How does your Property Management Company make Money?

Although it may not actually concern you how your chosen property management firm makes money, it is important to understand how they may want to get paid. There are no statutory regulations for the payment of property management companies, although most reputable companies will be members of the Association of Residential Letting Agents and will take advice from this source when planning their own payment system. Also, you may find your chosen property management company is a member of the Association for Residential Managing Agents (ARMA) and this is a specialised niche trade organisation especially for property management companies, including those who manage large apartment blocks in England and Wales.

The Property Management Companies Liverpool property owners have to choose from may take advice when it comes to planning their business model or they may have their own opinion. In either case we are looking at the most common models you’ll find below:

Percentage of Rent

This is probably the most popular business for property management companies in the UK. It is used by property management companies who manage both apartment blocks and single homes. In this situation the landlord signs an agreement with the management company where he allows the company to rent out the property and collect the rent in return. Once the rents are collected the property management company is allowed to keep a set percentage of the rent as their fee for managing the property and this is usually around 10-15%.

Fixed Fee

This business model is mostly used when property management companies are looking after empty plots and empty homes. Responsibilities include checking the property regularly and sometimes providing constant security 24/7 to ensure the land is safe. Most property managers will ask for a fixed fee as the property or land makes no revenue.

Guaranteed Rent

This business model is used by the property management companies Cardiff property managers can choose from when they take over residential units which have a range of individual apartments or units in a high demand area. Here the property manager will sign an agreement with the owners and pay a fixed amount of rent for the units. The agreement allows the management company to increase the rents on each of the units. The difference in the two rents is what the company earn and it is often the case that the rents paid to the owner to be lower to the prevailing market rates.

Revenue share

This is a model often used when the space being rented is used for a commercial purpose or for serviced apartments. Under agreement the management company converts the property into a revenue generating business and a share of the revenue generated is given to the landlord.