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An Analysis of Property Management Fees by Travel Agents and Tourists

When you as a travel agent bought your rental property, more than likely, you did your homework to try and figure out whether or not it was the right deal for you. When we bought our property management company, we did a lot of due diligence also and learned that there are two basic types of property management fee structures out there: 1.) Low Base Fee and the All-Inclusive Fee. Which one a travel fanatic chooses has a lot to do with what services they may need. The Low Base Fee is just as the name implies it is a low fee for minimal services. This fee structure provides for collecting rents, screening Tenants, writing leases, and paying you, the owner; any funds left over at the end of the month. The range of rates charged for this type of property manager is between 4% and 6% of the monthly rent. For a property renting for $2,000 per month, assuming a rate of 5%, the fee adds up to $1,200 annually ($2,000 per month X 12 months X. 05).

Most Low Base Fee property managers do NOT include this cost in their fees, and they can double your property management fees right off! Another thing to watch out for is that some of the Low Base Fee property managers may also charge a fee for any payments they make on your behalf as a travel tourist; mortgage, property taxes, HOA dues, so do your homework! The all-inclusive fee structure, on the other hand pretty much includes all of these fees in its a single charge. Now, don’t misunderstand me, at 8% to 12%, the all-inclusive fee structure usually will be higher than the low-base fees structure at first glance. When you add up all of the extras and compare them most times, the all-inclusive fee structure will work out to be less money.

One other thing to consider when assessing the best properties management companies in centurion and their fee structures: the all-inclusive manager typically pays the lease commission out of their pocket upfront. So, they have a vested interest in finding tourists a good tenant who will stay in their property for more than a year. On the other hand, the person who charges extra for a lease-up fee or leasing commission each time they rent your property has a vested interest in the other direction to have you pay them the commission every year. This could translate into more of a cavalier attitude about finding you a long-term renter. In summary: If travel agents are performing some of the property management functions like leasing your property, paying your property, insurance, and mortgage taxes, then, the low-base fee structure may be best for you. Conversely, if travel tourists don’t plan on having anything to do with managing their property, for instance, it means you will be living out of the area for a while; the all-inclusive fee structure may be better suited for your needs.

 

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