Today, we’re talking about the importance of not choosing a property manager based on fees alone. As consumers, it’s natural to want to save a few dollars. However, there are several service industries where choosing a provider based on the lowest price is not a good idea. Property management is one of those industries.
When researching different property management companies, you will most likely find that companies charge their management fees based on a percentage of the rent – usually between 8 and 10 percent. So it seems like it could be an easy choice when you’re making a selection between a company that charges 8 percent and another company that charges 10 percent. If you want to pay less every month, you’ll choose the company that charges 8 percent. But that’s not necessarily the best idea.
The best way to be successful with a rental property is by having a good tenant in place. In order to find that good tenant, you need a property management company with solid screening practices. If you have a bad tenant, you’ll lose rental income, pay legal fees and risk the damage to your property. A bad tenant can cost you between $5,000 and $8,000.
So, let’s do the math. On a $1,200 rental, working with a company that charges 10 percent instead of 8 percent will cost you $24 a month more, or $288 more per year. That’s not a big difference, and cheaper is not always better. As a landlord, you should be basing your decision on their success rate of finding and placing good tenant. Ask about screening and eviction rates, not the management fee alone.
Paying a few extra dollars a month can save you thousands in the long term. If you have any questions about this topic, please contact us at Solutions Realty Network. We’d be happy to explain our fees and tell you about the services we provide in exchange for them.