Managing a property, either on your own or with a company, can get very expensive. Many owners don't realize just how much property management costs, so we created this guide to help you get a full picture of monthly management fees and the real cost of property management.
Property management fees can vary depending on location, property type, services, and the company's reputation.
Rental properties in high-end or high-demand areas generally require more attention and care, which can increase the fees. The type of property is also important. Multiunit buildings require more management and maintenance than single-family homes, so costs are higher for those property types.
You'll have additional expenses if you use a property management company. Some companies provide full-service management, from marketing to maintenance and repairs, while others offer only basic services such as tenant screening and rent collection. The more services offered, the higher the fees are likely to be.
The company's reputation also affects the total cost. Established and reputable companies charge higher fees than newer or less experienced companies.
You don't want to overpay for any service, so take your time when researching and comparing management companies. Plus, this lets you familiarize yourself with all the different property management services and options, so you can choose the company that provides the best value for your needs.
But fees and services aren't the only things to consider. It's just as important to compare each company's reputation. Check out online customer reviews to see what people are experiencing. Weigh all this information carefully to avoid overspending in fees without getting the service you hoped for.
If you have a conservative budget, you might be better off with property management software instead of a full-service company.
With property management automation software, you can handle communication, maintenance, inventory, and more from a single platform. Consider this when you compare management company fees.
Property management or home rental companies charge a variety of tools you might not even be aware of. Keep reading to learn about potential fees before choosing a company.
Lease renewal fees are charged when a rental property management company secures a new lease. This is a one-time fee based on a percentage of the property's rental income. It's basically a setup fee. The leasing fee covers the costs associated with marketing the property, tenant screening, and making the lease agreement. They range from 50% to 100% of the first month's rent, depending on the location and type of property.
Tenant placement fees are charged when a property management company finds a new tenant and helps place them in the unit. Unlike leasing fees, tenant placement fees are a one-time fee with a flat rate rather than a percentage of the monthly rent. Tenant placement fees can range from a few hundred to several thousand dollars.
The renewal fee is a standard charge paid to property managers to renew an existing lease agreement between the tenant and landlord. The amount can vary, but it is typically a fixed amount.
The negotiation fee is the cost of renegotiating the terms of a lease agreement. This usually happens when a tenant requests a change in the terms of their lease or when changes to local regulations affect the lease terms. Negotiation fees can be either a flat fee or a percentage of the rental rate.
Maintenance fees are another type of monthly fee. The amount depends on the level of service required. Some companies offer tiered maintenance packages, with higher-priced packages including additional services such as deep cleaning or landscaping. Naturally, high-end properties require more constant maintenance.
Repair costs are similar, but they're charged only when repairs are necessary beyond routine maintenance. Management companies generally have a network of contractors they work with for repairs, so you don't have to look for contractors yourself. You can't really anticipate how much this will cost you until the repair is needed. But you must keep a budget in mind for this cost.
Vacancy fees are typically charged as a percentage of the rental's monthly rate when a property has been vacant for a specified period, typically outlined in the management agreement. They compensate the property management company for the time and effort spent marketing the property and finding a new tenant.
Occupancy fees are also charged as a percentage of the monthly rental rate. The purpose of this fee is to compensate the property management company for ongoing services such as rent collection, maintenance, and responding to tenant inquiries.
You also need to be aware of other fees involved with property management. Below are the main ones.
Most property owners don't get charged this fee since initiating an eviction is difficult. But if it comes to it, you can have the support of the management company you choose for a reasonable price.
The cost will depend on the complexity of the eviction process, the property's location, and the specific terms of the management agreement. You should have this factored into your budget.
Property management companies charge advertising fees to cover the costs of marketing a property for rent or lease. These fees can vary based on the level of service required and the marketing channels used, such as online listings or print media. Property management companies may offer additional services at an extra cost, including professional photography or virtual tours, through tiered advertising packages.
Property management companies charge accounting and inspection services fees to cover the costs associated with financial management and property inspections. These fees can vary based on the level of service required, property size, and complexity. Additional accounting services, such as tax preparation or budgeting, may be available at an extra cost, while inspections can be scheduled regularly or as needed.
Property management companies charge maintenance fees to cover the costs of routine maintenance and repairs required to keep a property in good condition. These fees can vary depending on the size and complexity of the property, as well as the level of maintenance required.
Maintenance fees may cover landscaping, cleaning, pest control, general repairs, and upkeep. Property management companies may also offer additional maintenance services, such as HVAC or plumbing repairs, at an extra cost.
Keeping your property clean is also a critical part of owning a property. Cleaning services will help you maintain your property's value and help attract new tenants by showing the property in its best state.
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