If you’re looking to rent a property there are many costs involved. To save yourself from any nasty surprises it’s best to keep track of them so everything runs smoothly.
At the end of the day, your investment property should be making money for you. You could handle property management by yourself or you could rely on the professional services of a property manager.
In some cases, people refuse to use a property manager because of the fees involved in hiring one.
To weigh up the value of using a property manager it’s worth considering what’s really involved in the complicated processes of managing a rental property. You may be surprised to discover how challenging it can be.
One of the most important factors to consider is just how much time it can take to manage a rental property. When you add up the fees involved with a property manager you find it’s worth the extra investment.
If you decide to use a property manager then one of your first questions may be what the property management fees actually cover. It’s a fair question and one that a property manager should be able to answer for you quite easily. Here we’ll break it all down for you. We’ll cover how property management fees are structured and why property management can be a worthwhile investment.
How to compare fees from different property managers
If you have a few options for property managers you’re considering then it’s not always about price. Think about how the fees themselves are structured. This can reveal a lot about how the property manager organises themselves and offers value to you.
Generally speaking, property management fees are broken down in these three categories:
- Leasing fee
- Ongoing management fees
- Other miscellaneous fees and charges
While comparing these property management fees it’s best to confirm which services are included in the fees themselves. These services aren’t always clearly communicated. In some cases, a property manager may bundle all services into one all-inclusive fee. So the initial leasing fee for finding a tenant may be included in the bundle instead of it being charged separately.
By now you’re probably wondering which fee structure is better. This is good to know. Especially if you have a choice. Ultimately the right fee structure comes down to you. An all-inclusive fee can make it easier for you to budget and calculate the costs of running a rental property. But having a separate management and leasing fee could help you save more.
Some property managers will charge you a leasing fee even though you may have the same tenant for over three years. Ideally, you should only be paying for a leasing fee on a yearly basis only if you have had new tenants moving in on a yearly basis. So a safer option for you as the rental property owner would be to have property management fees, leasing fees, and ancillary costs charged separately. It provides a lot more transparency to the real expenses you should be paying for.
So what is a leasing fee?
A leasing fee should cover all aspects of the service involved with finding a new tenant for your rental property. The amount for the fee is calculated based on the rent you’re asking for. An agent may include the marketing costs in your leasing fee. Alternatively, marketing costs may fall under the box of miscellaneous fees and charges.