property management

If you cannot manage a rental property due to work/study/parenting commitments or because you reside out-of-state, you can assign the task to a property management company. Of course, you will have to pay a fee for this service. Some of the common property management costs include:

Start-up/lease-up/initial finding fee

Though not standard across the board, you will come across property companies that require clients to pony up start-up fees. In general, lease-up fees vary widely ranging from as little as 4% to more than 10% of your property’s total lease amount. In addition, you would have to pay the same fee whenever your property management firm signs a new lease. Companies that do not charge this fee usually inform consumers when marketing their services.

Monthly management fee

This fee is a small percentage of your property’s monthly gross rent revenue. According to figures published on city-data.com, this fee ranges from 8-10%. The good news is monthly management fees remain more or less within this range across all US states. It is worth noting that you can cancel a property management contract at any time if unsatisfied with services offered. However, you must provide a written cancellation notice 30-days prior to ending the working relationship with your current property manager.

Tenant lease renewal fee

After a tenant’s lease period expires and he/she opts for renewal, you will have to pay your property manager a pre-agreed fee. Unlike the fees described above, companies that offer property management services usually quote this fee in US dollars ranging from $100 to $180 or more. For instance, if a tenant signs a one-year lease, a property manager will expect $100-$180 after renewing the lease at the end of 12 months.

Marketing/advertising fee

Some property managers charge their clients a marketing fee to cover the cost of video production and buying ad-space online to market a property whenever it is vacant. Since marketing expenses depend on numerous variables, this fee can range from less than $100 to hundreds of dollars.

Conclusion

Property owners planning to hire property management firms should evaluate services offered as well as fees payable annually or monthly. These include start-up/lease-up, marketing/advertising, monthly management, and tenant lease renewal fees.