How Much Do Property Managers Charge?Jun 15, 2022
What Are Property Management Fees
The costs of hiring a property manager aren’t just limited to the upfront or monthly fee they may require. There might also be hidden costs that reveal themselves during the advertising, leasing or maintaining steps. Every landlord should know these costs and ask a property manager about them to ensure they’re charging fair fees.
Generate leads using free resources such as signs and craigslist, but don’t prolong the search process to save a few advertising dollars. With vacancies, time is money.
Property managers may charge a fee whenever they draw up the paperwork to renew a tenant’s lease. This fee is typically anywhere from 0 to 200 dollars. This process isn’t much work, so a hefty price shouldn’t be necessary.
Reserve Fund Fee
These funds are used to pay everyday operating expenses, ensuring that services are performed promptly, and bills are delivered on time. A reserve of $200-$500 is average for single-family properties.
Will they contact you with an estimate before performing repairs over a predefined amount? Is this negotiable?
The policy may notify you if an expense exceeds a higher figure like $500-$1,000. You may want to ask if this can be set lower to $100-$200 to start with an increase over time as you become more familiar with the property management company's judgment.
Do they have their maintenance or repair crew? Companies that don't offer this may portray it as an ethical hazard since the company could overcharge. If managed properly and the billing rate and process are reasonable, it shouldn’t be a problem.
For larger remodeling and upgrading projects, do they act as the general contractor overseeing the work? Is there a fee for this?
This fee pertains to the eviction steps such as serving notices, dealing with attorneys, court appearances, and evictions.
Unpaid Invoice Fee
This is a small service charge, typically 1.5%, added each month to all unpaid invoices that are past due.
Bill Payment Fee
The Bill Payment Fee is for making owner payments such as a mortgage, insurance, and homeowner association dues.
Sales Commission If Property Is Sold
Management firms may require an exclusive arrangement to broker your properties. Know the brokerage rate and ensure a limited term that’ll allow you to resist another firm if the property does not sell within a reasonable time.
Also, if the firm requires it, how much would the sales commission be if a tenant ends up wanting to purchase the property they are occupying? This is typically 1-3%.
Find out if they will be keeping any portion of the following sources of income:
- Late fees
- Returned check fees
- Lease violation fees
- Interest on security deposits and owner funds held by the manager
- Income from laundry and vending machines
Extra Duties Fee
Contracts may contain a list of extra services not included in the contract and the billing rate if the owner requests any of them to be performed.
Check to see if this clause exists, what services are listed, and the billing rate.
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