the difference between an owner who sees a fee and one who sees a service.
“They don’t see all the work behind the scenes that you need to do,” she said.
When the work is hidden, the fee appears to be an arbitrary margin. When the owner can follow the onboarding process and see what is actually happening on their behalf, the same number looks like the price of a premium service.
Managed customer service team leader, Bairave Jeyasothy, said that management fees in the agencies she works with range from around 5 per cent to as high as 10 or 12 per cent, depending on the area.
Ahrns said this should demonstrate that owners would accept the price if property managers can demonstrate the value proposition and service attached to the fee.
She noted that agencies that win the right owners instead of every owner and prioritise revenue per property and team capacity are the ones that grow sustainably.
While there is a place for commercial flexibility as some markets are price-sensitive, Ahrns said that too many agencies default to discounting because it feels easier than defending the value. The cost of that habit is paid by the team that has to service the portfolio it produces.
Ahrns said she urges principals to educate owners, make the work visible, and stand their ground on what good management actually costs.
This discipline could determine whether the agency the principal is building can sustain the service standard they keep telling owners they offer, she said. If the fee structure cannot support the people, process, and communication standard the brand is meant to represent, the issue is not really pricing. It is a warning that the rent roll being built is bigger than it is valuable.
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