It’s one of the most common questions we receive from potential Clients interested in our property management services:
“What are your fees?”
We get it.
Price matters.
And while our pricing is front and center on our website, we know that, unfortunately, very few property managers in Indianapolis, for whatever reason, display their pricing.
So, if you’re considering real estate investment in Indianapolis, understanding the costs associated with property management is vital for maximizing returns. Let’s do a quick review of the expenses and services involved in property management in Indianapolis to help you make informed decisions.
Monthly Management Fee:
The cornerstone cost of property management is the monthly management fee, typically ranging from 8% to 12% of rental income collected. This fee covers essential services such as rent collection, maintenance coordination, resident communication, and financial reporting.
Think of this as a sleep well at night fee. Your property manager should be available 24/7 to handle the basic issues and, when called upon, the tough issues, so you don’t have to.
Leasing Fee:
When securing new Residents, property managers charge a leasing fee. This fee is all over the board in Indianapolis. Some discount providers may charge a leasing fee equivalent to 50% of one month’s rent, while other may charge a full month as a leasing fee. Also, some property managers in Indianapolis may have a leasing fee cap. For example, if your monthly rent is on the high-end… say $3,000 per month, for example, the management company may cap the leasing fee at $1500, for example.
This fee generally encompasses marketing, tenant screening, and lease preparation services.
Keep in mind that some property managers charge an additional “marketing” fee in addition to the leasing fee, so be sure to understand all the costs involved in leasing your home.
Lease Renewal Fee:
Property managers may charge a fee ranging from 25% to 50% of one month’s rent for lease renewals. Services for a lease renewal generally include a new Comparative Market Analysis (CMA), lease negotiation, and lease signing services.
Some property managers include a property evaluation during the renewal, while others include this evaluation in the renewal fee.
In addition, some property managers may also charge a percentage of the rent for a renewal fee. An example could be 25% or 50% of the monthly rent.
Keep in mind that renewals are extremely labor-intensive activities for property managers.
Vacancy Fee:
Some property managers charge a vacancy fee to help compensate themselves for services rendered while the property is vacant. Like the management fee, this can be a percentage of the rent, or a flat-fee.
To earn this fee, the property manager will generally conduct routine walk-thrus of the property to ensure that no issues arise while the home is vacant.
Mark-Up Fee:
Many property managers charge a mark-up on any bill paid on behalf of their Client. For example, a property manager may mark up a utility bill by 10%. So that $35 electric bill paid by the property manager for the Client would cost $38.50.
In addition, many property managers charge a mark-up for all maintenance. For example, if a property manager paid a vendor $400 for an HVAC repair, the Client would pay $440, assuming the 10% mark-up.
In some cases, property managers will charge more for repair costs during a turnover. These charges may range from 10% – 20% of the invoice total.
Additional Services:
Depending on your needs, additional fees may apply for services like eviction assistance, property inspections, and HOA management.
Understanding these costs and services is crucial for evaluating the value proposition of hiring a property manager in Indianapolis. Despite upfront costs, their expertise can optimize rental income and operational efficiency, ultimately safeguarding your investment.
In summary, there are a range of fees that property managers in Indianapolis may charge. By understanding these costs and services, you can navigate property management decisions with confidence and protect your real estate investment.
