If you are considering outsourcing tasks to a property manager and wonder what type of fees might get charged, continue reading.
We have assembled a list of the typical fees charged by property managers for a variety of common services. Using ManageCasa's accounting platform for landlords (rental owners), you will be able to easily track expenses like these against the revenue being earned by your rental property.
- General Fee: The most common way property managers charge is through a percentage of the monthly rent, typically between 8-12%. This means that if the unit isn’t rented out, the landlord does not pay the fee.
- Set-up Fees: This fee covers setting up a new tenant for a new or existing property.
- Advertising Fee: Property vacancies cost money, so it may be worthwhile to look into paid advertising. Establish who covers these fees, and set limits to this cost. This could include listing fees on sites like www.zillow.com or www.trulia.com.
- Renewal Fee: This fee can be anywhere from $0-$200 if the property manager needs to do paperwork related to renewing a lease. This should be a very low fee (if at all) since the process is quite simple. Landlords and tenants should understand who is responsible for these fees, if any.
- Reserve fund Fee: Reserve fund fees can range from $150-$550 for a single family property, for example. They cover day-to-day expenses.
- Maintenance Fee: Agree on the process of performing and charging for maintenance and repairs. Some options would be to establish a limit ($50-$100) on maintenance in which the property manager doesn’t need to notify the landlord. Some landlords require managers to always check in with a price estimate before performing the repair. Also, the landlord and manager should establish if they already have trusted contractors. Store these in your ManageCasa contractor contacts page.
- Eviction Fee: In the unfortunate event of evicting tenants, property managers could charge hourly rates ($30-$50) on top of a flat fee ($400-$700) for the entire eviction process including dealing with lawyers, court appearances, and communicating with tenants. Establish who is responsible for finding the attorney, and whether there are limits to these costs.
- Cancellation/Termination Fee: This is often charged if the landlord terminates the property manager contract early.
- Unpaid invoice fee: This comes as a service charge (1-2%) for any unpaid invoice.
- Attorney fees: In the event legal proceedings are required to settle a dispute about the contract, will the prevailing party be entitled to reasonable attorney’s fees? The contract can put a cap on this amount, so the entity with more cash may have an inherent advantage in the event of dispute.
The benefit of paying these fees are, that as a landlord of course, you can focus on your day to day activity and have a professional property manager take care of your rental properties. This gives you more time to worry about other things in you life while knowing that your properties are well taken care off.