Real Estate Managemnet Fee Structures

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If you have a real property, you will need to maintain it and the most common way is to hire a manager of real properties. This is very important as you may not be the expert in dealing with real property. The managers are the experts who have a clear understanding of the realty market and do their job with professionalism. Now, every professional needs to be paid for their service and this is the real estate management fees . There are certain duties that the managers need to perform in lieu of these fees and they must be very specifically mentioned in the agreement that you enter into with your manager. The fees can be based on a variety of structures that may be chosen from according to the existing situation.

One of the common ways to settle the fees is through a percentage of the rent collected. In this kind of real estate management fees structure, the real property manager is entitled to charge the fees according to a pre-agreed rate over the total rent collected. Usually, this is a percentage of about five to ten upon the rent and payable monthly. It may be made sure that rent means rent only and security deposits or other money paid by the storage or residential tenants does not qualify as rent. This is the most popular and the most logical method of determining the fee structure. It is also the correct method of settling the fees. A property owner should put shopping for a management company high on his to-do list.

Another accepted method of paying the real estate management fees is through the fixed fees structure. This means that while entering into the agreement of managing the real property, a predetermined fixed fee is decided upon and this is to remain that way if there is no tenant also. This amount again is to be paid monthly. Though there is nothing wrong in this method, it is said to lack in the motivating spirit. It is considered that if the managers receive a fixed amount every month even if the property lies unoccupied, they do not feel motivated enough to find a new tenant. In the previous case, the managers need to get the tenants and keep the property occupied constantly so that his income is not stalled at any stage.

The other method often used also includes paying the real estate management fees on per apartment or storage unit basis. This is generally not expected in case of individual houses but is very common in large buildings with many individual units and condominiums. Generally the fees are fixed in nature and are charged for each of the units that are managed by that manager. Sometimes the managers also charge a onetime fee each time the unit is re-rented and this is apart from the regular fees that are already being charged. Then there are the originating fees or leasing fees that need to be paid at the beginning of appointing the manager. If agreed upon, a similar fee may be charged every time the lease gets renewed or extended.

These days, generally the companies that provide management services for the properties are also the brokers for both renting and selling properties. The amount of commission a broker makes if a property is sold is greater than renting it out. But any attempt to convert the prospective tenant into a buyer is breach of conduct and should be strictly avoided. It should be clear that real estate management fees are for managing the real property and not selling it.

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Disclamer: This entry is intended to promote our partner StorageMart and some or all participants received compensation.