June 16, 2024

Fryer And Brown

Creating Your Dream Home

An Explanation Of Property Management Fees

Whilst many people can see the benefits in firing a property management service to help them deal with the pressures of being a landlord over a residential or commercial property, they are often hesitant to sign on the dotted line because of the costs involved. There are a number of different fees that your management service may impose for one reason or another, but we have aimed to outline the most common ways that you will be charged.

Commission

This is the name given to an ongoing monthly fee that you will be charged to compensate for the time the property management service puts into your portfolio. This fee could be as little as 3{bc081577d937b036760250a838c458dd2cdabe6c805de7ee78ca03a8e3da3931} of your monthly gross rent or it could be over 15{bc081577d937b036760250a838c458dd2cdabe6c805de7ee78ca03a8e3da3931}, it just depends on the service that you have chosen. Others will choose to charge a flat rate, but this is uncommon.

Lease or Setup

This is a one-off fee charged to compensate the property management team for the time and resources needed to set up your portfolio, to show the property to potential tenants and other responsibilities related to the procurement of tenants. Many people like to look at this charge as more of a ‘finders fee’, as this is essentially what the manager is doing.

Lease Renewal

This is a fee that you will be charged every time your property management service renews a current tenant’s lease. It covers the costs of having paperwork drawn up (as this often involves some legal aspect) and any communication involved in having the documents signed. Some services also believe that this fee covers an annual inspection.

Maintenance Markups

This is a fee that many people are often unaware of until some sort of maintenance is performed on their property. It will be disclosed in the contract that you hold with the manager and will list a percentage above the final invoice amount that you will be charged additionally (it is often around 10{bc081577d937b036760250a838c458dd2cdabe6c805de7ee78ca03a8e3da3931} and is to compensate the manager for their hassle).

On top of the four fees outlined above, many property management services will also charge what many people have dubbed “you’ve got to be kidding me fees”; costs that the service may believe are fully justified but that you can’t believe you are being asked to cover. These fees include being charged commission even though your property is empty, a preventative maintenance fee that isn’t refunded even if nothing goes wrong, and costs for signage.