Unless taxes and insurance are escrowed into your mortgage payment, you can expect a tax bill that’s around 11 percent and an insurance bill that’s around 5 percent of your property bill. For maintenance, plan on spending 5 percent of your rental income. This number may be higher or lower depending on your property's condition, but if you put aside the 5 percent, you’ll be able to cover expenses. It’s important to keep your vacancy rate below 2 percent, otherwise you’ll begin losing money quickly. Professional management costs include a few different things.
Mistakes Are Expensive
Mistakes are hidden costs, and you want to avoid management errors whenever you can. Properties left vacant too long and improper tenant screening can lead to very costly mistakes. Avoid putting the wrong tenant in your property. It can lead to unpaid rent and property damage. Working with a good property manager means avoiding these mistakes. You don’t want to price your home incorrectly, hire the wrong vendors, or wait too long to evict a nonpaying tenant. These mistakes cost a lot more than professional management services.
Time is a Resource
Your time is a finite resource, and something to consider when you’re hiring a property manager. It takes a lot of time to effectively protect and manage your rental home. If you’re going to be a full time landlord and manage your own property, you’ll need to sacrifice a lot of your own time.
Property Management Fees
There are two standard fees that you’ll find with most property management companies. First, you’ll pay a leasing fee or a marketing fee. This covers finding a tenant and filling a vacancy. It’s usually a percentage of your first month’s rent. Then, you pay a monthly management fee which is a percentage of the rent that’s earned every month.
Group 15 Fee Structure
Our fees at Group 15 are flexible and meant to meet your needs. One of these options will meet your budget and your expectations.
1st Option: Marketing fee is 25 percent of the first month’s rent, and the monthly management fee is 10 percent of the rent. This option is available for properties renting at $800 a month or more.
2nd Option: Marketing fee is 50 percent of the first month’s rent, and the monthly management fee is 8 percent of the rent. This is available for properties renting at $1,000 per month or more.
3rd Option: Marketing fee is 100 percent of the first month’s rent, and the monthly management fee is 5 percent of the rent every month. This is available for properties renting at $1,600 per month or more.
Marketing fees are a $250 minimum. If your property rents for less than $800 per month, call us to discuss a fee.
We will analyze the market two to three months before your tenant’s lease ends. This will help us determine how much of a rental increase is necessary. We want to increase your income and maintain your great tenants. Our lease renewal fee is $150.
Cost versus Time and Expertise
When I turned 16, I had saved up to buy an old car that needed a lot of work. I fixed the car up myself, spending time and money of my own. This included changing the oil, making minor repairs, and learning how to keep it running. Now that I’m no longer a teenager, I know I could still do my own maintenance. But I have a career and family obligations and it would take me longer than it would take a professional mechanic. I value and protect my time, so I don’t do my own car maintenance. It’s the same thing with professional property management; how much do you value your time, and are you really an expert at what needs to be done?
Contact us at Group 15 Real Estate if you’d like to talk about property management fees for your Charlotte rental property.