When it comes to hiring a property manager, one of the most common questions that property owners have is: “These are some of the costs that property managers charge:”
Therefore, the fees charged by property management firms depend on the location, type, and services that are offered to the property firm. This article intends to explain the various possibilities of fees may be charged by property managers and give general expectation of the amount to be paid. It is necessary to understand the activity of a property manager for appropriate collaboration.
Understanding The Role Of A Property Manager
A property manager is an individual who is in charge of the day to day running of the rental home through managing the identification of tenants as well as managing the bowels of the house. While being legal entities, they provide a link between the individual and tenants, making sure that the property is kept in proper condition as well as raking in high returns. Property managers can therefore be very useful particularly to third-party landlords or those who own several houses since it is hassle-free to get one to handle your investment.
Types Of Property Management Fees
The different property management fees that are charged by agents are explained below;
Property managers typically charge fees in one or a combination of the following ways:
- Percentage of the Rent: This is the most accepted fee structure in property management and most property managers use it. The property manager will cost a percentage of the monthly rent as their charges. The percentage may vary within the boundaries of 4% and 12% of the monthly rent depending on properties’ characteristics such as location, the area of the property, the number of units, and services included.
- Flat Fee: It is found that some property managers prefer to charge a flat fee as well as instead of charging their percentage of the rent. This is a common fee pegged either on a monthly or annual basis, which may be paid irrespective of the rental received. There are advantages of flat fees as a form of property charge especially if the property owner gets high rental income or in cases where the property owner is looking forward to paying a fixed amount.
- Leasing Fee: Besides the management fee property management companies may offer a leasing fee for securing tenants for the property. That is commonly a proportional amount to the amount of the first month’s rent and entails the printing of the ad, tenant screening, and preparation of the lease.
- Additional Fees: There can also be extra charges that property managers may charge for example, maintenance ad repairs, annual property inspection, eviction process or accounting among others. These fees are standard and are usually outlined in the property management contract; it is important that one consults with their property management company before signing the contract concerning these fees.
- Hybrid Fee Model-Combining Percentage and Flat Fees: Another type of fee structure is the hybrid model, which incorporates the percentage based system in conjunction with an established price. For instance, a property manager may take a proportion of the rent received, up to some amount, and then a fixed amount, thereafter. This model can afford middle ground in the two charging methods at the same time it can be more flexible for the property owners.
Factors Affecting Property Management Fees
Several factors can influence the fees charged by property managers:
Several factors can influence the fees charged by property managers:Several factors can influence the fees charged by property managers:
- Location: It is also there that the fees charged for property management may differ considerably. Thus, property managers may increase the wages in areas that are popular and costly in terms of rent. On the other hand, the fees may be lower where the values of rent are less so that costs are balanced to meet the different markets.
- Type of Property: Several factors contribute to fees whereby the type of property can also affect the fees to be charged. So, managing a single family house might be more or less different from managing multiple apartments in a building or an office block. It can be therefore deduced that the fees charged are dependent on the amount of work done, in addition to the size and complexity of the property.
- Services Provided: As to the pricing, it primarily depends on the range of services that property management companies are willing to provide you with. Depending on the extent of the company, some may employ themselves as property managers in that they carry out the responsibilities of sourcing tenants, collecting rents, maintenance, and accounting among others while others may be limited to only a few tasks. Due to availability of different amounts of services, it is expected that larger services attract larger fees.
- Market Conditions: It is also important to note, that the fees related to property management can also depend on the relationships existing in the market. Fees may be slightly more competitive since facilities are managed within a competitive market that has the host of property management companies. On the other hand, in a market with few stockist, property managers may set high fees.
Getting The Best Value
Though the cost of property management is an essential factor that one should consider to hire a property manager the factor alone should not influence such a decision. Thus, the efficiency of the selecting property management services should be assessed, the reputation and experience of property management, and availability of communication and support.
When comparing fees, however, always ensure that you have included the total fees that are charged by the service provider and what is offered to the service provider in exchange in the total fees charged as well as the total benefits and/or returns generated from the services that the service provider offers. Having a professional and well-mannered property manager is a blessing as he would increase your rental income, decrease the empty periods, and perform the tasks of a middle man resulting in time, money and stress saving.
Services Included In The Fee: What To Expect?
Thus, one of the most important aspects in outsourcing property management is knowing what services are covered by the fee. Some of the basic services may comprise of marketing and advertising of the property, screening of the tenants, preparation of the lease agreement and collections of the rent among others. These are the additional charges for services such as accounting, tax preparation, and coordination of maintenance services.
What Is Included In Property Management Fee?
Property management fees can include:
- Marketing the property to be let
- Tenants Rental Property Management & Attending Showings
- Requirements related to the screening of tenants, this entails conducting reference checks, and evaluating the rental history of the potential tenant.
- Management of the condition report process
- Coordinating the signing of tenancy agreement and answering questions
- Preparation of the financial accounts for the investment property and reporting on the measurements.
- Carrying routine physical check-up on the property
- Co-ordinating with the landlord tradespeople for the repairing and maintaining work of the rental premises.
- Tenant placement fees
- Inspection fees
- Fees for lease renewal
- Contract setup fees
- Eviction fees
Do Property Managers Pay For Repairs?
They don’t have to reach in their own pocket and pay for repairs as most people would think. The tenancy agency is responsible for the letting of the property for the owner and dealing with repairs and maintenance issues. Here’s how it usually works:
- It involves informing the property owner and getting their consent on the kind of work that needs to be done.
- The management of the property hires independent workers such as the contractor or handyman to do the work.
- The property owner is supposed to pay for repairs to be made depending on the rental or the money charger of the owner.
However, some property management companies may offer additional services, such as:
- Maintenance reserve: The property manager can maintain a contingency fund for the minor repairs and maintenance and the amount is replenished by the property owner.
- Repair financing: There are cases where the property managers or dealers can provide an option or perform a partnership where the property owner will pay for the major damage and then he will be reimbursed by the property owner.
One should understand that in most circumstances, it is advisable to be specific on certain issues like who between the two parties is supposed to make payments for repairs and maintenance. ヽ
Conclusion
The fees for property management can be charged using different parameters such as the geographical location, kind of property, services offered, among other influential aspects of the market. There are fees that property managers may require from their clients and one should know about them, the value each property manager can offer and whether he is worth the investment. When you assess the level of your requirement, it is essential that you compare the services provided by the various property management companies and the charges they impose so that you can dulyPartner choose a competent property management company to properly manage your property.
