If you don’t like being the overbearing landlord and are too busy to look after your property, you can outsource your responsibilities to property management companies for fixed fees. These companies offer all the services that are involved in managing a property, maintaining, and renting it.
If only renting a property would have been simple, there would have been no need for these companies. However, that is not the case and managing a property after renting it, is a full-time job. There is a lot of paperwork, advertising, and maintenance work involved, besides collecting the rent. That is why, people prefer letting a management company do the job for them.
Breakdown of the Fees
All the fixed fees involved, are normally mentioned in the contract, which you sign with the property management company. Here is a list of various costs included.
The job of these companies starts from scouting tenants for your property. So, advertising for your rental flat or apartment is the first of the tasks they undertake. They may place your advertisements in print media and real estate sites. The fees incurred in advertising, will be included in the total fees that they will charge, after they’ve found tenants. Make sure that the money you pay, is well invested.
There is a total non-refundable fee, that you must pay upfront, which is called a setup fee. This includes the compensation that needs to be made to the property manager, for the time he invests in scouting for tenants, the paperwork involved, and the resources he uses for the same. The advertising cost is a part of the fees.
Maintenance Markup Cost
This maintenance markup cost is a part of the monthly bill. This includes compensation to your property manager, for any maintenance jobs in your property, that they carry out through their in-house staff. This is generally 10% more than the actual maintenance cost. For example, if a repair job in your property involved USD 1000 in repairs, then you’ll pay USD 1100. These costs will eat into your share of profit, but then you do not have to worry about maintenance, for which you pay them a bit extra.
This forms a major part of your fees, that you pay every month. This commission may be of two types. It may either be a fixed monthly amount, which you must pay as fees or a fixed percentage of the month’s rent, that comes to you from tenants. The fixed percentage commission is generally 3% to 15% of the monthly gross rent that you receive.
Lease Renewal Fees
This is charged when a tenant renews the lease agreement on your property and the company handles all the legal paperwork involved. It is only charged once or twice a year, depending on the period of lease.