What Is a Management Fee?
Better Understanding of Property Management Service Fees
A property management company is meant to help a landlord “manage” a rental property and be a support system when it comes to a variety of services. These rental property services come at a price and vary depending on the company and the services rendered. Here is a breakdown of those fees and things to consider before hiring a property management company.
Before we start
Before we break down the different fees associated with a property management company, know that there is no set price. The fees will vary depending on the size/type of the rental property, and the extent of the services needed to properly run and maintain the property. If you are hiring a property management company to simply collect the monthly rent, then the fees will be much lower. If you plan on hiring a management service that will collect rent, find qualified applicants, market the property, and handle all maintenance issues, the price tag will be considerably higher.
Initial Setup Fee
Some property management companies will charge a flat rate for the initial setup fees for your rental property. The fee is usually between $300-$500 and covers costs such as an initial inspection, creating accounts for your rental property funds, welcome/introductory materials to tenants, and establishing communication with your property manager.
A management fee usually covers the day-to-day running of the property, such as collecting rent, communicating with tenants, conducting inspections, handling maintenance issues, and coordinating all repairs for the home. Most property management companies will charge either a flat rate for their services or require a certain percentage of the rent collected each month. A “Flat Fee” is a specific dollar amount collected each month to maintain the property as specified in the agreement. A “Percentage Rate” is a percentage of the collected rent each month as a management fee. Most companies will charge between a 4-8% management fee that is automatically deducted from your account each month.
Tenant Placement Fees (Leasing Fee)
A tenant placement fee or leasing fee is usually charged when you need a property management company to find a qualified tenant for your home. The fees can include:
- Advertising costs
- Tenant screening
- Background checks
- Lease agreements
- Informing the tenant about move-in procedures
Random Maintenance Fees
General Maintenance fees are included in the property management fee, but there are occurrences where specific repairs need to be made outside of the “average” terms. If something goes wrong with your rental, a property management company will help to address the problem by doing the following:
- Identify the problem and provide pictures of the damages
- Create and present an itemized list of potential repairs
- Get a qualified contractor or service representative to the home to estimate the repair costs. If the cost exceeds the agreed-upon limit, the property management company will need approval to continue.
- Aid in scheduling repair services
- Oversee the repairs of the home
- Report and document the end results to the homeowner
When trying to find a property management company, it is important to understand all of the fees and the services rendered. A property management company needs to be as transparent as possible when it comes to your money, and have open lines of communication for both you and your tenants. At Oak City Properties, we make sure to work with you each step of the way when renting your property. Our full management property service will market the property, locate prospective tenants, and show the home. Once a tenant is placed in your rental property, we will: collect rent payments, provide 24/7 maintenance, help with accounting/tax services, assess and collect late payment fees. If you are interested in learning more, give us a call at (919) 232-9222 or check out our website: https://oakcityproperties.com
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