What Will Property Management Cost?
Being a landlord is especially difficult for those that do not live in a close proximity to their properties. It is also a time consuming process that many people just don’t want to commit to. When you have a property management company, they will literally take care of everything for you. They find tenants, check backgrounds, collect the rent, make repairs and more. They can save you time and money and make having renters much easier than you might have thought. In many cases hiring a property manager is well worth any amount that you might have to spend.
Of course, all this benefit does come at a price. The fee will vary based on your area, the company you select, the value of your property and more. Ask your specific company what their fee arrangement is. Here are common examples to help you better understand what you might have to pay.
Percentage– Typically you will pay a small percentage of the amount received each month in the form of rent. The percentage will vary but is usually about 8-10%. You will find some property management companies that charge more and others that charge less.
Commission- Some companies charge a commission for each property that they find a tenant for. This really depends on your company. Some charge quite a bit and other companies don’t even have this fee. Make sure you find out in advance so that you will know just how much you have to pay.
Advertisement Fee– To find tenants for your property, your property management company may make listings online or in the newspaper. If this is the case they will charge you an advertising fee. Some companies charge a premium on top of what they actually spend. If this is the case, choose another company.
Set Up Fee– This is a one time fee that you will pay upon setting up an account with a property management company. It is used to create your bookkeeping accounts and records.
Repair Fees– If something breaks, you will have to spend the money to make the repairs. The best property management companies do not charge fees on top of this, rather they just charge what the actual repair cost.
When choosing a property management company, price should be a small factor in your decision. You want to get the best value possible for your money. However you also want to get great service. As you talk to companies, find out their charges and determine which is the best value. Generally this won’t be the cheapest company, but is probably not the most expensive either. Why save a few dollars to deal with subpar service and a company that doesn’t do their job.
Remember that you have to spend money to make money and if you have properties that you will have to pay the occasional fee or two. As long as you are making more than you are spending, the fees are worth the expense.