You shouldn’t be playing guessing games when you’re looking at the property management fees charged by a professional Chicago property manager.
At Paragon Property Management Group, we like to keep our fee schedule simple and transparent. Our job is to provide high quality leasing, management, and maintenance services to owners, investors, and landlords in Chicago and from outside of the area, and we’re happy to do that at competitive rates.
Every property management company will have a different way of structuring and establishing their fees. The amount you pay will depend on the company you choose, the property you own, and the services you require. If you own a building, you’ll likely pay less per-unit for management than you would for a portfolio of single-family homes. If you only need leasing services, that’s going to be a different price breakdown than it will be when you’re looking for full-service management.
When you’re comparing management fees, make sure you’re comparing management plans as well. It’s important to know what exactly you’re paying for.
Today, we’re taking a look at some of the typical fees you’ll encounter when you’re hiring a Chicago property manager, and then we’ll give you a look at how we structure our own Chicago property management fees at Paragon Property Management Group.
Leasing Fees: Paying to Find a Qualified Tenant
Nearly every property management company in Chicago will charge a leasing fee. This is necessary to cover the costs of marketing and tenant placement. Sometimes, you’ll find a company that charges a separate marketing or advertising fee in addition to the leasing fee. You might get charged separately for showings or for tenant screening. Investigate all of this before signing a management contract.
For most property managers, however, your one-time leasing fee will cover:
Rental analysis and property pricing.
A professional listing, which includes a description as well as photographs. Expect high-quality photos from your property manager, which will be included in a rental listing that is syndicated to a wide network of rental sites. You should also find your listing on your property manager’s website and potentially the MLS.
Communication throughout the leasing period. Potential tenants will call and message with questions about your property. Your manager will be tasked with fielding those calls, answering those questions, and making the property available when it’s convenient for showings.
Showings and tours. 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. This 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.
Leasing fees are either flat, one-time fees or a percentage of the first month rent. We have also seen leasing fees as a high percentage of the annual rent that’s earned, so if you’re looking for lease-only services, make sure you understand how much you’re paying and what you’re getting.
Chicago Property Management Fees
While the leasing fee is paid once, your management fees are recurring. Most property managers will deduct it from the rental amount before that rent is deposited in your own account. This makes it easy, and you’ll see that deduction in your accounting reports and statements.
Like the leasing fee, the management fee might be a flat rate or 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.
Lower management fees may include only specific services. Generally, an all-inclusive management fee will provide for:
Inspections of the property before, after, and during the tenancy.
Maintenance.
Rent collection and lease enforcement.
Tenant relationships and communication.
Accounting and bookkeeping.
Communication with HOAs, community associations, vendors, and other stakeholders.
Lease renewals.
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.
Communication and transparency is especially important when we’re talking about property management in Chicago. Find out how much you’re paying and why.
Paragon Property Management Group and Property Management Pricing
A complete list of our fees and a breakdown of what they cover can be found on our website. This kind of transparency is important to us. We know that you have big decisions to make when it comes to choosing a property management partner. We want you to have as much information at your fingertips as possible.
Remember that there’s a lot of value provided by professional managers that’s hard to list on a pricing page. We can show you what’s included, such as marketing and screening. But, how do we quantify that we’re also attending meetings and seminars that keep us up to date on fair housing laws?
This is a value part of your property management services; you know your property is compliant because of our expertise. You’re also getting general investment advice and support, and that doesn’t always show up in a pricing chart, either. There will be suggestions and encouragement. If you’re looking for new investment opportunities, the property manager you’re working with can point you in the right direction.
Our pricing looks like this:
Our leasing fee is 75% of the first month’s rent.
We charge between 4% and 10% of your monthly rent as our management fee.
Why such a range? Because we provide discounts for higher earning properties. If your rental home earns more than $2,500 per month, you’ll get a lower rate. If you come to us with more than five units to manage, you’ll get a lower rate.
We earn our fee based on actual collected income. We don't get paid unless you do.
And here’s what you get for those fees:
Leasing
Our leasing fee comes with a custom rental analysis. We perform a market analysis of nearby rentals comparable to your unit and provide our recommended target list price to maximize your revenue and fill vacancies faster. We also do comprehensive marketing and provide live phone service when prospective tenants call with questions or to schedule showings. We offer a weekly leasing update, which lets you know where you stand as we market your home.
Tenant screening is part of the leasing fee, as well as pet screening and meetings with the tenants. Administrative information is covered by the leasing fee. This might include verifying a tenant’s renters insurance, coordinating with the HOA if it’s applicable, and executing a lease agreement that’s both compliant and enforceable in Illinois.
The move-in inspection and the detailed move-in condition report are also included.
Lease Renewals
Lease renewals will cost $250, which covers a market analysis that informs our rental increase. If we’re working with a tenant on a subsidy, there’s an extra $100 charge to cover the additional administrative expenses. We have a retention rate of around 70%. We’re proud of that.
Management
The monthly management fee includes rent collection and lease enforcement. It includes all tenant communication and visits/meetings. We provide vendor payments, invoicing, and the coordination of repair work.
There’s an additional charge for contractor management. When a repair requires external vendors or specialty tradespersons, we will coordinate with contractors as needed such as: plumbing, electrical, heating, appliance repair, masonry, roofing, etc. We apply an administrative fee of 15% of the cost of the work. If you’d like a property inspection and condition report, that’s a $125 fee. We look for lease violation issues and outstanding or preventive maintenance items. A report is provided to you including photos.
Our management fee includes the disposition of the security deposit as well as an HOA administration that’s required. We provide an owner portal and monthly financial reports that are available on that portal. We send your rental income electronically to your bank account typically by the 10th of the month, but no later than the 15th. All of this is included.
At tax time, we’ll charge $125 for your 1099s and year-end statement.
In addition to all of these services, your management fee covers an eviction guarantee, pet damage guarantee, leasing guarantee, rent collection guarantee, and satisfaction guarantee.
Phew, that’s a lot.
Let’s talk more about your unique needs and the properties that we’d be managing. We’d be happy to tell you more about our own fee structure. Please contact us at Paragon Property Management Group. While we believe our prices are competitive and offer a lot of value for what you pay, we know that we’re not the cheapest property management company in Chicago. We don’t want to be. This is not a transactional relationship; it’s a commitment to your investment property and your success.
Contact us, and we’ll talk about it.
