What is the cost of services from property management and maintenance companies?

Many wonder, what is the cost of services from property management and maintenance companies, what are the price offers composed of, and how are they built? This article will present various pricing methods for management fees and provide useful information on the subject.

Most buildings in Israel are currently managed by property management and maintenance companies. More and more property owners and developers recognize that investing in the management and maintenance of the building is worthwhile and reduces operational and maintenance costs. They are also pleased to know that their building is handled by professional and qualified hands, allowing them to invest their time in advancing their businesses.

In order to choose a specific management company, property owners/developers need to know the criteria by which the management company prices the maintenance of their building, which of the services offered by the company are worth investing more in, and whether the price offer given to them is fair and reasonable. The pricing process for managing your building Initially, representatives of the management company will come to your building, inspect it, and check the integrity of all its systems: elevators, generators, electrical systems, water reservoirs, building cleanliness, and more. After that, the management company will prepare a price offer for maintaining your building.

There are two pricing methods used by property management and maintenance companies:

The Cost Plus method

This is a pricing method in which the monthly cost is the actual maintenance cost of the building: the cost of cleaning, monthly inspections, gardening, etc., plus an additional 15%-25% for the service provided by the management company. For example, for a month where the actual maintenance cost of the building was 40,000 ₪, the management company will charge between 46,000 ₪ to 50,000 ₪. The following month, the actual maintenance cost might change and be, for example, 45,000 ₪. For this month, the management company will charge between 51,759 ₪ to 56,250 ₪. The main advantage of this pricing method is the high quality, uncompromised, of the services provided to the client and the products purchased for them.

Its disadvantage: The cost of managing the building is not known in advance and changes from month to month.

The Fix Price method

In this pricing method, the management company recommends that the client set a fixed monthly budget to be invested in the maintenance of their building, considering the budget at their disposal. The management company does not exceed the monthly budget, and special cases require the client's approval. The monthly cost for managing the building, according to this method, consists of the monthly budget set for building maintenance, plus an additional 20%-25% for the management company's services.

For example, if the monthly budget set for building operations is 40,000 NIS, the management company will charge between 8,000 NIS and 10,000 NIS in management fees each month.

The clear advantage of this method: The management and maintenance cost of the building is known in advance, remains fixed, and does not change even when market prices fluctuate.

The disadvantage: The management company is sometimes forced to compromise on the quality of products purchased for the client and the services provided to them, in order to stay within budget limits.

Tips and Useful Information

It is important to check whether different payments are included in the price quote, such as: building insurance payments, water and electricity bills, etc. Some companies offer a service that includes these payments to save clients the hassle, and then the management fees will be higher.

Management fees are determined according to the rental area in the building. Here are the current standard management fees in the building management and maintenance market:

• For commercial space - 15-20 NIS/sqm.
• For office space - 15-20 NIS/sqm.
• For industrial/logistics space - 10-15 NIS/sqm.
• For warehouse space - 5-10 NIS/sqm.

As property owners/developers, you have the right to know all the details and to be familiar with the different pricing methods for managing and maintaining your building. It is important that you feel confident that the management and maintenance company to which you entrust your building stands by your side and is reliable and honest.

Contact us today for professional and reliable service in the field of building management and maintenance.