What are Property Management Fees?

Property management fees are fees charged by a property management company for their services. Such companies allow landlords to delegate the responsibilities for maintenance, dealing with tenants, originating leases, and other tasks to the company. Both commercial and residential property management services are available and companies which offer these services can be found in most regions of the world, working with a variety of property owners and tenants.

When a property owner approaches a property management company to discuss the possibility of establishing a contract, the company should provide a schedule of its fees, complete with information on the services it offers. A reputable company will usually break down its property management fees into different categories so that landlords understand exactly what they are getting for their money. Other companies may have a bundled fee which can hide the true nature of the fees, and landlords would do well to request a breakdown of the fees offered in “bundled” services.

A company may charge flat property management fees or fees as a percentage of the rent, depending on the contract. Fees are typically charged for maintenance, advertising, dealing with tenants, and so forth. If the property management company offers services to tenants such as doormen, delivery, and so forth, some property management fees may be charged for these services as well, in addition to the higher rents charged for properties which come with these services.

One thing for landlords to be aware of is that some companies charge property management fees on vacant property, while others do not. While the goal of the property management company is to avoid vacant properties because it wants to generate rents for the landlord so that the landlord will continue to work with it, sometimes vacancies do occur because of the need for renovations or because of a weak economy which makes it difficult to find tenants.

When shopping around for a property management company, it pays to get bids from several different companies to get an idea of the range of services available and fees charged. It is also advisable to get information about the company's experience and reputation. One way to gather information about reputation is to ask other property owners about their experiences, or to check out tenant reviews of various property management companies. If tenant reviews are consistently negative, it can be a sign that a company offers poor services and may not be a good choice of property management company.