Hello, I’m working on a deal to acquire a single family home in Texas with a broker and I’m about the close the deal.
Since I’m not a Texas resident myself, the same broker will take care of managing the property for me.
I have a question regarding the fees he’s asking for the management.
In short, the fees schedule is like this:
Management fee of 8% with a monthly minimum of $100 (which applies even if the property is vacant)
80% of one full month’s rent each time the property is leased to a new tenant (out of which broker may share with other brokers if applicable)
10% of the total cost for each repair, maintenance, alteration or redecoration
Broker keeps administrative fees from tenants (application fees, late charges etc.)
5% of the sales price in the event of a sale during this agreement or within 30 days after it ends
I don’t use property but the standard rate is 10%. I have not seen anybody charging the standard amount. Everybody charges from 7% to 9%. So your 8% is in the range. I don’tunderstand why they charge the 8% even if the property is empty. To lease an empty property is usually one month rent. They charge you 80% of a month rent which is good. But why are they charging you the 8% and then 80% of the rent to lease it?
I charge 10% of all money received and markup all invoices 10%. I don’t charge for an empty house and don’t charge to get it leased (it’s part of the job - high turnovers don’t add value to a property). I think it’s important that I make my money in ways that benefit the landlord, not me. What you mention though is somewhat common. I still think I would negotiate it. I wouldn’t pay for an empty rental and wouldn’t pay a commission for a guy that doesn’t have to do the work to sell the place.
FWIW, my pricing is only enough on higher priced rentals. On cheap places my pricing is too low to make enough money. I am considering a monthly minimum to deal with a property, like $60/month.
Does the property management company take the late payment out of the gross rent or is it an additional charge? Do you get a portion of the late fee? You are the one receiving the rent late.
I don’t understand PM companies that penalize the property owners for the tenant paying late. I have dealt with a number of companies that don’t have a valid reasoning to deduct from the overall gross rent for the tenant paying late. Always read the PM contracts to make sure you fully understand the terms.
I keep the late fee. The owner doesn’t usually even know if I got the money late. I send his money on the 15th, and if it hasn’t arrived by then it’s not coming and eviction has been filed. The late fee pays for my time to deal with difficult people and helps incentive the tenant to change their behavior.