The 6 Factors to Consider When Choosing a Property Management Company: #1 Cost
By Progressive Property Management - Thursday, July 30, 2015
Property management is a complicated business, and finding the right company to manage your investment property can be equally complicated.
Just look at our comparison chart, there a lot of boxes and variables to consider. I have found you can boil your decision down to 6 factors: price, reputation, value proposition, core competency, responsiveness and transparency. In this blog we will look at the first factor: price.
If everything else about two property management companies are equal, you should choose the company that is lower in cost. The operative word in that sentence is "equal". Â One company may have a lower price, but charge a number of extra fees. Â Another company may have a lower monthly management fee, but charge a much higher fee with the units needs to be leased out after it becomes vacant. Â Here are the 3 parts of the property management experience you must consider when comparing price:
1) The monthly management fee. Â Most companies charge a percent of the rent collected. Â At Progressive, if the monthly rental income is $1,800 or higher, we charge 5%.
2) The extraneous fees. Â Many companies charge additional fees during the management period including vacancy, inspection, court, and set up fees. Â At Progressive, we charge no other fees while we are managing your property.
3) Lease up/Tenant acquisition or Rental fee. Â Most property management companies charge an additional fee or percentage of expected rent collected to secure a new tenant for you. Â The time and cost to acquire a tenant can be quite high. Â You expect the property management company to prepare the unit for the market by coordinating vendors, put the property on the MLS (or other marketing sites) and offer a commission, show prospective tenants the property, screen tenants (obtain income documentation, run a credit report and criminal background check, require a completed application), execute a contract and conduct a move-in inspection. Â At Progressive, we have a one-time fee of 35% of the first month's rent as our tenant acquisition fee. Â If the tenant stays beyond the first year, you do not pay this again.
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