Smart investors know that professional property management is well worth the fees that are paid, especially when you’re working with an experienced company that can help you earn more on your rental property. Before you sign a management contract, make sure you understand the fees that are paid and how you’ll pay them. It’s also important to know the services you’re receiving in exchange for those fees. That will define the value you’re receiving.
How Much Do Property Managers Charge? Flat Fee versus Percentage
Rental fees are paid to most property managers as a flat fee or a percentage of the rent that’s collected. With a flat fee, you will pay the same amount every month, and it won’t matter how much your property rents for. A $2,000 per month rental property will have the same management fee as an $800 per month rental property. A flat fee might be $75 or $100 per month. With a percentage system, you’ll pay from 8 percent to 12 percent of the collected monthly rent for the management of your property.
There are pros and cons to both these systems of collecting management fees. With a flat fee, you’re paying the same amount, even if the rent goes up on your property. However, with a percentage system, your property manager will have more incentive to get you the most possible rent. A flat fee might make sense if everything is included. But, there might be additional costs for services that aren’t included in the flat rate. You also need to consider whether you pay your property manager when the home is vacant or a tenant doesn’t pay rent. With the percentage model, the manager’s fee is taken right from the rental income. With a flat fee, you may be expected to pay your monthly management fee even if there isn’t any rent coming in.
How Much Do Property Managers Charge? Additional Rental Fees
Your monthly management fee isn’t the only cost associated with the professional management of your rental property. Many management companies charge a leasing fee, which covers the cost of marketing your home, finding and placing a tenant, and signing the lease. Just like with the management fee, it may be a flat fee or a percentage of the first month’s rent. You may have maintenance fees in addition to what you pay in regular management fees. Some property managers will attach a service fee or an upcharge to your repair invoices.
Property management fees must be transparent. You don’t want any surprises when you receive your monthly statement. Ask for a complete list of fees and charges before you hire a property management company.
If you have any questions about rental management fees or you’d like to know what we charge, please contact us at CrossPointe Management. We’d be happy to tell you more.