Property management maintenance markup: the charge the agreement allows and nobody bills

Start with the agreement, not the invoice

A missing markup is only a miss if the agreement allows it. Read the fee schedule each owner actually signed: a percentage on vendor bills, a flat coordination fee, an hourly rate for in-house technicians, a materials policy, or none of these. Books that grew by taking over another company’s doors can hold several generations of agreements with different terms.

Some agreements carry no markup at all. A property management agreement form filed with the SEC in 2023 as an exhibit by Arrived Homes 3, LLC names a leasing fee, a renewal fee and a management fee, and sets a “Repair & Expense Limit” above which the broker must get the owner’s prior approval — and lists no maintenance markup. Under an agreement like that there is nothing to bill, and the limit is the clause to watch: work above it waits for an answer from the owner.

Whether a markup is allowed, how it must be disclosed and whether an in-house crew may be used without separate consent varies by state and by license rules. Ask the designated broker or the company’s attorney. This guide quotes agreement text as an example, does not interpret any of it, and takes no side on whether a company should mark up maintenance at all.

The 30-minute property management maintenance markup check

Three checks, each on a small slice of last month, so the whole thing fits in half an hour once the reports are open. The point is not a complete count; it is to find out whether there is anything to count.

• Vendor bills, largest first. Export last month’s vendor bills passed through to owners and sort by amount. For the top twenty, check whether the markup or coordination fee the owner’s agreement allows appears on the owner’s ledger. Starting with the largest bills puts the costliest misses at the top.
• One technician, one week. Pick one in-house technician and one week. Set the hours on the timesheet against the hours billed on that week’s work orders, and list every work order closed that week with no labor or materials charge.
• Receipts against owner invoices. Take that same week’s company-card and supply-store receipts and find each item on an owner invoice. Lohmann recommends auditing company credit card statements against owner invoices and admits it is a painful manual process. Ortscheid describes the receipt that mixes stock, job materials and drinks for the crew, where the owner’s share either gets billed wholesale or lost.

Then look at the work orders still open. Lohmann’s rule is to track every work order ever opened with at least one billable hour until it reaches completed and billed. A list of open in-house work orders sorted by age shows in one screen whether that is happening.

What a miss looks like in a month

Illustrative example: a company runs two in-house technicians and passes about 300 vendor bills a month to owners, under agreements that allow a 10% markup. The check finds that 3 of the top 20 bills carry no markup, including one turn of $12,000; that one technician billed 31 hours in a week with 40 on the timesheet; and that $400 of supply-store receipts reached no owner invoice. Nobody stole anything and nobody broke a rule. The $12,000 turn alone is a $1,200 markup the agreement allowed. These numbers are invented for the example; the company’s own records are the only benchmark.

A sample like that does not price the year. It says whether a full count is worth doing: every vendor bill for twelve months against the agreement’s rate, every closed in-house work order against hours and materials, every receipt matched to a job. That count is where a monthly dollar figure comes from.

Why it keeps slipping

The causes are mechanical, which is why a reminder alone does not fix them.

• Billing is reconstructed after the fact. Ortscheid calls it a “reconstruction exercise”: the work happens on Monday and the paperwork on Friday, from memory.
• The markup is typed by a person in a hurry. Dozens of invoices, one field to remember on each.
• Receipts are not split by job. One card swipe covers three jobs and the shop’s stock.
• Coding is lumped. When every repair lands in one general maintenance account, nobody can see which jobs, vendors or technicians the money went to.
• Nobody owns “closed → billed.” Dispatch owns the work order until the repair is done; accounting owns it once an invoice exists. The days in between belong to no one.

Making the markup reach the owner bill

Take the person out of the step wherever the platform allows. Ortscheid describes applying his markup automatically when an approved invoice reaches his accounting system, so nobody has to remember it; some platforms let a standard markup be set by vendor or at invoice creation. Test any automatic rule on a handful of bills before trusting it across the book, and check it again after any agreement change.

For in-house work, bill from the job, not from memory: hours and materials entered on the work order the day the work is done, receipts photographed and attached to the job before the technician leaves the store, and one person accountable each week for billed hours against timesheet hours. Lohmann puts the weekly check on one named person, and so would we.

Then run one report every week: in-house work orders closed without a charge, and vendor bills posted without the markup the agreement allows. Each line is either fixed or marked with a reason — warranty work, a goodwill repair the broker approved, an agreement with no markup. The reasons are the company’s policy written down; the unexplained lines are the leak.

When not to pay anyone for this

The check above is built to be run in-house, and a company with clean exports should start there. A company that uses outside vendors only and charges no markup or coordination fee has nothing to count on that side. And a company weighing whether to raise its markup is making a pricing decision, not finding a leak: that is the broker-owner’s call, and owner clients notice fee changes — one owner who bought another company’s book wrote on BiggerPockets that the owners “weren’t happy with our fees” and “many terminated.”

An outside review earns its fee when maintenance is one leak among several and the records are too scattered to connect: several agreement versions, an in-house crew, renewals that slip, owners leaving after the first year. Our Revenue Review takes two weeks. It works from read-only access to the company’s platform, agreements and maintenance queue and prices only what the agreements already allow and never reached a statement, as a monthly dollar figure where the records support one. It recommends no new fees, contacts no owner client, resident or vendor, gives no legal or accounting advice and moves no money. We do not manage property, and there are no client case studies on this site yet.

If it is unclear whether any of this is worth a fee, start with a free 20-minute call, where a company too small for the arithmetic is told so.