Property management fees often seem overpriced, yet the important aspect of their fees is not the ultimate number but the services provided and the quality of those services in respect to the standard fees in any given region.
After all, the property management company you hire is representing you and caring for one of your biggest assets, which is why you need to think about fees with a more open mind. Property managers with lower fees may offer a smaller scope of services or the quality of those services may not compare to other, more expensive property managers.Certainly, your budget is an important consideration when hiring a property manager; but you should take some time to understand property management fees and why property managers charge so much to manage your rental unit. Indeed, different property management firms may outline their fees in different ways, and one common mistake is to simply compare fees and not services. Some cheaper property managers may have a lot of back-end charges that you do not always recognize until later down the road. Also, remember that fees and services are negotiable so you should always be able to find a qualified, professional property manager within your budget.Typically, property managers offer a variety of services associated with various fees including management fees, vacancy fees, set-up fees, and leasing fees. Management fees represent the most significant portion of the cost of property management. These services usually range between 4 and 12% of the monthly rent depending on the type of property (residential or commercial), the number of units, the location and condition of the property, and the overall services included. Vacancy fees are not always required, but you should pay close attention if your property manager charges this fee. Vacancy fees are collected whether a tenant is occupying the space or not, and some companies expect their full management fee even when a unit is vacant. As such, you need to pay special attention to any agreements that include vacancy fees or require that you pay management fees even when the tenant has stopped paying rent.Many property managers also charge a set-up fee in order to cover the administrative costs of setting up a new account with a client. The fee may be charged per unit or per property and may depend on whether the unit is occupied. Furthermore, leasing fees are intended to compensate property managers for time and effort spent acquiring tenants. This is a common fee but many owners prefer that this fee be incorporated into the management fee.Before you choose a property manager, be sure to thoroughly discuss all the fees that will be charged and the services that will be provided. You can protect yourself against exorbitant property management fees by negotiating a fair and mutually beneficial deal with your property manager at the outset of the relationship. Yet, make no mistake, property managers will want to be compensated for the time, effort, and costs put forth to manage your rental unit.
