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Real Estate

How Much Do Property Managers Charge?: A Breakdown of Property Management Fees

Working with a property management firm to represent your rental property is a significant choice if you own rental property. Sure, you might already be familiar with the one percent rule, but that’s just the tip of the iceberg when it comes to the nuances of property management.

While many homeowners manage their properties themselves, hiring a management firm is an alternate method to ensure rental revenue with less worry and time commitment.

Working with a property manager comes at the cost of reduced revenue from your property due to unpaid management costs. And, this brings us to property management fees and their ranges. Keep on reading for our full breakdown of how the scale of fees of property management works.

Property Management Fees: The Basics

Let’s start with some of the foundational divisions in the market.

Generally speaking, you’ll find that property management businesses charge fees in one of two ways. Either as a percentage of the rent collected or as a fixed monthly fee.

Fixed Property Management Costs

Some property management firms provide a set fee structure instead of collecting a charge based on a percentage of a month’s rent. The set cost is usually determined by the kind of property, its square footage, and the management services offered.

The set property management cost for a single-family house may be about $100 per month as a general rule, although management rates vary by market. While a flat fee structure may seem to be a good bargain, at first sight. Management firms that get a set charge may not be as driven to optimize your property’s rental revenue.

Percentage of Monthly Rent

The majority of property management firms charge between 8% and 12% of the monthly rent received as a monthly fee. If your house rents $1,200 per month, the property management charge would be $120 based on a 10% average rate.

When a property remains unoccupied, management firms often charge a set fee or a fee equal to the expected monthly rent until a new tenant is found. Vacant homes may need more labor from the management firm, such as weekly inspections for possible break-ins or squatters.

Other Forms of Additional Property Management Costs

The cost of property management isn’t necessarily all-inclusive.

A property management firm may charge extra fees for additional services in addition to the monthly payment. You might want to check out how to hire a property manager before you go any further.

Contract Setup Fee

Most property management firms usually charge a one-time setup fee of approximately $300. The contract establishment fee covers the following expenses. To keep track of your finances, you’ll need to create an account. If necessary, open a bank account in your name.

Then, assisting with the acquisition of the necessary business or tax permits.
The initial examination of the property, and if you bought a turnkey rental property, you’d need to coordinate the transfer to a new property management company.

Leasing Vacant Property Costs

There are several excellent, free rental listing services where you may advertise an empty rental property. This can help you reach millions of potential renters each month. If you’re a distant real estate investor, though, you’ll still need someone to show potential renters your empty rental property.

While some property management firms do not charge a fee to lease an empty property, the majority impose a leasing fee equal to half to one month’s rent.

Overseeing Vacant Property

Because there are more possible issues than when your house is inhabited by a renter. Managing an empty property may be much more labor-intensive for a property management firm.

Because you must turn on utilities for showings, water leaks or security lights may arise unexpectedly. Even in the finest of communities. The longer a rental property remains empty, the higher the danger of being broken into or damaged. The management company will have to visit the home at least each week to assist reduce these hazards.

Fees of Routine Inspection

A residential rental property should be examined inside and out each three to six months as a matter of thumb. Inspections of the property regularly assist in identifying and repairing minor issues. Before they become significant and costly ones. And, verify that the renter is not causing damage to the property.

Certain property management firms offer a free semi-annual inspection. Others may request that you pay for each assessment in return for a reduced monthly property management charge. In any instance, ask that the property management firm give you a comprehensive inspection report. As well as pictures or videos, to demonstrate that regular inspections are being performed.

Repairs and Maintenance Costs

The finest property management firms will have a well-established network of reliable suppliers. Or a full-time maintenance team on staff.

Repair and maintenance expenses should be cheaper than what you might find on your own. Since most suppliers give management firms preferential pricing in return for the manager’s business.

Contract Termination Fee

Unless the landlord breaks the property management contract “for a reason.” Like the manager failing to perform as promised, terminating the property management contract early will generally result in an early lease termination charge.

Termination costs may range from one month’s lost revenue to a landlord getting sued for breach of contract. It depends on the circumstances.

Elements Influencing the Bulk of Property Management Coast

A property management firm will not charge you a fixed fee to manage your home. Fees will be determined by a variety of variables, including some of the following factors.

First, the size of the rental property. Because maintaining a more extensive rental property requires more effort than managing a tiny rental property, the price charged will be higher.

Next, you have the different property types. Property managers may care for single-family houses. Multi-family properties, or commercial properties, and even empty properties.

Then, we have the variance in property conditions. Newer properties, as well as restored older homes, may have fewer maintenance problems than older ones. Also, the location of the rental property. Property managers may charge higher costs for managing properties in high-rent regions. And, lower fees in low-rent areas.

Understanding the Average Property Manager Fees: Unlocked

If you’re new to the world of real estate and rental properties, things can be pretty overwhelming at first.

We hope that our guide has shed some light on the wide range of property management fees and what factors are involved in their increase or decrease. And, if you enjoyed reading our article, then you’ll love checking our additional tips and strategies in our real estate section.

Read Also: How to Remove Smoke Odor After a Fire

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