As a property manager or intending property manager, it is easy to get confused with money. The goal of becoming a property manager is to make money for yourself while also making more for the property owner. So, how then do you maneuver the market to make some money for yourself?
Though property management companies may not be open about how they make their money, however, Park Place Property Management, in this article, takes you on an expedition to discover how to make money being a property manager.
Below are some of the ways property managers and property management companies make their money;
– Management fees
One of the commonest and known ways by which property managers and management companies make their money is through management fees. While this is the most obvious income made by some property management companies, it is not to be confused as the only source of income.
Most property managers and companies charge as much as 7 to 10 percent of the collected rent as management fee. However, the percentage charged is not specific as some property owners may be able to negotiate a better deal.
Most property management companies charge management fees on rent every month regardless of whether the property is occupied or not. If you are working with a property management company or looking to start out as a property manager, you may want to consider the market more closely to determine the best policy to put in place.
– Sign up and/or lease fee
Another way that property management companies make their money is through sign up or lease fee. Some companies charge a sign-up fee, others charge a lease fee.
The difference between sign up and lease fee is quite simple. Sign up fee is an amount that the property owner pays up front to the property management company in hopes that they will find a tenant to occupy the space. This fee is usually a contribution towards the marketing aspects and other solutions offered by the property managers.
On the other hand, the lease fee is paid after the property has been leased out to a new tenant. In most cases, property management companies charge anything between 30 to 50% of the first month’s rent as the sign-up or lease fee.
– Application fees
Many property management companies see application fees as a huge moneymaker. This is because this fee is paid with no guarantees. Some property management companies may charge between $30 to $60 dollars as application fee per applicant depending on the location.
The mathematics at the end of the day is amazing because a property management company that, for example, charges $50 per applicant as an application fee stands a chance to make as much as $500 on a single home if 10 families show interest in the property.
– Late Fees
While many people are interested in getting a new home and moving into it as fast as possible, a lot of people fail to read the fine prints of their contracts. Some property managers and property management companies charge tenants to collect late fees from them.
This means that a tenant who has defaulted by a day or more, under such an agreement as this, will be expected to pay a certain amount in addition to the rent for being late.
– Maintenance fees
Maintenance fees are usually hidden and this is where it gets tricky. Surely, property managers and management companies make a lot from maintenance fees.
While the property manager is in charge of repairs at the request of the tenants, landlords sometimes fail to notice that property management companies use their own maintenance companies. By using a maintenance company that they are affiliated with, more money is being siphoned back into the property management company’s account.
Some property managers or management companies include a mandatory line in the contract that allows the landlord to use only a particular maintenance company, in such cases, the property manager or management company may be getting a commission on services rendered by the management company or may be getting more if the company owns the maintenance crew.
– Service and Notice fees
Many people assume that the management fee charged by property managers and management companies cover everything related to managing their properties. On the contrary, the details of the agreement may state otherwise.
Most property managers charge an extra fee for notices including 24-hour notices, 3-day notices, HOA violation notices, complaint notices, uncashed check fees, debt collection fees, returned check fees, and more.
