If you’re tired of self-managing your rental, one of the first things you might wonder about is budgeting for property management. On the surface, it might seem like the costs associated with a property management company could cut into your bottom line. However, when you consider how a property management company can increase your profits and maximize your investment—to say nothing of all the time and stress they can save you—the choice becomes a bit more complicated.
Here’s what you need to know about budgeting for property management and getting the most value from your rental property.
What Fees Does a Property Manager Charge?
Most property managers charge a base monthly fee for their services in managing your rental. This usually takes the form of a percentage of the monthly rent or a flat fee. But in addition, you may run into several other fees while working with a property manager. Here are a few of the most common charges that may crop up in addition to your property manager’s base fee and the circumstances in which you may encounter them.
Maintenance Fee
Many property managers will bundle the cost of property maintenance into your regular monthly fee. In some cases, however, you may be charged an additional amount for certain services. Usually, these fees may appear if your property manager has to contract the services of a professional to perform specialized maintenance, such as repairing an appliance.
Setup Fee
As you first sign on with a property manager, you will likely need to pay a setup fee at the start of your new contract. This fee covers the following initial expenses:
- Inspecting your property.
- Drafting your property management agreement.
- Analyzing your property’s unique needs.
- Creating a financial plan for your property’s future.
Leasing Renewal Fee
Creating a new lease often requires a lot of paperwork and time negotiating with the tenant. If the lease requires adjustments before renewal, that takes even longer. For this reason, a property manager may charge a lease renewal fee, either as a flat fee or a percentage of the rent.
Tenant Placement or Leasing Fee
Finding tenants is one of the primary challenges in property management. Luckily, a property manager can create a professional advertising campaign to attract high-quality tenants, give tours of the unit, screen potential applicants, and any other part of the process.
Vacancy Fee
When your rental unit sits vacant, neither you nor your property manager makes any money. However, your property manager will still be hard at work finding tenants and keeping your property in good repair. As a result, they may charge a vacancy fee to cover their expenses during that time. Of course, the best option is to avoid long vacant periods in your rental by focusing on tenant retention.
Eviction Fee
Evictions are stressful and complicated procedures, and you’ll be glad to have a property manager taking point on the process. If your property manager has to help you evict a tenant, they may charge a fee to help cover their additional expenses.
Early Termination Fee
When a tenant ends a lease early, they may need to pay additional fees or part of the remaining balance on the lease. Similarly, if you decide to end your contract with a property management company before its set end, they may charge an early termination fee. Check your contract before you sign on with a new property manager to determine whether they charge an early termination fee. You can also ask what recourse you may have if you aren’t happy with your management company halfway into your contract. A quality property manager will want to ensure you remain satisfied with their services.
Late Fees
If you’re late paying your property management company, they may charge an automatic late fee. Check your contract beforehand to determine what happens if you don’t pay on time.
How To Tell If You’re Getting a Good Value From Your Property Manager
Partnering with a high-quality property management company is absolutely crucial. To keep your property well-maintained and expertly managed, you need to ensure you’re working with an experienced and diligent manager. Unfortunately, as is the case in any field, not every property management company may be worth its salt.
Your property is a resource that should bring value to your income. If you feel like your property manager is charging so many fees that it’s cutting into your profits, that may be a sign it’s time to seek a better company. As you work on budgeting for property management, consider which company you want to work with.
Here are a few tips for finding a good property manager:
Research your options. In most metropolitan areas, you can find a number of property management companies to potentially work with. Look for companies with in-depth positive reviews, years of experience in both their business and your specific area, and who have managed similar properties.
Ensure open communication. Your property manager is a partner in your rental business. And in any partnership, open communication is crucial. You need to be able to talk to your property manager at any time if you have questions or concerns about your rental. Before you sign on with a property manager, ask about their standard procedures for communicating with their clients.
Check in about renter satisfaction. No rental business can succeed with perpetually unhappy tenants. A property management company cannot only be focused on the bottom line; they must also consider what tenants want, how to improve tenant retention, and the best ways to mediate conflict between renters.
Ask about their pricing structure. Before you sign on the dotted line with your new property management company, make sure you fully understand their fees. This will avoid unpleasant surprises and help you maintain a positive relationship with your property manager.
Budgeting For Property Management in Portland? We’re Here to Help.
A property manager is a great investment for landlords managing a busy schedule with multiple rentals. They’re also a great option for people looking to build and expand their property portfolios. The process of maintaining multiple rentals, screening a broad number of tenants, and writing up leases can be hugely time-consuming. When you work with professionals, you know these tasks are being completed efficiently by people with the experience to make sure every detail is done right. The extra time, relaxation, and peace of mind that service can bring is unquestionably worth the cost of a property manager for many landlords.
If you’re interested in exploring how a property manager can maximize your investment and profits, Rent Portland Homes by Darla Andrew would love to help. As the premier property management company in the Portland metro area, we have the experience you can rely on to treat your property and renters right.