How Much Does Property Management Cost?
Property management is a vital function for home and property owners who lease their properties without dealing with the associated stress. A property manager has the capability to oversee the rental and maintenance aspects of the property and effectively take care of various issues that may arise instead of the owner of the property having to deal with these issues. Through property management, property owners can save their time and not need to stress out over the daily management of the property.
How much does it cost?
- Depending on the property management company, most are going to charge one of two different ways. One way can be a certain percentage of the rent while others may charge a flat monthly fee. Usually, the percentage method tends to be the most popular. On average, prepare to budget 6% to 13% of the property’s value each month for property management.
- For example, aside from the tenant placement fees, let us say that your monthly rent was going to be $1,000. If the company charged 10% for their monthly fees, they would take $100 from your monthly rent.
- At Desertwide.com, for example, the minimum monthly fee for property management services is $85 or 8% of the rental amount, whichever is higher. An additional $495 is also required to pay for each new tenancy for advertising, lease-up referral commissions, photo tours, and move-in/move-out home inspections. An optional charge is the use of Multiple Listing Service (MLS), which costs from $100 to 3% of the total gross lease amount for a commission charged only after a tenancy is executed.
- Shelterrealty.com in Henderson, Nevada, specializes in the management of single-homes, condominiums and town homes. Its Las Vegas property management fees include the following:
- Management fee – 8% of the gross monthly rent (minimum of $80);
- One-time admin setup fee – $299;
- Tenant placement fee – $200; and referral fee – $300 (paid to referring agent)
- The setup fee and the monthly fees cover all management and accounting duties. The company also requires a minimum reserve requirement of $250 (depending on whether or not the property owner has a home warranty), which is collected to cover the immediate expenses for sanctioned minor repairs and maintenance work.
- According to Property Management Direct, property management fees can be as low as 3% to 15% of the monthly rent. Flat monthly property management fees may also be charged instead of a commission-based arrangement. Charges included are lease setup fee, lease renewal fee, fee for advertising, maintenance mark-up fees, and cancellation fees.
What is going to be included?
- Property management service fees differ according to the rental terms as well as the size and the location of the property. Fees and services included are monthly management fees, lease-up fee, start-up fees and reserve fund.
- Depending on the property management company, the services can include rent collection, handling of all tenant correspondence, use of updated lease contracts created to provide protection to the property owner, paying of bills on behalf of the owner, maintenance of the property, and providing the property owner with monthly statements and updates. Most property managers can supervise a range of property types including single family homes, multi-unit residences, commercial properties and vacation rentals.
What are the extra costs?
- Most property management companies require a maintenance trust, which refers to an extra expense that is used in the event that minor property repairs are required. Some companies require $250 minimum reserve requirement.
- Property inspections can also result to added charges. A number of property managers schedule home inspections and will charge the property owner a fixed rate or a weekly fee.
- As mentioned above, every time a new tenant has to be placed inside the rental, a $200 to $500 one-time fee will apply.
Factors that influence the price:
- Monthly fee. The monthly fees for property management varies from one company to another. Some require a fixed rate, while others charge a certain percentage of gross rent on the property. Many companies ask for 8 to 10% while others require 5-10% .
- Other fees included. Various types of charges and fees also influence a company’s property management rates. Included are setup charges, renewal fees, advertising fees, maintenance mark-up fees, and cancellation charges.
- Location. The location of a property can also influence the overall cost of property management services.
Tips to know:
- Obtain recommendations from trusted people and from local apartment organizations.
- Get as much information about a prospective property manager before making a choice.
- Ask for references and obtain details about the prospective manager’s fee structure and arrangement. While fees are often a percentage of the monthly rent, flat fees may be more suitable in certain situations.
- Inquire about the property manager at professional real estate directories and resources and find out about their ability to manage properties.
How can I save money?
- Find a property management company that requires no lease renewal fees and no maintenance markup fees.
- Choose a company that does not charge miscellaneous fees to coordinate repairs. Also, it is beneficial if they have vendors and maintenance contractors that provide them with volume discounts as these savings can be passed on to the property owner.
- Many property managers charge extra for online marketing and advertising. Look for companies that do not require clients to pay for advertising fees.