As property owners and intelligent investors, it is a no-brainer that hiring a good property manager is one of the keys to success and financial freedom in this industry.
With that said, you are probably wondering about the average fee for rental property management companies in Dallas, TX. Well, you definitely came to the right place because this article will break down the costs and let you know everything you need about the fees for hiring a Dallas rental property manager.
Why Do You Need Rental Property Management
Dallas is filled with tourists and US citizens that migrate from different cities and states. With that in mind, investing in rental properties to accommodate the movers and tourists looking for new homes and accommodations in Dallas is a good idea.
However, managing properties is not an easy task. Without an excellent rental property manager, you would have to take care of all the menial tasks, such as finding the right tenant, doing the background checks, and the most challenging part—which is collecting rent on time. Those are just a few of the many tasks you are responsible for if you have an investment property that you self-manage.
Hiring a property manager might seem like an expense initially, but understanding what a good manager can do will help you run your rental property smoothly without getting involved with the day-to-day operations.
You cannot deny that hiring a property manager is an expense. Still, it could be an asset that could make you even more money on your investment property if you select only the best property managers. Now, let’s talk about rental property management fees.
Rental Property Management Companies in Dallas: How Do Fees Work?
Property management companies structure their fees differently, and the two general fee structures are flat monthly fees and percentage fees that vary depending on the collected rent. Knowing how your property manager will charge you is best before signing a contract with them is best.
Percentage fees on monthly rent
Most rental property management companies will charge their clients a monthly percentage fee of 8% to 12% from rent collections. Let’s say you make $2,000 a month from rent on your property, and the property manager will take an average cut of $200. It is quite a lot, especially if you have not seen the actual value of a property manager. However, without their help, it would not have been easy to make that kind of money in the first place. It is not impossible, but it is challenging to manage a rental property without the help of a good property manager.
What if the property is vacant?
You will still need to pay a property manager for vacant properties, but it will be a fixed monthly rate or assumed percentage rate until the property manager can find the right tenant to rent your property. It would be best if you asked for the rates beforehand to get a clear look at your budget when your property is not yet leased.
Properties that are not yet leased require more work, such as weekly inspections, security checks for break-ins and squatters, maintenance, and searching for possible tenants. In the hands of an excellent property manager, you shouldn’t worry about long-term vacancies since they try their best to lease to the right tenant quickly.
Fixed Property Management Fees
Other rental property managers offer a flat monthly fee for their services. The prices depend on the type of property, square footage, and services the rental property manager provides. These services can cost an average of $100 per month, which can be lower than percentage fees.
However, property managers that accept flat rates may not be as motivated to maximize the rental income of your property. It is still best to deal with a reputable property manager—regardless of how they charge you for their services.
Additional Rental Property Management Fees
Just like most services, not all property management services are all-inclusive. Several services will require you to pay more on top of the agreed monthly fees. Some of these additional services are one-time fees, so you shouldn’t worry about them monthly. But it is better to know what to expect regarding your finances when hiring a property manager.
Here are some of the additional fees you might come across:
Vacant property services
Managing a vacant property requires more work from a property manager. An empty property can have unexpected break-ins, damages, vandalization, and more. If you want your property manager to do weekly inspections and other maintenance services, they might require you to pay them extra fees to secure your property during these times.
Contract setup fees
Most property management companies will ask for a one-time contract setup fee, which costs anywhere between $200 to $300. This service will typically include creating an account for bookkeeping, opening a new bank account for cash flow, coordinating the transition from residential to investment property, assistance in applying for the needed business and tax licenses, and the initial property inspections.
Eviction and collection fees
One of the most challenging parts of being a rental property owner or manager is evicting tenants who no longer have the capacity to pay rent or evicting a bad tenant that tends to disrupt the community and destroy the property.
A property management firm can handle all the dirty work for a one-time fee if the service is not included in the initial contract.
Late payment charges
Late payment charges may be for the tenants, but some property managers will have a percentage cut from the late fee since they are the ones who worked on collecting these late charges. But don’t worry. The property manager will only get a 25% to 50% cut from the late payment charges.
Extra repairs and maintenance
Some properties will have unexpected repairs and maintenance that needs to be done. If that is the case, the property manager can take care of them for a fee. These services may also include routine inspections and minor and major repairs.
Contract termination
If you signed a contract with a property manager, you must fulfill your end. However, there are instances when you want to switch to a different property manager. And when that happens, you can pay a one-time contract termination fee, which will allow you to make the switch or terminate the prior agreement.
