Property Management: How Much Does it Really Cost?
If you currently own, or are looking into owning, rental properties as a financial investment, you’re definitely going to want to consider hiring a property management company to help you out along the way. Though rental properties are a great investment, the time required for maintenance, cleaning, and general upkeep can turn out to be a bigger responsibility than you bargained for.
But the big question is this - is it worth it? How much does it really cost to hire a property management company to manage your rentals? Whether you already own a handful of properties or are just starting to do research, this is a really great question to ask.
But first, we should really start with what all a property management company does in order to get to how much you’re really paying for.
So… what does a property management company do?
Property management companies are typically hired by rental owners to oversee the daily, weekly, and yearly operations of the properties they own. Here are a few responsibilities of a property manager:
Marketing and advertising for the property
Tenant turnover management
In Case of Emergency
When it comes down to it, managing a rental property is a lot of work. From late-night property issues to finding the right tenants, it’s more than a part-time job. But that’s where management companies come in to help!
How much does it cost to hire a property management company?
The cost of hiring a property manager varies greatly due to a number of different factors. The cost depends on what all you want a property manager to help with, how many properties you own, and various fees associated with different tasks, such as maintenance.
Here’s what you can expect to pay when you work with PROMAX Property Management:
Tenant Procurement Fee: 80% of First Months Rent
This fee is basically what is known as an “onboarding” fee. It takes care of the beginning stages of getting your home setup for management and getting a tenant in the home. Whether or not you need this type of plan depends on whether or not you already have tenants in the house. If you already have long-term tenants, you can skip this section and move straight to property management. If not, we can help!
Management Fee: 8% of Monthly Rent
Monthly management fees can be all over the place depending on what company you decide to go with. Our experience? 10% of monthly rent seems to be pretty standard. At PROMAX, we charge only 8%, which we think is a pretty good deal!
This fee will take care of the daily tasks associated with managing the rental property - everything from collecting rent to handling repairs and emergency maintenance.
Lease Renewal Fee: 25% of First Month’s Rent
This fee applies to the situation where the property management company is renewing the lease of a tenant that is already living in the home. In our case, we typically charge 25% of the first month's rent of the new lease. This is to cover the time required for the manager to draw up the new lease, acquire signatures, and make any changes necessary.
So… do I need a property manager?
Before you hire a company to manage your rental property, ask yourself some simple questions. Do I live close to my rental property? Do I have the time to be in communication with tenants? Am I willing to be on call in case of emergency maintenance situations?
In most cases, hiring a property manager is the way to go. It prevents you from having to deal with headache situations while also ensuring that you continue to bring in income from your investment (which is the main point, right?). All in all, hiring a property manager will pay for itself time and time again while allowing you to make the passive income you always dreamed of.
Hiring a property management company is a big step in properly managing your rental property. You’ll find that the cheapest option isn’t always the best option and that quality customer service and reliable care is much more important than saving a few bucks a month.
For a full list of associated fees with PROMAX, you can visit our Fee page.