I have a few properties under a management company that charges me, the owner, $65 per door.
They also charge the tenant's a 2.6% admin fee each month, which equates to for example $20 a month on a $750 monthly rental payment. $20 a month, in the example, to process a payment seems high to me.
Is charging tenants an admin fee, which I believe is to cover the costs of accepting and processing their monthly payment, common for property management companies?
Would 2.6% be considered a industry average amount?
@James Conaway , frankly I've not heard of a charge to tenants for processing their payment-- the exception being if they pay by credit card--the service fee that the credit card processor charges should be paid by the tenant.
We charge $35/hour (CAD) and track what we do at properties and bill quarterly. I'd say high maintenance properties will run require probably 3-5 hours/month. Easy breezy properties I'd give maybe an hour a month!
Best of luck!
I find it funny that the property manager is charging the tenant an admin fee. Property management should be a cost for the landlord, not the tenant. Although, if you can successfully pass the fee on to the tenant, more power to you. I don't think its wrong either to charge a processing fee for an electronic payment, but shouldn't be any more than a $1-$2 per transaction or 3-4% for using a credit card per transaction.
@James Conaway , yes that is wrong!
Landlord Fees: Can you elaborate more on the fee structure? Is $65/door the total every month; flat rate? Or does the PM also charge a monthly management fee? It would be unusual to see an Admin + Management Fee. Typically it is only Management Fee and perhaps a 'setup' Admin fee when you first first.
Tenant 2.6%: What does this entail? I imagine it is not processing payment if they utilize a management software. Tenants are charged by the software for that service, not by management company. If tenant pays by ACH, that's less than $1.50 per transaction. Could it be taxes?
Combined: Assuming $65 is a flat rate, this could be PM trying to reduce your expenses but still generate enough income. $65 per door is cheap! With that additional $20-25 paid by tenant that significantly bumps their revenue. Unless it is Tenant Admin + Landlord Admin + Management Fee, that would be excessive.
Have you asked your property manager? They should be able to clearly explain their fee structure.
@Kenny Dahill It's a total monthly fee of 4.9% assessed to tenants. 2.3% for city taxes and 2.6% for admin fee, which is assessed to process tenant monthly payments and manage payment of city taxes.
The $65 management fee per door is a flat monthly rate. There are other fees assessed based on turnover, for example lease renewals have a fee ($150), marketing and lease starts have a separate fee. So they make more than the $65 monthly fee through turnover.