You’re looking to invest in real estate but aren’t exactly excited to become a DIY landlord. Luckily, with a third-party property management company, you don’t have to! Property management companies offer a wide variety of services, from customized to turnkey, to help you get the most out of your investment. Due to the complex nature of this line of work, it can sometimes be confusing for new investors to know exactly what they are paying property management fees for. Reputable companies will always be upfront with their pricing, but it doesn’t hurt to do your research beforehand so you have a good idea of the kinds of costs you’ll be expected to pay.
This fee is typically paid monthly and covers the cost to manage your property from day to day. This could include such services as screening potential tenants, showing the property, responding to maintenance requests, preparing the formal lease agreement, maintaining a 24-hour emergency response system, and more.
Management fees are typically calculated based on a percentage of the monthly rental rate. You can expect this number to be around 10-12% of the gross monthly rent. It is important to carefully review your contract so you are aware of all the services that the management fee covers. Some companies offer a lower upfront cost but will nickel and dime for anything over and above a basic package.
Initial Setup Fee
Some companies will charge a one-time setup fee when you sign up with them. That being said, this isn’t always the case so be sure to ask! GIL Property Management, for example, only requires this fee if you have an existing client in place. This is to cover such things as accounting, processing file documents, and the tenant welcome package.
In the case that your property has one or more vacancies, property management companies will often include a vacancy fee for inspecting and ensuring the unit is maintained. In most cases, this is in the form of a flat fee per month, per unit. In our Calgary and area properties, we require a $95 fee.
Lease Renewal Fee
When an existing tenant resigns their lease, your property management company may likely request a lease renewal fee. This one-time cost comprises the expenses related to negotiating a new lease term and drawing up renewal documents.
Early Termination Fee
If for whatever reason you decide to terminate your contract before the agreed-upon timeframe, you will most likely be subject to an early termination fee.
Expenses not covered under the aforementioned categories are often all lumped together under administrative fees. This could be anything from couriers to key cutting, photography to advertising. We try to make it easy on our clients by combining these smaller expenditures into an annual fee, but every property management company is different.
Third-party property management can come with many advantages as long as you are prepared to get what you pay for. We hope the above list gives you a solid jumping-off-point for what to expect when it comes to signing the dotted line. For a more in-depth look at our costs for both our Leasing Only and Full Service Management Packages, reach out to our team of friendly professionals today!