While many people may see the benefits of hiring a property management service to help them deal with the pressures of owning residential or commercial property, they are often hesitant to sign on the dotted line due to the costs involved. There are a number of different fees that your management service may impose for one reason or another, but our goal is to outline the most common ways that you will be charged.
Commission
This is the name given to an ongoing monthly fee that you will be charged to offset the time the property management service spends on your portfolio. This fee can be as little as 3% of your gross monthly rent or it can be more than 15%, it just depends on the service you have chosen. Others will choose to charge a flat fee, but this is rare.
Leasing or installation
This is a one-time fee charged to compensate the property management team for the time and resources required to set up your portfolio, show the property to prospective tenants, and other responsibilities related to recruiting tenants. Many people like to view this charge more as a “lookup fee” as this is essentially what the admin is doing.
lease renewal
This is a fee you will be charged each time a current tenant’s lease is renewed by your property management service. It covers the costs of drawing up the paperwork (as this usually involves some legal aspect) and any communication related to the signing of the documents. Some services also believe that this fee covers an annual inspection.
maintenance marks
This is a fee that many people are often unaware of until some type of maintenance is done on their property. It will be reported in the contract you have with the manager and it will state a percentage above the final invoice amount that you will be charged additionally (often it is around 10% and it is to compensate the manager for his trouble).
In addition to the four fees described above, many property management services will also charge what many people have referred to as “joke fees”; Costs that the service may believe are fully justified but you cannot believe they are asking you to cover them. These fees include charging a commission even if your property is empty, a preventative maintenance fee that is not refunded even if nothing goes wrong, and signage costs.