Cost of property management company

[Samir Shahani]

I just engaged my first property management company.

They suggested that to find a tenant it will cost 1 months rent for commission split.

AND

On an on-going basis, we will be putting the property under their management, which will cost 10% of revenue (rent).

Does this sound reasonable for SFH's?

[Nathan Gesner]

@Samir Shahani this is why it is important to investigate before you start investing. You can't buy a property without knowing all the costs, to include taxes, insurance, management, maintenance, etc. When you set aside funds for maintenance, you need to actually know what it costs to replace a water heater or change the locks or snake the sewer line. When you budget for property management, you need to actually know what property management will cost.

Property management is worth its weight in gold if you find the right company/manager. I recommend people look for the right manager before they look for property. Otherwise, you may panic after closing and just go with the one that has the flashiest web site or the lowest (advertised) fees.

That said, it is common for a manager to charge up to one month's rent to place the tenant and then a percentage of the rent collected after that. Shop around before locking yourself into an agreement. but also understand that the cheapest isn't necessarily the one that will make you the most money.