Today we’re talking about the cost of property management. Every day, we get phone calls from investors and property owners and the first question they ask is how much it costs. There are different ways to calculate the costs, and we recommend that you calculate the true cost of property management. The true cost includes two categories: what a company charges you to manage a property; and, what a company can cost you in the management of your property.
What Property Managers Charge…
Most property management companies charge a percentage of your gross monthly rental income. That’s usually between eight and 12 percent. Another common charge is an upfront fee or a set-up fee which is generally between $150 and $500. Aside from those two charges, some companies will charge other hidden fees that might not get mentioned during your initial discussions. There could be a move in fee, a move out fee, renewal fees, membership fees, and extra maintenance charges. Be sure to understand all the costs you’ll face before you hire a property manager.
What Property Managers Cost
Calculating what property managers can cost you might be a little more difficult, but it’s something you need to consider. The wrong property manager can actually end up costing you a lot of money. For example, there are costs associated with vacancies and how long they take to fill your rental property. If you’re renting a property for around $1,000 to $1500 a month, you will lose around $50 a day when it’s unrented. If your property manager doesn’t know how to advertise, show the property and market your listing, you stand to lose around $50 a day. Over two or three months, those costs add up to around $3,000 just to work with them.
Another example is a property manager not screening properly, resulting in a bad tenant for you. That will cost a lot of money. If you have to evict tenants, it can cost between $400 and $800 in Utah. If they cause damage, you’ll have to pay for repair costs and restoration costs, as well as clean up costs. Property managers who don’t screen properly can cost you thousands of dollars.
Not knowing the market well will also cost you. A small business or a new company that doesn’t understand what your property should truly be renting for will get you less money than you should be earning. That will cost you a lot over the term of a lease.
Make sure you’re working with a property manager that doesn’t cost you extra money. Contact Real Property Management Wasatch to calculate the true cost of working with a property management company. We’d love to help you!