Smart investors know that working with a professional Fort Worth property management company can help increase the return that’s earned on their investments. While you’ll need to pay for expert leasing and management services, you can more than make up for those fees with higher rents, better tenants, and lower expenses. The value that you receive when you work with good managers is more than worth the costs you incur.
The fees depend on the property you have and the management company you choose. There are a few fees you can always expect, however, and we’re talking about those today.
Fort Worth Leasing Fees
A leasing fee covers the costs associated with finding and placing a tenant for your Fort Worth rental property. You can expect most property management companies to include the following services in their leasing program:
- Advertising and marketing your property
- Showing your home to prospective tenants
- Managing the application process and gathering the required documentation
- Thorough tenant screening
- Collecting the security deposit, first month’s rent, and other move-in funds
- Reviewing and signing the lease
- Conducting a well-documented move-in inspection
During the leasing period, a good property management company will also help you prepare your property for the rental market. Together, you will decide on whether any upgrades or updates are needed to make your home more appealing to high quality tenants. You’ll discuss the right pricing range and your property manager will study the market and analyze the competition to settle on a rent that will be both competitive and lucrative for you.
Leasing fees can either be charged as one flat amount or as a percentage of the first month’s rent. Some management companies will offer a lease-only service, where you pay for the leasing services and then manage the home on your own. In this case, your leasing fee might be a little bit higher than it would be if you were paying for both leasing and management services.
With professional Fort Worth leasing services, you’ll get the property rented faster, which means you will earn more rental income. You’ll also have your property priced more accurately, and you’ll have a good chance of attracting more reliable tenants who pay on time, care for the home, and stay longer. All of this contributes to a higher ROI and a better rental experience. Your leasing fees will be a wise investment, and will help you earn more over time.
The leasing fee is a one-time fee that you pay at the beginning of your relationship with your property manager. You may be required to pay it up front, or you may have it deducted from the first month’s rental payment. Talk to your property manager about any guarantees that come with this leasing fee. For example, if your property manager places a tenant who needs to be evicted within two months of the tenancy, you shouldn’t have to pay another leasing fee to get a new tenant in place. Make sure you understand everything that’s covered in the leasing fee, and what might be extra. Some companies will charge more for advertising and others will charge for tenant screening. It’s important that you know what you’re getting in exchange for the leasing fee.
Fort Worth Property Management Fees
After the leasing fee, you can expect to pay a management fee, which is collected monthly. Like the leasing fee, this will either be a flat rate or a percentage of the collected rent every month. Flat fees might be $100 a month. Percentage-based management fees might be between 8 and 12 percent of the rent.
One way is not necessarily better than the other. The companies that charge a flat fee believe they are saving you money because you pay the same amount whether your property rents for $800 a month or $2,000 a month. They also tell you it’s a consistent fee, and you’ll always pay the same thing.
Companies that charge a percentage of your rent believe that they are providing a better service. While you do pay more if your rental amount is higher, this also might incentivize your property manager to get you the highest possible rent. When you earn more – they earn more, too.
Most property management companies will deduct the management fee directly from the rent before it’s deposited in your account. If you decide to work with a management company that requires you to pay the management fee outside of the collected rent, make sure you find out whether you’ll be expected to pay a fee while the property is vacant. Ask if you’ll be charged the management fee if your tenant doesn’t pay rent one month.
The management fee should cover all of the services you need and expect from your property manager on a regular basis. This includes rent collection, maintenance, tenant relations, lease enforcement, and regular accounting.
There are several things to keep in mind when it comes to monthly management fees:
- These fees are often tax deductible. Talk to your CPA or your tax attorney, but in many cases you can write off the amount you pay your property manager. This will reduce your tax liability and cost you less when you consider the big picture.
- Your management agreement should be transparent when it comes to management fees. Make sure it states exactly how much you’ll be paying, how you’ll be paying, and when you’re subject to cost increases. It’s important to know what’s included, and it’s even more important to know what’s excluded.
- There may be room for negotiation. If you’re bringing a property manager dozens of Fort Worth rental properties to manage, you shouldn’t have to pay full price on every single one. You can negotiate lower rates when you provide a larger volume of business.
- You should expect a complete accounting of your income and expenses every month. A good property management company will provide a monthly statement, where the deduction of your management fee is reflected. Your statement should show the income and the expenses associated with your investment properties on a monthly and annual basis. Advanced management companies will have an online portal where you can access this information whenever you need it.
Additional Fort Worth Property Management Fees
The leasing fee and the management fee are charged by nearly every property manager in Fort Worth and the surrounding areas. You can expect to pay them, whether you have one property under management or an entire portfolio. In some cases, these are your only costs associated with the professional management of your rental properties. However, there are other fees that a property manager might charge. These would not be included in the regular management fee.
This might also be called a set-up fee, and it will be charged to you to establish your account within the property manager’s system. The cost will depend on how many properties you have, and not all companies will charge it.
If your rental property is vacant and not earning income, you might be subject to a vacancy fee. This could be a small, flat fee or your regular management fee that’s charged every month. Find out what your property manager is doing for this fee. A vacancy fee will make sense if work is being done on the home or some other service is being provided while your home is vacant.
Many property management companies charge a mark-up when maintenance is needed. So, if you have a $200 invoice from a plumber for work that was completed on your rental home, your management company may charge a 10 percent service fee, bringing your total maintenance bill to $220. Ask any potential management company if they charge a mark-up on their maintenance and repairs. While this is not necessarily unrealistic, you do want to be aware of it.
Lease Renewal fees
A month or two before a tenant’s lease ends, your property manager should talk to you about whether you want to renew the lease. Your manager should also talk to the tenant. The negotiation of a lease renewal may result in a renewal fee.
Fees for late rent are paid by your tenant, not by you. However, you do want to know who keeps those late fees. Will they be paid to you or kept by your property manager? Some companies will share the fee with the owner. Ask how late fees are handled and when they’re charged to tenants.
Other Tenant fees
Tenants may have to pay other fees, such as pet fees, lease violation fees, or service fees for the payment of things like utility or cable bills. Talk to your management company about whether you are entitled to income from any of those fees, or if the property manager keeps all the proceeds.
Property management fees in Fort Worth will depend on a number of factors, including the type of property you own, the size of your portfolio, and the services you need. As you’re interviewing different property managers, make sure you understand what you’re being charged. More importantly, make sure you understand the value of the services you’re receiving in exchange for those property management fees.
If you have any questions about what we charge or how we work, please contact us at Specialized Property Management Services in Fort Worth.