Key Takeaways
- Property management companies handle everything from rent collection to tenant screening, saving you time and keeping things organized.
- Fees can vary, but they often include setup, monthly management, tenant placement, and optional extras like lease renewals or marketing.
- The right property manager can help reduce vacancies, find qualified tenants, and take care of day-to-day tasks so you can focus on your goals.
- H&M Property Management breaks down what you can expect to pay and what services you’ll get in return.
Are you considering hiring a property management company to help you run your rental property? If so, it could be the best decision you can make for your rental investment! You see, a property manager can save you time, money, and stress, as well as give you peace of mind.
You won’t have to worry about things like filling vacancies, responding to repairs, legal compliance, or rent collection, among other things. That said, this convenience comes at a cost! Hiring a property management company will mean additional expense.
Fortunately, that cost pales in comparison to the boost in return on investment you’ll get from working with the right company. In other words, the property management cost will be nominal compared to the potential savings in the long run.
With that in mind, how much does property management cost? In today’s blog, H&M Property Management will walk you through the different fees property management companies usually charge and the kind of services you can expect for the charges.
What Expenses are Included in a Property Management Service?
Initial Setup Fee
One of the first expenses you may encounter when hiring a property management company is an initial setup fee. Some companies charge this as a standalone cost, while others include it as part of a package. This fee typically covers the work involved in setting up your account and getting things organized at the start of the management relationship. It’s usually a one-time expense.
Property Management Fee
This is a basic fee that property management companies charge for their monthly services. It can be a flat rate or a percentage based on the monthly rental income. With a flat rate, it means that you’re liable to pay your property manager the fee regardless of whether there is a tenant or not.
This is, however, not the case with percentage-based property management fees. The property manager only gets to charge you the fee if you’re receiving rental income. This incentivizes the property manager to optimize the rental for a win-win outcome.
The following are the services that you can expect the management fee to cover.
- Rent collection after it becomes due.
- 24/7 repair and maintenance assistance for tenants.
- Rental inspections as per the lease.
- Drafting and enforcement of the lease.
- Communication with tenants.
- Emergency response.
- Record-keeping of all important documents.
- Utility coordination.
- Tax filing.
- Handling of tenant conflicts.
Tenant Placement Fee
Vacancies are every landlord’s worst nightmare. Luckily for you, you’ll no longer have to worry about vacancies once you hire a reputable and professional property manager. A tenant placement fee handles the entire re-renting process. From getting the home rent-ready again, to marketing it, to the lease signing stage.
After hiring a property management company, one of the first things they will do is walk through the property. This process helps them to identify any issues that may need fixing before the marketing process begins. They will often provide you with actionable tips on what issues to handle and what upgrades will make to make the property competitive.
Rental Marketing & Advertising
After the basics have been handled, the next step would be to market the property to prospective tenants. The following are some of the things it entails.
- Determining the best rental rate to charge tenants.
- Drafting a rental ad.
- Marketing the ad on both online and offline platforms.
A good property management company should ensure that the ad is seen by as many prospective tenants as possible. Because the more that get to see it, the higher the chances are of landing the right tenant.
Tenant Selection
No two tenants are ever the same. And this is where the experience of tenant selection comes in. A property management company will help you screen prospective tenants to find the right one for your property. Generally, the tenant screening process entails checking and verifying prospective tenants:
- Monthly income
- Creditworthiness
- Rental background
- Criminal status
- Employment status
Also, you can rest easy knowing that the process will be fair to all applicants. This is because property managers are familiar with their state’s fair housing laws.
Lease Signing
After the tenant selection process is over, the next step would be to get the successful tenant to sign a lease. This is also another area that is covered under the basic management cost. A property manager can help draft a solid lease, get it signed by a great tenant, and enforce all its terms.
Miscellaneous Fees
Other additional fees that most property management companies will include in their costing include the following.
- Lease Renewal Fees: Some companies will charge landlords a fee for getting a lease renewed. This is usually separate from the property management cost.
- Maintenance Fees: This is a charge that property managers levy in addition to the repairs and maintenance work they coordinate.
- Vacancy Fees: Although a rarity, some companies will charge a small fee for vacancies that go for extended periods.
- Eviction Fees: While not common, you may be charged an eviction fee when removing a difficult tenant.
Conclusion
So, how much does property management cost? Unfortunately, there is no straightforward answer. It’ll depend on things like the services covered, property type and size, property location, and the company’s reputation and experience, among other things.
H&M Property Management is an experienced property management company. We’ve been serving Hollister and the surrounding areas since 1962! Currently, we manage over 500+ million dollars in assets, and would love to know how best we can serve you. Get in touch to get started!