Property management fees are extremely important when it comes to cash flow of your property and if it's even worth hiring a Crestview property manager. Property management fees can range from percentage based, flat fee based, or even tiered packages. The fee structure also depends on services and value offered from that property manager.
Here's how property management fees work:
Percentage-Based Management Fee
A percentage-based management fee refers to the way that a property manager collects their money. Essentially, they will be paid a percentage of the rent they collect in this payment structure. Typically, you see somewhere between 8% to 12% for percentage-based management fees. This number can vary significantly as it depends on some of the other expenses that they charge. But, in general, you can anticipate around 8% to 12% for these types of fees, with the average at approximately 10%. With this type of fee structure, the property manager should not get paid unless you do. View our pricing here
Flat Management Fee
The other type of management fee structure is a flat management fee. In this payment type, it doesn’t at all matter how much the house rents for. All the management company cares about is just charging a monthly, flat fee. Usually, in these circumstances, it’s cheaper than a percentage. It can range anywhere from $100-$200 as a monthly flat fee. Although it can be cheaper, it may not incentivize the property manager to try for a higher market rental rate when listing it for rent or at renewal time
Procurement or Leasing Fee
One of the most common ancillary fees a property management company will charge is a leasing fee, also known as a procurement fee. This fee is associated with all of the marketing, showing the houses, underwriting the applications, and choosing an appropriate resident for your home. Generally speaking, most property managers will charge a fee when they rent the property and call it a procurement or leasing fee. This fee can range from $300.00 to 50% of the rental rate the home was rented for.
Late Payment Fee
When renting out your property, it is always in your best interest to charge a late fee for any rent payments not received on time. But if you’re working with a property management company, you’ll want to consider any late payment fees they charge when determining what amount to charge your resident. You may find that you are charged 50% of the late payment fee or all of it to the property management company. Again, while this might seem unnecessary if you think about how much effort goes into chasing down a resident to get them to pay the rent, this fee is likely for due cause.
Other Fees
The next thing worth noting with management fees is all of the ancillary fees that property managers charge. Property management fees are not always an all-inclusive situation. In most instances, you will find that your property management company changes for several different additional services they may be responsible for upholding.
Factors Affecting Property Management Fees
Much like everything else in the rental property industry, fees can vary greatly depending on several different factors. Here are some of the primary factors affecting property management fees:
● Market competition
● Full-service vs. a la carte pricing
● Neighborhood rating
● Property condition
● Size of your property
● Type of property
Wrap Up
In the end, determining whether property management fees are worth it or not will be a decision you have to make for yourself. Typically, real estate investors find that hiring a property management company is worth the additional expenses, but that may not necessarily be the case for you. Make sure you understand the terms of the company in question so you can carefully budget as needed.
Click here to view our pricing and services!
Click here to schedule a free consultation and learn more about our services!