How much does Commercial Property Management Cost?

As the previous answer has rightly and comprehensively explained, commercial property management charges a monthly rate of 8% to 12% of the rent. This cost depends on several factors too. An average commercial property management fees also include additional costs like routine inspection. I was discussing this with one of my colleagues whose uncle has a retail store, and he told me that beside the monthly percentage, there are additional fees charged by the companies.

What are Included in the Commercial Property Management Fees?

I remember my colleague telling me property management costs do not come all-inclusive and there are other charges such as contract setup and marketing fees. Here are some additional fees that a management company may charge.

1. Overseeing Vacant Property: There are vacant properties that need management and it requires more labour than managing a tenanted property. So, a company may charge additional fees for the same.

2. Contract Setup: There is also a onetime setup fee that most companies charge. These costs include creating an account for book-keeping, inventory audits, marketing materials, property inspection, and so on.

3. Repairs and Maintenance: Another aspect I learned was that a good property management company will have their own vendors and the cost for these should be lesser than what you could get on your own. So, it’s important to find a management company you can trust.

So, beside the fixed charges, these are some of the additional fees some property management companies ask for. I hope this gives you some clarity on the commercial property management cost. 

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What are the Benefits of Using a Property Management Company?

A property management business will assist you as a landlord with managing your rental property for a fee. The cost of property management will differ depending on a number of variables, including the type of property and the services offered. So let’s see how much does commercial property management costs.

How much are commercial property management fees?

Property management fees are often set up in one of three ways:

Typically, 8% to 12% of the monthly rent collected is the cost that property management businesses charge. For example, according to a 10% average cost, the property management fee would be Rs.1500 if your monthly rent is Rs.15,000. Management businesses often charge a fixed fee or a fee equal to the expected monthly rent when a vacant property is leased to a new tenant. A weekly examination for the possibility of trespassers is one additional management task that may be necessary for vacant properties.

Instead of charging a portion of the monthly rent, some property managers impose a flat fee. The set property management fees typically vary based on the type of property, its square footage, and the services offered. The fixed property management fees will change with the market. Although a flat fee arrangement could appear to be a good bargain at first, management companies who take a fixed charge might not be as driven to increase the rental income from your home. 

In this situation, the property management firm will rent the property from you and then sublease it to a different tenant. The benefit is that, even when a property is vacant, you can still collect rent. The property management company will ideally require you to sign a sublease agreement with them to give them the authority to sublet your property to chosen renters. Your stuff will be lost to you in this situation. The management business would need to make a profit even after taking a blow from the vacancy loss, so you would receive a lower rent than the market rate. 

I hope you understood how much does commercial property management costs.