Property management fees are paid to third party managers hired to handle the daily operations of a real estate investment. In most cases, managers are employed for investments of more than 4 doors (small apartment buildings). A property manager will typically charge between 7% and 10% of the collected rental amount.
A property management contract will include a combination of the following responsibilities:
- Marketing the rental investment and finding tenants
- Screening potential tenants
- Coordinating showings with or without a real estate broker
- Setting the terms of the lease, including the rental price
- Collecting and depositing rent on a month to month basis
- Handling repairs and damages
- Handling complaints and emergencies such as maintenance requests
- Renewing contracts with tenants
- Handling move-outs and inspecting the unit, checking for damages beyond normal wear and tear.
- Dealing with late rent payments, or evictions if a tenant does not respect the terms of the contract
- Supervising other employees such as the concierge, security, and cleaners.
- Managing the building's budget and setting apart an emergency fund for large maintenance projects such as roof repairs, structural repairs and landscaping.
- Maintaining recors pertaining to the property including lists of income and expenses, leases, complaints, repairs, maintenance costs, requests, insurance costs, etc.
- Filing taxes for the investment property and declaring passive income for the property owner.