If you own rental property and you do not live close to it or simply don't want to deal with being a 'landlord' you may want to consider hiring a property management company. A property management company can help you with every aspect of managing your property and ensure that your potential tenants and renters are put through the proper application process, pay their rent on time, and have someone to call to take care of matters that arise in a timely fashion. Because there is so much that a property management company can do to save you time and thus money there are of course going to be fees involved with hiring a management company.
Property management fees can vary greatly from company to company but here are some of the fees you can come to expect when dealing with management companies:
Property
o Percentage fee: Most property management companies will charge you a percentage of the rent that you charge the tenants. While there is no set percentage in the industry, the standard is usually ten percent. Of course you will find some that will charge higher and some that will charge lower. Just be sure that you are getting all the services you desire for your percentage.
o Leasing commission: Many times you will see this type of fee from a property management company. This is usually as one-time fee and equates to one half of the first month's rent. Again, this is not a standard and some companies charge more and some don't even charge it at all.
o Bookkeeping set up fee: This is usually another one-time fee and typically depends on the size of the property. If you have a smaller property the fees are generally set by the company, but if you have a large property with several units, such as an office building or apartment complex, this fee can sometimes be negotiated.
o Advertisement fees: This fee is an actual charge, meaning that the management company should only charge you what it actually costs for advertisement whether it is done in the newspaper or online. Stay away from companies that attempt to make a profit on this charge.
o Material fees: If something needs to be fixed on your property and you give the go ahead to do so, you will also foot the bill. Again, these fees should be exact and there should not be a mark-up associated with them.
While fees are indeed important when considering which property management company to go with, they should not totally dictate your decision. Be sure to get in writing what it is that the responsibilities of the property management company will be. If you pay a lower price but you get sub-par service, what is the point?
While incurring any fee is never a welcomed activity, when it comes to having your property managed these fees are a necessary evil especially if you live away from your rental property. But the time you will save when paying these management fees often makes up for the money you spend and then some.
Property Management Fees
Compare property management companies by reading independent property management reviews given by landlords and tenants.