If you own rental property, getting a professional real estate manager is a great method for ensuring it runs smoothly and optimizing returns on investment. For example, Toronto property management companies vet tenants and ensure rent is collected on time. Besides, the management also maintains the property so it stays in top condition.
To offer real estate management services, the selected firms charge landlords a fee. Here, you need to carefully compare the revenue from the property and the charges of the property manager. Remember that the premise also has to meet other costs such as rental income tax, land rates, and repair expenses.
This post is a careful evaluation of the real estate industry to answer one key question: “What is the average property management fee for rental properties?”
What is a Property Manager?
What is a property manager, and what services do they take out of your hands and handle for you?
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.
These are some of the tasks property managers will generally be responsible for:
- 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
- Collecting rent
- Clearly organizing finances
- Maintenance issues
- Move-outs and evictions
Of course, 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 actually need one. When you select a high-quality property manager, they can greatly enhance your premise in the following ways:
Helping to Get High-Quality Tenants
If you are a landlord, the last problem you want to encounter is a stubborn tenant. However, getting good 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 to avoid them through tenant screening, binding agreements, and regular inspections.
Short Vacancy Cycles
When a unit in the rental property falls vacant, property managers are able to fill it promptly. They use their networks with other managers 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 from 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 in Ontario for your rental property depend on a number of factors. These include the location of the property, the estimated man-hours for running the service, and the level of landlord/property management involvement.
The primary part of the cost when contracting a property manager in Ontario is the overall management fee, but there are some other additional costs you should be aware of as well.
The Typical Property Management Fee
When you contract 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 landlord/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 a number of repair professionals to carry out regular repair works.
- 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 normal 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 between $500 – $1000 per eviction. 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 premise. 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 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 out 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?
As mentioned earlier, 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.
Do Property Managers Keep Late Fees?
There are different policies about late fees, so whether or not your property manager is entitled to keep late fees will depend on your contract.
In some cases, property managers will keep late fees completely and use them to cover the added expense of needing to cover that unit’s rent. In other cases, the late fees may be split between the landlord and the property manager or passed on to the landlord completely.
How your late fees will be handled will be dependent on the terms of your contract with the property management company.
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:
- Collecting rent
- Setting up and handling maintenance requests
- Marketing the property
- Bringing in new tenants
- Coordinating move-outs
- Handling evictions
If there are specific services you want to be handled 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 are sometimes charged by property managers for the process of setting up a new tenant in one of the properties; its name directly ties into the leasing process.
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 costs. One outstanding firm that has won the hearts of real estate investors is Buttonwood Property Management.
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 greater returns on investment (ROI). Here is a closer look at the Buttonwood Property Management price list:
- The monthly management fee is 6% and this fee is capped at $190 for a condo unit and at $230 for houses. The low fee makes Buttonwood Property Management among the best value in the market to include both quality and price. For example, other companies charge between 6% and 12%.
- An invitation fee or property set-up fee is free at Buttonwood Property Management. However, other companies charge a fee of between $150 and $300.
- The tenant placement fee without MLS is free. However, a placement fee with MLS attracts a small fee of ½ a month’s rent and an additional $200 to cater for the MLS fee. This cost is minimal when compared to other companies that charge a full month’s rent for bringing in a new tenant.
- Move-in and move-out inspections at Buttonwood are free. However, landlords who use other companies are charged between $75 and $200 when tenants are moving in or out.
- Fall and Spring Inspections are charged $99 each at Buttonwood Property Management. However, other companies charge clients up to $400 for similar inspections.
- Other charges you need to know about include the non-resident tax remittance that is charged at $25 per month.
- Some of the free services at Buttonwood include vacant house visits (only when requested), granting access to tradespeople, a 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 estates in Toronto or converted a few units of your home into rental units, Buttonwood is there to make the investment grow.
Here are other benefits of using Buttonwood Property Management:
- The company offers a wide range of services. They can help you with residential property management, residential property rental, and commercial property management in Toronto.
- The company’s commitment to low fees demonstrates its appreciation of the landlord’s hard work and sacrifice when constructing the buildings.
- Buttonwood does not have hidden costs. When a landlord signs an agreement with Buttonwood, it is only the fee captured in the agreement that will be incurred. If there are additional costs, management discusses these with the landlord for transparency and value for money.
- Buttonwood Property Management provides expert investment consulting to help landlords and other interested parties grow their portfolios. This implies that no matter the level of your property investing, Buttonwood presents a better opportunity for growth.
- For Buttonwood Property Management, the target is not to optimize profits but rather to see the clients growing from one level to another. They work with experts in finance, investment, tax matters, and property development to ensure that their clients set the right goals and achieve them.
To optimize the returns from your property, it is advisable to work with property management professionals. These experts have been in the market for years and understand the problems to avoid for progressive growth and success. To get more from the property management company, it is important to look for the one with the best value.
Buttonwood Property Management came out as a professionally run enterprise that targets helping investors grow their businesses to the next level. Unlike other companies that focus on charging the highest possible fee, Buttonwood seeks to keep your property management fees in Toronto low to get the funds into the landlords’ pockets.
What is the average property management fee for rental properties? Though the answer to the question is on average between 6% and 12% depending on the selected company, it is advisable to also factor in the following best practices when selecting the company of choice:
- Ensure the company has professional management that is committed to assisting clients to grow progressively.
- The company is registered to operate in Toronto.
- Check past clients’ feedback to establish if they were satisfied after using the company’s services.