The rise of pursuing side hustles has led to an increase in rental properties. However, managing these properties yourself can be overwhelming. You need to look for a property manager to ensure rent collection and address tenant concerns promptly.
A common question that arises is, “How much does rental property management cost?” This article will answer that question and explain the rationale behind the cost structure.
How Much Does Property Management Service Cost?
The cost of rental property management depends on the type of services you’re looking for. Here are the five main types of property management services:
Residential Property Management:
Residential Property management involves managing single-family homes, apartments, and condominiums for investors or individual owners.
Commercial Property Management:
This consists of managing retail spaces, industrial properties, office buildings, and other commercial properties.
Multi-Family Property Management:
Multi-family property management is about managing apartment complexes. Therefore, it involves focusing not only on repairs but also on community amenities and tenant relations.
Short-Term Rentals/Vacation Property Management:
These are properties meant for short-term stays. Property management services concerning these include marketing, booking, and turnover services.
Special-Purpose Property Management:
Special property management involves managing student housing, government facilities, or government-subsidized housing. Managing them has to do with adhering to specific regulatory and operational requirements.
Factors that Influence Property Management Costs
The answer to “How much does a property management company cost?” can vary widely depending on the following factors:
- Property Type – We have already discussed the property types, and they determine how much money you may need to pay.
- Location – Property management costs can vary depending on where the property is located. An urban area may have higher charges than a rural one. Local market rates also play a role.
- Services Provided – Basic services like maintenance are less charged than comprehensive management packages.
- Number of Units Managed – If there are larger portfolios to be managed, economies of scale may apply.
- Property Condition – If a property is well maintained, it will require less work, which means it would need less management service.
- Tenant Turnover Rate – Tenant turnover means how many tenants are leaving the property yearly. If that rate is high, there will be more work for property management companies.
- Local Regulations – Regions that have strict regulations will require more compliance work, which can increase the price of property management services.
- Additional Services – Special services like inspections, evictions, etc., often come with their own separate fee structures.
- Experience – How much a property management company costs will also depend on the experience of that company. Established brands may charge you a higher fee.
- Technology Used – The type of technology implemented will also have an impact on how much money you will have to pay to property management managers.
- Occupancy Rate – Units that are vacant often require more work.
How to Find a Property Management Company That Charges a Reasonable Fee
With numerous factors influencing property management charges, consider these tips when searching for a company that offers reasonable fees:
Research Local Market Rates
The first thing to consider is to research local market rates. Look up the average fee in your area and compare the companies that offer property management services in your region.
Get Multiple Quotes
Don’t just stick by a single company; get quotes from multiple organizations. If you think the charges are higher than expected, ask the companies to provide a breakdown.
Evaluate Services
Offered Most property management services come in the form of packages, which means you need to evaluate each service within the package before putting your seal of approval. Find out if anything vague is written on the fee structure since it will determine whether you will end up with any hidden fee requirement.
Read Reviews and Get References
You need to pay more attention to the companies you are interested in. Therefore, check out what other customers say about them. Also, talk to the company you are interested in and ask them for references.
Consider Volume Discounts
If you want multiple units managed, you can ask for a discount. Also, learn whether the property management company is flexible enough to charge less based on your specific needs.
Conclusion – Property Management Charges Vary Widely
The cost of property management varies greatly based on location and the multiple factors we’ve covered. When researching companies, be aware of your specific needs to avoid unexpected charges. Remember, the question “How much does a property management service cost?” doesn’t have a one-size-fits-all answer, but understanding these factors will help you make an informed decision.