Today we’re going to discuss the various fees associated with property management and the cost of hiring a professional property manager, which is often lower than the cost of managing a property yourself.
The management fee is something that’s charged every month. Some managers will charge you a flat fee per unit and others will charge a percentage of the rent that’s collected. Sometimes, there will be a lower cost when you have more properties. There are different standards in fees among most management companies.
Other charges that you’ll come across in rental property management costs include maintenance fees. You need to compare apples to apples with maintenance costs, because sometimes you’ll pay an hourly maintenance rate, and sometimes you’ll have to pay trip charges. Some managers charge mark-ups on materials and others have minimum costs for their time. When you’re budgeting for maintenance, keep these variables in mind because each company is different in the way they bill for maintenance. A company that charges $50 per hour but bills in 15-minute increments will be better for you than a company that charges $40 per hour and has a minimum one-hour charge for everything they do.
Lease Renewal and Leasing Fees
Some management companies will charge lease renewal fees. When the lease term is up, there’s a processing fee that’s charged. The managers who charge this will say it’s because they’ve done a good job keeping the tenant in place, so the fee is warranted. The leasing fee is also a cost that equals half a month’s rent or a full month’s rent. It covers the costs of marketing a vacant unit and getting a good tenant in place.
All these charges will vary from company to company. It’s unlikely to find two companies that have the same pricing.Look at the structure and ask enough questions so you understand the fees you’re paying. These will be your ultimate long term costs, and you want to be prepared.
Hiring a property manager is hiring a service.You’re hiring someone to give you your time back. Self-management costs you a lot in time, and you have to do a cost analysis to see whether it’s more valuable to have those extra hours back every month or $150 in your pocket.
If you have any questions about the cost of property management, please contact us at GC Realty & Development. We’d be happy to tell you more about property management in Chicagoland.
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