Why You Want To Pay Property Management Fees
30,000 Ft
Generally, property management fees in Tampa range from 8% to 10% of the properties monthly rental income. These fees cover a range of services essential for maintaining your property and managing tenant relationships. The services typically include setting rent prices, preparing and listing rentals, tenant screening, pet screening, fraud prevention, lease management, rent collection, rare evictions and other legal headaches, and handling maintenance and repairs.
You say, “I can do all of that myself. On the off chance I run into an eviction, I’ll deal with it by finding an attorney”. Property managers will still do everything above better and more professionally than you can. You simply don’t have enough time or money to scale (unless you own 50-100 properties) to create processes and systems that rival theirs.
Fee Structures
You'll encounter two main types of fee structures for two different services: tenant placement ONLY or full-service.
Tenant placement only is exactly what it sounds like. The property manager will help you list your rental and find a tenant. The PM will go through applications and vet them like they would with full-service. That’s where the similarity ends. The PM will present an approved application and lease agreement to the owner and may or may not do a move-in inspection (depends on the company). Tenant placement only is a service that usually costs 100% of the first months rent. The owner/landlord will handle all communication, repairs, and anything else directly with the tenant once the lease agreement is signed.
Full-service is what most landlords and investors pick. You should get a discount on tenant placement when selecting this option. Once a lease agreement is signed, the tenant will be moving in to an inspected unit with a move in inspection signed off. Your property manager will handle literally everything for you to make this a 99% passive stream of income. The 1% that involves you is approving work orders that come in and signing e-docs. 8-10% is common depending on how many properties you give your manager, locations, and rent rates. The average tenant placement fee, with full-service, is 50-75% of the first months rent. The good news? You don’t pay your property manager unless your tenant is paying rent! The monthly fee is only paid when the property is occupied. That leads us to another big question.. are there any other fees?
Ask this question to your PM in question. There should not be any hidden or miscellaneous fees. You’ll want to verify that all services are wrapped under those two fees and you won’t get nickel and dimed. I have seen some property managers go as low as 6% monthly but charge extra for every little service. You get what you pay for!
Why?
Most of the time, property managers are operating on razor-thin margins. It’s scaling that allows them to profit.
Time Savings: Property management can be time-consuming, especially for investors who have other commitments or own multiple properties. A property manager handles day-to-day operations, saving you significant time.
Expertise and Experience: Property managers bring expertise in local real estate markets, legal compliance, and tenant management. Their knowledge can help maximize your rental income and ensure your property adheres to all legal requirements.
Effective Tenant Screening: Finding reliable tenants is crucial. Property managers have the resources and experience to conduct thorough tenant screenings, reducing the likelihood of rental issues and vacancies.
Maintenance and Repairs Management: Property managers handle all aspects of property maintenance and repairs, often having networks of reliable and cost-effective service providers.
Rent Collection and Financial Management: They streamline the rent collection process and manage financial records, providing you with regular reports and insights into your property’s performance.
Reduced Tenant Turnover: Good property management often leads to higher tenant satisfaction, which can reduce turnover and vacancy rates.
As always, budget for these costs and choose the right PM and structure so you can ensure effective management of your investment properties and maintain your profitability.
