Here is our last article regarding property management fees and services. We will now break down the last eight methods property management companies make money.
10. Late Payment Fee – Not only do late fees help provide incentive for on-time rent payment but they also allow management firms to collect additional fees for the increased time required to process rent and make payments to owners. Late fees are typically charged following a grace period after the rent is formally due.
11. Returned Check Fee – Standard fees for returned checks and payments from financial institutions.
12. Fee for Sale of Property – An owner may decide during the process of leasing to sell the property to the current tenant or to a separate individual procured by the firm. Under both circumstances the owner may be required to pay a percentage of the sales price as a fee back to the management company.
13. Sale Coordination Fee – A fee in which the owner sells the property and requests the management firm to coordinate showings, inspections, appraisals, or other matters related to the sale.
14. Termination Fee – If the owner elects to terminate the relationship with the firm while under the current management agreement a fee may be applied. The amount could be equivalent to the remaining monthly management fee or other amount as specified in the contract.
15. Referral Fee – Agents and brokers licensed in the state are allowed to charge referral fees from other licensed agents and brokers. If the tenant moves out of the firms area of operation and the firm is utilized to locate another firm they may request payment for providing a new client.
16. Tenant Repair Deductible – These deductibles are unfortunately becoming more common. Owners believe passing on deductibles to tenants saves them additional costs. In reality this is a rental increase passed on to the tenant since requesting deductibles convince some tenants to perform their own repairs. Our opinion is doing so is not in the best interest of the owner.
17. Eviction and Court Reimbursement Fee – A top quality firm will have low turnover rates and evictions but unfortunately there are times these services are required. During these circumstances the additional time and legal fees necessary to represent the owner are collected.
We hope that over the past three blogs that you are more familiar with the fees available to the management firms.