For many homeowners, it’s worth paying a property management fee per month or year for the peace of mind that comes from knowing that someone competent like 33 realty management for example is looking after their property and ensuring everything runs smoothly. Property management fees cover a variety of services including, but not limited to, finding tenants for your property through marketing on various platforms, conducting property inspections, performing routine property maintenance, collecting payments rent, chasing down late payments, performing necessary evictions, and dealing with emergencies calls.
While worth considering for homeowners who might not have the time to deal with all of this on their own and how much do real estate management companies charge, property management fees aren’t always as transparent as they could be, and getting clear and concise pricing information can be tricky. Read on for a guide to property management fees to help homeowners understand the costs of handing the keys to a property manager.
Small house with piles of coins illustrating increasing income
A guide to property management costs will help homeowners decide what is best for them.
General property management costs
How much does property management cost?
There is no single answer, as it can vary depending on the company you use and the services you are paying for. Some property managers offer fixed-fee property management, while others have a variable cost for property management based on the services you require in a given month or period. Property management fees are generally charged as a percentage of the rental income you generate from the managed property.
Different packages are often offered with different price points that you can choose from depending on what you need. For example, a basic property management package that includes finding tenants and collecting rental payments will be cheaper than a full-service package covering emergency response, repairs and maintenance, and more. Choosing a national or local agency can also affect the price, according to Upperkey in London. On average, a local agency in the UK charges just under 18% of your rental income, while a national agency is slightly higher at just over 19%.
Additional Fees To Consider
While property management companies offer packages that typically include a range of services for one monthly fee, typically a percentage of the rental income your property generates, you may need to pay some additional fees that aren’t included in your payment. Regular. This is often the case for one-time or additional tasks that don’t need to be performed as regularly as the services included in your property management package. Some additional services for which you may incur additional charges include:
hand with a graph of property management breakdown: rent collection, mortgage payments, accounting, leasing, deposits, inspections, maintenance, and repairs
Property management has many facets, each with its own special cost.
You will usually incur an additional fee when arranging work on a property. This may not include regular work, depending on your property management package. However, this is likely when additional or serious repairs must be made to a property. On average, you can expect to be charged 10-12% of the invoice cost if your property management company needs to arrange additional work on a property. What counts as extra work can vary greatly between different companies, Upperkey says. Because of this, it’s always worth asking more questions about this before determining if a property management company will offer you the best value.
Low-cost property management packages may not always include finding a new tenant for your property or renewing your current lease. When a property manager finds a tenant for his property, a term will usually be set forth in the lease, such as six months or one year. After the term ends, if you and the tenant are happy to continue renting your property, the property management company may require an additional fee to renew the lease.
This will typically cover the cost of any changes to the contract, changes to personal details, and changes to the cost of rent as a result of renewal. To prevent this fee from coming up over time, it’s worth switching to a “periodic” tenancy for a tenant you’re happy with, which means there’s no set end date unless they decide to move out or get evicted.
Contractor Referrals And Reserve Funds
Some property management companies will receive a referral fee from the contractors they use for maintenance or repair work on their properties. Although this will generally not mean that you have to pay an additional fee to use such contractors, it could result in you paying more than necessary for repairs and maintenance work to be carried out on the property. This is because when the property management company gets incentives to use certain contractors, they will have no reason to consider finding a better deal, which means you could lose savings.
Regarding property management costs, most property managers are not prepared to foot the bill for fixing any problem with the property. They will typically request that the money be made available in advance through a reserve fund so that they can avoid going after the landlord for payment after the fact. Many property management companies charge a reserve fund fee, a reserve of money paid in advance to cover future damage. This is usually determined based on the property’s value, usually from £200 to £1000.