Key Takeaways
- Property Management Services: A residential property manager handles all aspects of rental operations—from tenant screening and marketing to legal compliance, and repair coordination—saving landlords time, stress, and potential legal issues.
- Property Management Costs Vary by Factors: Property management fees typically include a monthly property management fee, plus potential charges for leasing, renewals, repair markups, and evictions. These vary based on factors like location, property type, and the certain services needed.
- Hiring a Manager Is a Strategic Investment: While hiring a property management company costs money, the return can be significant—reduced vacancies, improved resident satisfaction, legal compliance, and better property performance. It’s especially valuable for property owners with multiple properties or limited time.
Are you a landlord considering property management services? It could be exactly what you need!
A seasoned property manager can be an invaluable real estate resource. They typically handle day-to-day operations, such as repairs and tenant communication, saving property owners considerable time and stress. Their expertise helps ensure legal compliance.
Moreover, property managers also provide professional financial reporting, making tax season easier and helping you find areas of improvement for your rental income so you can earn more money.
However, it’s important to remember that hiring a property management company is an investment. While a good real estate partnership can result in maximized profits, management fees can reduce your cash flow.
To determine whether this is the right call for you, it’s important to understand what you’re paying for. In this article, the team at Yourway Properties will break down the typical services provided, cost structures, and tips to help you evaluate whether this investment aligns with your long-term goals as a landlord.
What Does a Property Manager Do?
Before evaluating property management costs, you must first understand the value. Property management goes far beyond collecting the month’s rent. A full-service property management company will typically handle every aspect of your investment property and rental operations, including:
1. Pricing Strategy
Property managers begin by conducting a detailed market analysis to price your rental competitively. This ensures you’re not underpricing and leaving money on the table or overpricing and driving prospective tenants away.
2. Marketing Your Rental Property
From taking professional photos to writing compelling listings and advertising on high-traffic rental platforms, property managers help your rental property stand out from the rest. They also field tenant inquiries, coordinate showings, and follow up with potential tenants, helping you rent out your property faster.
3. Tenant Screening Process
A reliable renter means fewer issues, timely rent payments, and less turnover. Property management company helps you with tenant placement by conducting extensive background checks, verifying credit history, income, and calling references to fill your vacant property.
Screening potential tenants helps our property manager lessen the chance of rental property damage, missed payments, or an eviction process. As a part of our property management company’s services, once a renter is placed the property manager will be dealing with all tenant complaints on your behalf.
4. Leasing and Legal Paperwork
A property management company has the knowledge and tools to write legally sound lease agreements and ensure they comply with local laws, state, and federal laws. They can also issue required disclosures or notices to residents for you.
5. Rent Collection
Property managers streamline the rent payment process with online portals, auto-reminders, and enforcement of late fees. They also manage difficult conversations and even initiate legal notices if residents fall behind, so that you don’t have any lost income.
6. Maintenance and Repairs
Property managers coordinate maintenance requests and repairs quickly and efficiently, often at negotiated rates through preferred vendors. Property managers verify licenses of contractors to ensure any work done is of professional quality and at your preferred pricing range for repair costs.
They also conduct regular rental property inspections to identify and address issues before they escalate. Inspections also help ensure tenants are maintaining the property condition and that no unauthorized modifications have been made. This helps keep maintenance costs low and property values high.
7. Accounting and Financial Reporting
Most property management companies provide year-end financial statements, breaking down all your income and expenses. A property management company also generates financial reports for you each month, so you can stay aware of your finances and real estate assets. This makes it easier to file your taxes and track your property’s performance over time.
When Should You Hire a Property Manager?
Hiring a property manager will save you time and reduce your stress as a real estate investor. While they’re managing properties on your behalf, you can sit back and focus on other important things. However, working with a property manager isn’t right for every landlord.
If you only have one unit or single family home, live nearby, and enjoy hands-on management, you might be better off managing the property yourself and saving on management costs rather than pay the monthly management fees. But if the work is too much or you simply want some time back, you could benefit from partnering with a trusted manager.
How Much Do Property Managers Charge?
Property management costs vary based on location, property type, services offered, and market demand. Before you sign a property management contract, it’s important to be aware of the property management costs and wary of any hidden fees or additional fees. However, most property management companies follow similar pricing models, usually charging the following basic property management fees:
1. Monthly Management Fee
This is the primary ongoing property management fee and can be either a fixed fee or a percentage of the month’s rental income. Percentage-based monthly fees range from 6% to 12% of one month’s rent. Flat fees are typically used for high-end properties or large portfolios and may range from $100 to $300+ per unit.
The property management flat fee generally includes day-to-day property management, communication, and coordination of maintenance tasks.
2. Contract Setup Fees or Onboarding Fees
Most property management companies charge a one-time setup fee when taking on a new property. This fee covers initial administrative work, inspections, and entering your property into their management system. This is often a fixed property management fee that property managers charge, ranging from $100 to $300+ depending on the investment property’s size.
3. Leasing Fees
Finding new tenants involves significant effort, so most property management companies charge a leasing fee of 25% to 100% of the property’s monthly rent collected. This property management leasing fee usually covers:
- Marketing and advertising efforts
- Property showings
- Screening applicants
- Lease signing
4. Lease Renewal Fees
Even if no more marketing is needed, lease renewals require time and attention. Property management companies typically charge $100 to $500 for handling renewal proceedings as a part of the property management agreement.
This often includes negotiating updated lease terms, deep cleaning the property, and drafting a new lease agreement. If the lease resigning is simple and doesn’t require much negotiation with the tenant, the lease renewal fee may be dropped.
5. Maintenance Fees and Markups
Some property companies apply a markup or maintenance fee to contractor invoices for repair and maintenance coordination. This covers their time and administrative work in coordinating service providers, while also maintaining the value of your investment property in the long term.
6. Eviction Fees
Your property manager can help you throughout the eviction process, but they may charge additional property management fees. Eviction fees typically cover services such as serving notice to the tenants, filing legal documents, and appearing in court on your behalf.
Keep in mind that, in addition to paying the manager for their services, you’ll also have to cover lawyer fees and any court-appointed fees.
Bottom Line
Managing a rental property is not easy. It involves late-night phone calls, piles of paperwork, regular property upkeep, and delicate tenant relationships.
For many landlords, especially those with growing portfolios, hiring a property management company can be a smart move.
Though you may spend $2,000 to $3,500 per year in property management fees, this investment often pays off in the form of reduced vacancies, timely rent collection, legal peace of mind, and greater tenant satisfaction.
To make the most of this partnership, make sure to find a trusted professional. Contact Yourway Properties today!