Understanding the Monthly Fees
A property management company is a support system that helps with the day-to-day tasks of owning and renting a property. They are highly trained individuals with the skillset and ability to handle all of the issues that arise when dealing with the proper running of a rental property. While a property management company has staff at the ready 24/7, they also absorb the risks associated with being a landlord and help to save money in the long run.
When looking for a property management service, you will notice that every company has its own way of charging the customer. From the initial setup fees to the reserve fund account, the amount you pay depends on a multitude of factors. The scope of services provided and overall quality play a pivotal role in how the company charges the client each month.
How Much Do Property Management Companies Charge?
According to Zillow, most property management company’s charge between 7%-10% of the monthly rent. However, some companies run on a flat fee model based on a consistent monthly rate regardless of the services rendered. No matter the business model utilized by the property management company, there are often additional fees each month that need to be factored into the total billable amount.
The management fee is usually the most costly fee when it comes to a property management company. The fee is charged each month to cover the property’s day-to-day management such as collecting rent, communicating with tenants, inspections, coordinating repairs, and responding to emergency maintenance calls.
Most property management companies take a look at several factors when it comes to management fees. The size and function of the rental property play a pivotal role in how much is charged each month. For example, suppose you have a multi-family unit or commercial rental property with multiple tenants. In that case, there will be considerably more work to be done each week towards the proper running of the unit. However, if the property is a single-family home with limited maintenance, the fees will be less. The condition of the property, amount of maintenance issues that arise each week, and the extent of services rendered also play a role in the monthly fees.
Additional Fee Breakdown
Another common practice for property management companies is to charge additional fees. To help you better understand what property management fees to expect, take a look at the following breakdown of services.
- Initial Setup Fee (onboarding fee): While not all companies charge an initial setup fee, this service is often linked to informing the current tenants of the new property management services, setting up account information, and completing an initial inspection of the property to identify any potential concerns.
- New Tenant/Placement Fees: A property management company may charge additional fees to place new tenants in the property.
- Advertising fees: If the tenant chooses not to resign the lease, the property management company will market and advertise the unit with the targeted audience (renter) in mind.
- Leasing Fees: A majority of property management companies charge a leasing fee or new tenant placement fee. This fee covers the cost of screening qualified applicants, showing the unit to prospective rents, preparing lease agreements, and performing a move-in inspection.
- Vacancy Fees: A property management contract may include a specific fee if a home is left vacant. The cost is often a one-time fee that is based on the monthly rent or a set fee per unit.
- Maintenance Fees: General maintenance is usually included in the property management fee, but if a specific service is needed for the proper functioning of the unit, an additional charge may occur.
- Reserve Fund Fee: A reserve fund is a separate fund of money that a property owner puts aside to offset any out-of-pocket expenses that may occur during a tenant’s stay in the home. A minimum amount of funds is kept in the account to allow for necessary repairs and maintenance.
- Eviction Fees: This fee takes into account the necessary process needed to correctly and legally evict a tenant from a home. The fees will vary based on the legal path needed to be taken to remove the tenant.
Things to Consider
Be careful when searching for a property management company based solely on the price point. According to ManageMyProperty, the lower upfront cost may reflect poor quality work, lack of experience, or cut-rate services. A lower management fee can also mean that there will be excessive back-end charges.
Getting the highest quality of service should be the goal of the property management company. As the property owner, you should understand all of the recurring fees and additional charges based on the services completed each month and know what was done to maintain both your property and keep your tenant happy.
How Is Oak City Properties Different?
At Oak City Properties, we strive to be better than our competitors. We provide custom solutions and competitive quotes that tailor our services to what you really need. Our full property management service will work with you each step of the way when renting and maintaining your property. We pride ourselves on having no hidden fees and providing you with a seamless experience from start to finish. We believe that hiring a property management company should be a transparent process that is built on trust and doing our absolute best to take care of your investment.
Interested in learning more about Oak City Properties? Give us a call at (919) 232-9222.
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