In the residential property management industry, we see a range in fees that is around 8 to 10 percent of rent that is collected. That amount can vary, due to other considerations. For example, the property management fee charged for a single family home might be much different than the fee charged for a 20-unit apartment complex.
There are several things to look for when it comes to the fee you are charged by your property manager. Pay attention to these things, especially:
Make sure there is no charge for a vacant property. There should not be a charge to you if the tenant does not pay. At Real Estate Connections, we charge our 8 to 10 percent based on collected rent. If no rent is collected, we do not charge our clients. Your contract with a property manager should have a similar stipulation.
Look for leasing fees. Some property managers will charge owners every time a tenant moves in our out of a property. You might be charged these fees on top of the percentage you already pay in fees to your property management company. Try to avoid paying them.
Refurbishing fees could exist. This is a fee added on to the service charge you must pay any vendor. For example, if your property manager sends a plumber out to your rental home, and the plumber’s bill is $100, will you be charged the straight $100, or will there be a 10 or 15 percent refurbishing fee added to the plumber’s bill, that you must then pay your property manager?
At Real Estate Connections, we do not charge our clients any additional fees. We believe in a flat rate percentage fee that is taken from the rent collected. You also want to make sure you read through your contract to ensure there are not any hidden fees. Your property manager might try to charge you a delivery fee on a three day notice, for example. There might also be additional fees charged for inspections and other things that we believe ought to be included in what you already pay a property manager.
Finally, it is important to check your contract and find out whether your property management company requires that you use them as a realtor if your property is sold. Some contracts have that language in place, and it is something you need to be aware of. Many companies are full service brokers and in addition to property management, they help people buy and sell properties. We provide sales services at Real Estate Connections, but we never require our clients to use us as a real estate broker. There are reasons why it might be a good idea; the property manager already knows and understands the home, so that might be helpful when it comes time to sell. However, it should never be required and you should always have the option to work with any realtor you want.
If you have any questions on this topic or anything related to residential property management, we’d be happy to talk to you. Call us at Real Estate Connections, (408) 873-2100.