Navigating the world of property management can be tremendously difficult and confusing if you’re not aware of the hidden fees that many companies sneak into their contracts. From leasing fees to move-in/move-out expenses, the array of additional costs can be both bewildering and costly.
The Hidden Fee Phenomenon
Hidden fees are those pesky additional charges that are not always apparent upfront when you sign a property management contract. They can quickly add up, eating into your rental income and, ultimately, your investment returns. In an industry with a multitude of these concealed costs, understanding what they are is the first step to avoiding them.
Typical Hidden Fees Charged by Property Management Companies
Navigating the financial landscape of property management can often feel like decoding a complex puzzle, especially when it comes to the myriad of hidden fees that can sneak up on unsuspecting property owners. Here’s a breakdown of the most common hidden fees to watch out for:
Leasing Fees
Often a percentage of the first month’s rent, leasing fees are charged for the time and resources spent to find a new tenant. This might seem straightforward, but some property managers may charge this fee again when renewing a tenant’s lease, even though the work involved is significantly less.
Companies can charge a leasing fee in many different ways; like a percentage of the rent, or a flat fee. One common way we see property management companies implement leasing fees is by charging ½ of month’s rent. So, on a property with a monthly rent of $3,500, your leasing fee as the owner would amount to $1,750 on top of your management fee. That’s a large out-of-pocket cost to owners that most don’t understand when signing a management agreement. To put it in perspective, this adds 4.16% to the management fee you’re paying for the year.
Move In/Move Out Fees
As tenants come and go, the associated costs shouldn’t be a financial burden on the property owner. These fees might cover the administrative costs of drafting new lease agreements, performing move-out inspections, and preparing the unit for the next occupant. While these are legitimate tasks, they can often be wrapped into exorbitant move-in/move-out fees.
Inspection Fees
Routine inspections are a necessary part of property maintenance, ensuring that the property remains in good condition and tenants are complying with the lease. However, some property managers may charge extra for these inspections, turning a standard practice into an unforeseen expense. Management companies all have different inspection expectations. Be sure to know when they plan to do inspections, whether annual or bi-annual, and the amount they charge per inspection.
Account Set-Up Fees
Starting a relationship with a new property management company shouldn’t come with a hefty price tag. Account set-up fees can sometimes be charged simply for the privilege of starting services, adding an unnecessary upfront cost to your tab.
Maintenance Up-Charge Fees
Beyond the actual cost of repairs and maintenance, some managers add a surcharge or markup. This could be a flat fee or a percentage of the invoice from the contractor, effectively making any maintenance work more expensive. Which, in turn, costs you more money and incentivizes more costly expenses.
Renewal Fees
Securing a lease renewal is part of the property manager’s job, but it shouldn’t be an opportunity to charge extra. Most management companies will tack on a renewal fee, penalizing you for your tenant’s loyalty.
Eviction Fees
Evictions are a regrettable but sometimes necessary part of property management. While there are costs involved in this process, some property managers may leverage eviction proceedings as a chance to levy hefty additional fees.
Vacancy Fees
It’s counterintuitive to pay management fees when your property isn’t generating any income. Yet, some property management contracts include vacancy fees, charging you even when the property is unoccupied.
Technology Fees
Most all professional management companies use some type of software that allows their tenants to pay rent online, submit maintenance requests, and much more. These softwares also often allow owners to have their own portals and keep track of their disbursements. Believe it or not, some management companies will throw in a fee, usually a percentage of the rent, or a flat fee, that ultimately means you as the owner, are paying for their software. These charges to cover software costs and tech tools, come across as an added burden for property owners. It begs the question: Should property management companies pass on the expense of upgrading their systems to clients? While these fees promise enhanced services, their imposition reflects a questionable practice, leaving property owners questioning whether they should foot the bill for the company’s technological advancements.
Early Termination Fees
Should you choose to part ways with your property manager, you might find yourself facing early termination fees. These fees can be costly and discourage switching to a better service, even when it’s in the best interest of your property.
These hidden fees can quickly add up, diminishing the profitability of your investment and complicating what should be a straightforward cost structure. It’s essential to carefully review any property management agreement and be on the lookout for these potential financial pitfalls.
AllView Real Estate: A Model of Fee Transparency
At AllView Real Estate, what you see is exactly what you get. We have a straightforward approach to pricing, where the only thing you pay is the percentage of rent in a monthly management fee. We don’t believe in charging additional fees for services that should be included in comprehensive property management. From leasing to renewals, maintenance to inspections – if you’re not making money on your investment, neither are we. That’s our promise of transparency and integrity.
The Cost of Hidden Fees
Hidden fees in property management contracts can be like termites to your investment, silently and steadily eroding your returns. What may seem like trivial, isolated charges—the leasing fee for a new tenant, a small markup on maintenance work, or an annual inspection fee—can accumulate to a sizeable financial burden. This not only impairs your immediate cash flow but also limits the funds available for property upgrades or new ventures. Over time, these seemingly negligible costs can multiply, impacting the long-term value and growth potential of your property. They create a reactive management environment where property owners are constantly blindsided by unexpected expenses, hindering strategic improvement and investment opportunities.
Moreover, the presence of hidden fees can significantly strain the relationship between property owners and management companies. The anticipation of additional, unforeseen costs with every service can lead to distrust, making owners wary with every financial statement. This erosion of trust undermines the partnership, creating a stress-inducing dynamic that can overshadow the benefits of having a property manager. The psychological toll—characterized by doubt and constant vigilance—can transform an investment that should offer financial freedom into a source of ongoing worry and frustration.
AllView Real Estate’s Commitment to Service Without Surprises
We pride ourselves on being a professional full-service real estate and property management company that doesn’t nickel and dime our clients. With in-house maintenance technicians and exceptional vendor relationships, we offer the lowest repair costs without any maintenance fee markups. We also offer professional photography/videography with personalized marketing strategies for every property to ensure high-quality listings, unlike most management companies that are satisfied with low-quality phone photos.
What sets AllView Real Estate apart from the competition is our dedication to straightforward, transparent dealings. Our fees remain consistent every month, depending on the rental price, of course, and we will never charge management fees if the unit is vacant. We charge an 8.9% management fee on portfolios with 1-4 units, and a 6.9% management fee on portfolios with units 5+. For bigger or perhaps multifamily or commercial portfolios, we will determine a customized percentage that makes sense for you and your portfolio! It’s this clarity and comprehensive service that differentiate us in the marketplace and allows us to build trust with our clients while keeping your goals for your property or portfolio, our number one priority.
In an industry where hidden fees can be the norm, AllView Real Estate stands out for its transparent and client-focused approach. We handle all aspects of property management in San Diego, Los Angeles, and Orange counties without absolutely NO hidden fees or unexpected costs to surprise you at the end of the month. Our commitment to your peace of mind and investment success is unwavering. Reach out to us at AllView Real Estate for a partnership that promises trust, reliability, and professionalism – every step of the way.