A simple guide to property management costs and fees
Visit any short-term let or Airbnb property management company website, and the simplicity of their pricing looks too good to be true—but, is it?
Generally, the majority of these management companies present options in a 3-tier system.
The bottom end rate aims to help clients list properties and boost rentals. Their standard rate covers the more typical service, and a premium option will include an array of added extras.
But what do they include? There are many benefits to employing a dedicated property manager, but do they offer value for money? The following page shows how property owners are rewarded with a healthy return on their investment, and without having to do any of the hard work.
What is property management?
A property management company takes over the running of your investment. They will include a wide range of services from business to business. The bulk of the short-term let companies, however, will take over almost every aspect of leasing your property.
What does a property manager do?
If you choose them to—they’ll do everything.
- Advertise and market the property
- Oversee the upkeep and maintenance
- Organise changeovers
- Meet and greet guests
- Take care of laundry
- Make repairs
- Carry out updates and more.
Try to imagine every aspect of running your property rental, and that’s what they do.
Sounds brilliant, doesn’t it? Well, if you let us take care of your property for you—it is.
How much does a property manager cost?
A property management service can cost anywhere from 12% to 25% of your rental rate.
You need to be on the ball to understand just what you’ll get for your chosen rate. Some companies will bump up a low rate with additional services. Others will offer an all-encompassing option and include everything you can think of.
One significant advantage to utilising a professional service is that they could help to increase the rental rate of your property. By managing its advertising over a multitude of platforms, and increasing the desire for guests to your property with professional imagery and presentation, they will charge more for each stay yet still keep it fully occupied year-round.
In such cases, the additional funds accrued can cover part or all of the management costs. You could be making the same profit but without doing any of the work.
Do property management companies pay for repairs and any other associated costs?
Yes, more often than not, they’ll take care of the property as if it were their own. You’ll have to discuss your contract and its terms, but most reputable management outfits will include everything.
Here at UpperKey, we take care of every last detail, however small, and we guarantee to pay your rent every month, whether there are tenants in the property or not.
The majority of managers take a cut from each booking. Choosing this type of option can leave you susceptible to an empty property and gaps in your income.
Considerations to property management costs
Of course, with rates that directly linked to rental prices, how much you can charge for a stay, and subsequently pay a manager, will depend on a number of factors.
- Is your property a house, a villa, an apartment or flat?
- What sort of condition is it in? Premium apartments fetch premium rates.
- City centre locations and those in high demand areas will achieve better returns than those in remote, less popular areas.
- The level of service available. From all-in to more basic marketing or rent collection options.
A few examples of what might constitute inclusive or additional fees
Set up fees
A one-off set up fee may be involved with some companies. Generally, where charged, it can cover an initial inspection, or handling a take-over where a high-street property manager is employed to manage a long-term tenancy.
Monthly management fees
As mentioned earlier, a property manager handling short-term lettings in tourism-centric apartments and houses will charge between 12–25%.
A high-street residential property manager’s fees could be as low as 10%, but the role typically covers a less-demanding array of services.
For short-term letting offering an all-in arrangement, all maintenance is included in the majority of cases.
For the long-term tenant/let manager, maintenances fees are often included as part of the management fee. The services won’t perhaps be as inclusive but may feature elements such as cleaning, property care and repair work. A fund is usually provided to cover such costs, or alternatively passed directly to the owner.
Tenant/guest placement fees
With holiday or short-term apartment managements, your guest placement is included in the service.
For long-term residential property management, having to replace a tenant isn’t something they’d expect to have to take care of on a regular basis. The fee will include advertising, screening, tenant checks and deposit management.
It’s unlikely you’ll have to evict a holiday guest or short-term booking tenant, but for long-term lets, it’s a real possibility. It’s not an easy job, so having a professional take care of business could be worth every penny.
Early termination fees
A management company will want to recoup potential losses whenever a client breaks a contract. The most likely breach of contract occurs when clients need to come out of the agreement before reaching its full-term.
How much does commercial property management cost?
Commercial property management caters for a manager or management company being employed to handle the tenancy and occupancy of an industrial unit, office block or other non-residential facility.
The principle is the same, and in practice very similar too. The rates too, aren’t so much different; depending on the services included, they should range from 4–5% to 12–15%.
Some managers will utilise a fixed fee, where others offer a revenue share or flat rate fee depending on the rent.
Guaranteed rents are also often an option for commercial properties. Sub-letting a business property gives the manager more scope in what they can achieve when renting out premises. Where a manager specialises in organising several short-term lets over an agreed term or has an available stream of high-paying clientele, they can charge higher rates, with the difference in what they charge to what they pay, being their profit.
Always read the small print
Sometimes a good deal is too good to be true. Yet, sometimes, it’s just a good deal. The only way to know for sure is to be scrupulous when you’re negotiating a contract.
Owners must always be sure that they understand what they’re signing up for, and what all the finer details mean.
We suggest choosing an established and transparent company to work with, one who hold excellent reviews and testimonials—someone you can trust.
UpperKey is just that. We are a well-established high-end provider; proud of our premier service and the satisfaction we deliver to every one of our clients. We offer a system that protects property owners from spiralling costs that they might not be immediately aware of or taken into consideration. As added incentive, we offer guaranteed rents over the typical market rate, or a flat fee of 15% for those looking for shorter-term property management assistance.