Property management company fees vary with different groups, so it is difficult to provide a flat-rate fee for everyone. The costs vary on a number of factors from how much engagement a property management firm handles. Let’s break down the costs of property management into various sections, allowing property owners to get a better understanding of their monthly fees.
Set Up Costs
When you enroll with a property management company, you will need to pay a set-up fee, or an onboarding fee. The set-up fee varies in costs from $300 and up, and will cover the costs of establishing an account with a property management company. Inspection costs are also part of the enrollment fee for the firm to inspect the condition of the property.
Each month clients will have a management fee that is the primary fee for holding an account. The fee is for the monthly management of the property including:
- Rent collection
- Tenant communication
- Property inspections
- Repair needs
- Maintenance calls
In the majority of cases, the fee is part of the gross collected rent, but some firms have a flat rate fee that is charged. Like other costs, the actual charge is based on market conditions, all the property management requests by the property owner, and how many units are being managed. One important thing to review with a contact is the rent collected date. Payment agreements are based on when the rent is collected; making sure both parties receive fair compensation.
A leasing fee is charged for new tenant placement. What this charge means is there is a charge to re-lease a unit if it has become vacant. The fee can be a flat –rate cost, or it can be a percentage fee. The lease fees will pay for advertising, applicant screening, property showings, and move-ins.
Another part of the lease fees are called lease renewal fees. The renewal fee is charged to an existing tenant for renewing their lease. The charge is for contract adjustments, which entail market comparisons to determine if rent changes need to be made.
One important thing to know is that there will be maintenance fees in addition to the monthly fee. Maintenance fees are normally once a year, or twice a year based on maintenance requirements. It is recommended to have about 1.5 months’ rent stored away to pay for the maintenance fees. If repairs are needed, property owners will be notified to prepare for the cost if they exceed $100.
If a flood occurs, an appliance breaks, or other issues happen, photographs are taken of the damage to help document and gain an estimated repair cost. Property owners normally have a maintenance limit, which will need to be approved by the property owner if the maintenance repair costs exceed this amount. One benefit of a property management company is that they do have the connections and network needed to ensure the repair costs are lower from what most people can get on their own.
Getting the property rent ready will use maintenance fees to pay for things like wall damage repair and paint, cleaning flooring and appliances, etc. Be upfront with a property management company about the repair costs when a property does need repair work for a new tenant.
Keyrenter Property Management in Main Line is here to help walk you through the beginning of hiring a property management firm. It is important that your goals and expectations are met by the firm in order to ensure a successful partnership. Whether you plan to keep managing a property on your own, or you plan to hire our team, we hope this guide can clarify some of the costs associated with hiring a property manager.