Hi, there! Joe White here from Grow Property Management, your trusted property management company in Philadelphia.
I recently received a question on the podcast as a comment from someone named Chrisman. He was a bit frustrated and wanted to know if what he’s experiencing with his property management company is normal. Specifically, his company is dictating the asking rent for his property, and he strongly believes it should be listed higher.
So, Chrisman, first off, yes, that’s actually pretty common. Most property management companies I’ve dealt with through various estimate groups tend to control the rental pricing. Some will come in and state, “This is the asking rent. That’s that.” Others follow a more collaborative, and in my opinion, more effective approach: they work with the owner to agree on a pricing strategy. What often makes the most sense is a tiered pricing model.
For example, you might start with a listing at $1,500. If the unit doesn’t rent within a certain agreed-upon timeframe, the rent would then drop to $1,400, and if still unrented, to $1,300. But the key point is that the property owner sets a floor, let’s say $1,300, and the rent won’t go below that without explicit approval. That’s a structure I’ve seen work well, and it balances owner control with market flexibility.
Now, as for my company, how we do things is a bit different. We don’t dictate the price outright, which might sound good on paper, but it does come with complications. We let property owners choose their own listing price, even if it’s unreasonably high. The downside is that this can affect our performance metrics, especially our “days on market” average. Right now, we’re just over three weeks on average to get a unit rented, which isn’t bad, but that stat is skewed by listings with unrealistic prices that don’t move. If all our listings were priced correctly, we’d be under three weeks easily.
This matters more than you might think. Many property management companies are judged by how quickly they can get a tenant into a property. Speed helps cash flow for the owner and helps us as a company maintain a solid reputation. When owners choose a rent that’s too high, it reflects poorly on us, even if we advised otherwise.
That said, I’ve never gotten serious pushback from new clients about our days-on-market number. But I know a lot of companies take it very seriously. From a business standpoint, it also makes sense. Every vacant unit costs the management company money. We pay per “door” for various services, Zillow listings, accounting software, showing software; all of it charges per unit. So even if the owner isn’t paying us during vacancy, we’re still losing money.
That brings me to another part of our model: we offer the first two months free when a unit is vacant. It’s a way to give owners breathing room and a fair chance to get their property rented before paying us a management fee. But here’s the catch; after those two months, we start charging a minimum fee, regardless of whether the unit is rented. That’s our way of protecting ourselves financially. If you’ve listed it way too high and no tenant bites, that’s on you, but we still have to cover our operational costs.
I’ll be honest, some owners take advantage of this. They want to shoot for the stars with their rent, hoping for a unicorn tenant. But the market always tells the truth. Recently, we had a property listed on First Street. The owner insisted on a rental price that was completely unrealistic. We advised against it, but still listed it as requested. No showings, barely any inquiries, and absolutely no interest. Eventually, the owner terminated our contract, or maybe we terminated them, I can’t remember. Either way, it wasn’t working for either party. That property became a financial burden, and we had no real chance of renting it under those conditions.
That situation illustrates why property management companies often want a say in the asking rent. They carry risk. It’s not just about putting up a listing and collecting a fee. Every day a property sits vacant, we lose money. And if we allow owners to set sky-high rents with no chance of getting tenants, we can’t run a sustainable business.
So back to your question, Chrisman, “Should your property management company be dictating the rent?” In my view, no, they shouldn’t have the final say without your agreement. But it is fair, and even necessary for them to want significant input. The best approach is a collaborative one where both parties agree on a starting price, a timeline for adjustments, and a floor price that can’t be crossed without the owner’s consent.
The approach we take, where the owner can set any price they want, isn’t ideal either. It can lead to long vacancies, wasted time, and ultimately no tenant at all. But we’re also clear with our owners about what we believe the property will actually rent for. We give them a range, say $1,400 to $1,600, and point to a realistic target like $1,500. Sometimes, surprisingly, properties do rent for more than expected. So we’re not opposed to listing it high initially to see how the market responds.
But again, it’s all about market feedback. If you get no inquiries, no showings, no applications, the message is clear: your price is too high. That’s why our model is flexible but time-bound. Owners can take a shot, but they’ve only got about eight weeks before we start charging management fees, whether there’s a tenant or not.
If I were in your shoes, I’d avoid companies that simply dictate the rent and leave you no say. You want a company that proposes a pricing strategy, gives you input, and includes safeguards like a minimum threshold price. That way, you’re part of the process, and you don’t risk underpricing or sitting empty forever.
Ultimately, property management is a business of balance. We want to rent your property quickly; that helps both you and us. But we also want to be fair and give you control. If your property sits empty, we lose money. If we push the rent too low, you lose money. So the solution is communication, agreement, and flexibility with a strategy in place.
I’m just a humble property manager from Philadelphia, doing my best to help people navigate rental property investing. And questions like this are a great reminder that good communication and realistic expectations are at the core of successful property management partnerships.
As always, happy investing!
