Like anything in life – it is better to be more educated and prepared than less, especially regarding your rental property.
If you are considering hiring a property manager, you’ll want to know all the daily fees a property manager might charge for managing your investment property.
As a professional Orlando property manager, I’ve seen property management companies nationwide charge different fees associated with various property management services.
One fee that gets misconstrued in the property management industry is a lease renewal fee. I’ll share everything you need to know about a lease renewal fee and why a property management company charges such a fee.
Common Property Management Fees
If you’ve been interviewing property management companies for the job, you’ve likely come across many of the same property management terms or property management fees. Well, that is because many property managers charge similar fees. The most common property management fees are:
1. Property Management Leasing Fee
Say you have a vacant rental property, or you’ve just moved out of your home, and you want to have your property manager find you a qualified tenant. You will need your property management company to list your property for rent and screen interested prospective tenants.
Most property management companies will charge this as a one-time fee and typically charge between 50-75 percent of one month’s rent or, in some areas, one full month’s rent.
However, when interviewing potential property managers, ask how much they charge for finding and placing a quality tenant because some may have a flat fee or percentage of the rental rate.
2. Monthly Property Management Fee
For most property managers, the most common property management fee is the monthly management fee. This fee will be charged monthly by your property manager for handling all aspects of your investment property.
Typically property management companies across the county will charge between 6-12% depending on your real estate market. For example, most property management companies charge between 8-10% of the monthly rental income collected in the Orlando, Florida, area.
3. Lease Renewal Fee
Lastly, one of the remaining property management fees is the Lease Renewal Fee. A property manager charges the Lease renewal fee for all the administrative tasks involved in getting your tenant to renew the lease agreement for another year.
How much do Property Managers charge for Lease Renewals?
Property managers will typically have a lease renewal fee that is either a Flat Fee or a Percentage-based Fee.
- Flat Fee Lease Renewal: Property managers may charge a flat fee for lease renewals. Typically this flat fee ranges from $250 to $500.
- Percentage-Based Renewal Fee: Rental property managers will alternatively have a percentage of the rental amount for lease renewals. Typically this fee ranges from 25% to 75% of the rental amount.
Which Lease Renewal Fee is best for you and your Rental Investment Property?
As a full-service property management company, we can tell you that it is best to go with a property management company that’s incentivized to perform.
- The lease renewal fee greatly incentivizes retaining quality tenants versus constant tenant turnover for your rental property.
- A property management company that charges a cheap flat fee, typically the other costs are more expensive.
- Your property manager is more likely to provide a better tenant experience, resulting in higher tenant satisfaction and long-term tenants.
- Your property manager is more likely to increase the rental rate and maximize your rental properties income. I higher renewal rate will result in more money for you and your property manager.
Why do Property Managers charge a Lease Renewal Fee?
The lease renewal fees are often misconstrued because many landlords or real estate investors think it is as easy as a handshake with the tenants. However, my years of property management experience can tell you otherwise.
From a property manager’s perspective, lease renewals entail:
- Conducting an updated rental analysis
- Offering new renewal rate for current tenants
- Contacting and Following up with existing tenants to see if they would like to renew
- Preparing and sending the new lease agreement
- Following up with tenants to ensure the lease is signed
Some property management companies, such as our full-service Orlando property management company, will inspect the property to ensure the tenants take care of the property before renewing the lease agreement.
Property Managers Summary
Lease renewal fees charged by a property manager can be a great incentive and keep your rental property running smoothly with little to no vacancy. However, all property management companies will charge slightly different rates and fees, so ensure you understand each before hiring them.
Contact us today if you have any questions or want to learn more about our Orlando property management services. At The Listing Real Estate Management, we are your boutique property management company and are here as a resource to you and your rental property.