asset management Fees Explained

Attorney - asset management Fees Explained

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 When you hire a asset management enterprise to serve as the liaison between yourself and your tenants, you want to be sure you're getting the best potential asset management services for the money. The services a asset management enterprise provides can range from ala carte to an all-in-one inclusive package. Along with that comes an array of fees for each. There is no set in stone fee buildings we can provide you. But we can educate you on what common fees to expect and what each is generally for. In the end it will be up to you to assess enterprise fee structures and pick the best one that fits within your budget. Below are some of the most common fees and what service they provide.

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Commission

This is an ongoing monthly fee charged to the owner to compensate the asset manager for the responsibilities of overseeing the management of their property. This fee can vary from as wee as 3% to over 15% of the monthly gross rent. In place of a percentage some managers may fee a flat monthly amount which again can vary from to over 0 per month. All asset management associates generally fee this fee.

Lease-Up or Setup Fee

This fee is charged to the owner to compensate the asset manager for their first time invested and resources used in setting up an owners account; showing asset and/or other activities resulting in tenant placement. I guess you could look at it as a "finders fee" for placing a tenant in your property. Once a tenant has been placed and first rent wage comes in, the asset manager will deduct this fee from the rent proceeds. Some asset managers have been known to want this fee upfront prior to tenant procurement. Commonly this fee is non-refundable once the asset manager has started the process of tenant procurement or any legwork has been initiated with the property. This fee can vary from none to as much as the first months rent, and Commonly is a one-time fee per tenant.

Lease reparation Fee

This fee is charged to the owner when a asset manager renews a current tenants lease and covers the costs of initiating paperwork or communication involved in implementing the new lease document. A asset manager may also account for this fee if they accomplish a year end inspection of property. This fee can vary from none to 0 or higher, and may be charged every time a lease reparation is implemented.

Advertising Costs

Depending upon the asset management company's contract, whether they will pay the advertising costs or the owner or they could split the costs. If the manager is willing to cover this cost, most likely they will fee the lease-up or setup fee as outline above. If the management enterprise covers this cost make sure to find out what type advertising or marketing of your asset is included. If it's placing your listing on their own web site and other free online classified sites you may not be getting your monies worth. They are many good rental or tenant resource online web sites that bring in mighty tenants for a inexpensive fee and you will want to consider these. And don't forget about print media, yard signs, listing on the Mls or even an open house. Nothing is worst than having your asset vacant, bringing in no money only because you or your asset manager skimped on advertising.

Maintenance Mark-up Charges

This is one of those costs you may never surely of known about or had it disclosed to you. A "Mark-up" is a fee over and beyond the final bill on maintenance and/or repair work done to your asset initiated by your asset management enterprise when using their vendors or in-house maintenance staff. This should be disclosed in your Manager/Owner ageement which Commonly will state the markup as a percentage above the final invoice from vendor. For example, your manager had to call a plumber to replace the dishwasher in your rental property. Total charges for completing the job: 0. If your asset manager ageement states you will incur a 10% markup on all maintenance work the actual cost to you will be 0. Just one of those things to be aware of as these all eat into your profits.

Early Cancellation Fee

The dreaded "3 months and no tenant". Your asset manager insist he or she's doing everything they can to find you a tenant. But here it is 3 months and still no tenant; what do you do. Well, look at your Manager/Owner ageement and that might be your deciding factor. I am not a fan of this fee, and believe it to be an unnecessary fee and for you manager out there this could be the deal breaker. I'll tell you why; if a asset manager is doing their due diligence and keeping the owners in the loop as far as decision making, market conditions and communication lines open an owner will not be second guessing his asset managers abilities. The odds of this scenario happening is unlikely but you must be ready for it. A cancellation fee can range from none to over 0. To be fair, some managers surely deserve this fee especially if they have pocketed advertising costs, incurred lots of legwork and time invested in your property.

"You've Got To Be Kidding Me" Fees - These are ones I have personally had the pleasure of running into.
Your asset is vacant, but we still will fee our monthly commission or a small flat fee. "A For-Rent Yard Sign Fee". I believe this was /mo. "Preventive Maintenance Fee". This was to cover the "just in case" and changing out A/C filters. If "just in case" never happens they still pocket the money. I believe this was /mo and I still was charged for filters.
In overview

Read your Manager/Owner contract, understand what you are signing, ask lots of questions and know what the fees will buy you in services. A good real estate lawyer can help in negotiating the terms in a ageement that suit both parties. These contracts are not set in stone. If your asset manager will not negotiate, there are other asset management associates that are eager to earn your business.

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