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Do My Property Management Fees Cover Rental Maintenance?

It may surprise some rental owners, but property management and property maintenance are not necessarily the same. For landlords, maintenance is just one item in a long list of responsibilities to keep a rental business running. Savvy investors look to professional management firms to maximize profits while avoiding the daily stresses associated with the rental industry. However, when choosing the right company for your business, you do get what you pay for. Continue reading below as we discuss what property management fees typically cover and what to expect for rental maintenance.


Property Management vs. Property Maintenance

Routine, preventative, and emergency maintenance are all essential parts of the rental management process. However, not all property management firms are created equal. In that lies one of the most significant differences between property management and property maintenance. Sometimes, maintenance is considered a part of a full-service property management plan, while others view it as “a la carte.” Let’s break these two categories down further so landlords can see what they get for the property management fees they pay.

What is Rental Property Maintenance?

For landlords, maintenance and repairs are an inevitable part of the business. That said, the benefit of hiring professionals is their ability to access a trusted pool of third-party vendors. Typically, property management fees cover maintenance coordination and not the repair cost itself. The job of handling rental maintenance includes facilitating basic upkeep, emergency breakdowns, and preventative repairs. The maintenance staff is also responsible for scheduling repairs with tenants, following up on completed work, and invoicing the owner accordingly.

What is Comprehensive Property Management?

Unlike maintenance coordinators, full-service property management focuses on a comprehensive approach where managers handle all daily tasks – including maintenance. That said, owners pay property management fees to gain access to the experience and resources of a team of industry experts. When done correctly, efficient managers can streamline processes and maximize cash flow while ensuring top-notch customer service. Some of the everyday responsibilities of a property manager include –

  • Targeted Marketing
  • Property Showings
  • Thorough Tenant Screening
  • Lease Agreement Drafting
  • Online Rent Collection
  • Help with Legal Services
  • Rental Property Registrations
  • Basic Accounting Functions
  • Routine Inspections
  • Move-in and Move out Reports
  • Maintenance Coordination and Invoicing

What Factors Determine Property Management Fees?

When it comes to calculating property management fees, various factors influence the overall cost. As an owner evaluating potential management firms, it is vital to understand how fees are determined. Some of these factors include the following –

Property Management vs. Property Maintenance

  • Services – The extent of services is the main determining factor in property management fees. So, if your goal is to have a company step in to help with maintenance only, you may pay a lower rate than an owner looking to hand over all daily tasks.
  • Unit Type – Depending on the type of unit, property management fees may vary. For example, the fee structure can differ between commercial complexes and single-family homes. In addition, certain types of properties may require more oversight than others and thus, could influence charges.
  • Property Size – Managing a 200-unit multi-family building and a vacant single-family home are two very different things. Therefore, the larger the property size or unit count, the more owners will likely pay.
  • Overall Condition – Newly constructed or fully renovated properties in good condition do not require as much upfront oversight to prepare them for rental licensing or new tenants. So, fees will likely reflect how much initial and ongoing work the property needs.
  • Property Location – In many cases, rental rates play a crucial role in determining property management fees. For example, a luxury property in an in-demand area may cost more to manage than one that generates less monthly rental income.

Common Property Management Fees

After discussing what factors determine property management fees, let’s review how these fees break down. Keep in mind that each company may have a different fee structure, and it is imperative that owners carefully read their contracts. That said, let’s take a closer look at the typical fees associated with professional property management.

Monthly Management Fees

Hiring a professional property manager will involve paying a monthly fee for the services rendered. Typically, this and any other applicable fees are outlined in a Property Management Agreement that owners and the representative sign. So, always be sure you understand what the property management fees include before making your final decision. For instance, some companies may charge a higher rate, but they also have more comprehensive services. A monthly management fee could be based on one of the two options below –

  • Percentage – The most common way firms charge property management fees is to calculate a percentage of the gross monthly rent. Typically, this varies between 6% and 12%, depending on different factors. First, however, owners must verify if the fee is for rent collected or rent due. This is a key distinction as owners could find themselves paying for property management fees even when the unit is vacant. So, make sure the contract states the cost is based on the rent collected.
  • Flat Rate – In some cases, property managers will charge a minimum monthly fee or a flat rate based on the type of property involved. In general, $100 to $250 per month as a flat rate fee is standard. However, this is subject to other determining factors, such as the size of the unit and negotiated contract specifics.

Monthly Management FeesOther Property Management Fees

  • Initial Set-up Fee – Usually, a set-up fee is around $100 to $500 and covers the expenses of setting up a new account. Additionally, this may cover an initial inspection of the home to determine recommendations on repairs or rental rates.
  • Leasing Fee – Property managers charge a leasing fee to cover the cost of marketing, showings, screening applications, and drafting lease documents. Depending on the contract terms, it may be a flat fee of a few hundred dollars or up to one month’s rent.
  • Maintenance Coordination – While coordinating maintenance is a part of any full-service manager’s job, the actual repair bill is a separate charge. Rental owners can usually choose to receive an invoice or have the repair deducted from a reserve fund. A maintenance reserve fund is a different account set up to allow the manager to process invoices and handle emergency repairs more efficiently. Typically, the owner must maintain a minimum balance and decide if the manager must inform them before completing repairs over a certain dollar amount.
  • Eviction Fee – In addition to applicable court costs, rental owners will need to pay a separate fee for a property manager to handle eviction proceedings.
  • Termination FeeEnding a property management early may result in the owner owning the manager an early termination fee. Keep in mind, this fee, like many others, can vary greatly. Failing to adhere to all obligations under the agreement, including paying applicable fees, could result in being pursued legally for breach of contract.

How to Find the Best Property Management Company?

No two property management firms are the same. For rental owners trying to find the best company, wading through the many options can prove overwhelming. Whether owners still want to do some of the work themselves or relinquish all control to a third party, hiring a professional requires detailed due diligence. Let’s review some of our top suggestions below.

How to Find the Best Property Management Company?

Steps to Finding a Professional Property Management Firm

  1. Lots of Research – Thanks to modern technology, seeking out managers in any area is easier than ever. Online searches allow owners to read reviews of current clients as well as current and former tenants. Also, owners can turn to reputable sites such as Angie’s List or the Better Business Bureau for additional insight.
  2. Conduct Interviews – After researching available options, narrow the list down to the three most promising prospects. Then, contact each one to ask probing questions that can help make an informed decision.
  3. Check References – Besides talking to the property management firm itself, ask for a few client references. Talking to actual clients offers a different and often more honest evaluation of the company’s ability to maximize rental investments.

Top Questions to Ask a Prospective Property Management Company

  1. What types of services do you offer?
  2. What are your fees, and what services do they include?
  3. Is the company led by a real estate broker?
  4. Can I review sample documents, such as the PMA contract and rental lease?
  5. Describe the techniques used to market properties?
  6. How do you determine the rental rate?
  7. Describe the tenant screening process, and what are the standard qualifications?
  8. How many properties does a property manager typically oversee?
  9. Is there a penalty to cancel my contract? If so, what are the terms?
  10. Can you provide any current owner references?

Look No Further Than Bay Property Management GroupLook No Further Than Bay Property Management Group

Finding the best firm to manage your rental portfolio is not an easy task. However, the benefits of qualified property management far outweigh the initial stress of choosing the best prospect. At Bay Property Management Group, our team of industry experts focuses on full-service rental management. Thus, allowing owners to sit back and enjoy the benefits of rental ownership without the daily hassles.

Our competitive and transparent property management fees are some of the best in the industry, and we pride ourselves on delivering top-notch customer service. To learn more about our extensive services or to schedule a free-no-obligation rental home analysis to see your income potential, give us a call today.