Vacancy fee
Because many property management companies make their money through a percentage of the monthly rent, you may have to pay a vacancy fee when units aren’t being rented out.
This helps cover the property management company’s expenses. The vacancy fee may be as low as $50 to $75, but not all companies charge it.
Early termination fee
An early termination fee is what you pay when you end your business relationship with a property manager before the contractual term ends. For example, if you agree to a one-year relationship but opt for self-management 10 months later, you may have to pay an early termination fee.
When you’re researching and contacting potential managers, be sure to ask about any other miscellaneous fees. If possible, request to receive a free structure in writing.
Property management cost factors
For many companies, their pricing depends on the type of property you have, as well as its size and location. For example, property managers often have different fees and pricing structures for residential and commercial properties.
The state or city where the property is located can affect the costs. In areas with higher rental rates, managers will generally charge more for their services.
How to hire a property management company
Hiring a full-service management company can make property management a hands-off experience. It can also help improve the landlord-tenant relationship because the property manager can take care of tenant concerns, helping make their experience smoother.
Do your homework when researching and hiring a management company. Here are some things to keep in mind:
Ask about the fees they charge and their pricing structure. They may charge fees that you haven’t thought of before. For example, many managers charge an eviction fee when they have to help you get a tenant out. Some also charge late fees if you don’t pay on time. This may happen occasionally, especially if you pay the property management company after your tenants pay and the tenant’s rent comes in a little late.
Check the licenses or credentials they need to have. In most areas, there are prerequisites for being professional property manager. For example, they might need to obtain a license in your state. You should make a list of the requirements in your state and ask the professionals to verify their credentials.
Ask about their approach to renter satisfaction. Inquire about how they assist tenants during the move-in or move-out process. You may also want to ask how they handle the lease-up period and how they help encourage tenants to continue renting your property.
Carefully read online reviews. Look for reviews that offer detail. A perfect review that’s only a few words may be less useful than one with a less-than-perfect score but with a good amount of detail.
If the property management company has a few bad reviews, check them for patterns. For instance, if words like “unprofessional” or “unreliable” pop up multiple times, this could be a red flag. Also, check to make sure that the quality of service has been consistent over time.
Check out photos. Property managers should have plenty of photos that showcase not just the units they manage but also the value added by their services. They may showcase how they add value by posting before-and-after shots of the building or its maintenance, including social areas, the parking lot or landscaping.
Is a property management company worth it?
Hiring a property manager is well worth the monthly management fee if you have a busy schedule and multiple properties to manage. If you want help with collecting the monthly rent, taking care of tenant requests or handling some of the maintenance and repairs around your rentals, a property management company can be a powerful ally.
You might also want to hire a manager if you’re in the process of growing your real estate investment business. If you need to spend time vetting potential investments or meeting with sellers or potential partners, hiring a property management company may free you up to earn more money in the long run.
If you’re in the process of expanding and you sign on with a property manager, their services can help tighten your overall rental property infrastructure. You can establish systems around rent collection, maintenance and renter retention that can be applied to your future properties.
On the other hand, in some instances, the fees may not be worth the investment. If you have one property and enough time to handle it on your own, hiring a manager may cut too deeply into your profit margin.
Take the time to thoroughly research the costs and gather cost estimates before you decide whether to hire a property manager or self-manage your own property.
Find a property manager near you
Property management FAQs
Many property owners have questions regarding property management. Here are answers to some burning question you might have:
Are property management fees negotiable?
In many cases, yes, but it depends on the property manager. You may be able to negotiate a lower fee if you’re having them manage several properties or if you agree to a longer-term business relationship.
The most common form of payment is via a credit card or other electronic means.
How do you deal with a bad property management company?
If your management company is falling short of your expectations, the first step is to make sure you communicate what you want and then give them a chance to fulfill your needs. Put everything in writing — even if you have to add to an existing agreement.