What Kind Of Fees?
Comparing property management companies is difficult because the quality and scope of services is often inconsistent. When you hire a company to manage your property, just remember that your rental is one of your largest assets and you want someone who will protect it, help it increase in value, and focus on profitability.
I can tell you right now that companies with really low management fees can’t possibly offer premier services and are probably not managing full time. In this business, it is simply not possible to offer a full range of quality services that protect your asset and secure great tenants with low, low fees. This is a service business and margins are very slim!
We frequently see real estate agents from large brokerages handling some property management to supplement their incomes. Agents will pick up a home or two, usually from one of their client’s that just bought a home and couldn’t sell their current one. The agent simply advertises for a tenant, signs the lease and deposits the rent. The agent will never go by that property again until the tenant calls or the tenant is moving. That is no way to handle any investment!
If you have an agent that says they’ll manage your home, feel free to direct them to us. They don’t need to be concerned that they will lose your future business – when you are ready to sell your home, we turn it back over to your agent – no problem!
So, what kind of investment do I have to make?
The most common range of fees are between 8 and 10% of the monthly rent. Monthly investment varies based on services included, location and condition of your property, the number of properties you want managed, and the monthly rental price of the property.
Services included vary from company to company. Some companies may charge a lower monthly fee but charge extra for specific services, such as property inspections. Recently, I’ve seen some companies charge a low flat fee but have very limited services and lots of “extra” services.
Many management companies that charge a low management fee will charge owners a vacancy fee to make up for the lost revenue. A vacancy fee might be a flat amount but most often these companies expect to collect the full monthly property management fee even when no rent is coming in.
- We do not charge you when your rental is vacant
This fee is an administrative charge to cover the time and effort of setting-up a new account. I’ve seen it as high as $500 and may even be a charge per unit.
- We do not charge you a set-up fee
A Leasing or Broker fee, usually equal to one month’s rent, compensates the brokerage for marketing your rental and procuring a tenant. It includes commission for the cooperating broker, photographs, listings, internet syndication, tenant background and credit checking, and performing the tenant move-in. There are many management companies that constantly turn over tenants rather than renew leases because this fee is their main source of income – they make more money signing up new tenants than renewing them.
LEASE RENEWAL FEE
All management companies charge a lease renewal fee of $350 to $500. This fee covers the cost of drawing up the paperwork and getting the tenant to sign a new 12 month lease. Some companies simply allow the lease to automatically lapse into a month to month term. Look for management companies that strive to renew leases – they are truly looking out for your interests, not theirs.
When you sign up for full management services, you will be required to have a reserve fund used for repairs and operating expenses for each rental property. The reserve fund allows the manager to pay invoices in a timely manner. State law requires management companies to retain these funds for each property.
It’s no fun doing an eviction and many times it get downright nasty. You must have a stomach for confrontation and know how to handle difficult tenants. The eviction fee generally starts at $500 and can go as high $1000 to manage the eviction process and interact with the tenant plus the costs of serving notices, dealing with attorneys, court appearances, and other legal costs.
UNPAID INVOICE FEE
If there are any unpaid, past due invoices, there may be a small service charge, typically 1% to 1.5% of the outstanding balance added to each each month it is past due. This fee covers the cost of money that the management company incurs.
- We charge 1.5% on any unpaid invoices
We include inspections as part of our service. We start with regular drive-bys and if a drive-by causes us concern, we schedule an internal inspection generally under the pretense of a maintenance call so as not to alert the tenant. We want to see exactly what is going on inside. We will cite the tenant for any lease violation and put a corrective plan with a target date in place.
We also offer an annual property inspection that is performed by an independent company for an extra fee and upon request.
* What is our Tenant Guarantee? Our Tenant Guarantee is simple and one of the best reasons to choose us to manage your property: If we place a Tenant in your rental property and there is an full service management agreement with you, we promise that if the Tenant must be evicted anytime during the first full year of the lease, we will cover the costs of the eviction (including court and legal fees), the cost of getting your home back in the same rent ready condition, and the cost to procure a new Tenant. However, we do not cover any lost revenue.