How much should Property Management cost you?
Pricing is one of the key deciders in any transaction. Here’s everything you need to know about the costs associated with Property Management
By Faraaz Hashmi
Property management companies differ greatly, and many depends on the nature of engagement. What are your expectations of a property manager? What tasks do you want them to do for you?
A property owner’s agreement with a property management firm is a delegation of agreement. A property owner can only assign those tasks and functions to a property manager while being involved in other areas, while some owners might prefer to be almost completely hands-off.
The cost of property management also differs in location, because of the different cost of living from one location to another. The type of property and the amount of tasks and estimated working hours to be rendered can also affect the cost of the property management.
Pricing can make or break a business. It is essential for every business to educate their customers on the costs involved for their services and products.
Pricing tends to be complicated for most products and services. Thanks to hidden costs as well as * conditions in fine print. Property Management covers a whole lot of services done for a monthly fee.
Skybridge Property Group is a top-rated property management company in Los Angeles and Orange County. We talk to landlords and investors all the time, and one of their first questions is the cost of professional property management. In this article, we will dive deep into the costs of property management.
Basic Property Management Costs - Explained
Rates for Residential property management in Los Angeles and Orange County can be as low as 5 percent and as high as 12 percent of the monthly rental income your property earns. You may wonder why there is such a wide range on the price scale.
The cost typically depends on the property management services offered by the company. There are standard services most property management companies will include in their monthly pricing, but it’s crucial to watch out for any additional services that would incur additional fees.
These are the most common services offered by Property Management companies which is included in their monthly pricing.
- Accounting and finances
- Maintenance requests and issues
- Collection of Rental payments both on-time and late
- Tenant Evictions
These are standard/essential services, and depending on the location and type of property you have, the property management costs between five and eight percent of the rental income. In different parts of the country, there are different rates. For the most part, you will find no matter what location, these are the standard services included with most property management company fees.
Now it’s time to look at the possible additional costs that you can incur as a home owner. These costs come into the picture only during specific situations. But it is important to understand the numbers before you sign the dotted line to avoid surprises at a late point in time.
Additional Property Management Fee 1: Lease Renewals
Most property management companies will charge additional fees for services that are not included in the standard property management agreement. A prominent one is your lease renewal. You may need to pay your property manager to negotiate your lease renewal once the 12 or 24 months have passed and the tenancy is coming to an end.
Many times, property management companies will charge you an additional fee to renew a contract or lease with a tenant after the original one expires. You want to make sure this information is clear in writing when you are about to sign a contract with a property management company.
At Skybridge Property Group, our Lease Renewal charges is a flat fee of $250
Additional Property Management Fee 2: Leasing Fee
The Leasing Fee is the fee charged by a property management company to lease up the property. The tasks involved in the extensive process are marketing the property, screening the applicants, showing the property, lease paperwork, planning the move-in process etc.
Most property management companies charge a flat percentage of the first month’s rent paid by the tenant to the homeowner as per the contract. At Skybridge Property Group, we charge a flat 50% of the first month’s rent as the Leasing Fee.
Additional Property Management Fee 3 : Eviction Costs
No homeowner likes to think about the scenarios of unpaid rent which leads to tenant eviction. If your property management company has done a great job in screening and placing qualified tenants, your eviction risk should be pretty low.
However, unfortunate things happen even to great tenants and you may find that you need to evict a tenant for nonpayment of rent. While the standard eviction process / clauses should be included in your property management fees, there are often times that the process takes longer.
Find out how court costs are handled by your property manager, and ask about who will be responsible for paying legal fees. It’s crucial to have all this in writing so you can refer back to it should anything comes up.
It is the responsibility of the property manager to make sure everything is transparent and all your questions about pricing should be answered. Working with a great property management company has its perks, but you need to be sure you have everything laid out in front of you and you understand how they operate before you make your final decision. Interested in knowing what we charge when we manage your property, check out our pricing page.