entalssowr.gq

When you hire a property management company to serve as the liaison between yourself and your tenants, you want to be sure you’re getting the best possible property management services for the money. The services a property management company provides can range from ala carte to an all-in-one inclusive package. Along with that comes an array of fees for each. There is no set in stone fee structure we can provide you. But we can educate you on what common fees to expect and what each is commonly for. In the end it will be up to you to compare company fee structures and choose the best one that fits within your budget. Below are some of the most common fees and what service they provide.

Commission

This is an ongoing monthly fee charged to the owner to compensate the property manager for the responsibilities of overseeing the management of their property. This fee can vary from as little as 3% to over 15% of the monthly gross rent. In place of a percentage some managers may charge a flat monthly amount which again can vary from $50 to over $200 per month. All property management companies generally charge this fee.

Lease-Up or Setup Fee

This fee is charged to the owner to compensate the property manager for their initial time invested and resources used in setting up an owners account; showing property and/or other activities resulting in tenant placement. I guess you could look at it as a “finders fee” for placing a tenant in your property. Once a tenant has been placed and first rent income comes in, the property manager will deduct this fee from the rent proceeds. Some property managers have been known to require this fee upfront prior to tenant procurement. Usually this fee is non-refundable once the property manager has started the process of tenant procurement or any legwork has been initiated with the property. This fee can vary from none to as much as the first months rent, and usually is a one-time fee per tenant.

Lease Renewal Fee

This fee is charged to the owner when a property manager renews a current tenants lease and covers the costs of initiating paperwork or communication involved in implementing the new lease document. A property manager may also justify this fee if they perform a year end inspection of property. This fee can vary from none to $200 or higher, and may be charged every time a lease renewal is implemented.

Advertising Costs

Depending upon the property management company’s contract, either they will pay the advertising costs or the owner or they could split the costs. If the manager is willing to cover this cost, most likely they will charge the lease-up or setup fee as outline above. If the management company covers this cost make sure to find out what type advertising or marketing of your property is included. If it’s placing your listing on their own web site and other free online classified sites you may not be getting your monies worth. They are many good rental or tenant resource online web sites that bring in qualified tenants for a reasonable fee and you will want to consider these. And don’t forget about print media, yard signs, listing on the MLS or even an open house. Nothing is worst than having your property vacant, bringing in no money only because you or your property manager skimped on advertising.

Maintenance Mark-up Charges

This is one of those costs you may never really of known about or had it disclosed to you. A “Mark-up” is a charge over and beyond the final bill on maintenance and/or repair work done to your property initiated by your property management company when using their vendors or in-house maintenance staff. This should be disclosed in your Manager/Owner contract which usually will state the markup as a percentage above the final invoice from vendor. For example, your manager had to call a plumber to replace the dishwasher in your rental property. Total charges for completing the job: $400. If your property manager contract states you will incur a 10% markup on all maintenance work the actual cost to you will be $440. Just one of those things to be aware of as these all eat into your profits.

Early Cancellation Fee

The dreaded “3 months and no tenant”. Your property manager insist he or she’s doing everything they can to find you a tenant. But here it is 3 months and still no tenant; what do you do. Well, look at your Manager/Owner contract and that might be your deciding factor. I am not a fan of this fee, and believe it to be an unnecessary fee and for you manager out there this could be the deal breaker. I’ll tell you why; if a property manager is doing their due diligence and keeping the owners in the loop as far as decision making, market conditions and communication lines open an owner will not be second guessing his property managers abilities. The odds of this scenario happening is unlikely but you must be prepared for it. A cancellation fee can range from none to over $500. To be fair, some managers legitimately deserve this fee especially if they have pocketed advertising costs, incurred lots of legwork and time invested in your property.

“You’ve Got To Be Kidding Me” Fees – These are ones I have personally had the pleasure of running into.

Your property is vacant, but we still will charge our monthly commission or a small flat fee.
“A For-Rent Yard Sign Fee”. I believe this was $25/mo.
“Preventive Maintenance Fee”. This was to cover the “just in case” and changing out A/C filters. If “just in case” never happens they still pocket the money. I believe this was $20/mo and I still was charged for filters.
In Summary

Read your Manager/Owner contract, understand what you are signing, ask lots of questions and know what the fees will buy you in services. A good real estate lawyer can help in negotiating the terms in a contract that suit both parties. These contracts are not set in stone. If your property manager will not negotiate, there are other property management companies that are eager to earn your business.

Karen McDaniel

Principal

Property Management Profile LLC dba pmvnetwork.com

PMVnetwork offers the most up-to-date listing of full-service property management companies and property service pros nationwide. We have become a wealth of information and resource for the first-time landlord as well as the seasoned investors.

For those of you who currently operate, or are considering taking the steps to operate a home based business, this article was written for you. The key is to recognize that some home based businesses put you in charge, but do not make you the owner. Often times people think because they signed up for a business, and received a website stating their name, or that of their company, they own the business. As you will discover throughout this article, many of these individuals are mistaken.Yes, it is true that essentially every single opportunity which promotes the operation of a home based business to its members, portrays the notion that its agents will become business owners by becoming involved with the parent company. The unfortunate thing is that many arrangements give you the title of business owner, but the authority of a distributor. Therefore, you are forced to work within the confines of the business model of the parent company, selling only their products, at prices which they have determined, earning what they have told you that you will earn.As negative as this may read, it is not to say that such home based businesses are necessarily a bad thing. Rather, I am simply pointing out that many people who join these companies fool themselves into believing they are business owners, when they are really distributors. As a distributor, you will not be able to make any changes on the website. Furthermore, you will not be able to sell anything that is not from the main company, and in a majority of these businesses, you will not be allowed to even remotely adjust pricing. Thus, if a competitor is undercutting you, there is no recourse. The only thing you can control, is how much money you spend on marketing this new distribution endeavor.With all of that being said, franchising in a pretty good way to open a business due to the name recognition and trust which it provides. This holds true whether you are operating brick and mortar or strictly online. Both situations present a similar scenario for the franchise business owner. Fees will be charged to take advantage of any national advertising campaigns and you are restricted to using only products bought from them or their authorized distributors. Again, your name will be right up there as owning the franchise for the business, but not the business itself.When deciding on one home based business over the other, you need to keep in mind that some opportunities will enable you to own the business, while others will not. If you want to have the freedom to market and sell products of your desire, then you will have to avoid businesses which make your enterprise subservient to a parent company.