When managing a property, there are lots of little details to keep track of. One of the most important is understanding the costs involved. It might seem straightforward at first, but property management can come with some unexpected expenses. From regular maintenance to dealing with tenant concerns, costs can add up quickly. Let’s break it down and see what you should expect when it comes to property management costs.
Basic Property Management Fees
The first thing to know is that most property management companies charge a monthly fee. This fee covers the basic services they provide. Typically, it’s a percentage of the rent collected each month. In most cases, this is around 8% to 12%. So, if your rental property makes $1,000 a month, expect to pay your property manager about $80 to $120.
This fee usually includes things like collecting rent, handling tenant requests, and dealing with basic maintenance issues. It’s a standard cost, and while it might seem a little high at first glance, it takes a lot off your plate. A good property manager will save you time, and time is money!
Leasing Fees
Another cost you’ll likely encounter is the leasing fee. This is what the property manager charges to find a tenant for you. It can be a flat fee, but it’s often equal to one month’s rent. So, if your property rents for $1,000, the leasing fee might also be $1,000.
This might sound steep, but finding a good tenant is no small task. It involves advertising, showing the property, screening potential tenants, and then handling all the paperwork. This fee is only charged when the property manager actually finds a new tenant, so you don’t have to worry about paying it every month.
It’s a big upfront cost, but once you’ve got a solid tenant in place, it should be worth it.
Maintenance and Repairs
Maintenance is one of those ongoing costs that can sneak up on you. While most property managers will handle the day-to-day issues, like a leaky faucet or a broken light fixture, you’ll be responsible for paying for the actual repairs.
Some property managers will have their own team of maintenance workers, while others will outsource to local contractors. Either way, you’ll be billed for any work done on the property. For minor repairs, this usually isn’t too expensive. But for bigger problems—like a roof leak or a busted HVAC system—costs can quickly add up.
It’s a good idea to set aside some money each month for these unexpected repairs. A general rule of thumb is to budget 1% to 2% of the property’s value each year for maintenance and repairs. So, if your property is worth $200,000, you might want to save around $2,000 to $4,000 each year for upkeep.
Emergency Costs
Every property owner hopes to avoid emergencies, but they do happen. Maybe it’s a burst pipe in the middle of the night or a heating system failure during a cold snap. When emergencies strike, repairs need to be done quickly, and that can mean higher costs.
A good property manager will have a list of trusted service providers who can handle these emergencies fast. However, these situations are often more expensive than regular maintenance, and there may be an extra charge from your property manager for dealing with them outside of regular hours. It’s important to have an emergency fund set aside for when these unexpected costs arise.
Vacancies
Even with the best property manager, there will be times when your property sits empty. When that happens, you’re not collecting rent, but you still have expenses to cover, such as mortgage payments, insurance, and utilities. Some property management companies will charge a small fee during vacancies, but this isn’t common.
The bigger issue is how long it takes to find a new tenant. Every month your property is vacant is money lost. This is why it’s so important to work with a good property manager who can help fill vacancies quickly.
One way to avoid long vacancies is by keeping your current tenants happy. If they like where they live and feel well taken care of, they’re more likely to renew their lease. Pest control is one service that can really help with this. For example, using Pest Share as part of your property’s amenities can prevent pest problems from becoming deal-breakers for tenants.
Legal Fees
No one likes to think about the legal side of property management, but it’s something to keep in mind. If a tenant stops paying rent or damages the property, you might need to take legal action. While your property manager can help with this, you’ll likely have to cover the legal fees.
Evictions, in particular, can be expensive and time-consuming. Property managers can guide you through the process, but you’ll be responsible for the costs involved. This might include filing fees, court costs, and attorney fees.
Staying on top of tenant issues and addressing problems early can help avoid the need for legal action. Once again, pest control can play a role here. Tenants are more likely to take legal action if they feel like their health or safety is at risk, and pest infestations can be a big part of that. By offering pest control as an amenity, you can show that you’re committed to maintaining a safe and comfortable living environment, reducing the chances of legal disputes.
Miscellaneous Costs
There are a few other costs to consider, though they may not apply to every property owner. Some property management companies charge fees for inspections or regular property evaluations. These are usually done to ensure everything is in good shape and catch small problems before they become big ones.
There may also be marketing costs. While this is often included in the leasing fee, some property managers will charge extra for advertising your property in more expensive or premium outlets. This can be worth it if it helps find a tenant faster, but it’s something to keep in mind when budgeting.
Lastly, if your property is part of a homeowners’ association (HOA), you’ll have HOA fees to pay. These are usually monthly or yearly charges that go toward the upkeep of the community, such as landscaping or shared amenities. Your property manager can help you manage these fees, but they are an additional cost to be aware of.
Saving Money with a Good Property Manager
All these costs might make property management seem expensive, but a good property manager can actually save you money in the long run. By handling issues quickly, keeping tenants happy, and filling vacancies fast, they can help you avoid many of the costs that come with managing a property on your own.
Offering attractive amenities, like pest control, can also make a big difference. Services like Pest Share make it easy for property managers to keep properties pest-free without the hassle of dealing with complaints or coordinating treatments. It’s a small investment that can lead to better tenant retention and fewer costly repairs down the line.
In the end, property management costs are an important part of owning a rental property. But by understanding what to expect and working with a reliable property manager, you can keep those costs under control and make the most of your investment.
