Property Management Fees: Are They Worth It?

Many property investors wonder if property management fees are worth the cost. While it might seem tempting to manage your properties yourself, doing so can be incredibly time-consuming and stressful. In this blog post, we'll discuss the various costs associated with property management, the services provided, and why it might be a worthwhile investment.

The Cost of Property Management

Property management fees vary depending on several factors, including:

• The type of property: HMOs (Houses of Multiple Occupancy) often have higher management fees due to the complexities involved.

• The location of the property: Properties in high-demand areas may have higher fees.

• The services provided: Whilst some services such as tenant referencing and rent collection usually come as standard, others offer additional services such as an emergency 24/7 or warranty insurance policies which may increase the cost.

The Services Provided

Property management companies offer a wide range of services, including:

• Tenant referencing: This involves conducting background checks and verifying income to ensure that tenants are reliable.

• Rent collection: Property managers collect rent from tenants and ensure that it is paid on time.

• Maintenance: They handle maintenance issues, such as repairs and renovations.

• Tenant relations: Property managers act as a mediator between landlords and tenants, resolving disputes and ensuring that both parties are satisfied.

Why Property Management Fees Might Be Worth It

While property management fees can add to your expenses, they can also save you time and stress.

Here are some of the benefits of hiring a property management company:

• Time savings: Managing properties can be extremely time-consuming. By hiring a property management company, you can free up your time to focus on other aspects of your life and business.

• Peace of mind: Knowing that your property is being well-managed can give you peace of mind and ensure no sudden emergency phone calls in the middle of the night.

• Expertise: Property management companies have the expertise and experience to handle various property management tasks efficiently, most notably tenant disputes and disagreements, which are some of the most common issues that require attention.

Our Experience with Property Management

At Headway Property Investments, we have experience managing a variety of properties, including HMOs. We have found that property management fees, especially for HMOs, can be quite high.

However, we have also found that the benefits of hiring a property management company often outweigh the costs.

Key Details and Numbers

•  Average property management fees for HMOs: 12-14%

•  Cheapest property management fee we have encountered: 6% per month which include the most basic services such as rent collection

•  Most expensive property management fee we have encountered: 18% which ensures no additional fees later on for things like setting new tenancies or referencing

•  Additional fees: Property management companies often charge additional fees, for example, for setting new tenancies.

•  In-house property management: We have our own property manager for part of our portfolio down South, which can be cheaper but more complex and time-consuming.

Funny Tenant Stories

Over the years, we have encountered many funny tenant stories. One of our favorite stories involves a tenant who complained that other tenants were pushing fingers into their bananas!

While this may seem like a strange complaint, it highlights the importance of having a good property management company to handle tenant disputes.

Conclusion

Whether or not property management fees are worth it depends on your individual circumstances. However, it is important to consider the time and stress savings that a property management company can provide. If you are a busy property investor, hiring a property management company may be a worthwhile investment.