There are several reasons to hire a property management company to manage your real estate investments for you, but that doesn’t mean that all property management companies are created equal. When you shop around for prospective property managers, you may notice a significant disparity in each company’s fees. While some companies may offer an impossibly low fee for their services, be wary of hidden fees that can quickly turn a great deal into a financial nightmare. 

Some examples of fees that property management companies may attempt to hide are listed below; be sure to ask your property manager what their services truly cost!

Leasing Fees

Leasing fees are one of the most common ways that property management companies make their money. If you expect a property manager to market the property to prospective tenants as well as screen and place tenants in your property, they will likely charge a leasing fee. Generally, leasing fees are about 50% of the first month’s rent, but some management companies will try to add additional costs to pad their bottom line. Ensure that your management company includes all aspects of the leasing process in their leasing fee, from advertising photos to showing the property, from applicant screening to move in.  

Late Fees 

If tenants are late on their monthly rent, there’s a chance the management company you hired to collect the rent may charge a late fee to the tenant. In some cases, the late fee will be credited directly to the property owner; however, some property management companies may keep the late fee. 

If your property management company keeps the late fee, be sure to ask how many of their tenants are late each month. For some companies, late fees are a big part of their income, and they are more than happy to rent to tenants who struggle to pay their rent on time. 

Lease Renewal Fees 

If your property management company has done an excellent job finding tenants and managing your home, you may find that your tenants want to extend their lease. This is typically great news for you as the property owner, as tenant turnover can be very costly between repairs and vacancy time. However, it’s important to be aware of any additional fees that your management company might charge to renew the tenant’s lease. 

Lease renewal fees are typically a flat, low-cost fee to help cover the property manager’s time to prepare and review the renewal paperwork. If you are charged a renewal fee, your property manager should also provide you with an updated market rent report to ensure your home remains competitively priced. 

Maintenance Fees

One of the most significant benefits of hiring a property management company is that they will handle maintenance needs for you, helping to resolve issues both large and small quickly and efficiently. Like other fees on this list, however, some property management firms will add a fee for repairs coordinated through their company. Whether your property management company charges a flat rate fee per repair or adds a percentage to the final repair cost, it’s important to know how much the true cost of each repair really is.  

Eviction Fees 

Evictions are one of the biggest risks that you take on when you rent your home. Hiring a property management company can help ensure that only the most qualified applicants are approved as tenants, but evictions can still happen even with the most thorough screening. If an eviction does become necessary, it’s important to know how your management company can help and what their fees really include. 

While owners will typically be responsible for the costs of hiring an attorney to evict a tenant, some property management companies will charge an additional fee to help coordinate the eviction. If a property management company charges a fee for every eviction, there’s little incentive to keep good tenants in the property. Property management companies that charge eviction fees may be more inclined to treat your property like a revolving door of tenants instead of working to find high-quality tenants who will stay for years to come. 

Selling Fees  

If and when it comes time for you to sell your rental home, some property management companies may charge an “administrative” fee to help prepare your home to sell or work with your real estate agent. These fees can quickly add up to hundreds of dollars that you weren’t expecting, so it’s important to know up front what the true cost of your property manager really is. 

Rely on Property Management Services With No Hidden Fees

We believe in transparency in everything that we do, including our pricing. That’s why all of our pricing is available online, so you never have to worry about being surprised but a hidden fee again. 

For more information about our property management services and our transparent fee models for Los Angeles County, Orange County, Riverside County, San Bernardino County, and San Diego County, don’t hesitate to reach out to our team today!