Account Fee

An Account Fee is a separate account maintenance fee that investors must pay if certain fund requirements are not met. Account Fees are assessed against gross investment proceeds or asset value to cover the cost of professional management services. The specific amount typically equals a minimum percentage of gross revenue and is deducted from monthly rental proceeds generated by managed properties. Other arrangements are often possible, however, based on the client’s needs and individual circumstances. Property management Account Fees pay for periodic accounting, vacant rental advertising, prospective tenant screening, and various administrative functions required to manage real estate competently and efficiently. Real estate investment Account Fees for IRAs, REITs and similar liquid capital funds are likewise percentage based and deducted directly from portfolio asset value. In addition, investment Account Fees pay for costs of buying, selling and managing real estate owned by the fund. Rather than gross revenue, however, the specific amount of real estate investment Account Fees is usually tied to asset value and length of commitment to a specific fund. A common scenario involves an investment period of up to five years, during which the account management firm uses the investor’s initial deposit to acquire profitable real estate acquisitions. Throughout the investment period, a quarterly or annual base account fee of around 1.5 percent may apply. Once the investment period is over, Account Fees are based on a percentage of either the gross or net value of fund portfolio assets. If asset value or periodic deposits fall below pre-specified minimum levels, an additional maintenance fee may be imposed to offset extra administrative costs of managing the investor’s account.