The cost of professional property management depends on the company with which you choose to work. Typically, in this market, things function on a percentage-based model. That means the manager will take a certain percentage out of gross monthly rents collected. In our market, this is normally 8 to 12 percent. But it really depends on what other fees the property managers charge. There are a few important things you should ask when shopping around for these services.
Standard and Extra Property Management Fees
In addition to the monthly management fee, you’ll want to know if there’s a leasing or renewal fee charged. Many property managers do charge a leasing fee, and some others will charge a renewal fee. There should be some incentive for property managers to keep good tenants in place, and that’s why a renewal fee is in the owner’s best interests. You’ll also want to ask if there’s a management fee charged when the property is vacant. Ask if there are tenant fees being charged. That will slow down the leasing of your property and result in increased vacancies. So, make sure your property manager is not overburdening the tenants.
Additional Income Opportunities
It’s also important to find out what other income opportunities your property manager can have for you. This is a space that management companies often fall short. What are they doing to help you make more money instead of just collecting rent? Are they sharing things like late fees and pet rent?
A really important thing for you to ask is how maintenance is handled. Is it an in-house company, do they use vendors, or is there some combination? You’ll want to know if they are charging you fees on top of the vendor’s invoice. Many managers will try to make money here. They could get rebates or kickbacks so they may make a profit off your home’s repairs.
Ideally, a good property manager uses a fee structure that supports owners. They understand that owners have to be successful and profitable for the manager to be successful and profitable.