Colorado is a popular place for many people to relocate to. According to KDVR.com, around 264,500 people move to the state each year. Many of these people and their families look for rental homes to settle down in, making it a great place to own an investment property.
While renting out properties is a great way to generate passive income, being a landlord can be time-consuming. Working with a property management company is a great way to decrease your workload. This blog will discuss what you can expect property management fees to cost when working with a company.
Common Property Management Fee Structures
Property management fees vary depending on various factors. This can include the following elements:
- Services provided
- Location
- Property types, such as commercial buildings or multi-family homes
Maintenance fees are usually included in this cost as well. These are typically applied to expenses related to the repairs and upkeep of the property.
Your contract will outline what services the fee includes and how the amount is calculated. The fees usually follow a rent percentage structure or a monthly flat rate.
Rental Fee Structures
Property management companies typically charge fees as a percentage of your property's monthly rent. The percentages can range anywhere from 8 to 12% of your monthly rent. You may be charged a smaller percentage if you have multiple properties with them.
You'll want to ensure that your contract states that the fee charged is for the rent collected, not just the rent that's due. If it's not structured that way, you may end up paying the property management company money even if your tenants aren't paying their rent.
Flat Fee
A flat fee refers to a specific dollar amount that's paid to the property manager monthly. That amount is determined based on the following:
- Square footage or size of the property
- Services provided
Maintenance Fee
As we mentioned, maintenance fees are usually included in your monthly property management cost. This can include various tasks, such as:
- Removing leaves or snow
- Taking out the garbage
- Cleaning common areas
If any unexpected repairs arise, the repair cost will be deducted from your reserve repair fund. That's a separate account that includes money solely for repairs. Some common ways you and your property management company can address the repair process include:
- You can decide only to get notified for repairs higher than a certain amount
- You can choose to authorize all deductions from your repair account
- You allow your property manager to utilize the account at their discretion
The amount you keep in this account is up to you. Most landlords choose to have at least one month's rent in the account per unit.
Affordable Property Management Fees at Walters and Company
When working with a management company, it's important to get a clear outline of what their property management fees include. This ensures you're maximizing what you pay for and not paying for things you don't need.
At Walters and Company Property Management, we're here to help keep your landlord expenses low. Our services help you get optimized rental value for your property, increasing your passive income. Contact our office to schedule a consultation with one of our property managers.
