Property Managers Fees

As previously stated in the last blog a property manager cannot enforce the collection of their fees without a written agreement between them and the person agreeing to make the payments. In most cases this would be the landlord. Because of this a wise property manager will not agree orally with a landlord concerning the payment of the management fees. In other word if the landlord interferes with the manager or with their disbursement of fees, within out a written contract specifying the management terms the manager will be unable to enforce the collection of their fees.

Therefore, good management set forth the fees due the property manager. A property manager must keep records of all documents connected with all transaction that require a real estate broker’s license for three years. These records hold property management documents and accounting files.

There are many types of management fees and they can be combined to create the contract in many different ways. I will write concerning four of them:

1. A percentage of the rents collected. A property manager is entitled to charge a percentage of the rents collected as their fee. This percentage is usually somewhere between 5% and 10% of the monthly rents collected. This is a good method when the landlord desire to grow the properties value and you are rewarded for your word to improve the property and devise methods to collect more payments. However, if your landlord restricts the improvements, you can make and they wish to not keep the property maintained then this method would possibly cause you to suffer lower pay at no fault of your own.
2. The Fixed fee method is usually used when your limited in ways your permitted to grow the properties value and the allowable maintenance is substandard due to the landlord’s demand. Under such a contract the manager is paid weather or not the unit is occupied. However, this method does not reward the property manager who is improving the property and seeking the things which can make the property more appealing to the area and is able to raise the rents.
3. Fixed fee per unit. This method is usually used on large complexes or condominium associations where a set price is charged per unit the manager must manage. Also, property managers often charge a one-time fee every time a unit is re- rented. This percentage of the first month’s rent is called a leasing or origination fee. With these four common methods of management fees, it is easy to understand why there are no set management agreements like the one size fits all hats you can purchase.
4. A planned unit development (PUDs) is called common interest developments (CIDs) often retain the brokers by the HOA to manage the property. These require more from the brokers and therefore I will not elaborate on them.

Note: Images on this blog site are from a free source or taken by the author. No image or group of photos is intended to represent the people the author serves. The author does not care about Race (that is a politically correct term that he does not like because we are all of the same Race, the Human Race. He prefers the term ethnicity, color, religion, sex, gender, marital status, disability, genetic information, national origin, source of income, Veteran or military status, ancestry, citizenship, primary language or immigration status.) He is a service provider for all people. We will all rise together when we band together and help one another. Joseph Erwin is a Real Estate Broker, DRE # O2131799, and a CA general contractor # B 696662. He’s a member of the CRMLS and The East Valley Association of Realtors located in the Inland Empire region of Southern California. This writing is not to be used as legal counsel the author is not a lawyer and does not give legal advice other than consult a lawyer before acting.