6 Property Management Fees You Should Never Pay

Comparing property management company pricing is like comparing apples to oranges or bananas to mangoes. Each management company has unique services.

In our case, we’re a full-service company, so when a new client tells us they need small tasks done, like connecting utilities, we cover it. However, not all companies are full-service, which makes it tough to do your homework and comparison shop within the industry.

Fortunately, there’s another way to be sure you’re paying a fair price. These are a few fees you should never pay across the board.

Add-On Fees for Services

It’s a red flag if a management company tries to upsell you on fees in addition to the basic service. This fee structure typically looks like a menu where you pick services.

For instance, a company will charge an extra fee for a four to six-week marketing plan to lease your rentals. The problem is you have to pay whether it’s successful or not and this service should be included in the basic cost of management.

Fees for the Future Home Sale

A property management company shouldn’t make you work with them to sell your house in the future, but that fine print can be found in some contracts. Keep an eye out for companies who try to charge a commission when your house sells.That’s a huge cost and you should be able to choose whoever you want to sell your home.

Fees to Terminate the Contract

A contract with a termination fee puts you in a bad spot as an investor. If a management company takes over and runs your property poorly, you’re the one who’s at a disadvantage if you want to end the contract. They still benefit even if their performance is poor. A company’s work should be good enough for you to stick around without holding you hostage.

Fees to Evict or Replace Tenants

Charging to evict tenants or find new ones is another red flag. You’re trusting a manager to find the right tenant so you can avoid evicting or replacing tenants altogether. Why should you have to pay if it happens? Both of these tasks are also basic parts of management you shouldn’t pay extra for.

Fees During Vacancy

Steer clear of companies who want to charge fees during a vacancy. There’s no incentive for a manager to lease a property quickly if they’re collecting management fees while it’s empty. You’re stuck paying fees out-of-pocket with no rental income while they earn money either way.

Markup Fees on Maintenance

Your management company shouldn’t charge an add-on fee for coordinating contractor repairs. After all, that’s the purpose of the management fee, right? Sometimes you’ll see companies charge 7 to 10% of the repair cost and point to in-house maintenance as the reason for the charge. Again, this should be included in the regular service.

Originally published on the LEAP Property Management blog.