The monthly baseline fee that residential property management covers are for the daily management and maintenance of your property. This includes handling rent, paying bills, communicating with tenants, coordinating the repairs needed, conducting inspections, and responding to emergency maintenance calls from the tenants. It’s better to study the standard property management fees of each company you want to hire to find which one will best align with your needs and your budget.
The services that a property management company provides plays an important role in how much they will charge you. The best example is if you want the property management company to only handle the aspects of finding and retaining tenants, but you want to do routine maintenance and inspection yourself, then you can set expectations and advise them about it before asking for a quotation.
If you are only interested in hiring a property manager to collect rent, you will pay less fees. But if you plan to add other services on top of this, then a property management company can demand a higher amount of fees from you. The property management fees vary depending on the type of property that you have. For residential properties, fees typically run between 6% and 10% of gross monthly rental income, while commercial and industrial property fees are around 4% of gross monthly rental income. If you will employ a property management company to manage multiple rental properties, they sometimes offer lower or discounted fees.
Some factors can influence residential property management costs. One of the factors is the size of your rental property. Property managers can manage all types of properties including single-family homes, multifamily, and commercial. This means that managing a larger number of investment properties involves more work compared with managing a smaller rental portfolio. So, the fee collected will be higher.
The condition of your property and its location may also affect the property management fees that may be charged to you as newer properties that have been renovated may have fewer maintenance issues than older properties. There would be lesser tasks to be assigned to your property management professionals and lower fees may be applied. Property management professionals may charge more to manage properties that are in areas that command a higher amount of rent and charge less to manage the properties in areas that only require a lower rent amount.
A residential property management company will provide detailed information about their fees and terms. The contract agreement should specify which services you will receive and how those services will be performed. It should also specify what you will be responsible for as the property owner, including your financial obligations regarding fees and maintenance reserves.
Doing so protects the company from managing a tenant that may not fit their guidelines. When searching for a residential property management company, you need to review their conditions in advance. You must understand what the property management company does and your responsibilities as an investor. You also want to clearly understand what is and what is not negotiable, so you can make sure that the services will fit your needs and budget.