Property management is an important aspect for all people involved in real estate business. This involves the real estate owners, landlords, investors that are always looking to improve their investment earnings and making sure their real estate business operations are carried out smoothly.

This article discusses the property management aspect for real-estate owners and how it can save them a lot of time. For this, the most critical question is how much property management costs. We seek to find the answers in this piece of content about the various aspects that affect the price of property management and whether it is a good financial decision to invest in property management. People who implement the services of a virtual CFO in their financial planning need to understand how property management is an essential aspect of a sound financial strategy. Therefore, let’s dive in and find out how much property management costs and whether it is worth it.

What is property management, how to hire a property manager

Property management firms manage a wide variety of tasks like marketing their client’s properties, presenting the list of potential tenants and carrying out the mending process for some properties. Nevertheless, these services are based upon the choice of the client, which determines how much a property management team is involved in the activities related to a specific property. There is also the concept of legal compliance, which is managed by a property management team. Let’s understand the pricing of property management by discussing the different components thoroughly:

Breakdown of property management fees of a property manager

Property management fee structuring

One of the easiest ways a property management company may charge for their services is by acquiring a percentage of the monthly fee and rental funds that are collected as placement fees. The most common amount of this percentage is between 8% to 12%. There are also a number of factors upon which this percentage depends:

• There are large or complicated property structures that mean a fairly lower percentage of the monthly rent as compared to a single family property.
• The location means that there are some big metropolitan cities where the cost of properties will be higher for the same property in a not-so-popular location.
• The property size means that more managerial work will be required, for which the percentage of fees charged by the property management team will also increase.

Flat fee property management cost

There are some property management companies that involve a fixed rate for property management regardless of the location, size or structure of the property. Some property owners do prefer this fixed cost especially considering the properties that have an everchanging income rate.

Flat fee property management varies between $100 to $300 for a basic single family home or apartment homes. This flat fee can be significantly higher for properties that require more involvement of the property managements team.

Lease and tenant prices

These property management firms charge separately for finding the right and ideal tenant for your property. Finding the appropriate tenant can be tricky therefore, the time and services utilized for finding the correct candidate is charged from the real-estate owner. Furthermore, when a persisting tenant leaves the property and it needs to be re-rented, this cost is also charged from the property owner. Apart from all this, there is also the leasing cost which usually varies from 50% to 100%.

Generally, the following services are involved in the leasing fees:

• Marketing and advertising of the property
• Making the property visible to interested tenants
• Providing a list of tenants
• Formulation of the lease process and the documentation signing.

Servicing and further improvement fees

It is important to note that regular maintenance costs are usually included in the property management fees. For major or significant renovations, there are additional charges applied for renovations. These property management firms have contact with specified vendors or contractors who can undertake this renovation task for specified or additional repairs. However, the owner charges this cost.

Hire a property manager for Eviction services.

Eviction involves the removal of a tenant from the property upon the desire or demand of the landlord. It is a time-consuming process that involves legal proceedings. This means additional costs charged by the landowner.

As a general rule, the termination fee typically falls between $200 to $500. However, this can depend more on the extent and intensity of the situation.

The average cost of advertising

Advertisement of your property is all about how much visibility your property gains and attracts more tenants. This is an essential aspect for people who want their property to be rented ASAP. This cost is usually involved in the management fee and depends upon the effectiveness of the property management firm’s advertising capabilities.

The average cost of advertising and marketing services can range from $50 to $200 on a monthly basis.

How much do Property managers charge for additional services?

Additionally, the property management company charges for some extra services upon demand from some clients. These additional services include:

• Emergency or immediate services 24/7
• Financial, accounting and compliance services
• Paying of utilities
• Annual renewal fees for the extension of leases with tenants.

The cost of these additional services can be anywhere from $25 to $100 that is included with your overall property management fees.