Through a property manager, handling your property can be at ease. A reliable property manager can be an asset to your property’s investment which is why a lot of real estate investors hire property managers to handle their property.
The property manager manages the property at a price. Several factors can affect the cost that a property manager will charge. Also, it can depend on the amount of workload you will delegate and include in the contract with your property manager. There is no fixed amount on how much a property manager will charge, however, there are variables you can look at when you are considering hiring a property manager. Here are some of the factors that a property manager can charge you:
Breakdown of Fees When Hiring a Property Manager
In hiring a property manager, there is a basic pay of 8% to 12% that comes from the monthly rent from your tenants. It includes daily management of the property such as collecting monthly payment for rent, interacting with tenants, inspecting the property, and a lot more. However, this is just the basic management fee. There are other fees that you need to consider.
Do not be surprised that there is a maintenance fee. Expect that you need a maintenance fee to keep the property free from damages and repair. It includes property inspection to prevent and to fix the damage right away. There should be a reserve fund repair for unexpected damages that may occur. Through this, it will keep you from the hassle and stress of damage costs. Pro-tip, discuss with your property manager the daily maintenance of the property in order to prevent future damages and repair.
Lease Renewal Fee
A property manager may charge you for drafting paperworks and adjusting the terms and conditions of the agreement for the lease renewal fee. In some cases, some property managers may not charge you, however, if they charge you, it is either the amount of flat rate or the percentage of rent.
Tenant Placement Fee
When a property manager placed a new tenant, there could be a tenant placement fee. Tenant placement fee includes advertising the property, screening of the tenant, moving procedures, and preparation of the lease. Its cost could be the same as a flat fee or a percentage from the rent. Depending on the conditions in the contract, you can refund the tenant placement fee if the tenant is evicted or breaks the lease.
Even if there is no tenant residing in the property, there are still certain bills that you need to pay. Whether there is a tenant or not, you will still pay the monthly mortgage. If you have other tenants residing in your building, it would be easier to deal with it. Aside from the monthly mortgage, there is also tax property every month. Dealing with tax property is stressful if there is no tenant residing in your property. You might want to find a new tenant as soon as possible. In addition to this, you will need to prepare the unit for the new tenant. It includes repair, painting the walls, and cleaning. These are also additional fees that you might need to add.
Evicting a tenant can be stressful. Thankfully, your property manager handles it with ease. For this process, it might cost a lot since you will need a lawyer in processing your eviction. Aside from the payment for the lawyer, you still need to pay your property manager for handling it and doing the process. Expect to spend a few hundred dollars in this process.
Early Termination Fee
If you plan to end your contract with your property manager, there are underlying costs for this process. Its costs usually depend on your terms and conditions with your property manager. Either you pay for the cost of early termination fee or you will face the court for the breach of contract. For your next property manager, make sure to discuss the other miscellaneous fee including the early termination fee.
There is no standard price on how much a property manager can charge. However, there are variables that could influence the cost, it includes the following:
Property’s size – depending on the size of the property that the property manager is handling whether it is a commercial or residential property, the size determines the cost. The larger the property, the higher the cost will be.
Property’s location – if the property is located in an area whereas it requires higher pay rent, you will also pay higher for your property manager. Contrary to an area wherein it only requires lower rent payment, you will also pay lower to your property manager.
Miscellaneous fee – there could be other extent of services payment for your property manager. Your payment will depend on the amount of work you will delegate to your property manager. If you hire him/her to just collect the rent, then you will pay lower. However, if you have given your property manager to manage and handle tenants, collect rent, handle maintenance, and other tasks, you need to pay higher.
Do I Need To Hire A Property Manager?
If you are looking for a property manager, you might want to consider these factors before making a decision. Also, it is vital to discuss the terms and conditions comprehensively. Hiring a property manager can help in handling your property with ease. It is not easy to manage a property especially if you are alone. Through a property manager, the workload can be easy. It has a price to pay, however, you can save yourself from the hassle and stress of handling a property.
As property owner, you need to understand that handling a property can be difficult and tedious especially if you own a larger property. Hiring a property manager can be an investment and asset for your property. Make sure to consider these steps when hiring a property manager, it can save you time and money.
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