How Much Do You Charge?
Inevitably, the first of the 3 most common property management questions asked by rental property owners to a prospective property management company is regarding their fees. Sometimes, “how much do you charge?” is the opening line…
So, let’s take a look at the industry standard fees associated with residential property management here in San Diego, CA.
Property management fees vary from between 6-10%. I would caution using discount services that boast of full property management for less than 6%.
Please keep in mind that this range should not be viewed as one property management company is more or less expensive than the other but review the services provided by each and make a determination based on value, not pricing.
In addition to the monthly service fee, management companies also have auxiliary fees such as:
Lease up fees-The cost associated with “leasing up” or finding a new tenant for a rental property.
Set up fees- Usually at start up, considered an onboard admin expense to set up a new account.
Maintenance fees- Usually pegged at an amount at which the property management company deems renovation or construction rather than normal maintenance. Example: replacing all the windows in a property might have a maintenance overcharge associated due to the coordination and time associated.
How Are Maintenance Issues Handled?
Property management companies typically use two general ways to handle maintenance issues, both of which have proven efficient and cost effective.
In-house Maintenance Department: Some property management companies have an in-house maintenance department in which they handle repairs based on a disclosed hourly service rate (typically between $40-$70/hour).
Third Party Vendors: Some property management companies choose to use third party vendors that are licensed, bonded, and insured to handle maintenance issues. These vendors are usually under contract with favorable rates based on corporate relationships and volume that are much less than the general public would receive.
How Are Tenants Selected?
Established property management companies typically disclose their criteria for selecting applicants on their website. First and foremost, Federal & State Fair Housing Laws are always to be followed regardless of company criteria or request from rental property owners.
Typically, tenants are selected on a first complete application basis not first come basis. Only after all the required documentation is received, processed, and meets company requirements can a tenant be offered the property. Here are some areas property management companies focus on when making their decision.
FICO Score Requirements: Some property management companies have a baseline for FICO scores. Example: FICO under 600 will not be approved
Income Requirements: Some property management companies use a multiple (2x or 3x) of the applicants monthly income to determine if they meet income requirements sufficient to afford the rental property.
Past Residential History: Some property management companies rely on the past rental history of an applicant to weigh their decision.
Hopefully, providing some insight on these 3 Most Common Property Management Questions will help you determine what property management company is the right fit for your rental property. If you have any additional questions or would like to receive a free rental estimate for your property click here.
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Written by Salvatore Friscia, owner of San Diego Premier Property Management a full service residential property management company offering Worry Free property management to the greater San Diego area since 2004 and TenantFinder.com.