Key takeaways
Property managers charge a monthly fee to manage the property, which can be a flat fee or a percentage of the monthly rental income.
Property managers typically charge between 4% and 7% of the rental income, but smaller properties might cost 10% or more.
Maintenance fees may also be charged for services, including garbage, snow, and leaf removal.
The size and condition of the property can be a factor in driving property management costs higher.
Also, the property type influences the property management fee, such as single or multi-family homes and commercial properties.
Standard Fees
Initial Setup Fee
A property management company may charge an initial setup fee to establish your account with their company. However, not all companies charge an initial setup fee, but if they do, it is usually P5,000 or less. This fee could also include costs to inspect the condition of the property, as well as costs to notify tenants that they will be managing the property.
Monthly Management Fee
Almost every property manager will charge you a fee to manage your property on a monthly basis. The contract you sign with the property manager will specify how this fee is calculated and what services the fee includes. Some companies charge a higher monthly management fee, but it may be more inclusive, so do not be put off by a higher initial fee until you understand what is included.
A property manager may charge a flat fee to manage your property or a percentage fee – make sure your contract with the property manager states that the fee is for rent collected rather than rent due, otherwise, the property manager will be collecting money even if the tenants are not paying their rent.
Maintenance Fee
Maintenance fees are generally included as part of the monthly management fee. This could include keeping common areas clean, taking out garbage, and leaf removal.
If a specific repair must be made, the cost of the repair will be deducted from the reserve repair fund, which is a separate account where the landlord holds money for property repairs. There are a few ways to manage the account and handle the repair process.
The landlord can choose to authorize every repair deduction from the account.
The landlord can choose to only be notified for repairs over a certain amount.
The landlord can allow the property manager to use the account at their discretion.
A minimum amount must be kept in this account, such as the equivalent of one month’s rent.
Additional Fees
Tenant Placement Fee
A property manager may charge a separate fee for placing tenants in your property. Again, this could be a flat fee or a percentage of the rent. Half a month’s rent to a full month’s rent is common.
The tenant placement fee can include advertising costs to find a tenant, tenant screening, move-in procedures, and preparing the lease agreement. Depending on contract terms, this fee may be refunded to the property manager if the tenant breaks their lease early or is evicted.
Early Termination Fee
If you break the property management contract early, you will often have to pay an early termination fee. This fee will vary greatly based on the terms of the contract. You may only be responsible for paying one month of additional management fees or you could be taken to court for breach of contract.
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