Property management fees can be quite different based on the property type, where it is located, and what services you need. It is important to know how much property managers charge if you are a landlord. This way, you can earn more money from rentals and reduce your stress. This guide explains the costs, extra fees, and factors that affect pricing. It will help you make a smart choice.
What is Property Management?
Before looking into rental property management fees, it's important to know what property management is.
Property management companies help landlords and tenants by managing everyday tasks for homes and businesses. They offer a range of property management services in the UK such as helping to find tenants, collecting rent, managing repairs, and handling property details. These companies know a lot about the property market and rules. They make renting easier for landlords and tenants.
For landlords who do not have the time, money, or skills to manage their properties, property managers are very helpful. They make sure rental properties work well and follow the law.
What Services Does Property Management Provide?
Property management means taking care of the daily tasks for a property. It makes sure everything works well and smoothly. A property management company does all the work for property owners. They provide services that match what each owner needs:
Advertise and market the property
Oversee the upkeep and maintenance
Organise changeovers
Meet and greet guests
Take care of laundry
Cleaning
Make repairs
Carry out updates and more.
How Does Property Management Fees Work?
Property management fees usually come in two main forms: a percentage of the rent you collect or a flat monthly fee. Here’s a look at how these fees are figured out and what extra charges you might face.
Percentage of Monthly Rent
Most property management companies take between 8% and 12% of the monthly rent. For instance, if your rent is $1,200 a month and the fee is 10%, you would pay $120 each month.
For empty properties, management companies might ask for a set fee or a percentage of the expected rent after the property is rented out. Taking care of vacant properties usually needs extra effort, like doing weekly checks to stop break-ins or damage.
Fixed Property Management Fees
Some property management companies charge a set fee instead of a percentage. This fee usually depends on the type, size, and services of the property. For example, managing a single-family home might cost about $100 each month, but this can change by location. However, set fees may not encourage managers to boost rental income, since their pay does not change with your property’s success.
Additional Property Management Fees
Property management fees are not always complete. A property management company often charges extra for services in addition to the monthly fee collected.
Contract Setup Fee
Most property managers ask for a one-time setup fee, which is about $300. This fee is to cover:
Making your space for bookkeeping
Opening a bank space if needed
Helping with business or tax permit requests
Doing a first property check
Switching from another property manager, if needed
Managing Vacant Properties
Vacant properties usually need extra care. This includes:
Keeping utilities running for showings.
Fixing problems like leaks or broken security lights.
Stopping vandalism or unwanted people through regular checks.
Property managers can ask for extra fees to handle these tasks.
Leasing Fees for Vacant Properties
While some management companies do not charge leasing fees, most take a fee equal to half or a full month's rent to rent a vacant property. This fee pays for marketing, checking new renters, and showing the property. Lease renewal fees are usually less, and can often be dropped if little negotiation is needed.
Late Payment Service Charges
If a person who rents pays rent late, landlords may add a late fee. But property managers usually keep 25% to 50% of that fee. They do this as payment for collecting the late money.
Repairs and Maintenance
The best property management companies have their own repair teams or work with repair businesses. They often get better prices for repairs. But, some might increase labor or supply costs. For big projects, you should plan to pay a project management fee of about 10% of the project's value.
Routine Inspections
Routine inspections should happen every 3 to 6 months. They help keep the property in good shape. They also catch small problems before they get worse. Some companies include the inspections in their monthly fees. Others will charge you for each inspection. Always ask for a detailed report that includes photos or videos.
Evictions and Collections
In eviction cases, property management companies usually charge a set fee of about $500. They may also add legal costs if they hire a law firm. If collecting unpaid rent is necessary, agencies or lawyers can take up to 50% of what they get back as their fee.
Contract Termination Fees
If a landlord ends a management contract without a good reason, there may be early fees. These fees can be as low as one month's management fee, or they can be higher, depending on the contract.
What Factors Influence Property Management Fees?
The cost of property management services depends on how much work is needed to keep and increase rental income from a property. For example, managing a small building with several units takes more effort than looking after a single-family rental home.
The key factors that influence property management fees are:
Type of Property: Managing different kinds of properties—like single-family homes, multi-unit buildings, or short-term rentals—changes in difficulty. This affects the pricing.
Property Size: Bigger properties with more units or space usually need higher fees. This is because there are more management tasks.
Property Condition: Older properties often need more repairs. This can increase management costs compared to newer or recently fixed-up properties.
Location: Properties in good areas with high rental demand, like great neighborhoods, usually attract reliable tenants and need less management. In contrast, areas with low demand might need more effort to find tenants.
Service Scope: Full-service property management, which includes everything from collecting rent to managing tenants and maintenance, usually costs more. Some agencies offer simpler services, like just rent collection and managing repair requests. They may have extra, optional services for things like property inspections or lease renewals.
Market Competition: Property management costs can change based on how many companies are in the area. In places with fewer property management firms, fees may be higher because there are fewer choices for landlords.
Should You Hire a Property Management Company?
For many real estate investors, hiring a property manager can be a smart choice. However, it’s not always the best fit for everyone. Deciding to hire one is based on your goals, resources, and the kind of help you require. Asking good questions can help you make the best decision for your rental business.
Q1. What Help Do You Need from a Property Manager?
Think about what you need to make it easier to manage your property.
Do You Live Far Away? If you are an investor from a distance, it is important to hire a local property manager. They can take care of daily jobs like fixing problems and dealing with tenant matters.
Do You Live Nearby? If you live close to the property, you may think about managing it yourself. This is a good option if you have the time and skills.
Tools like Stessa can help you manage rental money, keep track of costs, and create reports. You do not need a property management company for these services.
Q2. Is Saving Money by Managing Your Property Yourself Worth It?
Managing a property requires time and effort. You must think about whether saving money is worth the extra work.
Time and Ease: Property managers know reliable contractors who provide discounts and quick help. This saves you time and money.
Location and Renters: If your property is in a busy area or has renters who need extra support, a property manager can help reduce your stress. They make sure the property is cared for well.
Q3. What Do Property Managers Actually Do?
If you don’t know if you need a property manager, think about the tasks they take care of:
Managing Renters: They show open places, check renters, sign agreements, and handle renter problems.
Fixing and Care: They can get lower prices and make sure fixes happen soon and cheap.
Following the Law: Property managers know the rules about renters. They collect rent, control access to the property, and keep it livable to avoid legal issues.
Think about the time, effort, and risks of managing things on your own. Then, think about the benefits of getting a professional property manager. A property manager can help you and keep your investment safe. However, this help is not needed for everyone. Look at your situation and pick what is best for you.
How to Find a Property Management Company?
Finding the right property management company is important for keeping your property in good shape and making money. Follow these steps to make your search easier and find the best choice:
Ask for Referrals
Start with sources you trust. Ask friends, family, and real estate investors for suggestions. People you know, like agents, lenders, or inspectors, can also give you good advice.
Use Online Resources
Platforms like the National Association of Residential Property Managers (NARPM) and Roofstock offer lists of trusted property managers. These resources help you save time by linking you to professionals who have been evaluated for their quality.
Research Reviews and Testimonials
Read online reviews and testimonials. This can help you learn about the experiences of past clients. If you can, talk to other landlords. They can give you direct insights into the company’s performance.
Interview Potential Managers
Ask clear questions about their experience and services. Ask how they handle common issues like disputes or repairs. A good property management company should be open and willing to talk about your worries.
Review Contracts Carefully
Examine the contract for hidden fees or confusing terms. If something seems wrong, talk to a lawyer to make sure you understand what you are doing.
Trust Your Instincts
Choose a property manager you feel at ease with and who talks well. A good relationship is key for a good partnership.
With a careful plan, you can find a property management company that works for you. This will give you peace of mind and more time to grow your investments.
UpperKey – Taking the Problem out of your Hands
We are the group of expierienced property managers. Every one of our clients that chooses UpperKey to manage their rental property can stop worrying about property management.
Not only do we guarantee your monthly rent, but we also match our guests to your property. We choose the most appropriate and high-quality tenants while maximising rents. We are taking care of every aspect. Everything for property owner.
All that and without any work involved for you—it’s the perfect solution for everyone. Do not wait to hire your own property manager.
