Key Takeaways
- Property Management Fees Vary Based on Services and Property Type - Professional property management companies typically charge a percentage of the monthly rent. Additional fees can also affect the total cost. These costs depend on factors such as property type, location, and the scope of services offered.
- Value vs. Cost: A Property Manager Can Boost ROI - While property management adds expenses, it can also increase revenue by reducing vacancies, improving tenant quality, streamlining rent collection, and avoiding costly mistakes. For investors aiming for true passive income a good property manager may deliver greater long-term value than managing the property themselves.
- The Need for Property Management Depends on Investor Goals and Capacity - Investors should evaluate whether they have the time, skills, and desire to manage properties themselves. If you lack the expertise, plan to scale your portfolio, or want to avoid the day-to-day workload, hiring a property manager can help you focus on growth while maintaining property performance.
For most investors, the main reason they are in the rental property space is to acquire assets that can generate passive income. However, rental properties require a lot of work, and most of this must be hands-on. The best way to make a rental property passive is to put it under the supervision of a professional property manager.
But this raises another question: how much does property management cost? We at Atara Property Management will cover all the considerations that go into the pricing of a property management service. This post will also discuss how you can determine if you are getting good value for the money spent on Salt Lake City property management.
A Breakdown of Property Management Costs
Here is a rundown of the typical fees charged by Salt Lake City property management companies:
Percentage of Monthly Rent
This is the most common property management fee. It covers everything from tenant screening to rent collection, maintenance requests, and emergencies. It is often a percentage of the monthly rent. The exact percentage depends on the type of property and the rental market.
Tenant Placement Fee
This one-time fee covers every cost associated with finding the tenant, namely, advertising, showing the property, tenant screening, and preparing the lease. The exact amount varies, and in most cases.
Maintenance Fee
This pays for the services of the teams handling routine maintenance and repairs in the building. It covers labor, materials, parts, supplies, permits, etc.
Renewal Fee
When tenants renew their lease, paperwork must be updated, tenants re-qualified, and new lease terms negotiated. This fee covers the administrative costs associated with doing these things.
Eviction Fee
If a tenant has to be evicted, this fee covers the cost of handling the process. It includes legal and court filing fees, plus the cost of cleaning the rental and repairing any damage caused by the tenant. Eviction fees depend on the state and the circumstances of the eviction.
Late Payment Fees
This is charged to the tenants specifically account for late payment of the rent, either as a flat rate or a percentage.
Pet Fees
Not to be confused with pet rent or pet deposit. Unlike pet rent, this is a one-time fee, paid by the tenant, and it covers the pet-related damage to the property.
Factors Affecting the Cost of Property Management
Several factors influence how much a property management company charges for its services, but the most important ones are:
The Location
Locations with in-demand properties, as well as regions with a high cost of living, often attract higher fees. This is partly due to the higher cost of operations in these areas. Also, these areas often have more competition for professional property management services.
The Type of Property
Due to their unique needs, size, and complexity, commercial properties command a higher fee than residential properties. Large high-rise apartment buildings cost more to manage than duplexes and single-family homes. Buildings with lots of amenities also have higher fees because of the additional effort required.
Management Services Provided
The range of services offered by the property management firm also matters. Services can include tenant screening, rent collection, tenant placement, maintenance, marketing, legal assistance, and financial reporting. How much an investor pays for property management depends on the number of services offered.
Is Professional Property Management Worth the Cost?
Ultimately, this is the most important question for any investor. To determine if the cost of property management is worth it, compare the costs and rewards of managing the investment by yourself to the cost of having someone else manage it.
Here are some questions you want to ask to determine whether or not you need help renting out your properties:
- Is Revenue Increasing? Determine whether or not the management services are helping to maximize income by finding better tenants, minimizing vacancies, and collecting rent on time.
- Do I Have the Required Skills? If you feel unprepared to handle to demands of self-managing a rental property, then professional services are better option. By hiring a skilled professional you benefit from the convenience of their services as well as the quality and thoroughness of their work.
- How Many Rental Properties Do I Want to Own? If you plan to investing in multiple rental properties, you need a team and efficient system in place. You also have to be prepared to invest a lot of your own time and effort in. By working with a property manager, you’ll benefit from true passive income, as they’ll provide the teams and services necessary to operate your rental property.
Bottom Line
Based on the above, should you hire a professional property management company? There is no one-size-fits-all answer to this question. The best way to determine whether or not professional management is right for you, is to look at your current situation, budget, and long-term goals.
If you would like help managing your Salt Lake City rental properties, turn to our experts at Atara Property Management. Contact us today to learn about our services!