Professional San Francisco property management delivers a lot of value. Not only are you relying on experts to lease, manage, and maintain your investment property, you’re also relying on your management partners to protect you from expensive legal mistakes, which are easy to make.
California is notoriously tenant-friendly, and San Francisco is even more so. There are many tenant protections in place, and if you don’t understand the intricacies of rent control, just cause eviction, security deposits, and rental laws, you can find yourself in some legal trouble.
What should you be paying for property management in San Francisco?
That depends on your property, the size of your portfolio, the exact location of your rentals, and the services that you require. It also depends on the company you choose to work with. All property management companies structure their fees a little differently. In some cases, you may find yourself paying one flat fee that includes everything. In other cases, you’ll pay a lower fee for basic management and then add on any additional services you need, such as leasing, turnovers, or evictions.
Let’s take a look at the type of property management fees you can expect when you hire a company in San Francisco, and why it’s important to know exactly what you’re paying for.
Here’s something to remember: not all companies will have these fees. We simply want to cover all the potential options so you’re not surprised when you’re interviewing a possible management partner and they mention something like a technology fee or a paperwork fee.
Onboarding/Administrative Fees for San Francisco Property Management
When you sign a property management contract, you may be subject to a one-time administrative fee. This could also be called an onboarding fee or a contract fee. It’s basically what you’re paying to get yourself established in your property manager’s systems.
Most management companies are using technology and software that will require the establishment of your online portal. In your portal, you’ll be able to see when rent is paid, when a lease is signed, and where you stand with maintenance invoices and other expenses.
Getting you set up in a management system doesn’t take too long, and it’s not terribly expensive. Some management companies will simply roll this into their leasing fee or their management fee. Others keep it separate. You may have to pay it when you sign the management contract or when you have a tenant placed and rent starts coming in.
You can expect your property manager to explain this to you. Typically, it should not cost more than a couple hundred dollars.
Leasing Fees in San Francisco
The leasing fee often covers tenant placement and marketing. Sometimes, you’ll find a company that charges a separate marketing or advertising fee. You might get charged separately for showings or for tenant screening.
Generally, however, a one-time leasing fee will cover:
- A comprehensive rental analysis that will establish the correct rental price for your property. Your property manager has access to excellent data that will help with establishing the right rent. They’ll study comparable properties in the area and consider what they’ve recently rented for.
- Advice on preparing the property for the market. Your management company may make suggestions about improvements or updates that will help you rent your home quickly and for the most possible money. You’ll be responsible for any costs associated with this work.
- Photographs. Your property manager, during the leasing process, will take some high-quality photos to include with your rental listing.
- Creating the listing. The leasing fee should include the listing that will be used to market your home to potential tenants.
- Sharing the listing. If there’s a separate advertising fee charged, it will likely cover the expense of syndicating your listing out onto all the popular websites that tenants use when looking for a new home.
- Communicating with potential tenants. When interested parties begin to call and message and request showings, your property manager will be tasked with fielding those calls, answering those questions, and making the property available when it’s convenient for showings.
- Managing the showing process. Whether a leasing agent shows the property in person or puts together a system where self-showings can be facilitated, your leasing fee will cover the effort that’s needed to manage this process.
- Applications and tenant screening. The screening process likely includes background checks, credit checks, eviction checks, and a look at income, employment, and rental history.
- Lease execution and negotiation. Your tenant, once approved, will sign the lease agreement. Your property manager will explain it, collect a security deposit, and prepare the property and the tenant for the move-in date.
Most leasing fees are one flat fee or a percentage of the first month’s rent. You may find yourself paying a flat $750, for example, or 50 percent of the first month’s rent. It depends on the company.
San Francisco Property Management Fees
While the leasing fee is paid once, when a tenant is placed or right before a tenant is placed, the management fee is a monthly expense. Most property managers will deduct it from the rental amount before that rent is deposited in your own account.
Again, the management fee might be a flat rate and it might be a percentage of the rent that’s earned. For example, you could find yourself paying $300 a month, or you could find yourself paying 10 percent of the monthly rent.
Generally, an all-inclusive management fee will provide for:
- Inspections and walkthroughs of the property before and after the tenancy.
- Responding to routine, emergency, and preventative maintenance requests from tenants.
- Rent collection.
- Lease enforcement.
- Tenant relationships and communication.
- Accounting and bookkeeping associated with your rental property.
- Communication with HOAs, community associations, vendors, and other stakeholders.
- Lease renewals.
- Complaints and disputes.
- Compliance with fair housing laws, rent control laws, and all state, federal, and local requirements for rental properties.
- General investment advice and support.
- Eviction notices.
The scope of what your property manager provides will often be found in the management contract you sign. Make sure you review it carefully to avoid any surprise fees or unexpected charges.
Always as if you’ll pay a management fee when the property is vacant. If you’re not earning any income, you may not want to pay a management fee. However, your property manager is likely keeping an eye on your investment property even while it’s not occupied. They may be supervising turnover repairs and cosmetic upgrades.
Additional Fees Owners and Investors May Encounter
When your leasing and management fees are all-inclusive, there won’t be other charges to worry about. However, some companies will add onto their general fees when specific services are needed. Here are some examples:
- Technology Fees. You might be charged for the technology used in the management of your property. This will cover the portal as well as any self-showing technology, digital locks, or other resources. Sometimes, tenants are charged for making online rental payments.
- Lease Renewal Fees. You might be charged a couple hundred dollars at the end of a lease term when your property manager is negotiating a new lease with your existing tenants. Lease renewal fees are always going to be cheaper than the cost of finding a new tenant.
- Maintenance Fees and Surcharges. These aren’t as common anymore, but you may encounter a company that charges you for maintenance on top of what you’re already paying the contractor or vendor. For example, if a plumbing cost is $500, your property manager may charge 10 percent of that. So, you’ll end up paying $550, and $50 of that bill will go to your property manager.
- Eviction Fees. If you have to evict a tenant, there will be court and legal fees to pay. You may also need to pay your property manager for their representation of you in court.
Communication and transparency is especially important when we’re talking about property management fees. Don’t sign a management contract until you’re absolutely sure of what you’re getting into and how much you’ll be expected to pay.
Most management companies will advertise their fee schedule before you even get in touch. This eliminates the confusion or the need for awkward money conversations when you do get in touch. If you’re interested in working with a property manager, see if their fees are listed on their website. If they are, that’s a good sign. If the property manager seems to have something to hide, you might need to worry about how much they’re willing to tell you about what they charge.
There’s no single model or fee structure that works best for every company and every client. When you’re looking for San Francisco property management, get an idea of what you’ll be spending, and why. Remember that management is a service and not a commodity. You don’t want to go out looking for the cheapest management company in the market. We guarantee you’ll end up spending more than you realize.
If you’re interested in talking about San Francisco property management and the fees we charge, please contact us at Sharevest Property Management.