Property Management Fees: What’s Included In The Cost
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by Richard Morrison
- January 7, 2020
- Buying
- 0
Property managers help rental owners collect consistent income with less hands-on work. But to make an informed hiring decision, you need to understand typical fees and what services are included. This guide examines standard pricing models, factors that influence costs, fee variations for different management levels, and tips for choosing a provider.
Key Takeaways:
- Expect fees around 8-12% of monthly rent for residential properties.
- Commercial and multi-family units are 4-7%.
- Monthly fees generally cover core services like rent collection, maintenance coordination, and 24/7 emergency response.
- Extra costs may apply for tenant placement, lease renewals, accounting, evictions, etc.
- Property type, location, size, condition, and services included impact pricing.
- Hands-on owners pay less for limited services, while hands-off owners pay for full management.
- Vet potential managers thoroughly and look for reasonable fees, excellent communication, and willingness to accommodate your needs.
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Typical Property Management Fees That Companies Charge
The standard fee model charges a percentage of collected monthly rent, typically 8-12% for residential properties and 4-7% for commercial units. On a $2,000 rental, expect to pay $160-$240 per month.
This monthly fee generally includes:
- Rent collection
- Basic maintenance
- Addressing tenant complaints
- 24/7 emergency service
- Legal/regulatory compliance
Pro Tip: Get all services included detailed in writing when signing a contract.
Potential Additional Fees
Beyond the monthly percentage, possible added fees include:
- Tenant placement – 50-100% of monthly rent when finding a new tenant.
- Lease renewals – $200-300 to negotiate lease extensions.
- Maintenance markup – 10-20% markup on repairs/improvements.
- Evictions – $200-500 to handle evictions if needed.
- Accounting – $50-150 per month for detailed financial statements.
- Owner supervision – Hourly charge if significant owner oversight required.
These extras allow for comprehensive management services but also increase costs. To save on fees, consider more limited service contracts.
What Impacts Pricing When You Hire A Property Management Company?
While 8-12% is typical for residential property management, many factors influence the fees charged:
Property type – Single family homes incur higher fees than large multi-family complexes due to more individualized service.
Location – Desirable high-rent areas allow higher fees, while lower-demand areas see reduced pricing.
Property size – Larger properties require increased oversight, warranting higher fees.
Condition – Properties requiring significant repairs/updates justify elevated fees for the extra work involved.
Services – The more tasks required, like accounting and renovations, the higher the monthly fees.
Market conditions – In tight rental markets, managers can charge slightly higher percentages due to lower vacancy risk.
Limited vs. Comprehensive Property Management
Property owners fall into two camps – those wanting limited hired help, and those preferring to hand off all property work. Fee structures differ accordingly:
Limited Service
For hands-on owners, limited services like:
- Tenant screening
- Tenant placement
- Emergency maintenance
Typical fees would be 50-100% of monthly rent for placing a new tenant only. No ongoing monthly fees required since owners self-manage day-to-day.
Comprehensive Service
For hands-off owners, full-service management handles all aspects:
- Advertising vacancies
- Collecting rent
- Maintenance/repairs
- Financial record keeping
- Regulatory compliance
Owners pay 8-12% monthly for the convenience but benefit from passive ownership. Reserve funds also needed.
Comprehensive service incurs higher fees but greatly reduces landlord duties and stress.
Choosing Your Property Management Company
Selecting the right partner is essential. Here are tips for identifying an optimal firm:
Check online reviews – Many positive client reviews indicate a reputable company.
Interview multiple options – Meet with several managers before deciding.
Ask about experience – Look for 5+ years specifically in your local rental market.
Clarify division of tasks – Detail which you’ll handle vs. what they should manage.
Get fee specifics in writing – Understand exactly what’s included in each fee.
Assess communication ability – Responsive, thoughtful communicators make the best partners.
Ensure willingness to accommodate you – Avoid rigid, one-size-fits-all services.
Request a trial period – Insist on a 3-6 month trial period to evaluate performance.
Take time to discuss your needs, involvement preferences, and expectations. The right company will provide a customized plan and pricing.
Are Residential Property Management Fees Worth It?
While adding significant expense, professional management has many benefits that often outweigh the costs:
- Reduced vacancies
- Higher rental rates
- Improved tenant retention
- Faster evictions when necessary
- Less landlord workload
- Increased peace of mind
- Expert guidance to expand your portfolio
For most real estate investors, especially those with multiple properties, the 10% or so spent on property management pays for itself many times over through maximized revenue and minimized headaches. Just be sure to partner with an experienced, reputable company that aligns with your goals.
Understanding typical fees and services allows informed hiring of a property manager best suited to your investment property needs and preferences.
Frequently Asked Questions
Q: What is Property Management Cost?
A: Property management cost refers to the fees you pay a property manager or property management company to manage your rental property.
Q: How much does it cost to hire a property manager?
A: The cost of hiring a property manager can vary depending on the type of property and services needed. Generally, expect to pay anywhere from 5-12% of the monthly rental income plus additional one-time fees such as an initial set-up fee and tenant placement fee.
Q: What services are included in Property Management Cost?
A: Typical property management services include rent collection, tenant screening, maintenance coordination, inspections, evictions and more. Depending on your needs, you may choose to add additional services such as financial statement preparation or non-resident tax filing.
Q: How do I manage my property?
A: You have several options for managing your property. You can do it yourself by finding tenants, collecting rent payments and performing regular maintenance. Alternatively, you can hire a professional property manager or a property management firm to handle all aspects of managing your rental.
Q: What type of properties do Property Managers charge for?
A: Property managers typically charge for both residential and commercial properties. Fees will vary depending on the size and complexity of the rental unit.
Q: How much does it cost to get a Property Manager?
A: The cost of getting a property manager will depend on what level of service you require. Most companies charge between 5-12% of the monthly rental income plus additional one-time fees such as an initial set-up fee and tenant placement fee.
Q: What is a Placement Fee?
A: A placement fee is a one-time fee charged by some property managers when they place new tenants in your rental unit. This fee usually covers advertising costs associated with finding qualified tenants.
Q: How much should I expect to pay for Property Management Services?
A : Fees for professional property management services vary depending on the type and size of the rental unit. Many companies offer flat rates based on number of units managed or percentage of the monthly rental income collected.
Q: What if I’m not sure how much my Property Manager will charge?
A: Download our free guide which covers everything you need to know about hiring a professional Property Manager including typical fees charged by different types of companies.
Q: Are there any other fees associated with working with a Property Manager?
A: Yes, some property managers may also charge maintenance fees, late rent collection fees, eviction costs or even penalties for early termination. Be sure to ask about all potential fees before signing any contracts .
Conclusion
The cost of property management will depend on how much property you have to manage and the services you require. A property management company will charge a monthly property management fee, which can vary from around $100 per month depending on the complexity of the job and the number of properties being managed. This fee could be charged either on a monthly basis or per unit. In addition to this fee, some companies may also charge for court costs, additional inspections and other related services.
If you need someone to manage your rental property efficiently, it might include setting up tenancy agreements, collecting a first month’s rent upfront and taking care of any rental payments due each month. All in all, it is important to note that there are fees associated with hiring a property manager but they can help save time as well as money in the long run.
Ready to turn your real estate dreams into reality? Contact Richard Morrison, Vancouver’s top realtor with 20+ years of experience. As a Medallion Club member and RE/MAX Hall of Fame award winning agent, he’s the expert you need on your side. Whether buying, selling, or investing, Richard’s personalized approach and deep market insights ensure a successful transaction. Reach out to Richard today at (778) 900-2235 and make your real estate journey seamless and rewarding.
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