For rental property owners, having a trustworthy and experienced property manager at their side is often one of their most valued assets – especially for out-of-state investors. Having someone with boots-on-the-ground knowledge, who answers calls 24/7, and who understands the importance of both tenant retention and protecting your investment can help make the investing experience successful. However, it isn’t free. Unless you're a DIY landlord and the fee is your time, property managers all come with a price tag. And keep in mind that price will likely change depending on location and property type. With a low barrier to entry when it comes to property prices and rising rent rates in 2023, investors might have their eyes on the Toledo, Ohio, market as their first (or next) investment location. But just how much do property managers charge in Toledo, Ohio? Are there any factors that can affect prices? What can I expect as an investor? Let’s dive in.
Leasing Fees for Toledo Landlords
For most property management companies, there is a separate leasing fee that is charged on top of the PM fee. Typically, you can expect a percentage of the first month’s rent. Some Toledo property managers have tier subscriptions where they will offer discounts on the leasing price. For example, Evernest offers the Gold Package, where leasing costs half of the first month’s rent, and the Platinum Package, where the fee is waived completely. This is calculated separately because it is outside of the day-to-day management tasks, typically only happens once per year (or much longer if the tenant stays long-term), and some owners may only want the leasing service, or vice versa. A Property Management company may not offer marketing and leasing services at all, so it’s best to double-check with any given company if that is something you want for your property.
Flat vs. Percentage Property Management Fees in Toledo
The fee structure for property management comes in two forms: percentage or a flat-fee. A percentage is taken out of the owner’s rental income and is determined fully on the rent rate, while a flat-fee is unchanging. Which one a property manager uses can depend, and sometimes they offer both. If that is the case, then that typically means:
- Whichever one is higher will be used. For example, a percentage fee might be 10% of rent or have a flat-fee option, but the flat-fee will only be used if it’s less than the percentage amount.
- The management team has a tier-structuring system that either uses a percentage or a flat-fee depending on factors such as the amount of properties an owner has and the amount of services that are included in that tier.
For example, Evernest offers two structures, Gold and Platinum, that are a flat-fee, while the third structure (primarily for investors) is in a percentage format.
Repairs and Maintenance Fees
Depending on the company there may be fees associated with maintenance and repairs. The property manager will be handling all coordination with the contractor making the repairs while also keeping you informed, which takes time and effort. This fee is typically a percentage of the overall maintenance bill. In some situations, PMs will have in-house maintenance and that additional up-charge fee will be waived. However, there may still be a percentage markup on the materials purchased and an hourly rate for repairs.
Leasing Renewal Fees
Alongside the leasing fee, there is also typically a lease renewal fee. If your tenant’s lease expires and they want to renew, Toledo property managers will usually have a fee to coordinate that renewal. However, unlike the leasing fee that’s based on rent, the lease renewal fee is typically a fixed rate that will depend entirely on the company. While most take a fee, there are situations where that fee is waived. This is typically with an upgraded package. For example, Evernest waives this fee in the Platinum plan.
Vacant Unit Fees
Even when your property is vacant, property managers may charge a monthly fee. This is because a vacant property must be inspected regularly by law in order to stay up-to-date with code regulations, keep insurance policies in line, and ensure the building stays in good shape. The city of Toledo has their own Code Compliance that rental property owners must abide by.
Onboarding Fees
Some Ohio property managers will charge an onboarding fee for new owners and properties. These fees can include:
- An owner fee
- A per-unit fee
- A duplication fee (for keys, documents, etc.)
Some PMs will either waive the fee or only have one fee for both the owner and the tenant, but it’s best to ask that company and find out what their onboarding fees are. If you want to learn more about the best questions to ask before hiring a PM, then this blog post is for you.
Eviction Fees
While the leasing and pre-screening processes exist to try and keep this from happening, there may be times when an eviction is unavoidable. If the tenant stops paying rent, causes damages to the property or neighbors, or are regularly breaking the lease agreement, you may be left with no choice but an eviction. Some property managers offer an eviction policy where they will handle all of the proceedings. In certain cases, they may not charge fees for eviction, but that is usually only included in an upgraded plan. For example, Evernest includes an Eviction Protection plan with our Platinum tier, or as a $200 annual add-on. However, Ohio property managers will usually include a charge-up fee for evictions.
Routine Inspection Fees
Routine inspections are a critical part of maintenance. Inspecting on a regular basis ensures that safety codes are up-to-date, maintenance issues aren’t left untreated and causing more damage to the property (such as a leak), and that the tenants are abiding by the lease agreement. However, these inspections often come at a price, depending on the plan. For example, Evernest charges $149 for annual inspections unless you have the Platinum plan. With that package, annual inspections are free.
Contract Termination Fees
For many PM companies, ending your contract early can come with contract termination fees. Some companies, like Evernest, for example, have a 100% Happiness Guarantee, where you can cancel at any time with zero cost. However, if the Toledo property management company you choose does not come with a guarantee, then you will most likely be met with a penalty.
Factors Affecting Property Management Fees
While pricing plans may seem straightforward, they are only a range of what it might cost since there are several other factors at play that affect PM rates.
Types of Property
The type of property you own can make a significant difference in management fees. If you have a multifamily property for example, then you will most likely see a varying pricing chart. The cost will likely be on a per-unit basis.
Size of Property
If it’s a larger property, there is essentially more property to manage. This means more items to repair, more property to take care of, inspect, etc., and a higher rental rate. For percentage-based pricing models, the latter will automatically raise the cost.
Condition of Property
It may cost more to hire a property manager if your property is in poor condition, since it will take more work to get it rent-ready. It will also likely have more maintenance issues compared to a newly built or renovated model.
Neighborhood Rating
Along with size, the neighborhood class that your property falls in will help determine rental rate. Whether that rate is higher or lower will often affect the cost of a PM.
Market Competition
Market competition plays a big role in how much property managers will charge. If there’s more competition, PMs will often lower rates in order to attract more clients.
Extent of Services
At the end of the day, the extent of services will play the largest role in how much you pay. If you’d only like leasing services, that will cost a lot less than a full-time property manager with an eviction plan, proactive maintenance, etc. What you choose comes down to your individual needs and budget.
Final Thoughts
Many investors find that having a trustworthy property manager on their side makes the rehab, marketing, leasing, and renting processes easier. This is because there is someone dedicated to the property who has years of experience, either access to in-house maintenance or third party connections, an underwriting service, and more. However, these services come at a price, and every city’s property management selection is different. For owners who have properties or are thinking of buying properties in Toledo, there are certain fees to be expected when hiring a PM. For more information about Evernest’s services, you can contact our Toledo, Ohio, team here and reach out with any questions you might have.