Buying & fees
Service Charge
A service charge is the recurring fee owners pay for the upkeep of shared areas and facilities in a building or community.
Service charges fund the maintenance, security, cleaning, insurance, and management of common areas such as lobbies, pools, gyms, and landscaping in a master community or apartment building. They are typically billed per square foot or per unit on an annual or quarterly basis and are set by the owners' association or management company. Because service charges directly reduce an investor's net yield, buyers should factor them in alongside the purchase price and confirm the current rate before committing.
Related terms
- Net Yield — Net yield is annual rental income minus operating costs, divided by the property's value, giving a truer measure of return than gross yield.
- Master Community — A master community is a large planned development with shared infrastructure and amenities governed by a single set of community rules.
- Gross Yield — Gross yield is annual rental income divided by the property's purchase price, expressed as a percentage before any costs.
- Transfer Fee — A transfer fee is the government charge paid to register a change of property ownership, calculated as a percentage of the sale price.