There really is no standard for what’s charged for or what could be charged for when it comes to property management fees. And while I’m a true believer in you get what you pay for, I also want to know what I’m paying for on the front end. We’ve reviewed many of the property management agreements used here in Chicago and it is very evident that a lot of companies don’t disclose their full fee schedule on the front end. So today, we’re diving into what charges you may come across and what to look for in case they’re not disclosed in the property management agreement.
1.) Early Termination Fee
Want to cancel your contract? Be prepared for an early termination fee, which could be significant. Now, I personally never really understood this and we definitely don’t charge this one - you’re not happy with their services and want to cancel, but for some reason you have to pay a fee to get your property back. Doesn’t make sense to me but this is definitely something you want to ask about on the front end.
2.) Property Management Fee
This is typically the main fee property management companies charge and you’ll almost always see it on the property management agreement. I think the question to ask is, “what services are included in that fee? or maybe more importantly, “what services are not included in that fee?”
3.) Leasing Fee
This is another very common fee that you will most likely see. Of course you want to know how much they charge but also see if things like professional photos, tenant screening, and lease preparation are included in the leasing fee itself.
4.) Inspection Fee
Not only does the inspection fee itself vary from company to company, the scope and frequency of inspections will vary as well. Not all landlords do routine inspections but you’ll definitely need a move out inspection to create a scope of work for the unit turn and a move in inspection to document the condition before the new tenant moves in. Since those are a necessity, I would want to know how much they charge to have those specific inspections done.
5.) Maintenance Coordination Fee
Not all companies include this in their monthly management fee so I would find out if it is included and if not, how much they charge per word order. This can usually be seen as a percentage mark up for the work order bill or a flat fee per work order.
6.) Bill Payment Fee
Between utilities, trash, vendors bills, insurance payments, and more - there can be a ton of bills that need to be paid for each property. I would find out if this is included in the monthly management fee and if not, how much the property management company charges per bill that they pay.
7.) Administrative Fees
From paperwork to filing reports, there are quite a few things that may fall under the category of Administrative Fees. Make sure the administrative fees are clearly defined and reasonable so you’re not getting nickel and dimed every month.
I know choosing the right property management company to handle the day to day operations for your rental property is a huge decision. I hope this video helped bring clarity around some of the fees you should be aware of and that it helps guide you while searching for your new property management partner. Again, remember that the fees aren’t necessarily good or bad - we’re just looking for transparency on the front end so you know what to expect and can accurately assess whether the property management company is a good fit for you and your rental property.
If you have any questions about real estate investing or how we can help make your next real estate investment a home run, consider us at Landmark Property Management, a resource. We're always happy to help. Feel free to check us out on our website at Chicagospropertymanagement.com - that's Chicagos with an s - Chicagospropertymanagement.com or give us a call.
