Every property management company has a different fee structure when it comes to management costs. The amount that you pay and the way that you’re billed will likely be different. There are, however, a few things you can count on when it comes to the way you compensate your property managers for their services.
Property Management Services Increase Revenue
The number one thing you’re paying for when you hire a professional property manager is increased revenue. When you work with a management company, you earn more money, and you earn it faster. Your rental income will increase and your ROI will also grow. Through strategic marketing plans that get your home rented quickly, you avoid vacancy costs and drive up your cash flow. A manager’s proactive communication with applicants, tenants, and vendors will ensure there aren’t any disputes, claims, or lawsuits against you. Your property management company will also increase tenant retention, saving you money on turnover costs.
Leasing Fees and Tenant Placement
Sometimes, your management fee will cover the cost of marketing your home and finding a tenant. Usually, there will be a one-time leasing fee in addition to the monthly management fee. The leasing fee covers everything associated with finding and screening a tenant for your home. It includes advertising, preparing the home for the rental market, showing the property to interested tenants, responding to questions, providing the application, and conducting the background checks, credit checks, employment verifications, and rental references. Most leasing fees are a percentage of the first month’s rent, but you might also be charged a flat fee, depending on the company you work with.
Property Management Fees and Structures
Some companies offer flat rate fees, where you pay the same amount regardless of the rental price attached to your home. Other property managers will charge you a percentage of the collected rent. You need to know whether all the management services you need and expect are included, or if they will be extra. You may find a management company that charges a low monthly fee but then also charges for each inspection, maintenance coordination, and tenant phone call. You might also find a management company that charges a little more but offers an all-inclusive management package that covers all those things.
How to Measure Property Management Value versus Cost
It’s natural to gravitate towards the lowest price, but remember that property management is not a product, it’s a service. You’re entrusting your property management company with one of the largest investments you’ll ever own. You’re paying your management fee for their experience, judgment, relationships, and resources. A good management company will provide a lot more than basic rent collection and tenant placement. You’re looking for expertise and responsiveness. You want a company that will respond to maintenance issues in the middle of the night and keep you from making fair housing mistakes. Don’t shop around for the lowest price. Look for the best service.
If you have any questions about property management fees or you’d like to know more about how we structure our services and our costs, please contact us at Charleston Home Rentals.