How Much Does Property Management Cost?
First, I want to assure you that property management fees are not standardized. What you pay can vary greatly from office to office or market to market. It's important that you read the contract carefully and understand what you are signing up for.
Most property managers will charge a percentage of the rent income collected each month. An example would be charing 10% on a home that rents for $1,000 a month. Other companies may charge a flat fee so you might pay $100 whether the home rents for $1,000 or $2,000 a month. This would obviously be advantageous if your home rents for a higher price.
We've seen property managers charge as low as 4% for management fees but that can be very misleading. They typically charge a low monthly management fee to attract business but they have additional fees that drive the overall price up.
Here is a partial list of other fees you may incur:
Start-up Fee: This is charged when you first place the property under management. It covers the expense of setting up your account, inspecting the property, taking photographs, initial marketing, etc.
Leasing Fee: This fee is charged any time the manager attempts to find a new tenant. There are costs associated with marketing, inspections, showings, etc. In many areas, the leasing fee is shared with other real estate agents that help the property manager find a renter. A separate, smaller fee may be charged if the tenant renews their lease for an additional period of time.
Maintenance Markup: Many managers will mark up the price of a maintenance to cover processing, tracking, and verifying all maintenance work. Other companies cover these charges by creating in-house maintenance.
Late fees: Most management companies will retain the late fees to compensate for the additional work required to get the tenant to pay.
Adminstrative Fees: There is no limit to the number of administrative fees available.This could be charged for year-end report processing, payment processing, or special requests.
The Bottom Line
It is your responsibility to understand the costs before hiring the manager. Ask them to explain all possible fees and why they charge them. Don't be afraid to ask if the fees are negotiable.
The last thing to remember is almost as important: the manager with the lowest fees is not necessarily the one that will make you the most money! You have to know what they charge but also what services they provide and the quality of those services.
Do you need professional Property Management in Cody Wyoming?
Learn about our services or call us at (307) 587-9608 .