What Fees a Property Manager Charge

Fees are NOT Always Black & White

This day in age, property management fees are most commonly charged as :

  • Flat Fees
  • Percentage of Monthly Rent

While each model has it’s own strengths and weaknesses, the model must align with the landlord’s motivations in hiring a property manager to begin with.

Flat Fee Property Management Model

This model is best used to scare away low-income housing (as a benefit to the property manager) and appears to be very affordable to the high income rental property. While this model is fairly simple for a landlord to understand, it comes with potential interference :

Fees that may be built into a Flat Fee Model

  • Pet Fees (that go to the property manager)
  • Late Fees (that go to the property manager)
  • Invoice Fees
  • Charge per Repair Call request from tenant
  • Application Fee
  • Lease Renewal Fee
  • Showing Fee for Vacancies
  • Move in evaluation fee
  • Move out evaluation fee
  • Property Management profile setup fee
  • Utilities changeover fee
  • Tenant move in fee
  • Security deposit holding fee
  • Eviction management fee
  • Notice of Nonpayment of Rent Fee
  • Work Order Invoice Markup Fee
  • Cleaning fees while property is vacant
  • Inspection of property fee
  • Fee for preparation of market analysis for rental of vacancy
  • Fee if tenant refusing showings to rental property
  • Early cancellation of management agreement fee

While these are just examples, it’s important for any real estate investor or landlord to make sure that the management agreement they are signing is aligned with their anticipation of what they will be charged on a monthly basis. Inconsistencies in fees being charged will, naturally, hurt the landlord’s bottom line.

Secondly, if you are a landlord MOTIVATED to have the property manager bring you the highest rent possible, a flat fee model may not be best. The property manager is paid the same if they bring you a tenant at the highest rental price in the area or the lowest price in the neighborhood. Fact is, you are paying a flat fee, in direct relation, to the service provided. Then again, that’s only the case if there are not numerous add-on fees.

Fees that may be built into a Percentage of Monthly Rent Model

This model is built on charging a management fee in relation to the monthly rent being charged. As stated, while this structure is best towards a landlord that is motivated to get the highest rent possible, it can come with a similar or same fee structure – as mentioned above.

In our opinion, here are common fees based upon a percentage of monthly rent model :

  • Management fee while property sits vacant
  • Inspection fees
  • Late fees (that go to the property manager)
  • Showing fees
  • Move in / Move Out Evaluation fee
  • Pet Fees (that go to the property manager)

So, while this model may offer less fees (although this is not necessarily the case), it is traditionally a model more expensive to landlords and not necessarily the most cost efficient unless the landlord is determined that the property manager is getting them the rental price that justifies more that what a flat fee model can provide in their local market.

What Should a Landlord Choose as a Model?

Well, as stated, it comes down to the landlord’s motivations. Do you, as a landlord, find that payment for services provided make the most sense? Then, a flat fee model makes the most sense.

On the other hand, if a landlord is shooting for the highest priced rental property in a given market – then, a percentage of monthly rent makes more sense.

While it is possible to find a hybrid of the two, al la carte flat fee property management service model or an al la carte percentage of monthly rent property management model, this comes with it’s own complications – more for the manager than the landlord.

Regardless of your choice, you are always welcome to check in with our office for what might be best for you :

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