Tampa, FL · Member since 2015 · 46 posts · 21 votes
Hi,
I just bought my first rental property last month. I live in NY and my property is in FL so the property will be run by a property manager.
I just received the property management agreement and the cost of property management is a little higher then I expected. Could somebody please tell me if the fees of this deal are reasonable.
Property location: Ocala FL
Expected Rent rate: $900
Fee for managing tenant relations: %10 of gross lease value
Fee for managing property: $100 per month.
First months rent goes to property manager. Also, 1st month rent of renewal's goes to property manager.
So then this would mean $190 every month goes to my property manager for a property that rents for $900. Is it normally that high for Ocala FL?
Investor · Central America, Panama · Member since 2010 · 423 posts · 293 votes
10y
These property management fees are ridiculous.
You should contact Michael Bielon. He does Master Leasing in that area and does not charge any property managment fees. Hi web site is OnTimeRents dot com
or contact DavidTilney dot com for other recommendations in that area. David trains people to do Master Leasing and has been doing it for more than 30 years.
PM fees are another good reason to not buy outside your own market. Those initial fees are just the beginning. If you need an air conditioner repaired or a roof replaced, a PM will tack on 10-20% of the cost of the repair .. just for making the phone call. Beware of additional fees for sending you accounting every month, etc
Someone who does master leasing does not play those games.
Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes
10y
I am not sure what the norm is for Florida but the norm up here is
8-10% of gross rents collected
1/2 to 1 months rent to fill a vacant unit
I have never heard of the $100/mo mystery charge or just taking the first months rent. Those I would question
What kind of area is the property in? If it is in a good to great area you should have no trouble finding a good PM. If the property is in a bad area you are lucky you are finding someone willing to manage it. How much BS a property manager has to deal with is a large part of how they price their services in my experience.
Tampa, FL · Member since 2015 · 46 posts · 21 votes
10y
Marco, your right that my trust in her is broken due to this problem. But the thing is she has been good up until now so I want to give her the benefit of the doubt and assume the original contract was a mistake.
Tampa, FL · Member since 2015 · 46 posts · 21 votes
10y
Michael, the property is in Ocala FL. There are others PMs I could go to if it doesn't work out with this one. I would say the area the property is in is average.
Investor · Richmond Hill, NY · Member since 2016 · 64 posts · 8 votes
10y
Congratulations!!!! I own property in Ocala i always use a Realtor who charges only half a months rent. But I do know she charges 10% for property management. Also I manage my properties myself and to be honest in two years of managing them i think Ive recieved two calls, nothing that i couldnt simply Google or call my Realtor about and ask for a referral. Maybe you can find a good Contractor/handyman to have on call. That has helped me tremendously. Much success to you and feel free to reach out if you have any questions, Glad to help.
Investor · Richmond Hill, NY · Member since 2016 · 64 posts · 8 votes
10y
Robert im kind of curious to know who your working with, I thought your property was in Tampa I just read Ocala. I've been through a few realtors in the area and boy are they all different. Im also in NY and have been investing in Ocala for almost three years now.
Tampa, FL · Member since 2015 · 46 posts · 21 votes
10y
@Wendy Gomez I don't think I'd be able to manage them myself being I'd first have to find a renter. Maybe if I already had a renter I would try to do this myself, but being so far away and being new to this I feel I would need a property manager atleast for finding a renter.
My property manager's/real estate agent's name is Cheryl B. I don't want to post her full name being this is a public posting. Have you worked with her?
Property Manager · Cumming, GA · Member since 2015 · 261 posts · 199 votes
10y
@Robert T. A red flag for me is the agreement up top is from 2009. I know the Georgia Real Estate Commission updates their forms every year. I would think Florida does also.
If this person only dabbles in property management, I think the fees are only the tip of the iceburg.
Developer · New Brunswick, NJ · Member since 2015 · 1k+ posts · 2k+ votes
10y
Those fees are ridiculous. I am a PM in central NJ. I know I'm on the cheaper side but I would never think of double dipping on leasing fees and then re-leasing fees. For me, I charge 8-10% of monthly rent, no leasing fee, no re-leasing fee and no markups on repairs. I like simple. That company seems like its nickle and diming you to death.
Residential Real Estate Broker · Atlanta, GA · Member since 2012 · 34 posts · 9 votes
10y
As a realtor from Atlanta who doesn't represent many folks leasing but am somewhat familiar with the norm, I think the actual commission she is charging is reasonable. $225 is not enough to entice an agent to take time out of their day to show the home /draw up a contract etc. I wouldn't .
the norm here is 8-10% monthly
First months rent which would be split with coop agent - $450 a piece .
Tampa, FL · Member since 2015 · 46 posts · 21 votes
10y
Thanks Annette.
I have seen some examples where the PM would change the full months rent for finding the tenant. So perhaps that particular fee was in fact somewhat reasonable.
Fairview Heights, IL · Member since 2015 · 48 posts · 27 votes
10y
OMG Im from SLOWCALA horse country out there and let me tell ya something after living there almost all my life. People will try to take advantage of you. If you have the slightest hint of distrust go with someone else! In this business you need people you can trust!
Investor · Verona, NJ · Member since 2014 · 1k+ posts · 832 votes
10y
Robert, couple things, she has not checked any boxes that says she will supply Lead paint pamphlets to tenants, your house is too new for lead paint, but should be an automatic thing. you are also going to be charged for credit checks of prospective tenants, this should be charged to people as an application fee. i still say look for another PM,
Tampa, FL · Member since 2015 · 46 posts · 21 votes
10y
@Patrick LiskaThank you for reviewing it Patrick. I agree with you that I should be looking for a new PM. My reasoning for staying with her is that up until now, I felt she has been good. I started with her in September when I was first looking for a place. We found a place in October, it was mine in January(the loan process took awhile), and it was fixed up in February. I felt she has been great the entire time up until yesterday when I reviewed the property management contract.
So I'm going to stick with her under the better terms that I was able to get from her(10% monthly, 1/2 of first months rent, $150 renewals) and hope there aren't any more problems from her. This may seem foolish but I don't want to leave her after things had been going so well.
@Patrick LiskaThank you for reviewing it Patrick. I agree with you that I should be looking for a new PM. My reasoning for staying with her is that up until now, I felt she has been good. I started with her in September when I was first looking for a place. We found a place in October, it was mine in January(the loan process took awhile), and it was fixed up in February. I felt she has been great the entire time up until yesterday when I reviewed the property management contract.
So I'm going to stick with her under the better terms that I was able to get from her(10% monthly, 1/2 of first months rent, $150 renewals) and hope there aren't any more problems from her. This may seem foolish but I don't want to leave her after things had been going so well.
Good luck to you. I came late to the party I see you got a lot of responses.
I'm in Gainesville FL and renegotiating my agreements for 2 rentals under one PM. Good that you negotiated up front on terms. I signed and afterward realized I should have done what you are doing now.
I will say that the lease renewal I think is hog wash. My opinion and I pay it now, which is why I'm renegotiating.
I'm also looking in Ocala market and will be needing a PM but that's far off.
Tampa, FL · Member since 2015 · 46 posts · 21 votes
10y
@Daria B.I agree that there shouldn't be a lease renewal fee. I've read that many don't charge one but I've also seen others that charge 25% to 35% of first months rent. So I offered $150 for the renewals, which is about 15%, and she accepted it. Maybe she would have accepted $0 for the renewals but now I'll never know.
Real Estate Agent · Warner robins · Member since 2015 · 35 posts · 7 votes
10y
I am a Realtor in Georgia and we charge 10% of each months rent for managing the property and then half of the first months rent for finding a tenant. I do not charge a lease renewal fee because you already paid me that fee (1/2 of the first months rent). I do think that is a little over the top to charge that additional fee.
Residential Real Estate Broker · Atlanta, GA · Member since 2012 · 34 posts · 9 votes
10y
I would not sweat the fees. Obviously each market charges different fees. I think half the first months rent is reasonable and $150 renewal fee is reasonable. The more important issue is , are they going to represent you well , are they going to screen the prospective tenants well, handle any issues that arise etc. Good luck! Im sure it will go great!
Property Manager · Gainesville, FL · Member since 2014 · 47 posts · 20 votes
10y
Wow, a renewal fee??? We are excited about just renewing a lease and keeping the owner with cash flow. 10% per month during occupancy is typical, one half of one month for placement is typical. In Florida, you have to be very careful who does your maintenance and who answers calls for maintenance. We have an approved amount for broker/manager approval and anything over that amount, we contact the owner, we take all the calls personally... Every business model is different, choose you manager carefully and remember; you are the boss, you set the standards... you are hiring the manager.
I am a Realtor in Georgia and we charge 10% of each months rent for managing the property and then half of the first months rent for finding a tenant. I do not charge a lease renewal fee because you already paid me that fee (1/2 of the first months rent). I do think that is a little over the top to charge that additional fee.
Hi Courtney,
Since there are varying degrees of what is charged on the 1st month placement, what do you do for the 1/2 of the 1st months?
Real Estate Agent · Warner robins · Member since 2015 · 35 posts · 7 votes
10y
I normally pay the referring agent a finders fee of 10% of the first months rent. I know in our area we do not normally pay more than the 10% finders fee and I have not heard of ever splitting it with the other agent.
Jacksonville, FL · Member since 2014 · 58 posts · 3 votes
10y
Monthly fees can be a flat fee or % of the rent collected, 10% is pretty standard in my area and I have even seen it 15% of the monthly fee. There is also a leasing fee everytime you get a new tenant. This can be again from 50%+ of the monthly rent. There is also a renewal fee usually 25% in our area. Most PM's also have a maintenance reserve ( I don't) . Check to see what the average length of time tenants remain in the house. 2 out of 3 of mine renew for 3 years and I have a 100% no eviction rate for tenants I have placed. See if they are members of NARPM( National Associaton of Residential Property Managers). You can go on their site to find a good pm in your area.
@Daria B.I agree that there shouldn't be a lease renewal fee. I've read that many don't charge one but I've also seen others that charge 25% to 35% of first months rent. So I offered $150 for the renewals, which is about 15%, and she accepted it. Maybe she would have accepted $0 for the renewals but now I'll never know.
I'm learning in negotiating that it's never too late. :-) I'm sure what I am proposing will not likely be taken well and the lead in was my telling them that it's no secret that there are other PMs in this town and that I have spoken with a few. I just want to reduce the fees and make some other changes that I should have thought on before I signed on. Now, service, they did what they were advertising and I didn't have any issues until management changes came about and staff started leaving or were asked to leave. There have been some hiccups and I'm super tolerant where most wouldn't be.
I'm of the feeling that if you are managing the company too much then they aren't doing what they are supposed to do. And don't get me wrong, it's not micro managing. If something happens that you know shouldn't be and you have to step in, well that can just happen too many times.
Ocala, FL · Member since 2013 · 17 posts · 0 votes
10y
I live in Ocala and do field work in the real estate industry. I just want to say shop around there are other PM companies who provide quality services at a lesser rate.