Determining A Fair Cost Of Property Management – How Much Should Your Property Management Cost

A common question that I get asked by investor friends is how much should property management cost?  The cost of property management can vary widely from market to market, but here are some general rules of thumb that I apply to the local property management Daytona Beach marketplace.

The first thing that I like to differentiate to determine property management cost is what type of property are we focused on?  There will be a significantly different cost of property management for a single family home than there would be for a large apartment community or a massive retail shopping center.  I will focus this article on the property management cost related to residential properties (four residential units or less) because trying to structure the cost of property management for other property types can be property-specific and would better be suited as the topic of a small book rather than a simple and short article.

Now that we know that we’re talking about residential properties, I feel it is important to point out why we are looking for an ideal property management cost.  Most people would say that it is crucial so that investors do not allocate too much of their income towards the cost of property management.  Although I agree that is very true, I think it is also equally important not to contract your property to the lowest bidder.  Underpaying for property management can be a major problem as well.  Your property management company has the greatest control over the cash-flows coming from your property.   A poor company can cause financial ruin for your investment.  Before hiring the “cheapest in the market” property management company, you need to wonder if their cost of property management is so low because they are not effective at their job and need some sort of saving grace to obtain business, or perhaps they concentrate on quantity over quality and will not be able to give your property the crucial attention it deserves.

Since that is out of the way, I generally recommend your property management cost for residential properties to be around 10% of your monthly rent.  If you are an investor with many properties managed by one company, you may be able to negotiate that down slightly, but if your portfolio consists of one or just a few properties, 10% is a very fair cost of property management.  For the services that property management companies provide, that is a worthwhile investment to ensure you don’t have to worry about 2:00AM tenant phone calls, dealing with collecting rent, and especially the bookkeeping and accounting portion of property management.  Property Management Daytona Beach always offers fair rates considering the vast services they provide.

Contact us in order for a property specialist from Property Management Daytona Beach to discuss how our property management services can reduce your cost of property management.

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