“How much do property managers charge?” As a former manager myself, I’m asked this question a lot. Fortunately for you, I’ve used my experience in the field to create a complete guide.
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- What Services do Property Managers Offer?
- How Property Managers Price Services
- Types of Property Management Fees
- How Much Do Property Managers Charge?
- Things to Consider
How Much Do Property Managers Charge?
Considering hiring a property manager to take care of your rental property? You might be uncertain about one thing: How much do property managers charge?
How much do property managers charge to manage tenants, collect rent, and take care of your property?
The fees depend on a few factors:
- Services offered
- Pricing format
- Types of fees charged regularly or sporadically
We’ll look at the most common property management services, how property managers usually price their services, and the fees you might be charged.
Then, we’ll then show you how much property managers charge on the low, mid, and high pricing levels. Let’s start with the services a property manager may offer.
What Services Do Property Managers Offer?
Property managers handle the day-to-day tasks and any urgent matters associated with rental properties. They relieve landlords and investors of the burden of self-managing a rental property.
By working with a property manager, you can take a hands-off approach to renting without letting your property’s condition or tenancy suffer as a result. Property managers offer a range of services that differ by the company, individual, or plan chosen.
Here’s an example “menu of services” you’re likely to see from any property management company:
- Screening and finding tenants
- Collecting rent and security deposits from tenants
- Receiving and handling maintenance requests
- Performing property inspections
- Creating and renewing tenant leases
- Delivering monthly financial reports
- Handling preparations before new tenants move in
- Resolving tenant issues
- Ensuring compliance with landlord/tenant laws and rules
How Property Managers Price Services
Property managers offer the services above on a monthly or per-project basis. Property managers typically price their monthly services one of three ways:
- Percentage of the monthly rent
- Monthly flat fee
- Per unit + base fee
Most often, property management fees are a percentage of the monthly rent. It’s less common for managers to charge both a flat base and per-unit fee.
Per-project costs are often applied to things like lease creation, maintenance, evictions, and vacancies. These costs may be a set percentage of a month’s rent (usually the case with lease creation and placing a new tenant).
They might be flat fee charges in the case of evictions and vacancies. They could be highly variable costs, as with maintenance issues that can range in price from less than $100 to a couple thousand.
Any property management company you’re considering working with should be able to explain what exactly is included in your monthly costs and what will cost extra.
What Fees Do Property Managers Charge?
Property management companies commonly charge a few different fees. You might be charged any of the following fees when you work with a property manager.
A setup fee is sometimes charged to cover the startup of property management services. The company may need to onboard you, provide you with documentation, and create and sign a contract.
Then, they perform an initial property inspection for each property, and set up your online payment and rent collection portal. Not all property managers charge a setup fee.
Property Management Fee
A property management fee, sometimes just called a management fee, covers the bulk of the work your property manager will do.
This fee ensures the property manager is available to your tenants to collect rent, resolve issues, and perform regular inspections. All property managers charge some type of fee.
The leasing fee is sometimes charged if your property manager has to create a new lease agreement for a tenant moving into one of your vacant units or properties. Not all property managers charge a leasing fee.
The renewal fee may be charged when a property manager must renew an existing tenant’s lease for another lease period. Not all property managers charge a renewal fee.
An occupancy fee may be charged when a property manager is tasked with marketing a vacancy for you, collecting applications, screening tenants, and placing a new tenant in one of your units or properties.
Not all property managers charge an occupancy fee. But most do. In a nutshell, it compensates them for the up-front work, which can be a lot. In fact, most managers lose money on this part of the process.
A maintenance fee may be charged to cover regular maintenance tasks like replacing air filters or cleaning gutters.
Some companies charge a recurring monthly fee to generally cover simple, expected maintenance tasks while charging extra for unexpected or major maintenance.
Some companies do not directly provide maintenance, but work with a third-party maintenance provider to pass along a discount on services to you.
Property managers may charge a cancellation fee if they require that you sign a contract for their services. If you want to cancel before the agreement period ends, you could be charged a fee.
This ranges from a few hundred to a thousand dollars, or more. up to a few hundred dollars. Not all property managers charge a cancellation fee or require you to sign a contract.
However, it does protect the manager’s interests. When I was managing properties, investors would bring us under-performing assets, and we’d invest significant time and energy into turning them around.
When an investor broke the contract or cancelled management after we’d turned the property around, they benefited. But we’d wasted our time and lost money on the deal.
After all, we had made an up-front investment into the property with the expectation of reaping the rewards of the resulting increased and stable rental income (and fees as a result).
A vacancy fee may be charged when a property or unit sits unoccupied for a month or more, preventing property managers from collecting a percentage of the rent for that unit. Not all property managers charge a vacancy fee.
An eviction fee may be charged to cover the cost of handling an eviction, from notifying the tenant(s), attending court, handling paperwork, and more.
Eviction fees usually cost at least a few hundred dollars, but some companies don’t charge extra for evictions. The truth is, these cover legal fees, and managers don’t usually make anything from them.
An administrative or admin fee may be charged for general or miscellaneous purposes. Sometimes administrative fees are kept by the property management office to cover any potential charges that may come up.
Or, they cover extra services like garbage collection or rekeying. Not all property managers charge an administrative fee, but you’ll typically find these on bigger apartment or commercial contracts.
Fees May Be Negotiable
Something you may not realize is that some fees are negotiable with a property management company. If you’re considering hiring the company but don’t need eviction management services, plan to handle maintenance tasks yourself.
If you’re willing to find, screen, and create leases for tenants yourself, you may be able to negotiate a better deal. You can do this by asking them to remove inapplicable fees, lower the monthly percentage slightly, or reduce the overall flat fee.
With these possible fees in mind, let’s look at the answer to “How much do property managers charge?”
So, How Much Do Property Managers Charge?
Property managers choose their own pricing amounts and decide what is included in the different plans they offer. But to stay competitive and get real estate investors’ business, most price their services fairly and within an average range.
So, how much do property managers charge? To answer this question, I took my experience as a property manager and combined it with real-life fees charged by San Francisco property managers.
On the low end, property managers charge a management fee as little as 3.9% of the monthly rent, either per unit or from the total monthly rent collected.
- For a house that rents for $1,000/month, that would be $39/month. With a renewal fee once per leasing period (about $100-$250 on average), you’d pay about $568/year.
- With a one-time leasing fee for a new tenant (about 30 of one month’s rent on average), you’d end up paying about $768/year to have the property managed for one year.
In the mid-range, property managers charge a management fee of about 6% of the monthly rent, either per unit or from the total monthly rent.
- For a house that rents for $1,000/month, that would be $60/month. With a renewal fee once per leasing period (about $100-$250 on average), you’d pay about $870/year.
- With a one-time leasing fee (about 60% of one month’s rent on average), you’d pay about $1,320/year to have the property managed for one year.
On the high end, property managers charge a management fee of about 10% of the monthly rent, per unit or from the total monthly rent.
- For a house that rents for $1,000/month, that would be $100/month. With a renewal fee once per leasing period (about $100-$250 on average), you’d pay about $1,450/year.
- With a one-time leasing fee (100% of one month’s rent on average), you’d pay about $2,200/year to have the property managed for one year.
Keep in mind that some property managers do not charge either a renewal fee or a leasing fee. You may have additional charges from occupancy fees, vacancy fees, cancellation fees, maintenance fees, administrative fees, or eviction fees.
Do Your Research for the Best Property Management Price
If you want the best possible property management service, know that it may not be the one with the lowest price. Lower prices on the front-end often point to hidden fees that will accumulate and result in a higher price.
Consider how many units or properties you’ll need managed. Most property managers offer greater discounts per unit as your portfolio expands.
Also, think about how involved you want to be with managing your properties. If you’re just looking for a little extra help, there’s no need to pay for full-service property management.
Do You Even Need a Manager?
Suppose you’re looking to be as hands-off as possible and have the monthly rents deposited to your account. In that case, you will need to pay a little more to ensure your property management company can handle any situation and task that comes up.
Be sure to check with any property management company you’re considering working with to find out every fee they charge. Be aware that viewing a Pricing page on a company website may only give you part of the story.
You need to speak directly with an employee to learn the full details. Ask specifically about any additional fees, what isn’t included, and the limitations on what is included.
For example, you may find that fees differ based on how many units or properties you need managed, or if you need management services for a single-family home instead of apartments.
You might find that services advertised on the website are only available with the most expensive plans or for an additional fee.
Overall, the cost of property management is a small price to pay for peace of mind and quality management of your investments.
Choose a reliable company that will treat your property like their own while relieving you from stressful landlord duties.