The cost of property management depends on the fees that a company charges, and today we’re sharing some of the more common property management costs that you can expect. This should help you shop around for management services or audit your current company.
How Much Does Property Management Cost? Property Management Fee Breakdown
The top line fee is always the monthly management fee. This should include rent collection, day to day correspondence with your tenant, the production of owner’s statements and any year-end accounting. It should cover all these things, but it might not. As a consumer, you need to do your due diligence because property management isn’t as highly regulated as other areas of real estate in California.
How much is Property Management? Property Management Fee Structure
When it comes to property management fees, the one really important thing we encourage you to get is a schedule of fees. Any reputable management company should provide a schedule of fees that lists what the costs are and when you pay them. You can hold the company accountable in the future if items on the list do not get taken care of. It’s a giant red flag if you talk to someone and they can’t provide a schedule of fees.
How Much Do Property Managers Charge?
The next fee we see about 50 percent of the time in the Burlingame and San Mateo area is a leasing fee. This might also be called a lease up fee or a tenant placement fee. Typically, it’s a percentage of the gross yearly lease. Some companies charge this in addition to the monthly maintenance fee, and others have one flat fee that covers it all. The property management fee structure that works best depends on what you’re comfortable with. But, it’s important to ask for that fee schedule when you’re shopping around. A 4 percent management fee could end up being 10 percent once all the additional fees are added in, and you’d be better paying 10 percent for all-inclusive management services.
Property Management Burlingame: Lease Renewals
Lease renewal fees are separate from tenant placement fees or lease fees. Some companies will charge a fee to renew the lease at the end of a term. This is another fee you should be aware of and look for. Ask about it up front. Many times managers won’t tell you about it and hope you’re focused on the management fee.
There are other fees, such as file set up fees. I question whether this is necessary, but it’s out there. Do your homework and ask why this fee is there, what it covers, and how much it is.
This is another detailed topic, and the list of fees can be either substantial or concise. Make sure you can understand and live with the fee structure of the company you work with. You wouldn’t necessarily choose or not choose a management company based on the fee alone. But, asking these questions will give you a lot of information on how the company operates. If you can’t get clear answers up front about fees, you’ll be left with questions about what to expect service wise.
Contact us at Five Star Property Management if you’d like more information about property management fees or if you have any questions about Burlingame property management.