How Much Do Letting Agents Charge to Manage a Property?
Having a letting agent manage a property can mean a whole lot of things for a client. The stress and worries of the management of the property can be handed over to a letting agent. Simple tasks like collecting the rent or calling a professional for repairs can become a daunting and exhausting task. A letting agent can juggle all of that. How much does it cost though? Here is the long answer.
Where Does the Payment for the Fee Come From?
A lot of times fees are charged by letting agents to manage a property. The good news is that the money will not be due right up front. In fact, a lot of times the fee for letting agents will just come right out of the rent payment before it is sent to the property owner. So, the short answer is, most of the time the payment for the fee will come from the rent that has been collected. This is not always the case though.
There are other ways that a letting agent or property manager may decide to collect the fees that are due for managing the rental property. Sometimes the payment for the management service will be due up front each month. This is often called rent value. This can be difficult to do, especially if the tenant leaves and no rent is coming into the home.
Some people prefer for the management fee to be paid right out of the rent that is collected for the property. It is important to work with the agent and make sure that everything is agreed upon before committing and signing any contract.
This YouTube video offers more information on the differences between rent value and rent due.
What Is the Average Amount Charged?
The average amount that is charged for the management of a property can vary depending on the property, the value and the area. For the most part, the average fee for property management is anywhere between 8% to 12% of the rental price. While this is the average cost for the rental management fees, this does not include any expenses.
Some letting agents will just charge a flat rate. This can depend greatly on the agent and what they charge. This is a bit different than the percentage rate. However, it does make the math simpler. Before signing any contract, make sure that all of the fees will be covered. However, this is not all that may be spent on the property. There are other things that may not be avoided and are the owner’s responsibility.
Maintenance Fees Will Be Due
There are some fees that occur when renting out property that are not the letting agent's responsibility. While the letting agent will maintain the property and ensure everything is managed, the costs for maintenance will be required and the home owner will be responsible. For example, it could mean paying to get a septic tank pumped out, which is required every five years, or even a new roof every ten to twenty years.
Repair costs generally do get passed along to the home owner. The repairs should be done as soon as possible and it will be the letting agents’ job to make sure that everything is set in motion and things are being cared for.
Fees for the Eviction Process
If someone needs to be evicted from the property, the letting agent may charge a fee to handle the eviction process. This is because the process can be very difficult if not stressful. This fee can start at a couple hundred dollars. The fees to file with the courthouse will be due up front also. This fee is dependent upon the state and the specific court.
A Vacant Property Costs You Money Too
Just because no one is in the property does not mean that management will stop charging you. A good property manager will take care of the property and do their best to get a new tenant to rent the property out. In the meantime, a fee will be required by the property manager. Sometimes this is the first month's rent while other times it can be included in the rent value due every month. This is dependent upon the agreement signed.