Posted in Blog  
  on Dec 10, 2014

How Much Do Property Management Companies Charge

If you have a rental property, one of the easiest ways to care for that property and secure good tenants is to hire a property management company. For that company to stay in business, they must be able to charge fees to property owners and to tenants so that they can make money too. Here are some of the typical fees and charges that the average property management company will have in place. It all begins with the initial fees that come with a new contract. Many rental agencies will charge the equivalent of one month's rent to secure a tenant. In return, property owners don't have to deal with background checks, credit checks, or the other information that you might request in the tenant screening process.

A Portion of the Rent

Property management also get a portion of the rent. A standard percentage for a property management company to charge 10%. They would take this percentage directly out of the rental payment that is received every month. The company would then forward the remainder of the payment to the property owner once it clears.


Late Fees Have Higher Rates

It is not uncommon for a property management company to charge a 50% commission on late fees that are recovered. In other words, if the tenant has to pay a 10% fee because they have been late on their rent, the $100 late fee on a $1,000 rental agreement will give a property owner an extra $50 that month.

Certain Fees Go to the Tenant

Property owners aren't the only ones that will be charged fees – tenants have to pay as well. Most property management companies will charge tenants for the cost of the background check. If a tenant has a pet, there may be a pet rent that must be paid and this is generally paid directly to the property management agency. There may be other associated service fees as well depending on landlord/tenant laws in any given jurisdiction.

A Vacancy Fee May Apply

In addition to the annual fee for services, a property management company might charge a property owner vacancy fees for every month that a home does not have a tenant. Most of them don't require this fee, but you do need to watch for it because it is out there. Some may even expect to select their full percentage of the rent even when there are no tenants available. This can be avoided by making sure these are paid out of collected rent or rent that has been selected instead of scheduled rent or rent that is due.


Leasing Fees Are Common

Even if you just use a property management agency to secure a tenant and have them do nothing else, a leasing fee will still apply. By taking on this service only, property owners may be able to save up to 75% on the cost of securing a good tenant. A good agreement will refund a portion of this fee to a property owner if an eviction or lease breaking event occurs within the first year of the lease. Most of the fees the property management company will charge are reasonable. Take this information to make sure that the fees which are being quoted to you are reasonable and you'll have a positive experience.


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