How Real Estate Businesses Come Up With A Breakdown of Property Management Fees

There are some other important fees that you’ll need to consider in addition to the monthly property management fee.
There’s the leasing fee, which is something you can expect to pay one time, at the beginning of a tenancy. The leasing fee is typically between 50 percent and 100 percent of your first month’s rent. Some companies may charge a flat leasing fee. This covers the cost of a property manager to advertise your home, market the property, manage applications, screen tenants, and then negotiate and execute the lease and move those tenants into your property.

Property management fees in Johannesburg and throughout Gauteng generally range from 5%-10% of all rent collected. In Johannesburg’s inner suburbs you can usually source fees at the lower end of that range, with the average being 6%.

Conduct market research and find out what the potential demand levels are for a new property management company within the area you intend to set up your business. Would it be best to concentrate on property management or is the demand sufficient to set up a full service letting agency? carefully research the services of other management agents and find out the fees they charge.

Just like with anything new, contracts and property management fees can seem intimidating to many first-time investors. You don’t want to feel like you’re being nickeled-and-dimed each month with a list of confusing fees. Nor should you have any doubts about what a larger blanket fee is really covering.

Factors That Influence Property Management Cost

Although hiring a property management company has many advantages, using one can be expensive. And, even apart from the cost, relying on a property management company is not for everyone. Consider the following factors to determine if hiring a property management company would be a good decision for your business.

Unless you plan to manage a commercial property yourself, hiring a commercial property management company is a must for any serious commercial real estate investor. However, just like any service, property management costs money. Typically, a commercial property management fee will be between 4-12% of the rent for a commercial property, though this can vary greatly upon several factors, including the location, size and condition of the property, the amount, type, and quality of tenants, the specific services that the company is expected to perform, and the average property management rates for that area.

Tips for Starting Your Own Property Management Company

  1. Real estate property management is a business that involves managing different kinds of properties and people such as landlords, tenants, and contractors. For those who feel comfortable with managing people and property, learning how to start a property management company can definitely be a rewarding career path. Having said that, this real estate career also comes with its own set of risks and challenges. However, while not everyone would consider taking this job, property management is surprisingly an easy and affordable field to enter! so, if you enjoy and understand what it takes to manage residential properties, here are the steps to starting a property management company.
  2. As a property owner, shopping for property management agents can be confusing. The spectrum of property management fees is complex and every property management company has a slightly different fee structure. Most companies start with a base management fee and charge some additional fees for ancillary services like leasing. The fee structure can also say a lot about a company and the quality of service one can expect to receive. We have put together some tips for owners in the market for a new property manager.
  3. Starting a property management company is a challenge, which is not for everybody. However, if you are confident that establishing your own company is worth all the risks, simply go for it! great rewards come with great risks, which is one more reason for building something of your own.
  4. Property managers are a must for property owners who don’t have the time or desire to maintain their rental properties or deal with tenants. In many cases property managers can also increase the value of a rental property by keeping it in good shape and ensuring that it operates efficiently, according to the bureau of labor statistics. For people with experience in real estate or property maintenance, and a taste for entrepreneurship, starting a property management company might be the right career move.


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