Working with a property management company to represent your property is a big decision if you own rental property. While many owners manage their properties, using a management company is an alternative way to secure rental income while saving stress and time. Working with a property manager does result in less income from your property due to owed management fees.
If you are considering hiring a property manager or already working with one, looking into property management company fees is a good idea. There are numerous costs that can be included and added to property management responsibilities. Here are some typical property management fees that investors should expect to pay.
Types of Property Management Fees
Although property management fees refer to the amount charged for looking after rented property, property management firms charge the fees in various ways depending on their needs. Some of them are listed below:
1. Monthly Management Fee
It is a self-explanatory term that refers to the monthly fee paid to property management like Charlotte realty companies for its services. This payment is made for the various services provided by the group, such as receiving rent from tenants, regular inspection of the property, property maintenance, resolving tenant complaints during odd hours, and so on. This fee typically ranges between 7% and 10% of the monthly rent collected from tenants.
2. Leasing Fee
This cost reflects the time and effort spent finding a renter, showing them the property, conducting a background check and credit check, and creating the lease and other legal documents. Typically, this one-time fee ranges from 75% to 100% of the first month’s rent. You can also learn more about the rental application process.
3. Maintenance Fee
primarily refers to investments made by the company to keep your property in good condition. Generally, this fee is based on the terms and conditions agreed upon by the property management company and the landlord. If the landlord is responsible for the property’s maintenance, no fees are paid to the group; otherwise, the responsibility is placed on the group’s shoulders. The group pays based on the terms, conditions, and maintenance fee.
4. Late Fee
Landlords or property managers charge late fees to renters who don’t pay their rent on time. If the tenant fails to pay the rent by the due date, the management company may choose to collect the total amount or a certain percentage of the rent, depending on the mutually agreed-upon terms.
5. Eviction Fee
In some cases, the landlord may wish to have his property vacated before the end of the contract. In that case, the management company can assist him in evicting the tenants mostly through mutual agreement or court order. The property management company can charge the appropriate fees based on the effort and time invested.
It’s also important to note that many property management fees are charged as a percentage and are determined by factors specific to your property, such as location, number of units, and expected workload. You can follow this link to find out more about property management.
Final Thoughts
Working with a property manager is an important decision for a real estate investor. While you may be more than capable, a property management company can sometimes make your business (and life) a lot easier. Weigh the advantages and disadvantages of hiring a property manager, and be prepared to research what is best for you. Property management fees should be viewed as a small price for more time and less hassle with the right company.