Being a renter in the current housing market can be daunting in its own right. Would-be tenants are faced with a series of challenges before locking in a favorable rental agreement that meets the demands and requirements of landlords and property management agencies.
Prospective rental property owners and existing landlords are facing similar, if not more demanding, challenges as market conditions continue to change and the process of maintaining a rental property becomes harder and more complicated due to rule changes and new regulations.
As a rental owner or landlord, choosing a property manager or management company could bring new uncertainty. Fortunately, this doesn’t have to be the case, as Buttonwood Property Management has spent years accumulating the necessary expertise to provide you with a quality-tailored property management service.
Becoming a successful real estate owner and investor requires you to understand the basics of property management and how paying for the appropriate service provider can become a valuable asset to your property portfolio.
Property Management In Toronto
A property manager is a person or a management company that manages the details of running a rental property from day to day or month to month.
Below are some of the more general tasks a property manager will carry out on behalf of a property owner or investor:
- Helping you set rental rates for your area
- Setting up a solid and complete lease agreement according to your terms
- Marketing the rental
- Choosing the right tenants
- Rent collection services
- Organizing finances
- Maintenance issues
- Move-outs and evictions
The specific tasks of any property manager you hire are going to differ based on the agreement you have in place. Not every property will need the same level of management, and some multi-unit buildings might need even more. Good property managers will have some flexibility in the services they offer, so you can mix and match to get exactly what you need out of their services.
Why Do You Need a Property Manager?
Before setting out to explore the average fee charged for managing real estate premises, it is prudent to establish why you need one. When you select a high-quality property manager, they can greatly enhance your premise in the following ways:
Screening and Securing High Quality Tenants
Finding good quality tenants is no easy task. Because property managers have been on the job for a long time, consider using them because they know how to vet and get good tenants. These are tenants who pay rent on time, stay longer, co-exist well with others, and cause fewer problems.
Fewer and Inexpensive Legal Problems
Landlords who have been in business for some time can confirm that it only takes a troublesome tenant to incur major legal and financial issues. However, property managers have seen such cases often enough and will help you avoid them through tenant screening, binding agreements, and regular inspections.
Short Vacancy Cycles
When a unit in the rental property falls vacant, property managers can fill it promptly. They use their networks to advertise and fill the vacant units immediately so landlords do not incur losses.
A Tighter Rent Collection Process
If you have a rental property, the expectation is to get a smooth flow of income. However, this can only happen when you contract professional property management firms with the expertise of handling tenants and rent.
The process starts with tenant screening to ensure that only the tenants capable of paying rent, those who will hopefully look after your property are considered, and those with proof of income are allowed to move in.
How Much Does Property Management Cost?
Property management fees for your rental property depend on several factors. These include the location of the property, the estimated billable hours for providing the service, and the level of landlord-property management involvement.
The primary part of the cost when contracting a property manager is the overall management fee, but there are some other additional costs you should be aware of as well.
Typical Property Management Fee
When you contract with a property management company, expect to pay a commission of 6% to 12% of the rental value. This fee goes to the management company. However, some companies charge a flat rate of $100 to $200 per month, especially when the rental income is relatively low.
Rental Management Cost Breakdown
In addition to the property management fee, the management firm is also expected to meet additional charges for running the premises. These charges include:
- Maintenance Charges: To keep the cost of maintenance low, some property management firms opt to work with several repair professionals to carry out regular repair work.
- New Tenant Placement: Some property managers might charge a fee for getting a tenant into a lease. Most of them charge equivalent to one month’s rent. These fees are known as leasing fees. The rate might be negotiable, but charging a leasing fee is a common practice in the industry.
- Eviction Charges: It is important to appreciate that there are times when things do not work as expected, and even a good tenant can become irresponsible and a nuisance. If the tenant needs to be evicted, property managers’ charge starts between $500 – $1000 per eviction and may go higher depending on the eviction case. This cost is used to follow the legal process of acquiring a court order to evict the tenant.
- The Vacant Unit Charges: If you engage the property manager when the premise is empty, you are likely to be charged the value of one month’s rent for the unit. The cost is used to pay for expenses associated with placing adverts and showing prospective renters the premises. It also covers costs related to preparing lease paperwork.
- Miscellaneous Fee: When you contract a property manager, it is possible to get some extra costs meant to cater for additional expenses such as advertisements, inspection fees, and other unanticipated spending.
Property Management Company Fees: How To Calculate The Cost Of Property Management Charges
There are plenty of factors to consider when hiring a property management company in the Greater Toronto Area (GTA). Seeking to hire a property manager will help maximize your rental property income. In addition, property managers assist with legal and regulatory requirements and further ensure that lease agreements will cover your most important demands and concerns.
Unfortunately, there are instances of less trustworthy property managers charging clients hidden property management fees, which can quickly increase the cost of hiring a professional service provider.
In the following section, we review 11 different property management fees charges by other companies, and what you can look out for when hiring a property manager for your next rental property.
Leasing Renewal Fees
Keeping good tenants around can help minimize the need to screen and secure new renters. Instead, you might not save money if your property management company does not have to place tenants in your rental property unit.
There are some property management companies that may charge lease renewal fees. Generally, a property manager might charge either a flat fee per property or request one month’s rent as the leasing fee.
Initial Setup Fee
Often a property management company 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 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.
Vacancy Fee
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, you will have plenty of options. Keep in mind that one of the options you will have is whether you want your unit listed/advertised on a Multiple Lister Service (MLS). While this might come with a lower cost, it might be more difficult to find a tenant for your property.
Maintenance, Repair and Additional Property Management Fees
If you look carefully at your maintenance and repair invoices, you may find that your property management company added hidden fees, and in some instances, you might notice that prices have been marked up higher than the market average.
Move-in and Move-out Inspection Fee
A property management company may often charge inspection fees when tenants move in or out. 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 regularly, and some may charge a fee to do so.
Vacancy and/or Rent Delinquency Fee
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, such as advertising the property, screening applicants, and 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 these when you sign the contract with the manager.
Pre-Delivery Inspection (PDI) Fees for New Properties
It’s not uncommon for a manager to charge a fee for a pre-delivery inspection, which often involves inspecting the property to ensure that it is in good enough condition for new occupants.
Monthly and Yearly Statement Online Access
Some hidden property management fees might cover monthly reports, although many firms offer free online access to monthly and yearly statements.
What Factors Affect Rental Property Management Fees?
Property managers in GTA can request a percentage of monthly rental payments as part of their monthly fee. These fees can change depending on the property and the agreement you might have with your agent. Additionally, property managers may lose out on fees should a rental property undergo construction, renovations, or remain vacant.
Nonetheless, as property owners or investors, it’s important to know that property management fees can change depending on several factors, including:
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.
Total units included on 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 fee amount to be charged.
Services offered: Finally, owners will pay different amounts for a variety of different services. Every manager sets their own cost for each of those services.
Property Management Fee Structure
The average property management fee ranges between 6% 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.
Flat Rate
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.
Understanding Residential Property Management Cost
Residential property management contracts can be paid to a management company to help you maintain and upkeep single-family homes, duplexes, condominiums, townhouses, and other residential properties once you have a tenant settled in them.
Paying residential property management fees ensures that repairs are done on time and the properties are generally held in good condition. These dues are paid to help protect and maintain your long-term investment. A well-kept rental property creates more value, which in turn translates into a higher return on your investment.
Every company is different. However, Buttonwood Property Management generally includes the following residential property services:
- Rent collection
- Bookkeeping services
- Cash flow management
- Repair coordination and payment
- Payment of property tax, maintenance, condo fees, and other specific fees
- Tenant communication and dispute resolution
- On-call services for tenants
- Tenant intake and exit reporting
When you pay a fee to a property management company, you work out the details about what specific aspects of management they will handle. After all, every property is different, so you can find the perfect balance for the services that you need.
Understanding Commercial Property Management Cost
Residential properties aren’t the only ones that need to be maintained. Some commercial property owners turn to property management firms to help organize them and keep the properties in good repair. While similar to the residential process for property management, there are a few key differences.
To compare with the residential property management process, we’ll once again highlight what we cover in our commercial property management at Buttonwood:
- Commercial tenant sourcing and screening
- Arranging commercial property lease agreements
- Rent, property management fees, and maintenance fees collection
- Around-the-clock tenant communication
- Property cost management
- Payment completion for local taxes, maintenance, repairs, and more
- Property inspection services
- Bookkeeping, including a monthly financial report
In addition to these baseline services, the best property management firms will also help you do a risk assessment and sustainability reports to ensure the future success of your commercial property is viable.
What is the average management fee for commercial properties?
Similar to residential property management, the base idea that the cost will differ depending on the specifics of your contract with a management firm remains. Still, average costs for commercial property management can be compared to give you an idea of what to expect.
How are commercial properties management fees calculated?
The price for commercial property management is usually equal to between 4 and 12% of the property’s rent as a base cost. Depending on the number of properties in your management portfolio and the exact services that you need, this number may change.
Similar to residential property management, there are fees for finding new tenants, renovating a space, evicting tenants, and other specific situations that your management company will charge you for.
Before you begin to work with any management firm, it is important to work out the detailed costs so that you are not caught unaware by a management fee.
You might want to consider including the following costs as part of commercial property fees:
- Upkeep of public parking
- Snow removal
- Renovation costs
- Contracting fees
- Property-wide budgeting for multiple commercial units in a single space
- Purchase or rental of maintenance equipment
Property Management Fees FAQs
Are Property Management Fees Negotiable?
Yes, property management fees may be negotiable in many cases. In addition to being able to mix and match which services you want to hire from a property management company, you may be able to negotiate the rate of property management fees with them as well.
It is more likely that you will be able to negotiate a reduction in the per-unit costs and fee schedule if you hire a company to manage multiple properties, but you can always ask to find out what is possible.
Remember, however, that most property management companies are going to have some type of minimum required services. This means you have to purchase a package of services from them or set up a minimum number of units managed.
Regardless, it is always good to discuss fees and budgeting with a property management company before you sign on for their services.
How Much Do Property Managers Charge Upfront?
The exact fees charged by any property manager are going to be dependent on the services you are hiring them for.
Many property management companies charge a setup fee when they first take on your account, and this fee is used to set up the administrative processes that will be necessary to manage your rentals.
Your property manager or management company should be clear with you about fees and budgeting from day one of working together. At any time, you should feel comfortable asking for an explanation of the cost per service rendered. If you do not, it is time to find a more reliable property manager.
What is the Average Property Management Fee?
Most property management fees will fall in the range of 6% to 12% of the unit’s rental value. When the rent is on the lower end, management companies may opt for a flat monthly rate instead.
In cases where you are hiring a property management company to take over a multi-unit building or a group of properties, the company may instead charge one flat rate for the monthly management of those units.
What Duties Are Property Managers Responsible For?
The specific duties of a property manager are determined by the agreement you have with them but will generally include the following:
– Rent collection
– Setting up and handling maintenance requests
– Property advertising and marketing communications
– Sourcing new tenants
– Coordinating move-in and move-out
– Handling evictions
If there are specific services you want to handle or services you would prefer to continue handling yourself, these terms can be negotiated with your management company.
What is the Difference Between Property Management and Leasing Fees For Rental Property?
Property management fees are the fees that are charged monthly by a property management company for its services. Leasing fees are the fees that property managers sometimes charge for the process of setting up a new tenant in one of the properties; its name directly ties into the leasing process.
Why Choose Buttonwood For Your Toronto Property Management?
Our directive at Buttonwood Property Management is to provide you with optimized returns on your property. Working with a team of professionals allows you to leverage years of industry-based experience and expertise.
Buttonwood focuses on delivering professional services to property owners and investors. Our objective approach ensures that you can grow your business by removing barriers to accessing the necessary property management resources.
As a number one choice, Buttonwood Property Management works to keep property management fees in Toronto at a minimum, allowing owners and landlords to increase their turnover and raise their return on investment.
Property Management Fees At Buttonwood
If you are a landlord in Toronto, the property management company of choice will determine how effectively the property is managed. You should focus on the commitment of the selected firm and its costs.
Buttonwood’s Property Management Fees in Toronto
The most notable thing about Buttonwood Property Management is its commitment to low fees. Management holds the view that the investor or landlord should enjoy more significant returns on investment (ROI).
Here is a closer look at the Buttonwood Property Management price list:
Monthly Management Fee
Buttonwood’s monthly management fee is 6%, which is capped at $190 for a condominium unit and $230 for a single-family house. Considering that the market average other companies may charge is between 6% and 12%, Buttonwood Property Management is among the best value-driven providers in the market, including both quality and price.
Initiation Fee
Buttonwood Property Management has waived initiation fees and has a free property set-up fee. On average, other property management companies in GTA can charge anywhere between $150 and $300.
Tenant Placement Fee
Buttonwood provides a 50% discount when listing a property on Multiple Listing Service (MLS). This fee is usually 1 Month’s rent plus HST – however for long-term clients – Buttonwood provides a 50% discount and reduces this fee to ½ a month’s rent to be paid to the collaborating agent plus $200 MLS fee. The cost of Buttonwood’s placement fee is minimal compared to other local companies that can ask for a full month’s rent to place a new tenant.
Move-in/Move-out Fee
Both move-in and move-out inspections at Buttonwood are free. Landlords using other property management companies can be charged anywhere from $75 to $200 during a change of tenancy.
Additionally, Fall and Spring inspections are charged at a flat rate of $99 each. This is considerably lower than other companies that may charge a starting rate of $400 for similar inspections.
Additional Fees
Other fees charged may include non-resident tax remittance, which is charged at $25 per month.
Additionally, free services included at Buttonwood can vary, however, our most popular services include vacant house visits (upon request); access control (maintenance and service); pre-delivery inspection; online financial statements, and lease screening.
Why You Should Consider Buttonwood Property Management
Buttonwood Property Management is a company built on four key values: integrity, service, expertise, and commitment. These values demonstrate the working model of offering the best possible services to landlords in Toronto.
Whether you have multiple real estate properties in Toronto, a single-family home, or a condo that you want to rent, Buttonwood is there to invest and grow.
Here are other benefits of using Buttonwood Property Management:
- Buttonwood offers a wide range of services. We can help you with residential property management in Toronto, residential property rental, and commercial property management in Toronto.
- Our commitment to low fees demonstrates its appreciation of the landlord’s hard work and sacrifice when constructing the buildings.
- We have waived any hidden costs and ensure that any agreement signed between a representative of Buttonwood and a landlord reflects the cost amount that will be incurred. Should there be any additional costs, management will discuss these with the landlord, providing increased transparency and value for money.
- Our investment consulting services are available to landlords and property investors who are seeking to grow their investment portfolios. Buttonwood seeks to present you with an opportunity to increase your return on investment, regardless of your level of property investing.
- For Buttonwood Property Management, the target is not to optimize profits but rather to see the clients grow from one level to another. We work with a plethora of experts in finance, investment, tax matters, and property development to ensure that their clients set the right goals and achieve them.
- We rarely recommend selling, and we encourage real estate investors to hold properties for generations to come. However, should the need arise for you to sell your property or place on the market, Buttonwood is available to assist you throughout the process and provide you with an opportunity to excel at selling tenanted properties.
What Is The Average Property Management Fee For Rental Properties In Toronto?
Though the answer to the question is on average, between 6% and 12%, depending on the selected company. Buttonwood advises that you consider all necessary factors that could influence the price you will pay when selecting a company. Additionally, consider the following:
- Ensure the company has professional management that is committed to assisting clients in growing progressively.
- Read about past clients’ feedback to establish if they were satisfied after using the company’s services.
- Ensure that the company is registered to operate in Toronto.
Closing Thoughts
Property owners, would-be landlords, and rental property investors have plenty of factors to consider when choosing to hire a property manager or selecting a property management company to oversee their investment.
Finding a suitable property management company can become a complicated process to navigate. Various hidden costs and fees, additional charges, and a limited number of services can make rental property ownership more work than it needs to be.
When searching for a new property manager, ensure that you choose a company that can provide you with the services you require at an affordable price. More than this, consider how this company can provide you with value for money while allowing you to maximize your investment.
At Buttonwood Property Management, we seek to integrate our four key company values – integrity, service, expertise, and commitment – in everything we do, allowing us to build lasting relationships with our clients while delivering a service that’s both value-driven and demonstrates a working model that offers clients the best property management experience in Toronto.
