If you're on the fence about hiring a property manager in Pleasanton, sometimes weighing the costs against the benefits can feel like a deadlock. You're not alone in this. In fact, the data supports a split in the perceived need for property management. According to recent reports from Strategic Market Research, of the 10.6 million Americans who own rental property, 51% use property managers to run their rental for them.
Most landlords like you who haven't taken the leap yet are conflicted. that conflict usually stems from a common misconception that property management costs are too high and would reduce the income you make on your rental property.
However, with a full-service property management company, the truth is actually the opposite. While there are property management costs you should understand, the ultimate benefit of hiring a property management company will turn those costs into a higher ROI for your property. Let's talk about it.
Understanding Property Management Fees
To start, it's important to understand the typical makeup of the fees that property managers charge. Property management fees can get complicated if you require many different services, and no one wants their business relationship to feel like an indecipherable cellphone bill.
Property management companies charge different one-time fees depending on the services required, but the basic overseeing of your rental property will incur a recurring monthly fee for keeping them employed on the property.
A monthly property management fee will typically be broken down into one of two categories: percentage-based and flat-fee.
Types of Property Management Fees
Percentage-Based Management Fees
Percentage-based management is when the property management company charges you a percentage of the monthly rent collected on your rental property. This tends to be the most common fee structure for property management companies.
Under this style, the typical percentage that property managers charge is 8-12% of your monthly rent. This is deducted right from the monthly rent payments received and the remaining amount is paid out to the property owners.
Flat-Fee Structure
Flat-fee management is less common but still worth noting. This style is exactly what it sounds like, the property management fee that you pay each month is a predesignated flat amount.
Flat fees depend on the property manager and the services provided. But the typical range for these fees is between $100 to $500.
Additional Fees
As mentioned, you may incur other one-time fees from your property manager depending on the services you need and the packages they offer.
The most common of these fees is a tenant placement fee. This is a fee incurred whenever the property manager finds, screens, and places a tenant in your property. This fee is typically incurred on basic property management packages or when you hire purely for tenant placement. They typically range from 50-100% of the first month's rent.
Other common one-time fees include a lease renewal fee when tenants resign, a setup fee when you first sign up for property management services, or a maintenance fee when repair work is done on the property.
It's important to understand your property management contract before signing to ensure there are no hidden fees or lack of transparency. No one wants to enter into a long-term relationship with a management company only to discover that the contract isn't what they thought it was.
Factors Affecting Property Management Fees
Property management cost can vary on a number of factors. This largely boils down to the services you need for your rental property. However, it can also be affected by:
Property type (such as multifamily, single-family, or commercial properties)
The condition of the property and if renovations are needed
The size of the building and how many rental units it has
At Advantage Property Management Services, we keep it as simple as possible. Our packages start at the low property management cost of 4.9% of monthly rental income for our basic plan. Feel free to explore more of our pricing packages, or reach out to consult with us on what package makes sense for you.
The Real ROI of Hiring a Property Management Company
So that now begs the question, why incur all of these fees? Wouldn't that hurt my rental income in the long run?
Much do property managers have to answer this question, and in fact, it's quite the opposite. Just like you invested money in your property in the first place to see a return, you invest money in your property manager to see a higher return from that cost.
What Do Property Managers Do?
It starts with everything the property manager does for you and the convenience and time savings you'll get from that. From your monthly fee paid, you'll get back:
Knowledgeable rental property marketing that finds the right tenants fast and cuts down on vacancy costs.
Documented tenant screening practices that align with all California legalities and ensure your tenants are taking care of your rental.
Lease administration, daily proactive maintenance, and tenant relations management to safeguard your investment.
Rent collection, financial reporting, and accounting to keep you on top of your investment without actually having to spend the copious amounts of time needed to run it.
With all this time given back to you, you're free to focus on other business endeavors or expanding your investment portfolio, turning you into less of a landlord and more an investor with full financial freedom.
The Financial Benefits of Hiring a Property Manager
Hiring a management company is about more than just the convenience, however. It's about the financial benefits of allowing a full-time expert to handle managing your rental.
There's a real return from the management fee you'll pay, and it comes in the form of increased rental income and property value from a dedicated manager.
With someone on hand to fully dedicate the time required with your rental, your rental rates will be optimized to ensure the maximum profit for you. You'll also get steadier lease renewals, ensuring a steady stream of income. Setting the right rates and keeping your income consistent can be something landlords struggle with on their own.
More than the tenants though, your property will also be safeguarded by maintenance professionals that will keep the building in good shape and away from snowballing problems that could damage your property value.
With existing tenants, legal issues can always be a reality, especially in California. Owners who don't understand landlord-tenant law inside and out can get sued. Property managers like us know the local market and the law, so you'll be prepared to avoid these issues and defend yourself when the need arises.
Cost Savings
With issues like evictions and maintenance issues especially, already expensive problems can become much worse if tackled alone. At Advantage Property Management Services, we've had first-hand experience cleaning up those messes. For example, one property owner we took over for had a $15,000 maintenance project that ended up costing them $35,000 in lost rental income due to them not having it handled efficiently.
To put it plainly, if your property manager is an expense, you have the wrong property manager. The right one should lead to work getting done faster, avoiding potentially immense profit loss due to work taking longer.
Weighing the Costs and Benefits of Property Management Companies
All of these benefits add up to a return on investment with property management that far outweighs the cost of the fees. It also means avoidance of much bigger maintenance and legal costs that can arise with running a rental business.
But we do understand that this kind of business decision can take more thought. That's why we're here to walk you through it and help you decide if property management is the right move for you.
At Advantage Property Management Services, we have a priority to show an equal level of care to every property owner we talk to. We're here to help, and would never offer our services to a property we didn't think was the right fit.
Reach out to us by phone at 925.430.7899 or through our website to schedule a free consultation.
