When considering hiring a property management company, it makes sense to know what fees they charge and what services these fees will cover.
While every company varies in whether they charge a flat fee or a percentage, what types of fees, and what these fees involve, there are some general charges that nearly every company will have to professionally manage your income property.
So what are some property management fees and what exactly do they cover?
The Cost of Advertising and Leasing Your Property
A leasing fee and will cover advertising costs for your property as well as showing your property to prospective tenants. The leasing fee will also include the leasing paperwork, taking applications, and screening tenants. Some companies will also prepare the property for tenants to move in as part of this fee.
How much does a leasing fee usually cost? While a leasing fee could cost as little as 25 percent of the first month’s rent, on average, this fee costs between 25-75 percent of the first month’s rent and could cost as much as 100 percent. Other companies may charge a simple flat fee for the leasing fee.
Day-to-Day Management Expenses
For the actual management of your property, there’s the monthly management fee, which includes property inspection and maintenance, handling emergency maintenance, collecting rent payments, and other day-to-day tasks.
The management fee is typically paid on a per-month basis and costs, on average, 7-10 percent of the actual collected rent on a property every month. This means if your unit is renting for $1,000, the property manager would make $100 per month as part of their management fee.
Again, every company varies with their cost and some companies may charge a standard flat fee for their management services.
Onboarding Costs and Other Fees
There may also be an onboarding fee, sometimes referred to as a setup fee, which is usually a one-time charge to set up your account and establish your partnership with the property management company. This fee may also cover an initial inspection of the property to evaluate its condition.
Some property managers may charge a vacancy fee, which means that even if the unit isn’t occupied, they may still charge a small flat fee or regular monthly maintenance fee to maintain the property.
There may also be a lease renewal fee, which could be a flat fee or a full month’s rent, similarly to a leasing fee. Finally, the company may charge an eviction fee for the time and effort it can take to follow through with the eviction of a tenant.
In addition, property management companies have the discretion to collect a portion of or all of:
Late fees from tenants
Returned check fees
Rental fees for pets
Lease violation fees
Unpaid invoice fees
Laundry or vending machine income
When hiring a property management company, you’ll need to carefully review the terms of your partnership and ask questions to clarify what services the fees cover and the terms thereof.
Get the Most Out of Your Investment
If you have questions about fees or what services are involved in professional property management, give us a call at Circle Property Management at (703) 349-0144. We’ve been making tenants and investment property owners in DC and Northern Virginia happy for over a decade. Find out more about our services in the DC Metro Area!
About The Author
Eric Guggenheimer - SFR, ARM ® » Principal Broker, Certified Property Manager, IREM, ARM, NARPM, NVAR, NAR, VAR
