How Much Does a Property Manager Cost?
The cost of a property manager is typically around 10% of a home's monthly rent. However, the amount a property manager charges directly correlates to how much work you want them to do. If you want them to keep track of the repairs, they will charge less than if you want them to take care of tenants and the structure of the building.
There are also various property management companies offering their services for differing amounts, but the best property managers typically charge about 10% of the monthly rent. Expect to pay this amount when looking for a solid property manager for your space.
If you look at your contract, you can see how the fees work. From here, you can determine the cost.
Common Property Management Charges
- Management fees
- Vacancy fees
- Setup fees
- Maintenance fees
- Lease renewal fees
- Early termination fees
- Leasing fees
- Eviction fees
1. Management Fees
The most common type of property management fee is the management fee. Every month, the property management company might require you to pay a fee for their service. This cost is to keep their services with you and to pay their employees for helping you out with your investment.
A typical property management fee is either a percentage of the rent (normally between 8% to 12% of the monthly rent) or a flat fee (which is often between $100 and $300 per month, depending on the property and services provided).
2. Vacancy Fees
Some property managers charge a fee when the property is vacant, known as a vacancy fee. This can be a reduced management fee or a flat fee to cover basic maintenance and security.
3. Setup Fees
An initial fee for setting up the property management services can range from $250 to $500. The setup fee covers setting up your account with the company or buying materials to help the new tenant communicate. It covers everything necessary to get a relationship between the consumer and the company. From then on, they are equipped to help you handle your investment.
4. Maintenance Fees
Property managers often charge for coordinating and overseeing maintenance and repairs. Some charge a markup on repair costs, usually around 10% to 20% of the invoice. Other property managers may include this cost in the management fee.
5. Lease Renewal Fees
Lease renewal fees work to renew the lease for some tenants. It isn’t very much.
Several fees come from a property manager when renewing a lease. It’s critical to consider all of them.
6. Early Termination Fees
When you work with a property management company, you sign a contract. If you terminate early, there are fees.
The contract should let you know how much early termination will cost you. Ensure you read this ahead of time.
7. Leasing Fees
Leasing fees are charged by property managers for finding and placing a new tenant. This is often a percentage of the first month’s rent, usually between 50% and 100%, or a flat fee ranging from $500 to $1,000.
8. Eviction fees
Property managers also charge you for handling the eviction process, which can result in fees ranging from $200 to $500 or more, plus legal costs.
Property Manager Cost Examples
Residential Property (Single-Family Home)
- Management Fee: 10% of monthly rent ($150 if rent is $1,500).
- Leasing Fee: 75% of the first month's rent ($1,125 if rent is $1,500).
- Maintenance Fee: 10% markup on repair costs.
- Lease Renewal Fee: $200.
Multi-Family Property (10 Units)
- Management Fee: 8% of monthly rent ($960 if total monthly rent is $12,000).
- Leasing Fee: 50% of the first month's rent per unit ($600 if rent is $1,200 per unit).
- Maintenance Fee: 15% markup on repair costs.
- Lease Renewal Fee: $150 per unit.
Vacation Rental
- Management Fee: 20% of monthly rental income ($800 if monthly rental income is $4,000).
- Leasing Fee: Included in the management fee.
- Maintenance Fee: 10% markup on repair costs.
- Advertising Fee: $100 per month.
What Is the Difference Between Rent Due and Rent Collected?
Rent due and rent collected can help determine how your property manager is paid. Ideally, their funds should come from the rent collected and not the rent needed.
Rent collected is the amount you receive, while rent due is what you should receive. If someone moves out or doesn’t pay, you’d be supplementing the property manager out of pocket. Give them a portion of the rent collected to keep your income similar.
Dealing With Property Management Costs
It can be pricey to hire a property manager, but they take care of a lot of the work that would otherwise take up most of your day. As an investor, a property manager can give you the time to continue making excellent investments for your life.
As the owner, some of the other factors that might impact the price of a property manager include:
- The location of the property
- The condition of the property
- The size of the property
A massive, run-down apartment building will cost more with a property manager than a pristine two-bedroom home.
Property Management Costs Bottom Line
Property management fees can vary widely based on various factors, including property type, location, and the extent of services provided. It is important for property owners to carefully review and understand the fee structure of any property management company they are considering. Comparing multiple companies and negotiating terms can also help find the best value for the services needed.