Property Management Fees

At Castle Inc., we do not charge a fee for every single service we provide. However, you should be aware of the potential fees that other property managers may charge, and the number of creative fees can be onerous. 

Here is a partial list of add-on costs and charges that you could receive after engaging the wrong management group

Property managers collect fees for services to keep your property occupied by a reliable tenant and to handle the dirty work, like late night phone calls, maintenance management, hunting down rent payments, or dealing with an eviction process.

Leasing Fee: 

A leasing fee is charged to owners to cover the cost associated with advertising and showing your rental property, reviewing applications, screening tenants, processing lease paperwork, and preparing a property for move-in.  Leasing fees usually cost 75-100% of the first month’s rent and are sometimes be referred to as placement fees.

Monthly Management Fee:

A monthly management fee is collected for services associated with accepting and processing rent payments, ensuring tenant rent payments, property inspections, maintenance management, and emergency maintenance calls.  Monthly management fees typically range from 7-10% of collected rent on a property.  

Late Fee:

 If a tenant needs to pay a late fee for a late rent payment, a management company can choose to collect all or a portion of late fees charged to your tenants or pass along 100% of late fees to you as the owner.

Maintenance Fee:

Depending on who the management company uses for repairs and property maintenance, they may charge a markup for cost-of-services and keep the difference from the owner as management income.

Lease Renewal Fee: 

When a current tenant decides to renew their lease for your property a management company may charge a flat fee per property or a full month’s rent, by treating the lease renewal like a leasing fee.

Vacancy Fee:

Some property managers collect a fee even if your rental property is vacant and not making any rental income.  Vacancy fees can range from a small flat fee or the regular monthly management fee even if no rent income is coming in.

On-boarding Fee:

An on-boarding fee, or setup fee, may be charged as a one-time amount to establish a new partnership with management company and set up your account. Setup fees can vary depending on how many properties or units exist in your portfolio.

Other Income Fees:

Management companies may keep all, part of, or none of income associated with returned check fees, rental income for pets, lease violation fees, unpaid invoice fees, bill payment fees, or income from laundry or vending machines.

Other Types of Management Fees

Eviction Fee: 

Evictions can take a lot of time to process, especially if taken through to court.  Management companies may charge fees based on the amount of effort and time it took to remedy or process an eviction.

Other Income Fees:

Management companies may keep all, part of, or none of income associated with returned check fees, rental income for pets, lease violation fees, unpaid invoice fees, bill payment fees, or income from laundry or vending machines.

Questions for Apartment Managers

When assessing a property management company, make sure to ask specific questions about their fee structure and the services included.  Consider the management company’s performance and decide if you are getting value in exchange for your money. You also have the opportunity to negotiate contract terms.

Value:

Typically, apartment or condominiums managers charge a monthly fee to administer, inspect, maintain and operate your properties. Fee generally range from as low at 7 percent to as high as 20 percent for rentals and $35 to $40 per door for condos.  It’s true with anything you do, but you get what you pay for most of the time. 

Communication: 

How well will the property management company and their managers communicate with you?  Do they want text, email, phone, or fax? Do they offer 24/7 live operator telephone support all year round?  Most likely, you will want instantaneous responsiveness and service for emergencies, complaints and issues.

Agreement Termination:

What are the terms, conditions and penalties involved should you decide to cancel your property management contract?  Sometimes, the manager you hire is a dud, lazy, unknowledgeable and uncooperative. In this case the sooner you can terminate the agreement the better.  Is there a charge for breaking your contract? Penalties?

Repairs and Maintenance: 

Who does the actual repairs and required maintenance? This depends usually on the scope and complexity of the job.  It’s always best to deal with professionals who are certified in their trade for many reasons.  The job gets down right the first time, and usually comes with a guarantee.  We don’t want headaches!  Sometimes your service provider will have a crew on staff who can take care of the basics. Most companies use contractors for just about everything, such as plumbing, HVAC, landscaping, cleaning,  and etc.  Castle Inc. has a portfolio of tradespeople, contractors and professional that offer dependable, and trust worthy services at competitive rates.

 Monthly Statements: 

Does the company send out monthly or quarterly statements, and on what day.  As previously discussed, monthly income/expense statements sent out on the 6^th is a good way to stay up to date on a routine basis.

Evictions: 

There are cases where it becomes necessary and must be handled correctly and in a timely manner.  Deadbeat tenants must be held accountable, and as soon as the law provides.  Notices of past due must be sent immediately.  There are slow and fast ways to handle this, but there’s a price and its good to know in advance what that cost is.  Management companies may charge fees based on the amount of effort and time it took to remedy or process an eviction. 

 Landscaping and Yard Work: 

Most management companies do a poor or very poor job at landscaping, yard work, and snow removal.  They know how to mow a lawn and use noisy, dirty, and highly disruptive leaf blowers.  Leaf blowers are hated just abut everywhere; they kick up dust, animal waste, sand and stones, and then the operator blows it out on the street, which by the way is illegal.  Ask how much these services cost and what you get in return.

Reserves: 

What kind of reserve does the company require? The reserves are used in case anything comes up. Most managers will require a certain amount.

Accounting: 

The manager is looking after inflows (receipts) and outflows (payments). Most of the time excess cash, or profits, should be transferred to you at a specific date each month.  In fact, there are regulations covering this.  Make sure you know when you can expect funds transfers to hit your account.   

Tenant Deposits: 

Typically, tenant deposits should be held in reserve, however owners often have their own methodology.  Are deposits commingled, or simply put together with all other income for your account? Do you require damage deposits, and if so when are these funds released back to the tenant?

Vacancies: 

Sometimes it takes a lot of work to fill a vacancy. Most managers will charge between 50-100 percent of the first month’s rent, commonly referred to as a ‘placement fee’.

Advertising: 

There are several great ways to fill vacancies by advertising online at free sites.  Once prospective tenants inquire, an appointment is set up for all the prospects to view the apartment at the same time on the same day.  This creates a competitive atmosphere that often results in a rapid closing. Does your property management company have the skills to truly advertise and successfully rent your property?