Property management fees are undoubtedly vital and must be reviewed on the basis of the extent of services delivered and quality. Remember the hired company will be taking care of your biggest asset and you do not desire to make decision on the sole basis of which management firm charges lowest fees.
Actually, price needs to be the last aspect to consider. It does not mean that price is least vital factor, but must be considered after determining whether the PMC offers tailored services. Each service includes fees, which differ from one firm to another. You can see Pacific Beach property management website for details about their fee structure.
Expected Common Fees
Management fees – Fees for managing commercial and residential property differs significantly, but it can range from 4% to 12% on total monthly rent. The fees will be based on number of properties that need management, location, number of units and property condition along with the kind of services needed. Some may charge flat fee in place of percentage, which can range from $50 to more than $200 monthly.
Lease up cost – This fee is compensated for time invested to set owners account, which can result in tenant placement. As soon as first income from tenants starts coming in, the lease-up fee will be deducted from rent proceeds. It is one-time charges per tenant.
Advertising costs – In accordance to contract, either the landlord or the property manager or both will pay the cost for advertising. If the property manager willingly covers the expense, then they will charge lease up fee.
Make sure to find out where they plan to place your rental vacancy ads, because if they place it on free classified sites online, then you will not get money worth. Remember there are the yard signs, print media, MLS listings, or open houses. Skimping on ad can keep your property vacant, which is bad business.
Lease renewal fees – When an existing tenant’s lease gets renewed, the property manager charges this fee. It covers paperwork or communication costs involved in executing the rent renewal documents. It gets charged whenever a lease gets renewed. The fee can be around $200 or more.
Mark-up charges – A mark-up is charged, when maintenance or repair bill exceeds the pre-defined amount. The mark-up is a percentage based on the final vendors invoice. It has to be disclosed clearly in the contract.
For example, total charges of plumber to replace leak pipe is $ 500. In the contract, 10% is stated as markup on every maintenance work, so you will be charged $550. Remember, such fees will chew your profits.
Premature cancellation charges – If your property stays vacant for several months, then you can decide to cancel the contract with the property management company. Premature cancellation charges are unnecessary. If the property manager is committed in keeping landlords updated about marketing conditions and the communication lines are open, then the owner will never doubt the property manager’s abilities. Cancellation fee can be more than $500.
There are many other fees like eviction charges, unpaid invoice fee, bill payment fee, reserve fund fee, vacancy fee, and extra duties costs. Read and understand the agreement, before signing. Negotiate the contract terms and move to another firm, if the potential property manager will not bargain.