Are you considering hiring a property management company for your Cumberland County property? Understanding how payment works, what it covers, and tips for finding the right company is key. Read on to learn about property management company costs/fees and what they cover!
Property Management Fees and What they Cover
- Management Fee: This is the overall monthly management fee to pay for the management services of a PM company. Generally, it is a percentage of the rental income at the properties they manage for a landlord. It is usually around 10%. In addition, some companies offer an all-inclusive package that bundles the fees and services mentioned below. This is usually a flat rate charged monthly.
- Set-up Fee: A set-up fee is a common fee that property management companies will charge. This fee usually covers the cost of setting up your account. Sometimes it will also include the first inspection and welcome materials. On average, this is $300 or less.
- Leasing Fee: There is usually a leasing fee and lease renewal fee. It tends to equal about one month’s rent or up to 75% of it. These fees cover marketing, screening, handling move-ins, and renewals.
- Maintenance Fee: The maintenance fee is in place to cover the cost of any repairs or damage. It generally is 1.5 months’ rent annually.
Flat Fees vs Percentage Costs
As previously mentioned, some companies will offer a flat fee for all of these services while others will take a percentage of income. What are the differences between these billing types and pros/cons of each?
Flat Fee: A flat fee is when a property management company bundles all the fees and charges into one annual fee. All these built-in fees would include all the properties, they are managing for you.
- A set price without additional fees monthly to worry about as it is all bundled
- Tend to be fairer for owners of multiple properties
- Can be just as efficient as a percentage-based company for property manager if they operated well
- Can make a property management company less money than if they charge a percentage for each property
- Cheaper is not always better and although this method may seem cheaper upfront, it doesn’t mean it will be if rent prices drop, etc.
Percentage: As we mentioned above, the standard percentage fee is about 10% of monthly rental income. There may be additional annual fees and lease fees/renewal fees as applicable.
- Tends to be fairer for the property management company
- Both parties make money if the properties do well
- Can be an effective incentive for the property manager to operate properties well
- Fees are subject to change for landlords as rent is increased of additional properties are added
- It may cost more monthly than a flat rate for landlords
Tips for Finding a Property Management Company
Now that you have a general idea about how you may be charged, you can find a property management company and start negotiating a contract. How do you find a good company? Keep reading for some basic tips to finding a Cumberland County property management company.
- Do plenty of research: Use both online research/reputation and opinions from other landlords nearby. This will help you narrow down the choices of property management companies.
- Interview several companies: Always choose a few companies after research to interview. While interviewing them ask questions about eviction rates, prices, and how they charge. It is also vital to ask what they can do to increase profit at your rental properties.
- Know your budget: Have a budget set in mind ahead of time and know which rate you want to pay (flat or percentage). This will help further narrow down the companies that you can afford but also meet your expectations.
- Negotiate: Negotiate the type of charge (if needed) and the monthly price/percentage if need be. Most companies have some wiggle room and will work with you to get close to or match your budget.
A property management company can maximize rental rates, minimize eviction and vacancies, and maintain your property. Hiring a company will likely increase your profit and make up for the cost of their services. Looking for a Cumberland County property management company? Reach out to Bay Property Management Group Cumberland County for services in Carlisle, Mechanicsburg, Camp Hill, Harrisburg, and more!