Property Management Fees: Beware! You May Be Paying More Than You Think
When selecting a property management company, be sure to check the small print of the management agreement before signing. There are lots of ingenious ways property managers have to bury additional fees in the agreement.
The two basic fees in all property management agreements are the management fee and the leasing fee. The management fee is a percentage of the rental income charged by the management company each month for the services they provide. The other fee is the leasing fee. This is a one-time fee as a percentage of the first month's rent for securing a new worthy tenant to rent the property.
However, there are a number of other ways some property managers collect fees in addition to the two stated above. Here are some to watch for:
- An advertising fee, charged to the owner for any advertising costs to secure a tenant.
- An administrative fee added as a percentage to the cost of any actual repair or replacement costs for appliances, hot water heaters, furnaces, plumbing, electrical, painting, etc.
- A tenant renewal fee, charged each time a tenant renews the lease for another year.
- A vacancy fee, charged as a minimum monthly fee even when the property is vacant.
- A termination fee, charged to the owner if the owner cancels the agreement before the end of an existing tenant's term.
- A termination during vacancy fee, charged to the owner if the owner terminates the agreement when the property is vacant.
- An eviction or court fee, charged to the owner for time and costs involved to evict a tenant.
- A lead paint processing fee, charged to the owner for the administration and compliance procedures to license pre-1978 homes related to federal and Maryland regulations on lead paint.
- And a lead paint contamination processing fee charged to the owner for arranging for the abatement of any lead paint found on the property in addition to the actual costs incurred.
Caveat emptor, or buyer beware! Be sure to read the small print before committing your property into the hands of just any property management company.