Condo Leasing and Property Management Fees

[fromtx]

We have a condo in another town and looking to rent it now since DS is graduating this year and will be moving out. We are planning to use a realtor who stays in the complex to manage the property for us. The Realtor is asking for 60% of first month rent as leasing fee and 10% of monthly rent as an ongoing management fee. Is this reasonable for Texas?

Would appreciate your advice and feedback.

Thanks!

 

[CaliKid]

We have a condo in another town and looking to rent it now since DS is graduating this year and will be moving out. We are planning to use a realtor who stays in the complex to manage the property for us. The Realtor is asking for 60% of first month rent as leasing fee and 10% of monthly rent as an ongoing management fee. Is this reasonable for Texas?

Would appreciate your advice and feedback.

Thanks!

That's not unreasonable but certainly no bargain. If paying full retail, like that, you might look at different options to know what they are. For example, would it be better to use a full time PM company rather than a Realtor who dabbles in it!? On the other hand I like the idea of a person who lives there as that could be positive. Good luck.

 

[Souschef]

I had the same situation. When I retired in 2009, I moved to Ventura to our new home. I rented my condo, but used a management company. They charged 8% IIRC.
I rented it until the housing market improved, and then sold it.

 

[fromtx]

Calikid - thx for your input, actually, the Realtor also does Property Management and is part of a Prop Mgmt company ... seemed a bit expensive from a gut feel perspective but did not know what the current rates are since we are new to all this.

Souschef - Did you end up paying leasing fee in addition to the 8%? We may go your route and sell the property in a year or two, for now we thought we can buy some time by leasing it.

 

[Souschef]

Calikid - thx for your input, actually, the Realtor also does Property Management and is part of a Prop Mgmt company ... seemed a bit expensive from a gut feel perspective but did not know what the current rates are since we are new to all this.

Souschef - Did you end up paying leasing fee in addition to the 8%? We may go your route and sell the property in a year or two, for now we thought we can buy some time by leasing it.

Yes, there was a setup fee, which is understandable. After we replaced the stove and installed a new range hood, we had the mgt company come in and paint the place to get it into move in condition.

 

[euro]

We have a condo in another town and looking to rent it now since DS is graduating this year and will be moving out. We are planning to use a realtor who stays in the complex to manage the property for us. The Realtor is asking for 60% of first month rent as leasing fee and 10% of monthly rent as an ongoing management fee. Is this reasonable for Texas?

Would appreciate your advice and feedback.

Thanks!

10% is probably the higher end of the range, but it does depend on the location too. A condo should be a little easier to manage than a single family house, so perhaps look for something closer to 8%. The 60% lease-up fee is reasonable - the range is typically 50%-100%. An important question to ask too is whether the PM takes a cut off of service calls (some will charge 10% of the service/repair bill as overhead for handling the process - this is a red flag to me since it should be included in the management fee).
If you are in a decent size town, check out a couple of additional PMs and compare the prices/services. Then try to get references for them before you decide. Picking the right PM is CRUCIAL to the success of your rental. A bad one can cost you dearly.

 

[ivinsfan]

I recently did an open house in Southern Utah of a new condo development pedaled as Zoned for weekly and nightly rentals. You had to use their management company and they charged a cool 30% of the rental gross...

 

[nwsteve]

Suggest you get a copy of the contract the Property Management company uses and be sure you understand all the proviso's. PM companies have a lot of ways to get you in the fine print. For example, if there are late fees, does the PM keep all or just take their management fee pct. Another--if you pay the 60% leasing fee and the tenant bails after 3 months, do you have to pay a full 60% leasing fee. Also, do they pass through the charge (with or without markup) for running background checks on tenant prospects).
Do the "due diligence" and repeat until you can explain what and why you are paying them.

 

[fromtx]

Thanks all for your thoughts! Got a copy of the contract, there is no additional charge for managing service calls and we do not pay management fee until the tenant arrives, however, if the tenant bails we would have to pay $50 per month during the vacancy period. Am planning to go ahead given the convenience factor and the fact that we know this person. Based on responses it appears that the charges are in the ball park.

 

[euro]

I recently did an open house in Southern Utah of a new condo development pedaled as Zoned for weekly and nightly rentals. You had to use their management company and they charged a cool 30% of the rental gross...

Yes, PM fees for short term rentals / vacation rentals are much higher - 30% is not unreasonable there. Tenant turnover is THE most labor intensive time for a PM, so that seems fair.

 

[ivinsfan]

Yes, PM fees for short term rentals / vacation rentals are much higher - 30% is not unreasonable there. Tenant turnover is THE most labor intensive time for a PM, so that seems fair.

Well, the rentals are done online, the renters pay in advance, all damages and or repairs are charged on top of the 30%..basically they reprogram the locks and send in the cleaners (which does not come out of the 30%, that is an add on fee that the renters pays in advance).

So I am going to have to disagree with you on the "fair" comment.