Successfully running a rental property usually means acquiring the services of a reliable property manager. The property manager takes care of a lot of things for the property owner, including looking for a good tenant for the property, collecting rent and checking if repair or maintenance work is needed in the premises. Service quality should be the prime consideration when choosing a property management company to entrust your property. But the fee schedule should also give you a hint of whether you are getting your money’s worth or if you should look for another property manager.
The fees structure of property management agencies are different from one property manager to another. The most common fee for the property manager’s service is the commission, which could be a percentage of the monthly gross rent or it could be a fixed rate per month. This serves as compensation for the property manager’s overseeing of the property.
Most property managers would charge for the placement of a tenant in a property. This can be regarded as a let fee for the property manager to compensate for the time and resources spent to find a suitable tenant. Typically the rate is equivalent to one week’s rent for the property, with the fee being deducted from the initial rent payment. But since the usual tenancy agreement is for at least a year, the amount could be negligible considering the profit that would be obtained the rest of the year. A lease renewal fee may also be charged when the lease is renewed for another term.
In some cases, the property manager may charge the owner for advertising costs. There are companies that include the advertising cost within the general property management fees charged, but some will charge this as a separate fee. Although it may be good that the property manager covers advertisement costs, the owner should check how the property manager is marketing the property. The more desirable type of marketing should include online ads as well as print ads.
Some property managers may also charge for arranging maintenance work that they have initiated. Check whether these fees are reasonable. The best way to make sure that you are getting your money’s worth is by reading the contract presented by the property manager. Make sure that there are no unreasonable fees included in the agreement. It should also be good to note that hiring a property manager is also advantageous tax-wise because their service fees are tax deductible. You should be sure to check what you are getting for your money, often the least expensive agent is not going to offer you the best service.