What do you get & what you pay?
We now have an idea now about what property management companies do exactly (hint: if your are still curious, you can check out my blog post from yesterday about what exactly property managers do). The next question is always: How much does property management cost? Since you ask, here are the fees in bare bones form, most property management companies charge in the following three ways:
1. Tenant Finding Fee.
This expense comes up when tenants move into your property and start paying rent. The charge should only come up again if you tell your property manager to find you a new tenant after the first one moves out. This fee is generally designed to cover the commission paid to the person showing your house, advertisement costs if any, and any other charges related to leasing your property like online credit checks or welcome baskets. We charge $695 per new lease in Alberta, and 50% of the first month’s rent for properties in the greater Vancouver area.
2. Monthly Management Fee.
This expense is based on the monthly rent that your tenant is paying to live in your property. The property manager charges the fee against the rent collected, and generally takes their fee out of what they transfer into your account. We charge 8% of rent collected on a landlords behalf in Vancouver, and 10% in Calgary and Edmonton.
3. Maintenance Expenses.
Most property managers charge extra for repairs and renovations to be completed on your rental property, and unless specifically agreed to beforehand, you should expect any repair or home improvement costs to be over and above the monthly management or tenant finding fees that we already looked at. Since every home is different, repair costs can vary greatly but most property managers charge a service fee or mark up on any repair or renovation project expenses. We charge an additional 10%.
I have already received a few emails from people asking why the fees vary between cities; and the answer relates to the size of the city. Property management tasks like leasing, rent collection, and maintenance take longer in bigger cities due to traffic, travel times, distance between destinations, etc. and the fees correspond.
Hope this helps!