Phoenix Property Management Fees Explained - Landlord Education

System - Friday, September 20, 2019
Property Management Blog

Phoenix Property Management Fees Explained - Landlord Education

When you’re looking for professional Phoenix property management, it’s normal to want to know how much it will cost. This is an investment you’re making, not a simple product you’re buying. The company you handle to manage your Phoenix rental home will be responsible for finding and retaining tenants, protecting the condition of your investment, and increasing both your rental income and your long term ROI.

Keep in mind that property professionals offer different levels of service, and usually the cost depends on what type of property you have, how many you’re renting out, and what kind of services you’re seeking. We recommend you measure value, not price, when you’re choosing a Phoenix property management company.

Phoenix Property Management Fee Structures

You’ll find that some companies charge a leasing fee upfront and then a flat monthly rate to manage your home. Other companies will charge a percentage of the rent that’s collected every month. When you’re comparing prices and services, make sure you’re comparing apples to apples. You might find a company that seems to offer a dramatically lower price than other companies you’ve encountered, but they might also charge a separate fee for each service they provide. So, by the time you’ve paid the administrative fee, leasing fee, marketing fee, and inspection fee, that low management fee isn’t so cost-effective.

Leasing Fees for Phoenix Homes

Leasing fees are fairly common, but you have to make sure you understand what you’re paying for. You pay it at the beginning of each tenancy, and you expect to get a well-screened, qualified tenant in exchange for the fee. But, what happens if the tenant fails at some point during the lease? Will you get that leasing fee back, or some pro-rated amount of it? Usually, you don’t get any of it back. The management company might offer to place a new tenant for you, but how do you know you won’t get the same result?

Consider this when you’re comparing management companies that have a separate leasing fee and those that have an all-inclusive management fee that may be a bit higher.

Review Your Phoenix Property Management Agreement

All fees and services should be listed clearly and transparently in the management agreement. Review them carefully before you sign with a property manager, and make sure you are comfortable with what you’ll be paying and the services you’ll be receiving. A good management agreement will reflect:

  • The operating reserve. This is the reserve that your management company will hold in your account in case you need repairs that must be paid for right away.
  • Marketing costs. Marketing fees may include advertising costs, signage, and professional photos.
  • Leasing fees, which are typically charged when the lease is written and a tenant has been procured.
  • Licensing fees. Some communities require rental properties to be registered as a business and charge a business licensing fee. In the Phoenix/Mesa area, all communities charge rental tax. Each Owner is required to have a tax license and the amounts charged for the licenses and the taxes vary by city.

feeThe management company you’re considering may also charge an extra fee on top of your maintenance invoices. So, if you pay $100 for a plumbing call, the property manager may include a 10 percent upcharge, bringing your complete maintenance bill to $110. This should also be reflected in your management agreement.

Other random charges you might come across include lease renewal fees, inspection or walk-thru fees, and administrative fees.

If you want to get the most value and best service for your Phoenix rental property, be willing to communicate openly with the property management companies you’re considering. We’d be happy to tell you about our rates. Contact us at Bennett Property Management to learn more.