How Much Do Property Management Companies Charge

For a property management company to stay in business, they must charge certain fees in order to facilitate the work that they do. These fees can range from a placement fee to place a new tenant into a property to a percentage of the monthly rent. Additional fees may be added to the monthly rent as well that are paid directly to the property management company as well.

Here is a look at some of the typical fees to expect if you're considering a relationship with a property management company.

Initial Placement Fee

This fee is typically charged when a new rental property comes to a property management company and there isn't a current tenant renting the place. In most instances, this fee is equal to the first month's rent. Some rental companies may request a flat tenant placement fee instead of $500-$1,000 depending on the current market conditions.

Ongoing Maintenance Fee

This fee comes off of the monthly rent that the tenant pays the property management company every month. This is usually 8%-9% of the monthly rent, but may be lower or higher in certain markets. In return for this fee, the property management company will handle tenant notices, evictions, and regular inspections of the property to make sure that it is being taken care of in a proper manner.

Pet Rental Fee

This fee is charged to the tenant instead of to the owner. It is an additional fee that is placed on top of the monthly rent to allow for pets to be included in a lease. Some companies may provide this increase as a percentage to the owner of the property, but many simply tack on a small fee, often less than $50, for the convenience of living with pets. Other companies charge this fee per pet.

Late Fees

Whenever a tenant doesn't pay their rent on time, they are subject to a number of late fees depending on the rental agreement that they have signed. These late fees are considered part of the rent, but instead of receiving 8%-9% of the fee, a property management company may take up to 50% of the late fees because of the increased work associated with collecting late rent.

Placement Only Fees

Some property owners prefer to use a property management agency to screen prospective tenants only. In this instance, a higher portion of the monthly rent will often be used as the pricing basis for this service. It may even be a certain percentage above the first month's rent in some jurisdictions.

Upgrade Fees

Some tenants of a rental property may wish to upgrade the appearance of a residence or improve the appliances, counters, or other features that the home has. Some rental agreements allow this to happen if a tenant is willing to pay an upgrade fee and have the final work professionally inspected and approved. The range of this fee that the company would take is extremely variable and ranges from 5%-65% in many markets.
Posted on Sep 23, 2014


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