Beware of cheap property management. That’s property management that’s too good to be true. Good things cost money, and it goes back to the age-old expression. You get what you pay for. You don’t want to be overcharged, but if it seems like you’re getting something for nothing, take a closer look.
Property Management Fees: Hidden Costs
Are there hidden fees?
Watch out for things like vacancy fees. If your property is vacant and not cash flowing, and you aren’t making any money, why should the property manager make money?
There may also be account set-up fees. How much, if anything, are you charged to set up an account with a property manager? You need to ask.
Property Management Cost: Maintenance
Another big fee to be careful of is maintenance or contractor fees. If you are a landlord or an investor, eventually you’ll need someone to fix or maintain your property. A toilet might cost $75 to fix, but is that the cost of repairs and parts, or is there an extra mark-up that’s going to your property manager? Ask that question. You need to know if you’re paying the net fee which is the same as what the property manager charges, or if the cost is marked up. You should also ask if the contractor kicks anything back to the property management company. This does happen. You need to ask and be clear about whether this is taking place.
Property Management Fees: Guaranteed Rent
Something that can really be damaging is guaranteed rent. There is no guaranteed rent. As a landlord, you are always at risk that a tenant won’t pay. As a property manager, it’s our job to screen tenants and make sure the tenants we place have the ability and willingness to pay. I have seen some managers offer guaranteed rent, but that isn’t rent at all. It’s a payment advance. Read that guarantee and make sure you understand it. Make sure it’s not a cash advance that you could be liable for paying back if the tenant never pays rent.
We’ll have more to tell you about property management fees, so please stay tuned. If you have any questions, please contact us at All County Medallion Property Management. We provide property management in Fort Myers, and property management in Cape Coral.