When you’re starting your own property management company, one of the most important decisions you’ll make is what to charge for your services. There are a lot of factors to consider when setting your fees, and it can be tricky to find the right balance between being competitive and making a profit. In this article, we’ll take a look at the most common fees charged by property management companies and some of the factors you should consider when setting your own fees.
Common Fees Charged By Property Management Companies
One of the first things you’ll need to decide when setting your fees is what services you’re going to offer. Most property management companies offer a range of services, from finding and screening tenants to handling repairs and maintenance. The fees you charge will depend on the services you offer, but there are some common fees that are charged by most property management companies.
Setup Fee
A setup fee is a one-time fee that’s charged when you first start working with a new client. This fee covers the cost of getting the property set up for rental, including activities such as taking photos, creating listings, and advertising the property. The amount of the setup fee will vary depending on the size and condition of the property, but it’s typically a few hundred dollars.
Tenant Placement Fee
A tenant placement fee is charged when you find a tenant for your client’s property. This fee covers the cost of things like advertising the property, showing it to potential tenants, and doing background and credit checks. The amount of the tenant placement fee is typically a percentage of the first month’s rent, and it’s typically charged when the tenant signs the lease. The average percentage charged is around 50%, but it can range from 30% to 100%.
Leasing Fee
A leasing fee is a monthly fee that’s charged for managing the property and handling the lease. This fee covers the cost of things like collecting rent, dealing with tenant issues, and maintaining the property. The amount of the leasing fee is typically a percentage of the monthly rent, and it’s typically around 10%.
Maintenance Fees
Maintenance fees are charged for handling repairs and maintenance on the property. This can include things like fixing a leaky faucet or dealing with a clogged drain. The amount of the maintenance fee is typically a percentage of the cost of the repair, and it’s typically around 10%.
Eviction Fee
An eviction fee is charged if you have to evict a tenant from the property. This fee covers the cost of things like filing the eviction paperwork and dealing with the tenant. The amount of the eviction fee is typically a few hundred dollars, but it can vary depending on the circumstances.
Lease Renewal Fee
A lease renewal fee is charged when you renew a tenant’s lease. This fee covers the cost of things like negotiating the new lease terms and preparing the new lease agreement. The amount of the lease renewal fee is typically a percentage of the monthly rent, and it’s typically around 10%.
Early Termination Fee
An early termination fee is charged if a tenant breaks their lease. This fee covers the cost of things like finding a new tenant and preparing the property for rental. The amount of the early termination fee is typically a percentage of the remaining rent owed on the lease, and it’s typically around 50%.
Vacancy Fee
A vacancy fee is charged when a property is vacant. This fee covers the cost of things like advertising the property and showing it to potential tenants. The amount of the vacancy fee is typically a percentage of the monthly rent, and it’s typically around 10%.
Factors To Consider When Deciding On Your Fees
The above numbers are averages, and your fees will vary depending on a number of factors. Here are some of the things you’ll need to consider when setting your fees:
Location
The location of the property will affect the amount you charge in fees. If the property is located in an urban area, you can expect to charge higher fees than if it’s located in a rural area.
Property Size
The size of the property will also affect the fees you charge. Larger properties will typically require more work, and you’ll need to charge accordingly.
Condition Of The Property
The condition of the property will also affect your fees. If the property is in good condition, you can expect to charge less in fees than if it’s in poor condition.
Type Of Property
The type of property will also affect your fees. For example, apartments are typically easier to manage than single-family homes, so you can expect to charge less in fees for an apartment complex than for a single-family home.
Range Of Services You Offer
The range of services you offer will also affect your fees. If you offer a full-service package, you can expect to charge more in fees than if you offer a basic package.
Final Thoughts
When creating fees for your property management company, it’s important to consider the factors mentioned in this article. However, you should also research fees in your area to get an idea of what’s typical. Once you have a good understanding of the fees charged by property management companies, you’ll be able to set fees that are fair and reasonable.