Before we talk about the cost of property management in Raleigh, you need to know how much owning a rental property costs. You have to consider five things; taxes, insurance, maintenance, vacancy, and management. So, understand those five categories and how they impact what you’ll pay for the care and upkeep of your investment property. Taxes will usually be around 11 percent of your property bill, unless they are escrowed with your mortgage payment. Insurance will be about 5 percent of your property bill. Again – if you are escrowing your property insurance, the number will be a little different.
Budget around 5 percent of your rental income for maintenance. What you spend will depend on your property’s age and condition, but it’s good to have a little bit put away in case a major expenses arises. Vacancy will be your most expensive cost, and your goal is to be at or below 2 percent in terms of vacancies. Management costs will be discussed a little bit further.
Hidden Costs – MistakesThe first management cost is the hidden cost – mistakes. Your manager, or you if you’re self-managing, can make some important and costly mistakes. They might include taking too long to fill a vacancy, or putting the wrong tenant in the property. That will be the most costly mistake you make. Not collecting the rent or having high maintenance costs at your property are also expensive errors. Property damage, rental prices that are too low, and evictions that weren’t filed quickly enough will all be more expensive than professional property management.
Measuring the Value of Your TimeThe amount of time it takes to manage your own property will make a big difference in your life. Time is your most precious and limited resource. Think about whether you’re willing to give that time up in order to be a full-time landlord and property manager.
Management FeesMost property management companies make their money in two ways. First, they charge a marketing or leasing fee. This is some percentage of the first month’s rent or a flat fee, and you pay it when they fill a vacancy for the first time. The second way they make money is through a management fee. This will be a flat fee or a percentage of the rent that you pay monthly while they’re managing the property.
Group 15 – Flexible FeesWe have a flexible fee schedule at Group 15. We understand that different landlords have different budgets, goals, and needs, so we provide options that you can pick from.
Option 1: Marketing fee of 25 percent of the first month’s rent, and a management fee of 10 percent of the rent every month. This is available for properties renting at $800 a month or more.
Option 2: Marketing fee of 50 percent of the first month’s rent, and a management fee of 8 percent of the rent every month. This is available for properties that are $1,000 per month or more.
Option 3: Marketing fee is 100 percent of the first month’s rent, and a management fee of 5 percent of the rent every month. This is available for properties renting at $1,600 per month or more.
Please note – the marketing fee must be a minimum of $250. If your property will rent for less than $800 per month, call us to discuss what kind of fee schedule we’ll need to consider.
Between 60 and 90 days before the end of your tenant’s current lease, we’ll look at the market and consult on what kind of rental increase may be appropriate. Our goals are to keep your income climbing and to ensure your property is occupied with a great tenant. Lease renewal fees are $150.
Measuring Cost Against Time and ExpertiseWhen I was 16 years old, I had saved up just enough money to buy an old beater of a car. This car needed a lot of work, so I took the time and spent the money to fix the car up. I did my own maintenance and changed the oil and learned how to make it run. Fast forward all these years later, and my middle aged self has a job and a business and a family and other responsibilities. I could still do maintenance on my own cars, but it would take me a lot longer than it would take a mechanic. I don’t have the right tools and I know I might break something. My time is the most limited and valuable resource that I have. This is why you hire a professional management company.
If you have any questions about property management fees or your Raleigh rental property, please contact us at Group 15 Real Estate. We’d be happy to help you prepare a budget and plan on evaluating the cost of owning and managing a rental property.