The robust economy of Greater Vancouver, British Columbia, coupled with strong rental demand, makes it a prime location to grow a rental business. Data suggests that homeowners in Greater Vancouver experience significantly higher monthly rental income than the national average, attracting both local and foreign investors from the United States, Asia, South America, the Middle East, Europe, Australia and more to establish property portfolios in the region.
The full-time role of managing rental properties can be time-consuming, hence the necessity for property management services. As of 2023, over 1,000 property managers serve a diverse array of companies within Greater Vancouver.
The question then arises – how much does property management cost in Greater Vancouver? Is it financially prudent to hire a property manager, or should you manage your properties yourself to save on fees?
In this article, we will delve into the costs of property management in Greater Vancouver and other potential charges beyond the standard management fees. This will allow you to gauge whether the services of a property manager align with your financial plans.
Understanding Property Management Companies Before Hiring
Property management companies vary in their offerings. Some may charge less for their management fee but levy additional upfront costs, while others might charge a premium for a comprehensive suite of services.
Therefore, it is essential to fully understand the offerings when comparing property management companies, rather than basing your decision solely on the monthly fee. This ensures you select the right property management company, such as Refinity Homes, to handle your investments effectively.
Before hiring a property manager, consider the initial setup costs associated with establishing your account and leasing your property.
Initial Setup Fee
Property managers often charge a one-time initial setup fee. This covers the costs associated with account setup, paperwork, and the various administrative tasks necessary to manage your property.
In Greater Vancouver, setup fees typically range around $300-$500.
Property management companies also charge a separate fee for placing renters on your property. This is usually equivalent to 50% or 100% of one month’s rent.
Note that companies charging higher management fees might have lower tenant placement fees, and vice versa. Some companies also offer a fixed rate, generally around $1000, for tenant placement services.
Tenant placement services often include:
Once a tenant is secured, property managers will then charge a monthly fee for managing your property.
Property Management Fees in Greater Vancouver Area
Property management fees in Greater Vancouver fluctuate based on factors such as the property management company, payment structure, the number of properties to be managed, and the services provided.
Two common payment structures are:
The management fee usually covers property maintenance, addressing tenant concerns, enforcing the lease agreement, and rent collection.
Let’s consider an example: If your property rents for $2,500 a month and you engage a property manager that charges a flat rate of $100 for a single-family home, it might seem like a savings of $50 a month compared to a property manager charging 7% of one month’s rent. However, it’s essential to consider the quality of service, inclusions, and potential additional fees for other services rendered.
For instance, if a company charges a flat rate of $100, an initial setup fee of $500, a tenant placement fee equal to a month’s rent, and a 10% markup on repairs and assuming $900 in annual repairs and maintenance, you would spend $4,290 in a year for property management, not including the 10% markup on any repair costs.
For instance, if a company charges a flat rate for lease up fee of $1000, a monthly management fee of 10%, an initial setup fee of $500, a tenant placement fee equal to a month’s rent, and a 10% markup on repairs, you would spend $4,200 in a year for property management, not including the 10% markup on any repair costs.
For instance, if a company charges a flat rate of $100, an initial setup fee of $500, a tenant placement fee equal to a month’s rent, and a 10% markup on repairs, you would spend $5,090 in a year for property management, not including the 10% markup on any repair costs.
In contrast, if you hire a property manager that charges 6.8% of a month’s rent ($170 a month for a $2,500 rental), no initial setup fee, and a tenant placement fee equal to half a month’s rent, you would only spend $3,290 on property management by the end of the year.
Understanding the inclusions and exclusions of such fees is paramount, and due diligence is recommended when making your choice.
Additional Costs of Hiring a Property Manager
Eviction Fee Evicting a tenant in Greater Vancouver can be a lengthy and challenging process. Therefore, property management companies typically charge a fee between $200-$500 for evicting a tenant, in addition to any legal costs associated with the eviction process.
However, certain property management companies, like Refinity Homes, offer eviction coverage to ensure high-quality tenant screening services and protect you from the cost of eviction.
Vacancy Fee While not a common fee, it is essential to be aware of potential vacancy charges. Even when a property is vacant, maintenance tasks like lawn care and dusting must continue. The vacancy fee is a reduced fee designed to keep the property rent-ready during a period of vacancy.
Repair and Maintenance Markup Most property managers hire third-party services for property repairs and maintenance and may charge a markup fee, typically around 5-30% of the total repair cost, for managing these services.
Summary of Possible Property Management Costs in Greater Vancouver
Hiring a property manager involves various costs on top of the standard monthly management fee. To simplify, we’ve collated a table of potential fees associated with property management in Greater Vancouver:
|Fee Type||Industry Average in Greater Vancouver|
|Initial setup fee & Early termination fee||$300 – $500|
|Tenant placement fee||50 – 100%|
|Eviction fee||$1,000 – $3,000|
|Monthly management fee||6 – 12% of a month’s rent|
|Mark up on repairs||5 -30% of maintenance cost|
Please note that these are usual fees across many property management companies within the region, but the exact charges may vary. Furthermore, not all companies charge all the fees listed in this table.
The cost of property management in Greater Vancouver Area from Vancouver West, West Vancouver, Downtown Vancouver, North Vancouver, Burnaby, Coquitlam, Richmond, Whiterock, Delta, New Westminster to Ladner varies based on factors like location, size of the property, type of property, and payment structure. Although a lower monthly management fee % might initially seem more affordable, you must account for other fees, what they include, and the quality of service each property management company provides.
The high rental demand in Vancouver especially in Burnaby, Downtown Vancouver, and Richmond attracts rental property investors, leading many to invest in multiple properties, which inevitably require more time to manage. Hence, determining whether hiring a property manager is economically viable for your situation will be based on the monetary value of your time saved.