What does property management cost?
When you’re looking for a property management company and you’re trying to compare fees, there are so many pricing models out there. There’s a wide array, lots of different ways that these businesses are set up. So I just want to talk just a minute about some of the various ways that property managers make their fees and how they set themselves up. So that way, when you’re shopping around, you can really make sure you’re comparing apples to apples and really see what you get.
The first thing and the one that everybody always talks about the most is the monthly fee. That can be a flat fee or it can be a percentage. There’s some pros and cons to that. Obviously for a flat fee, regardless of the rent, the fee is the fee. And whereas if it’s a percentage, the property manager kind of has some incentive to try to get you maximum rent.
So we’re based on a percentage. If we get you more rent, we can make just a little bit more each month. And so that’s the first thing that people talk about is that monthly fee.
The next thing you look at is a leasing fee. And leasing fees can range. I’ve seen them anywhere as low as a couple of hundred dollars up to a full month’s rent. So the leasing fee, that’s what covers the property manager, marketing that property, getting it out to the public, letting people know it’s there, showing that property, meeting tenants, screening tenants, getting the good tenant in. So that’s what kind of covers the property manager for that particular service.
The next one is a lease renewal fee, and I’ve seen that fee range as well, as low as a couple hundred bucks, all the way up to a full month’s rent. And so again, every property manager sets their business up a little bit differently, but those are three of the big ones.
Other ways that property managers sometimes filter in some other streams of revenue, they may have a really low monthly fee, but then when you really look, they’ve get it somewhere else. So I want to talk about a few of those things that sometimes aren’t as in your face as the monthly fee and the lease fee and the renewal fee, and those are, one would be inspections. One, do they inspect? Believe it or not, a lot of property managers, if they don’t hear from the tenant, they don’t go into the property. So you want to make sure your prompting manager is inspecting that at a minimum once a year, or even more.
And so we actually include inspections in our fee. That’s part of what you get for our service. Other property management companies won’t do that. And so on the surface, you may look and see, “Hey, they’ve got a low monthly fee,” but then you find out, well, they charge you an exorbitant amount to do an annual inspection or a semi-annual inspection or whatever it may be.
Another would be upcharging maintenance. We see a lot of companies out there that send somebody out to make a repair to the garbage disposal, and that invoice comes in and then they add 10 or 20% to that invoice. And so again, they get people in the door, they’ve got a low management fee, get people in the door, and the next thing you know, they’re hitting them for maintenance and upcharging and making a percentage on that maintenance.
So again, nothing wrong with that as long as it’s disclosed and as long as you know that’s what you’re getting into. And what I’m telling you here is just explore that. Look at all the avenues. Don’t look just at the management fee or just at the lease fee.
Another thing to kind of keep in mind are sometimes hidden fees or what can almost be sometimes called junk fees. So some companies may have a marketing fee or an advertising fee, just something that comes out that’s a couple hundred bucks a year that just shows up on your statement, and they do that across all their property owners and it kind of makes up for that difference when they’re charging potentially a lower fee somewhere else.
So again, you want to look at what the company really offers, what they provide for that service, look at all the fees, not just the monthly management fee.
At Iron Horse, we’re pretty transparent and straightforward. We tell you what our fees are. We tell you what’s included in that. We don’t upcharge maintenance. We don’t have additional hidden fees, things like that. Also, we operate on a month to month basis with our owners. Now, we sign a year long lease or a two year lease or something like that with tenants, but with owners, if you’re not happy with our service, we allow you to leave at any time. Most property managers are going to charge you as if they were continuing to manage that property if you decide to pull out and leave.
So we just have a little different philosophy here. We feel like we need to earn your business throughout the process, and that you should always be happy with our service and that we shouldn’t rope you in or tie you into a contract when you’re not happy. And we tell all of our clients, if you’re not happy about something, let us know. We want to fix it. We want to smooth it out. And if we can’t and we’re just not seeing eye to eye, then we’ll let you out of the contract. We’ll part ways and both of us move on. We’ve just learned that’s better for both of us.
We’ve been doing this a long time and very rarely does that happen because we do a good job and we want to have good clients. We want you to be singing our praises to every other property owner that you know.
So I hope that’s been helpful. Again, if you’re looking for a property manager, look at all the details, read the fine print, make sure you know what you’re getting into, and talk to us. We’d love to talk to you if you’re looking for a property manager.