When you’re looking at hiring a property management company in Scarborough or any other part of the Toronto area, there are many things to consider. It’s always good to hire a property manager because they will help you maximize your income on your real estate, keep you in compliance with all local laws, and ensure that your lease agreement covers every concern you have.
However, what many property owners in Thornhill don’t know is that many property management companies charge hidden fees that you might not be aware of when you sign an agreement with them. Aside from property management fees, you may find a lease renewal fee, an eviction fee, maintenance fee, an early cancellation fee and many other unexpected expenses related to property management services.
11 Property Management Fees Charged by Other Companies
Property managers in Richmond Hill may charge many different property management fees. Reputable, trustworthy Richmond Hill property managers will spell out every fee they charge to a property owner.
However, a less trustworthy property manager may charge many hidden property management fees. Here are the most common fees charged by property management companies.
Leasing Renewal Fees
Of course, it’s always beneficial or landlords to retain good tenants instead of trying to find new ones. However, you might not save money if your property management firm doesn’t have to conduct place tenants again in your unit.
Some property management companies in New Toronto charge lease renewal fees when a tenant’s lease is renewed. Generally, a property manager might charge either a flat fee per property or one month’s rent as the leasing fee.
Initial Setup Fee
Often a property management company in or around Mimico charges a setup fee to establish themselves with property owners. Depending on how many units you have, this initial fee may be a few hundred dollars or more. It will cover the costs associated with inspecting the property and notifying each tenant that they will be taking over as property manager.
Late Payment Fees
In addition to monthly management fees, a property management company in Toronto may also charge the tenant late fees if they pay their rent after the due date. The property management company may collect a percentage or all of the late fee or may pass the entire late fee on to the property owner.
The property management company may also charge a vacancy fee in addition to a monthly management fee on all rental properties. When units are vacant, the property manager must take time to advertise them and show them to potential tenants, but there is no rent collected to take a percentage of. As a result, the owner will often pay a vacancy fee.
Tenant Placement Fee Without Advertising on MLS
When establishing yourself with a new property management company in or around Toronto or North York, there will be many choices. One will be whether or not you want your units listed on the MLS. While this might come with a lower cost, it might be more difficult to find a tenant for your property.
Marking up Maintenance and Repair Invoices and Adding Property Management Fees
If you look carefully at your maintenance and repair invoices, you may find that your property management company added hidden fees by marking them up.
Move-in and Move-out Inspection Fee
A property management company in Markham will often charge inspection fees when tenants move in or out. Of course, placing new tenants requires tenant screening and background checks, so it’s not unusual for a landlord to pay for these services. Additionally, the property manager might charge an eviction fee if they have to force a tenant out for various reasons.
Property Visitation Fee
With some managers, there is an additional fee for property visitations. A reputable property manager should visit every unit on a regular basis, and some may charge a fee to do so.
Property Management Fee Charged Even when you are Vacant and/or Tenant Not Paying Rent
It’s important to realize that there will still be a monthly management fee if the property is sitting empty. There is still much to do when it comes to managing empty units, like advertising the property, screening applicants and much more.
In many cases, the manager will charge a flat fee since they can’t take a percentage of monthly rent payments. However, there could be other hidden costs or extra fees, so it’s important to ask about them when you sign the contract with the manager.
Pre-delivery Inspection (PDI) Fees for New Properties
It’s also not uncommon for the manager to charge a fee for a pre-delivery inspection, which often involves inspecting the property to ensure that it is in good enough shape for someone to occupy it.
Monthly and Yearly Statement Online Access for Free
Some hidden property management fees might cover monthly reports, although many firms offer online access to monthly and yearly statements free.
What Factors Affect Rental Property Management Fees?
In general, property managers in or around East York or other parts of the Toronto area take a percentage of monthly payments on each unit as their monthly fee, but sometimes that isn’t possible because they are sitting empty. However, the fee that’s charged can vary widely depending on these factors.
Type of Property
First, the type of property is an important factor in how much the manager will charge. Commercial and residential properties have different rates, as do different types of residential properties, like single-family homes, duplexes or townhomes.
Number of Units Included in the Property
The number of units is also a critical part of the formula for how much managers will charge.
Monthly Rent Roll Amount
Additionally, the monthly payments on the property will factor in when determining the amount of the fee to charge.
Finally, owners will pay different amounts for a variety of different services. Every manager sets their own cost for each of those services.
Types of Property Management Fee Structure
The average property management fee ranges between 8% and 12% of the rent collected each month. However, the cost for various property management services will vary from manager to manager. The lease fee is only one part of the package, so it’s important to understand the manager’s fee structure before you sign on the dotted line.
In some cases, a flat rate might be a better deal for you, but many factors go into determining whether that is the case for you and your properties. It’s a good idea to compare different structures to see how you will save the most money, but it’s important to understand that some managers make the cost of their services appear lower than those of other managers. However, they make up for that lower cost by charging hidden fees.
Percentage of Rent
A common way to structure fees is for the manager to take a percentage of the rent collected every month. Many owners will find that this structure is particularly attractive for them, but it depends on how many units they have, how much the monthly payments are and other factors.
How Much Do Property Management Companies Charge to Manage a Rental?
A typical property management company in Mississauga or the rest of the Greater Toronto area charges 6% to 12% of the rental value. However, as you can see, the leasing fees vary widely from manager to manager because each one offers different combinations of services.
What Is a Property Manager’s First Responsibility to the Owner?
The manager’s first responsibility is to maximize the owner’s potential profit on their property while abiding with all their instructions.
Property owners have many things to consider when looking to hire a manager, and the decision goes far beyond the basic lease fee. If you’re switching managers, you should be aware that some charge a hefty cancellation fee if you switch before the end of the contract.
The best managers can easily find a new tenant who is quick to pay their first month’s rent and make their monthly payments on time every month. In some cases, the tenant pays fees that the manager charges, but the owner passes on them.
Remember, a lower price doesn’t necessarily mean you’re getting a better deal. Sometimes you get what you pay for when it comes to hiring a manager, as you’ll see that some are better at maximizing your profit margins.