Property Management Fees: What Are You Really Paying For?

Property Management Fees: What Are You Really Paying For?

One of the first questions I hear from rental property owners is:

“How much do you charge for property management?”

It’s a fair question. If you own an investment property, every expense affects your bottom line. But after working with rental property owners, I’ve learned that there is another question that’s just as important:

“What am I actually getting for the fee I’m paying?”

Two property management companies can advertise similar management fees and provide very different levels of service. On the other hand, a company advertising a lower percentage can sometimes end up costing more once additional fees are added.

That’s why I believe owners should look at the entire management agreement, not just the percentage printed at the top. At All County Coastal Property Management, we try to keep things simple. We want owners to understand what they’re paying for before they decide to work with us.

How to Compare Property Management Fees

I understand why owners compare management percentages. I would do the same thing. If one company charges 8% and another charges 10%, it’s easy to assume the 8% company is the better deal. But ask yourself these questions:

• What does that 8% include?
• Does it include maintenance coordination?
• What is the leasing fee?
• Is there a lease renewal fee?
• Is there a minimum monthly fee?
• Are there additional administrative charges?
• What happens when the property is vacant?
• What happens when you want to cancel the management agreement?

Those questions can be much more important than the difference of one or two percentage points. A lower monthly management fee isn’t much of a bargain if you’re paying extra for services you thought were included.

What Services Are Included in Property Management Fees?

Every property management company operates differently, so don’t assume something is included just because another company includes it. Depending on your management plan, a property manager may handle things such as:

• Advertising and marketing the property
• Showing the property
• Processing applications
• Tenant screening
• Preparing the lease
• Collecting rent
• Communicating with residents
• Coordinating maintenance and repairs
• Property inspections
• Lease renewals
• Move-in and move-out coordination
• Owner statements and financial reporting

When you’re interviewing a property management company, ask them to walk you through the process. Don’t be afraid to ask, “What is included, and what will I pay extra for?” You should know the answer before you sign anything.

Property Management Leasing Fees: What to Expect

The monthly management fee gets most of the attention, but the leasing fee can also make a big difference. Finding a tenant isn’t simply putting a property online and waiting for someone to call. There can be advertising, inquiries, showings, applications, screening, lease preparation, move-in coordination, and communication throughout the process. Ask your property manager how the leasing fee works and exactly what you’re receiving for it. You should also ask about lease renewals. Some companies include renewals while others charge a separate renewal fee. Neither approach is wrong, but the important thing is knowing about it ahead of time.

Maintenance Is Where Owners Really Need Clarity

These are areas I think every owner should pay close attention to:

• When the air conditioner stops working or a plumbing issue comes up, who handles it?
• Does the property manager contact the vendor?
• Who communicates with the tenant?
• Who approves the repair?
• Does the management company charge a markup?
• Can you use your own vendor?
• Can you handle maintenance yourself?

There shouldn’t be surprises when something breaks. At All County Coastal, we offer different management plans partly because owners have different preferences. Some owners want us involved in practically everything. Others tell us, “John, I have my own contractors. I want to handle my maintenance”. That’s fine too. Why should those two owners necessarily have the exact same management plan?

Compare Our Property Management Plans and Fees

I’ve never believed property management should automatically be one-size-fits-all. An owner living in New York with one rental property in Boynton Beach may need a very different level of service than an experienced local investor who owns several properties and already has contractors. That’s one reason we’ve structured All County Coastal Property Management with different management options.

12% Exclusive Protection Plan

This is our more comprehensive management option. It includes Landlord Protection Plus and the lease renewal fee is waived.

This plan is designed for owners who want a higher level of service and additional protection built into their management plan.

10% Standard Plan

Our Standard Plan provides professional day-to-day property management while allowing owners to add certain additional protections if they choose. There is a $350 lease renewal fee, and Landlord Protection Plus can be added separately.

9% Discount Plan

Under this plan, the owner coordinates, authorizes, supervises, and pays for maintenance directly. We still handle the other management responsibilities included in the plan, but we’re not charging the owner for a level of maintenance involvement they don’t want.

This option is designed for owners who want professional property management but prefer to handle their own maintenance.

8% Military & First Responder Appreciation Plan

As a veteran-owned business, this plan is particularly important to me.

We offer an 8% management option for qualifying veterans, active-duty military personnel, and first responders as our way of recognizing their service. Each management plan has its own terms, fees, minimums, leasing charges, renewal charges, responsibilities, and optional services, so we go through the details with owners before they select a plan.

How Much Does Property Management Really Cost?

I’ve spoken with owners who initially chose a property management company because the advertised percentage looked great. Then they started discovering the other charges. That doesn’t mean a low-cost property management company is automatically bad. It simply means you need to know what you’re comparing. If you’re interviewing property managers, ask “What will I actually pay during a typical year, and what will you handle for me?” That’s a much better comparison.

What to Look for in a Property Management Agreement

This may sound obvious, but read the agreement. Pay particular attention to:

• Monthly management fees
• Minimum management fees
• Leasing fees
• Lease renewal fees
• Maintenance responsibilities
• Repair authorization limits
• Additional administrative charges
• Vacancy charges, if any
• Cancellation and termination provisions
• Services that cost extra

If something isn’t clear, ask. A property manager should be able to explain the agreement in normal language without making you feel like you’re asking too many questions. It’s your property and your money. You have every right to understand where that money is going.

How to Choose the Right Property Management Company

For me, it comes down to the fact that property management should make ownership easier. You’re hiring a property management company because you don’t want another full-time job. You want someone dealing with the tenant calls, rent collection, leasing, paperwork, maintenance issues, inspections, accounting, and all the other things that come with owning rental property. The management fee should make sense compared with the amount of work and responsibility being taken off your plate. And you should know what you’re paying for.

Property Management in Boynton Beach and Palm Beach County

If you own a rental property in Boynton Beach or elsewhere in Palm Beach County, I’d be happy to talk with you about your property. We’ll talk about how involved you want to be, what you need from a property manager, and which management option makes the most sense for your situation.

If you’re already comparing property management companies, that’s okay too. Ask questions, compare the services, read the agreements, and don’t make your decision based on the management percentage alone.

Your Property. Your Investment. Your Management Plan.

Why pay for services you don’t need?

If you’d like to learn more about working with us, contact All County Coastal Property Management for a free property management quote.

This article provides general educational information and is not legal or financial advice. Requirements vary by state, municipality, and property. Each All County franchise office is independently owned and operated.

Commission Disclaimer: Real estate commissions in Florida are not set by law and are fully negotiable. There is no mandated or standard commission rate. Any rates mentioned in this article are illustrative only; actual compensation is agreed upon between the client and their brokerage.