If you’ve never hired a professional management company before, you’ll need to know what property management fees to consider when you’re looking for the right manager. There are four basic fees that you’ll probably run into most frequently.
This is the monthly fee you’ll pay, and it has two different ways of being charged. It could be a percentage-based fee that ties to the amount of rent you collect. If you collect $1,000 in rent that month and we have a 10 percent fee, you’ll pay $100. The flat fee model is also out there, where there is a certain amount paid every month regardless of what the rent is or how much is collected. Your property manager will charge a flat fee, for example $99 every month.
Tenant Placement Fee
The placement fee is tied directly to the placement of a tenant. It includes a lot of things, such as marketing, processing the application, screening the tenant, and executing the lease. You can expect this fee to be about 50 percent of the first month’s rent. It might go up to 100 percent, and you’ll only pay this fee once. Sometimes it can be a flat fee as well.
At the end of a lease, a tenant may decide to renew. This fee will cover the things that come up during a renewal, such as a property inspection, the execution of a new lease or the addition of amendments to the current lease. Typically, the renewal fee is a flat fee or up to 50 percent of the rent.
You may not always see this fee but maintenance is a large part of what property managers do. It includes the coordination of vendors, communication with your tenant, and the payment of bills. It takes a lot of time. There may be an upcharge to the vendor charges or a flat fee on top of your bill. This cost could be hidden and it’s not always transparent.
There may be other smaller fees as well. Don’t be alarmed because in the property management world, those little fees make up the income for your property manager. You may choose not to do certain things if there are costs involved. Maybe they won’t file an eviction or place your tenant if you want to save money. You can pay only for the services you use.
Ask a lot of questions and look at the property management agreement so you know exactly what you’re paying for. If you have any questions about your property management cost, please contact us at Bravo Group Real Estate.