If you are a first-time landlord or homeowner wanting to rent out your property, you may be wanting a property management company to lease and manage your property. You have done your research and narrowed in on your best choice for Orlando property management companies. But even after doing all your research, you may still not know how you pay your property manager. Today, we will be going over the most common ways property managers get paid, who pays them, and how managers may operate differently with their payment structure.
You’ve Chosen Your Property Manager, Now How Do I Pay Them?
As a new landlord, you may not fully understand the rental process; after all, anything new or foreign takes time to understand. When your tenant pays rent, your property managers in Orlando will collect the rent. In Florida, your manager will direct rental funds into a trust account holding your rental income. Typically, rental funds take a few days to fully manifest. At which your funds are ready to be paid to you, the rental property owner. There are typically two methods your manager will get paid for managing your rental property every month.
Property Management Payment Structures
1. Percent of Rents Collected
The most common way property management companies get paid is by rent collection, funded by your tenant. Your property management agreement should state what percentage your manager will keep for managing your rental property. If you are new to real estate investing or being a landlord in general, find out the standard Orlando Property Management Fees. Your manager will keep the agreed-upon amount (typically 10%) of the monthly rent amount collected. To break it down, if your property manager rents your home at $1,600.00 per month, your management company will keep 10% of that amount, which is $160.00 per month. Percent of rents collected is the most common type of property management payment.
2. Credit Card on File Method
A few property management companies will take down your credit or debit card and charge you monthly for the monthly management. At the surface, you may think, “Wow, how convenient.” But, in all reality, there is no skin in the game for your property manager. You will get charged if your tenant doesn’t pay or is late on rent. What if your home is sitting vacant, will your credit card get charged? If hiring a property manager was like an Amazon account or a Netflix subscription, it makes sense, but that is not the case for managing a real estate asset.
Is There a Property Management Startup Fee?
Many property management companies in Orlando will not ask you for a startup fee. Once your manager finds a qualified tenant, the tenant will pay your property manager for the leasing fee and every month. Some managers will require a startup fee; this fee is:
- Rental Property Onboarding
- Startup Marketing Fee
- Rent Ready Repairs
- Online Syndication Fee
Again, managers require this fee upfront when the property management agreement is signed, and this is one fee that can be missed by many homeowners.
Why Pay A Property Manager? I Can Self-Manage
If you’d like to save a buck, you may think that managing your property is a good idea. At the surface, it seems like an easy task. As a DIY landlord, ask yourself, How Valuable is Your Time? Is all the headache worth it to save a few bucks? Property managers are excellent multitaskers and handle every aspect of managing your rental property.
Property Management Conclusion
As one of the highest and best rated Orlando property management companies, we have seen our homeowners and real estate investors benefit from the percent of rents collected method. This motivates your property manager to increase your rental income; if you earn more, they make more. Paying your property manager is well worth the cost.
If you have any questions about how you will be paying your property manager, please contact The Listing Real Estate Management. We’d enjoy hearing from you and discussing all things about property management in Orlando & Central Florida.