When investing in real estate, there are always real estate loan repayments, including interest, as well as property management costs.Especially if you feel that there is a big hurdle to purchasing, you may be conscious only of purchasing and not paying attention to the management cost beyond that.If you have a main business, it is quite difficult to do the work related to apartment management on the side of your main business, so in many cases you will ask a real estate management company to manage it.However, the increase in administrative expenses will lead to a decrease in yield, so we want to reduce the administrative expenses as much as possible.This time I will tell you about the management expenses in real estate investment.
The role of a real estate management company and the benefits of requesting management
By paying a certain amount of rent income as a fee, you can leave the rental management work to a real estate management company.The main roles of a real estate management company include rent collection, reminders to delinquents, complaint handling, eviction procedures, tenant recruitment, and tenant renewal work.Doing these things alone is not easy.
The real estate management company confirms that all residents have paid the rent and common service fees on a fixed date every month, and if there is any delinquency, they will demand it.When the rental contract renewal date is approaching, I will confirm whether to renew or move out, and will be present on behalf of the owner at the time of vacation.If there are vacancies, we will advertise and recruit tenants, and if there are any complaints, we will respond.The advantage of using a management company is that you can concentrate on your main business because they will take care of all the work related to apartment management.
Rate of management consignment fee to be paid to the management company
The market price for management consignment fee depends on the contents of the contract, but it is about 5% of the rental income.If all rent management is outsourced, the management fee will be deducted and paid to the owner.The amount varies depending on the category of management work, but in many cases (rent collection, reminders to delinquents, complaint handling, eviction procedures, tenant recruitment, tenant renewal work, etc.) the market rate is 5%.
Prepare a reserve for repairs in a planned manner in case of emergency
In addition to the management consignment fee paid to the management company, there is another important expense.It is a reserve fund for repairs, which includes electricity costs for lighting in the corridors and entrances of the condominium, cleaning costs for common areas, garbage disposal costs if garbage collection is outsourced to an outside company, and maintenance costs for the surrounding plants. , firefighting equipment, elevator maintenance and inspection costs, etc.The money collected on the rent as a common service fee will be used for these.It is not always necessary to pay for everything every month, but it is ideal to manage it as a reserve separately from the rent income so that you can raise it even if you need it in a hurry.The management fee and reserve fund for repairs are about 1% of the rental income.
In addition, there are various taxes such as real estate investment loan repayment, income tax, etc., so let's make a income and expenditure plan how much you need before purchasing a property.
At Rich Road Co., Ltd., we will consistently support all aspects of investment real estate, from complete beginners to experienced people, from a wide range of real estate selection, loan consultations, post-purchase management, and renovations.
