Today we are talking about the general cost of property management and what you can expect in the Phoenix market.
Management fees are the most common costs charged by management companies. You pay this fee in exchange for the bulk of a property manager’s services. This usually includes your monthly financial statements and bookkeeping, rent collection, coordinating with tenants, work orders, protecting the property and working with vendors. It’s the cost of managing a property. This can be a flat fee or a percentage of the rent collected; it depends on your property management contract.
Leasing fees are charged to the owner once a property manager has completed the successful placement of a tenant. Again, it can be either a flat fee or a percentage structure based on the gross lease. The gross lease is the number of months on the lease agreement multiplied by rental amounts. So, if you charge $1,000 per month for your rental home, the gross lease over a 12 month tenancy is $12,000. This fee will cover marketing, commissions, media and advertising.
Normal inspections done in the property should be covered by your monthly management fee. However, some inspections are unique, such as an HOA inspection or an inspection requested by the owner or an insurance company. They are outside the normal scope of management services, and there may be a fee schedule for that.
Property managers who are required to pay a state sales tax or a licensing fee might charge a service fee to property owners to cover this. Owners need a license to operate the property within the municipality.
All landlords must be prepared for ongoing costs like home maintenance fees, pool and landscaping costs, pest control and things that come up on a recurring basis. Ay repair costs not caused by tenant damage or abuse will be owner’s responsibility. You’ll also have to pay for upgrades, or improvements that are required while prepping for a new tenant.
The administration fee can include anything from credit application fees to the tenant, annual administration fees for setting up your property in their system, administering the eviction process and handling rent collection. Before you sign on with a property manager, get a list of what these fees cover and how much they cost.
We don’t have any hidden fees at Paramount. We like to be transparent about our costs and fee structure. If you have any questions, please contact us at Paramount Property Management & Realty.