To properly compare the cost of various property management companies, you have to measure the services you receive against the management fees you’re paying. Don’t fall into the trap of choosing the company with the lowest fees. That’s only going to be more expensive in the long run. Choosing a company that charges 8 percent and provides minimal services instead of a full service company that charges 10 percent will only save you a few hundred dollars over the course of a year. And, your property and ROI could potentially suffer due to what that cheaper management company isn’t doing for you.
Excellence in Property Management
Your first priority needs to be excellence. Find a Los Angeles property management company that is professional, reputable, and experienced in handling properties similar to your own investments. Even if you’re paying $500 more per year, your property will earn more income and lose less on vacancies, turnover costs, maintenance errors, and potential lawsuits. You’ll save time, money, and frustration by working with an expert management company that can preserve the condition of your investment and minimize what you spend on it.
Low cost management companies can cost you more than full service, professional companies. You may be faced with hidden fees that were not disclosed when you signed a management agreement. You may have poorly screened tenants who will stop paying rent or damage your property. You may lose money on longer vacancies because the management company doesn’t market your home strategically.
Los Angeles Property Management Costs
Your costs will depend on the size of your portfolio. Most management companies will offer discounts when you have several properties, and if your portfolio includes different types of residential and commercial assets, you’ll probably have differing costs on each unit. What’s important is that you find transparency when you’re talking to companies about their management services. You need to know exactly what they’ll charge you up front and during the course of their management.
Most management companies will charge a leasing fee or a placement fee and a management fee. The leasing fee covers the cost of placing a qualified tenant in your property. It’s usually a percentage of one month’s rent, and you only pay it when your vacancy is filled. The management fee is paid monthly and it will either be a flat fee or a percentage of the rent that’s collected. Always ask about any additional fees.
Property Management Costs vs. Services
In exchange for the management fees you pay, you should expect the resources and experience available to a good property manager. Their knowledge, skills, and talents should help your property perform better and earn you more money. Working with a professional property manager will allow you to earn more than you would if you were managing the home on your own. That’s why the management fees are actually an investment; you’re more than recouping what you pay in short and long term investment gains. You will have access to a professional manager’s legal knowledge, experience screening and placing good tenants, and their ability to maintain and protect your property.
Many investors wonder if they can afford professional management but the real question is – can you afford to do it on your own? Probably not.
If you have any questions about costs and services, please contact us at Los Angeles Property Management Group. We’d be happy to tell you more.
