- July 10, 2018
- Posted by: @dmin
- Category: Blog
Know How to Build Your Budget When Hiring Management Services for your Condo
There’s no question that the Toronto condo market continues to be red hot. Despite the fact that home prices in the region plunged an average 40% over the past year, condo launch prices have actually increased 23% over the same period – a solid sign of investor confidence.
And with the city’s vacancy rate at its lowest level in sixteen years, the demand for rental units – especially in downtown Toronto – has never been higher. In an area where reduced supply has led to an average 50% increase in condo rental rates since 2012, it comes as no surprise that investors are leading the buying spree. Yet surprisingly, only 10% of condo investors are offshore purchasers, with the rest being individual property owners hoping to leverage their units as long-term personal investments. But since most owners of rental properties have full-time careers and family commitments, more and more are offloading landlord duties to professional property managers.
So how much do condo property management services cost in Toronto anyway? The short answer is typically anywhere from 5% to 11% of your annual rental revenue. The longer answer is that it depends on the types of services you need as well as the company you hire.
When you’re looking over your real estate portfolio and trying to determine whether or not it makes financial sense, you’ll need to get a sense of the various fee structures offered. Let’s take a look at a breakdown of common property management services, and how they will affect the fees you’ll end up paying.
Factors Affecting the Condo Property Management Services Cost in Toronto
Ultimately, how much you’ll pay in property management fees depends on how hands-off you want to be. While some condo owners prefer to have some degree of contact with their tenants, others may want none at all. Tenant screening, maintenance, and monthly rent collection are the major services, but there are many more available.
Typically, these will be bundled into service levels and priced accordingly.
Tenant Location and Selection
This highly-recommended service finds and screens a suitable tenant for your rental unit. The goal is to minimize vacancies so that you can maximize your ROI. Some companies include tenant selection activities within their fee structure, while others will charge separately for this service.
Tenant location & selection services usually include:
- Assessing the rental value of your property
- Photographing your condo property for rental advertisements
- Placing and managing advertisements
- e.g. MLS listings, corporate relocation services, Kijiji, Craigslist, other rental sites
- Responding to rental inquiries
- Conduct re-screening of all applicants
- Perform background and credit checks
- Furnish a lease agreement tailored to your needs
- Handle key distributions and move-in related activities
If this service isn’t included in your overall fee structure, expect to pay a fee roughly equal to the value of one month’s rent per rental unit.
Standard Property Management Services
The management services you require will depend greatly on the number of rental units to be managed, the scope of coverage you need, and the services offered by the property management company. For owners of a relatively small number of condo units, the fees will be significantly less than an owner with several multi-unit buildings or complexes to be managed.
Relatively simple management scenarios will usually net the lowest rates. A single condo unit with a monthly rent of $2400, for example, might see a fee structure of 5% or roughly $120 per month. The fees will then scale upwards and, depending on the management scope required, may incur higher fee percentages.
Here are some of the standard property management services you will need for your condo.
Usually, an initial inspection will be provided. This will allow the management company to determine the state of the property from both a maintenance and safety perspective. Depending on the management company, additional inspections may be provided at predetermined intervals.
Rent Collection Services
Your property management will invariably offer rent collection services. These include collection, accounting, bank deposits, and accounts receivable/overdue rent collections activities.
Maintaining your property through timely repairs is critical. Most property management companies will offer your tenants 24/7 access to emergency maintenance services so that you won’t have to worry about fixing problems when they arise.
Your property manager can take care of all aspects related to the financial administration of your rental unit. In addition to rent collection services, they will take care of paying expenses, insurance, remitting property and business taxes, all while providing up-to-date financial reporting.
Many property management companies provide an online portal system for tenants to facilitate communications, report issues, and streamline rent collection.
Know the Costs to Outsource the Management of Your Condo Investment Properties
Getting good property management services for your condo lets you enjoy the benefits of your investment while not having to worry about handling day-to-day landlord activities. Whether you need basic tenant location services, rent collection, or the full suite of management services, good property management is an affordable way to ensure you maximize your condo investment.
ICC Property Management is the award-winning property-management company of choice for condo owners throughout the Greater Toronto Area. Our licensed and certified management team has extensive experience with all aspects of condo management in Ontario, and they’re ready to help you get the most out of your property. Request a free management proposal and get started today!