Not all property management companies are created equal.

If you’re an accidental landlord, first-time investor, house hacker, or seasoned multifamily owner in Maine, choosing the right property manager is one of the most important financial decisions you’ll make.

And yet, most owners evaluate companies based on one number:

The management fee.

That’s a huge mistake.

Because what truly matters is how a property management company makes money

beyond their management fee and whether those incentives align with your bottom line.

At its core, Net Operating Income (NOI) should be the shared performance metric that aligns both the property owner and the property manager, serving as the clearest

measure of how effectively the asset is operated and how well its financial potential is being realized.

This is where underperforming property management companies fall short - and where the best operators create real value - by recognizing that every decision should ultimately drive and protect Net Operating Income (NOI).

The Hidden Fee Problem in Property Management

Most firms advertise:

• “10% management fee”

But buried in the management agreement are a host of hidden fees:

• Lease-up fees (often 1 month’s rent)

• Lease renewal fees (often ½ month’s rent)

• Vacancy fees

• Maintenance coordination fees (10–20%)

• Markups on repairs

Individually, these may seem reasonable.

Collectively, they create misaligned incentives - where the property manager can profit from:

• Vacancy

• Turnover

• Maintenance issues

And that’s where owners lose control of NOI.

It also creates a massive conflict of interest.

Case Study: Vacancy Fees in Southern Maine

A Portland-area owner hires a management company charging:

• 10% monthly management fee

• 1 month lease-up fee

• Monthly vacancy fee while the unit is empty

The unit sits vacant for 5 weeks due to a poorly timed winter rental cycle (February to March lease term).

Outcome:

• The owner loses over a month of rent

• The manager still collects a vacancy fee

• Manager earns again on lease-up

In Maine’s rental market, where well-priced units often lease within 2–3 weeks, extended vacancy is often a pricing, marketing, or execution issue.

Yet the fee structure doesn’t penalize delay.

The PM still generates revenue while the unit sits vacant.

A simple way to evaluate a property manager:

Look at how they get paid.

Some charge fees during vacancy. Others only earn when rent is collected.

That difference matters.

It determines whether the vacancy is a shared risk or just the owner’s problem.

Maintenance: The Quiet Profit Center

Maintenance is where many owners unknowingly overspend.

Traditional models include:

• In-house maintenance teams

• Vendor markups

• Coordination fees

This creates a subtle but real conflict:

The more maintenance that happens, the more revenue the manager generates.

If the PM is motivated by profits, they will "discover" hidden maintenance issues to pad their bottom line.

At its best, property management should avoid maintenance conflicts.

That means:

• No profit from in-house maintenance

• No coordination fees

• No markups on repairs

Instead, the focus should be on:

• Using vetted, licensed, and insured third-party contractors

• Gathering multiple quotes when appropriate

• Prioritizing cost control and quality outcomes

Preventative maintenance?

Absolutely.

But it should live inside:

• Quarterly strategy meetings

• Capital planning

• Asset preservation plans

Not as a reactive revenue stream.

Lease Fees & Tenant Turnover: A Costly Incentive

Turnover is expensive:

• Lost rent

• Cleaning and repairs

• Leasing downtime

• Increased wear and tear

Yet many firms charge:

• Lease renewal fees

• Full lease-up fees for new tenants

This structure can unintentionally incentivize churn.

A better approach prioritizes long-term tenancy.

The most valuable tenant is one who stays.

When fee structures avoid rewarding turnover, the focus shifts to retention, resulting in:

• Greater stability

• More predictable cash flow

• Stronger Net Operating Income (NOI) over time

Eviction Accountability: Where Alignment Gets Real

Under Maine law (Title 14, Chapter 709), eviction - known as Forcible Entry and Detainer (FED) - can move quickly, often within 7–14 days for nonpayment notices, but the financial impact is significant.

Typical Maine Eviction Costs:

• Legal fees: $1,500+

• Lost rent: 2-3 months

• Court & service fees

• Turnover + repairs

Total impact:

$3,000–$6,000+ per eviction

Now ask yourself:

Who chose the tenant?

If a property manager places a tenant, they should stand behind that decision.

Case Study: Screening vs. Speed

Lewiston, Maine – Two Identical Units

Unit A (Fast Placement Model):

• Limited income verification

• Weak landlord references

• Credit issues overlooked

Result:

• Nonpayment within 90 days

• Eviction filed

• $4,800 total loss to the owner

Unit B (Underwriting Model):

• Verified income (3x rent)

• Clean landlord references

• Credit trend analysis

• Co-signer required

Result:

• Tenant renews lease

• Zero disruption

• Stable NOI

The difference is not luck.

It’s process and accountability.

A Better Standard: Shared Risk

Imagine if property managers covered:

50% of eviction-related legal costs for tenants they place.

What would change?

• Screening becomes more disciplined

• Risk tolerance decreases

• Long-term tenant quality becomes the priority

Because true alignment isn’t just about fees.

It’s about shared outcomes and shared accountability.

A Better Model: Fixed, Transparent, Aligned

A more aligned approach to property management keeps things simple and predictable:

• A flat management fee based on rent collected

• No vacancy fees

• No lease-up fees

• No renewal fees

• No maintenance markups

The goal is straightforward:

• Revenue is tied to rent actually collected

• Expenses are controlled, not monetized

• Tenant retention is prioritized

• Net Operating Income (NOI) improves over time

“How Does That Work as a Business Model?”

It requires discipline and selectivity.

Instead of chasing door count, this approach focuses on:

• Working with the right owners

• Managing the right buildings

• Building long-term partnerships

Because when incentives are aligned properly:

• Client relationships last longer

• Assets perform better

• Revenue becomes more consistent and predictable

In the long run, alignment creates a more sustainable model for both owners and managers.

A modern property management company doesn’t just manage buildings.

It aligns incentives, protects the asset, and drives Net Operating Income (NOI).

Because at the end of the day, every decision: leasing, maintenance, tenant selection, retention - either strengthens NOI or erodes it.

Owners don’t want variable, unpredictable expenses.

They want clarity, consistency, and control.

They want a fixed cost structure that allows NOI to be measured, forecasted, and improved year over year.

That’s where average property management companies fall short and where the best operators separate themselves.

Before you hire a property manager, ask:

• Do they profit from the vacancy?

• Do they profit from maintenance?

• Do they profit from turnover?

• Do they share in tenant placement risk?

Because if their revenue increases when your NOI decreases, you don’t have alignment; you have exposure.

And that’s not a partnership.

That’s a liability.

The right property management company treats your NOI like its own.

Until next time,

Mike Marquis