Perhaps you are already leaning toward hiring a property management company to manage your investment properties if the price is right. Understanding what property managers can do for you and how they make their money will help you arrive at the right decision for you. 

Searching for an experienced partner to manage your rental property? Palmetto State Properties is known for their ability to manage, market and maintain rental properties in the greater Charleston, SC area. Contact us today. 

What Can a Property Manager Do for You?

Perhaps the better question is, “What do you need a property manager to do for you?” That depends to a large extent on your personal involvement in managing your investment properties. If you’re considering hiring a property manager, it’s probably because you lack the time, interest, skills, or proximity to be your own property manager. 

Consider which of the following you want a property management company to do for you, for example:

• Collect rents
• Inspect and maintain vacant properties or units
• Advertise, show and lease vacant properties or units
• Perform or arrange and oversee repairs and routine maintenance
• Conduct periodic property inspections
• Respond to tenant complaints
• Handle evictions

Clarifying your needs and expectations gives you the basis for requesting cost estimates from potential property management companies. You can see our owner services here. 

How Do Property Managers Charge for Their Services?

Property management companies typically charge either a percentage of rents collected or a flat monthly fee based on the tasks delegated to them and the associated demands on their time and resources. 

Rent-Based Approach

Property management companies that charge property owners a percentage of monthly rents typically multiply the total rent collected for the month by 8% to 12%. The usual practice is to include vacant apartments in the calculation, even though no rent is collected for them.

The truth is that vacant units require attention, perhaps more than occupied ones do. Property managers either charge a standard fee for inspecting vacant apartments weekly, or they include in the total rent figure the rent that would be collected for vacant apartments if they were occupied. 

Fixed Fee Structure

The other pricing approach commonly used by property management companies involves setting a fixed monthly fee that reflects:

• the type of property (single-family or multifamily)
• property size (square footage, number of rooms, number of units, etc.) 
• property age and condition
• Specific services provided

If you choose a property manager that charges a fixed fee, make sure you agree on the services provided. Fees for certain services may be considered as add-ons to the basic monthly fee.

Typical Property Management Services

Some of the services described below are considered standard and are included in the monthly fee charged by a property manager. Others may be treated as extras because they are not provided on a regular basis. Here at Palmetto State Properties our pricing is unmatched, where most companies charge anywhere from 40-100% for the first full month’s rent as the leasing fee, we charge 30%. And our management fee is a mere 10%. Other common fees that companies charge are:

Managing Vacant Properties

Bad things can happen when a property is vacant, such as break-ins or vandalism, or an undetected water leak. Property managers typically make weekly visits to vacant properties. 

Advertising and Leasing

It’s common for property owners to rely on their property management company to advertise vacant apartments and show them to potential tenants. This often is an add-on charge, especially when tenant turnover is low. At Palmetto State, this is included.

Collecting Late Rent Payments

Chasing after tenants to collect late rent payments can be challenging. Property owners who charge late fees should expect their property management company to want a percentage of the late fees collected. Typically, the property manager will assess an add-on fee equal to about 25% to 50% of all late fees collected during the month.

Repairs and Maintenance

Property managers either have their own crew or tap into their network of handypersons, painters, plumbers, electricians, HVAC professionals, and so on to handle repairs and routine preventive maintenance. They may charge as much as 10% of the total repair or maintenance bill as a project management fee for overseeing major projects.

Scheduled Inspections

Some property management companies will charge an add-on fee to conduct quarterly or semiannual inspections as part of a regular preventive maintenance routine. Others consider scheduled inspections to be a basic service covered by their normal monthly fee. We include a minimum of two semi-annual inspections by a licensed contractor for no additional charge.

Handling Evictions

In many states, the eviction process can be long and cumbersome. Whether an eviction is because of nonpayment of rent or some other violation of the terms of the lease, ousting a tenant involves working with an attorney that has experience in handling residential evictions. Property managers typically charge an add-on eviction fee of $500 or more for their role in the process.

Start-Up and Termination

It’s common for property managers to charge a one-time fee (usually a few hundred dollars) to handle all the start-up tasks when contracting with real estate investors to provide property management services. There may also be a contract termination fee to cover income lost if you end the property management contract early without cause.

Which Approach Works Out Better for a Property Owner?

Both methods have their advantages and disadvantages. The most important thing is to find a reliable, reputable property management company and make sure you understand their fee structure. If there can be add-on fees, you need to know upfront what they are and when they apply. The most important thing is predictability, so your planning and decision-making are based on numbers that won’t fluctuate too much from month to month.

Get in touch today to find out how we can help.