Property Management Fees
Initial setup fees: A property management company may charge fees to set up your account with the company. However, not all companies impose initial setup fees, but if they do, it is usually $500 or less. These fees may include costs for inspecting the condition of the property, as well as costs for notifying tenants that the property will be managed.
Monthly management fees: Most property management companies charge monthly fees for managing your property. The contract you sign with the property manager will specify how these fees are calculated and what services are included in the fees. Some companies may charge higher monthly management fees, but these may be more comprehensive, so don’t hesitate to pay a higher monthly fee until you understand what is included.
Maintenance fees: Maintenance fees are usually included in the monthly management fees. These fees can include keeping common areas clean, trash removal, and snow and leaf removal.
Extra Property Management Fees
Tenant placement fees: A property management company may charge a separate fee for placing tenants in your property. This can be a flat fee or a percentage of the rent. It is common for this fee to be half of one month’s rent to a full month’s rent.
Vacancy fees: A property management contract may include fees for vacant units. These can be a one-time upfront fee equivalent to one month’s rent, or it can be a fee for each vacant unit, such as $50 per unit.
Eviction fees: If you want the property manager to handle evicting tenants, you will have to pay the costs for that. Expect to pay several hundred dollars for each eviction, in addition to any related court costs.
Early termination fees: If you terminate the property management contract early, you will typically have to pay an early termination fee. These fees can vary greatly depending on the terms of the contract. You may only be responsible for paying one additional month of management fees, or you may be taken to court for breach of contract.
Factors Affecting Property Management Costs
There is no set price that a property management company charges for managing your property. The fees will depend on a number of factors, including the level of services required from the property manager.
What property managers do: Property managers are helpful as they manage the property and handle tenant issues on behalf of the owner. The responsibilities of a property manager include booking new rentals, collecting rent, maintenance and repairs, as well as evicting tenants. An effective property manager can help save time and headaches for owners by responding quickly to tenants and handling the ongoing day-to-day operations of the property.
Size of the rental property: One of the main factors affecting the cost of a property manager is the size of the rental property. Managing a larger property involves more work than managing a smaller property, so the fees will be higher.
Type of property: Property managers can manage all types of investment properties, including single-family homes, multi-family homes, commercial properties, and even vacant properties.
Condition of the property: Newer properties, or older properties that have been renovated, may have fewer maintenance issues than older properties.
Location of the rental property: Property managers may charge higher fees for managing properties located in areas that demand higher rents and lower fees for managing properties in areas that demand lower rents.
Extent of services: The services offered by the property management company play a significant role in the amount of fees charged. If you are hiring a property manager just to collect rent, you will pay much less than someone who wants the property manager to handle rent collection, fill vacant units, make repairs, handle tenant evictions, and maintain financial records for your taxes.
Questions
Frequently Asked Questions (FAQs)
Is a property manager worth the cost?
When determining whether a property manager is worth the cost, evaluate the time you will need to manage the property, including booking new rentals, collecting rents, repairs, maintenance, and ongoing tenant issues. It may be worth paying the fees for properties with many units, while the cost may not be justified for single properties.
How to calculate management fees?
A management fee charged based on a percentage of the monthly rent could cost the owner $2400 per month for a property that generates $30,000 in monthly income with a property management fee of 8% (30000 * 0.08).
Source: https://www.thebalancemoney.com/a-breakdown-of-property-management-fees-4589926
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