So you’re researching different property management companies trying to figure out who’s got the best deal. This can take a lot of time: requesting proposals, asking for references, conducting interviews. Maybe your property is hours away and you can’t even meet these people—you just need someone who can take care of your property for a good price. What should you know about the property management fee?
Fees Will Vary by Company
Some companies charge a percentage of the rent per month while other companies have flat rate fees. Every company will most likely have something different going on when it comes to charging you a property management fee. This really just depends on the company but it also could depend on location, whether it’s a single-family home or a residential building with many units, and also the condition of the property. Discuss with your potential property manager to inquire about the property management fee and why they charge what they do.
Lower Is Not Always Better
Just because it’s a great price doesn’t mean it’s a great deal. You may run into that company that charges a really low property management fee, and you may be tempted to hire them. But lower is not always better when it comes to a property management fee. You want to be sure that the services you’re receiving will be what you need, especially if you won’t be able to check in on the property very often yourself. A property management fee should accurately reflect the work your company will put into your property—if it’s low, chances are the services you’re getting will be below average, too.
Fees Are Negotiable
What the company offers you is not always what they will accept. Property managers make an estimate based on a lot of different things, and this estimate is totally negotiable. Talk with your property manager about their property management fee to see how negotiable it is. What did they base it on? How much time will they be spending there? These are all questions you’ll want to ask when negotiating prices for the services for your property.
Beware of Vacancy Fees
Most property management companies that charge a property management fee will not also be charging you a vacancy fee. A vacancy fee means if there’s no tenant paying rent, your property manager will still expect money every month. If you have a property management fee of 10% of the monthly rent every month, then the property manager only gets paid if there’s a tenant there. Vacancy fees can be hidden in contracts; make sure there’s only 10% due if there’s actually a tenant.
Leasing Fees May Not Find You Good Tenants
Some property managers include in their property management fee a leasing fee, which means that every time new tenants come in, they charge for what it costs for them to find and screen tenants. The reason this may not be ideal is because it doesn’t provide any incentive for the property manager to actually spend the time and energy to find you decent tenants. Actually, it does the opposite—the more tenants that leave, the more tenants they get to bring in, hence a hefty leasing fee for them. If a property management fee includes a leasing fee, it’s not a bad thing—just be sure your property manager has your best interest in mind.
Maintenance Fee Policy
Part of a property management fee may include a maintenance fee. If your property manager has their own crew come in to do work, you need to figure out what their rate is. The maintenance fee policy may not include contacting you when maintenance is needed—you may just get a bill in the mail. You’ll need to figure out if there is a maintenance fee included with the property management fee and what the maintenance fee policy is. Questions to consider are: will you be contacted before they hire services, do you trust their judgement to find reliable services, and will they charge you for having to find maintenance or is this included? These are all things you’ll need to address.
Property management fees vary widely, but in order to find the company that’s right for you, you’ll need to look at more than just the property management fee. When you are looking at the property management fee though, keep these things in mind—everyone ought to know them!