The Ugly Truth about HIDDEN Property Management Fees.
Consumers would be shocked if they knew that some property managers pay upwards of $1000 to attend courses on how to charge their clients MORE!
At Realty Management Group, we do not charge ANY of these extra fees whatsoever!
Here are 10 fees to watch for:
General Fee (Standard)
This is the standard management rate or fee. The standard fees range from 5-10% depending on building, condition, etc. This fee should be clearly displayed in your contract and not “subject to change.”
2. Tenant Finder or Lease Fee (Extra)
Nearly every company charges a fee equivalent to 1/2 of the first month’s rent, up to the entire first full month’s rent. While this may be an industry norm, this archaic practice should never be accepted. Your monthly management fees should pay for everything, including leasing. Your manager should be finding long-term tenants, not tenants that move every 12 months, which allows them to charge this fee more frequently.
3. Setup Fee (Extra)
A setup fee is an easy way for companies to generate additional revenue. What other business do you pay for them to do their job, and then pay them again to do their job? This should be included in the general fee.
4. Unpaid Invoice Fee (Extra)
When your property needs a repair, a property manager will oversee the execution of that repair. If the repair is above and beyond your repair reserves, many companies will charge interest from the day it is paid. You should have a 14 to 30-day grace period to replenish your repair fund.
5. Reserve Fund Fee (Extra)
This fee is closely connected to the “Unpaid Invoice Fee” mentioned in #4. Many companies will charge this fee when they have to front the cost of the repairs, while also charging interest. You should be able to replenish the reserve when the next month’s rent comes in.
6. Cancellation Fee (Extra)
Did you know that most property management agreements are for 1 year and automatically renew? If you decide that your property manager is not a good fit, you have limited options. You can either cancel at the end of your term, or pay a hefty cancellation fee. A management company should be confident enough to have a cancellation guarantee in place.
7. Renewal Fee (Extra)
Isn’t the job of the property manager to find a long-term tenant? Why would a manager get rewarded for having to find a new tenant? This expense should be covered by your management company, especially when it’s a tenant they chose.
8. Eviction Fee (Extra)
In the event your tenant does not pay, an eviction proceeding will be initiated. You should not be charged a fee when this happens, as you will already bear the expense of hiring an eviction attorney and the related court costs. In addition, your manager should handle all paperwork on your behalf for no additional fee.
9. Maintenance Fee (Extra)
Water leak, broken window slider, drain clog, etc. These are common issues that need to be resolved. You should not be charged a fee for your management company to do what is required of the job.
10. Maintenance Override
When a water heater goes out and causes a flood, the damage can cost around $2,500. Many companies will charge a percentage above and beyond the cost of the repairs. In this situation, your bill would go from $2,500 to $2,750.
As you can see, your profit margins will drop drastically due to all these “junk” fees. A property manager’s goal should be to protect their clients’ investments while helping increase returns. A potential owner must ask, “What does the GENERAL FEE cover?” The opinion of Realty Management Group is that the general fee should cover EVERYTHING!
When searching for a San Diego Property Management company, be aware that there are many more fees that should be taken into consideration in addition to the general fee.
Realty Management Group is an industry leader that offers property management services for a low flat fee of $125/mo. There are no hidden fees whatsoever You will simply be paying $125 each month for exceptional property management services.
