Being a real estate investor comes with a slew of challenges that often require a lot of your time and attention.
That’s why investors often choose to outsource the management of their portfolios to a property manager, rather than managing it themselves.
This, of course, does come with a cost.
But exactly how much do property managers charge? Read on for a full breakdown of property management fees in 2024.
Property management fees come in a few shapes and sizes. This includes the monthly management fee and additional costs you’ll need to pay for from time-to-time.
This is the core fee for property management services. It typically ranges from 8% to 12% of the monthly rent collected. The services included in this fee can vary but will usually cover:
While the percentage of rent is a common model for standard management fees, some property management companies offer alternative structures, such as a flat fee.
The choice between a percentage-based fee and a flat fee can affect the property owner’s costs and the property manager’s motivation to maximize rental income.
For example, a flat fee structure may seem attractive as it provides you with more certainty. However, it might not incentivize the property manager to increase rent or fill vacancies as effectively as a percentage-based structure would.
Some property management companies charge an initial setup fee to cover the costs of adding a new property to their management portfolio.
This fee can range from $250 to $300 but is sometimes negotiable.
This fee covers advertising the property, screening tenants, preparing the lease agreement, and managing the move-in process.
It can vary significantly, from a flat rate of $300 to $500 to a percentage of the first month’s rent (typically 25% to 100%).
The purpose and scope of these setup fees are as follows:
Property management companies charge fees for these inspections to cover the costs of the labor and time involved in conducting them.
The fees for routine inspections can range from $100 to $200 per inspection.
Some companies include a certain number of inspections per year as part of their standard management fee. Others charge separately for each inspection.
When repairs and maintenance are required, property managers will often add a makeup of 10% to 20% of the contractor costs. As a side note, a reserve fund may be required to cover these expenses as they occur.
Lease renewal fees are charged for the administrative work involved in renewing a tenant’s lease for another term. This fee covers the cost of negotiating the terms of the lease renewal, updating the lease document, and ensuring both parties sign the renewed lease.
The fee can vary but is typically around $150 to $300. This fee incentivizes property managers to retain tenants.
Vacancy fees are charged when a property is unoccupied. They cover the property management company’s efforts to fill the vacancy. Also, some property management companies charge a monthly vacancy fee to cover the basic costs of overseeing an empty property.
The structure of this fee can vary greatly. Some companies charge a flat monthly rate (ranging from $50 to $100 per month) while others don’t charge at all unless the property is occupied.
Eviction fees cover the cost of the legal process required to remove a tenant from a property. This includes filing for eviction with the courts, serving notices, and any legal representation required.
These fees can vary significantly depending on the complexity of the eviction case and the jurisdiction. Property owners can expect to pay anywhere from $300 to $1,000 or more, not including potential court costs .
Some property management companies offer eviction protection programs for an additional fee. This covers all or part of the eviction costs.
If your property generates $2,000 in monthly rent and the property management fee is 10%, you would pay the property management company $200 per month for their standard services. You may also need to pay for additional services such as inspections, lease renewals or new tenant placements if they occurred during the billing month.
The exact amount you’ll be charged depends on a number of factors, including:
Use KeyCrew to find and compare the top rated property management companies in your local area. You can also request quotes from multiple providers with a single request, using our AI-powered concierge service.
The decision to hire a property manager or manage a rental by yourself depends on the number of properties you own, your proximity to your properties, and your willingness to handle day-to-day management tasks.
Here are some pros to consider:
The cons of hiring a property manager include:
Here are a few quick tips on how to select the best property management company for your needs.
Property management companies should have a positive reputation for adhering to a strict code of ethics and standards of practice. Seek references to get an insight into a company’s performance and reliability.
Look for companies that have professional certifications from organizations such as the National Association of Residential Property Managers or the Institute of Real Estate Management.
Also, consider the company’s experience in managing properties similar to yours in size, type, and location.
Understand the full range of services the company offers. Clarify all fees involved and review the management agreement carefully.
Also, pay attention to terms regarding the length of the contract, services provided, fees and payment schedule, responsibilities of both parties, and conditions for termination of the agreement.
Once you’ve narrowed down your list, arrange to meet with representatives from each company and assess their professionalism, communication skills, and understanding of your needs.
Also, inquire about their tenant screening process, how they handle tenant complaints, their maintenance workflow, and how they would deal with vacancies and evictions.
You can also read our blog on the 10 Tips for Hiring the Best Property Manager for a complete rundown on how to choose the best company for your needs.
If you’re new to real estate, you can benefit from hiring a property manager. Whether you plan to own one property or many, a property manager can help streamline the process of operating your property.
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