Property management is available for residential homes, apartments, condos, commercial spaces and retail spaces. Property managers can oversee just a single unit or as many as 30 units or more, whether those sites are inhabited full-time or are vacation rentals. Property managers assist with finding tenants, collecting rent and taking care of accounting, property maintenance and repairs, on-site management, and vacation rental check-in and check-out tasks. Many factors affect the cost of property management.
Management fee (monthly)
Many property managers charge a monthly fee for overseeing rent collection, handling minor repairs and communicating with tenants. Monthly management fees for private residences are sometimes based on a percentage of the total monthly rent paid by the tenant, and sometimes they are agreed-upon flat rates. Here are two examples percentage-based monthly fees:
Redleg Property Group in Arlington, Texas: 7 percent of collected rent up to a maximum of $99
- WrightDavis Property Management in Tampa, Florida: 10 percent of the monthly rent
A leasing fee, also referred to as a procurement fee, is the price that some property managers charge for finding a suitable tenant for a property. This service may include background checks, prior eviction searches, financial verifications and more. Specifics of what tasks the property manager will perform should be outlined in the contract. Here are a couple examples of leasing fees:
Redleg Property Group: 50 percent of one month’s rent, plus an outside agent commission if applicable (typically between 25 percent and 40 percent)
- WrightDavis Property Management: 75 percent of one month’s rent
When a vacancy fee is indicated in the contract, it signifies the amount of money that the property owner pays to the management company when a property is vacant. Some companies have no vacancy fee, and some have a flat fee that kicks in when the property is empty (typically a lower cost than the standard monthly management fee). Others dictate vacancy fees based on "rents scheduled," which means whether or not the property owner is receiving rent, the vacancy fee is still based on what the scheduled rent would be if it was incoming. This arrangement is the least favorable situation for the property owner as they pay the same regardless.
Property managers may charge no lease-renewal fee, they may charge a flat-rate, or they may charge a percentage of the rent each time a lease needs to be renewed with existing tenants. This fee is to cover the additional time and effort involved in making any lease modifications, getting tenants to sign the new lease and so on. WrightDavis Property Management does not charge a lease renewal fee, but Redleg Property Group charges a flat $150 lease-renewal fee.
The region of the country where the property is located can affect the cost of property management. In cities and areas with higher rental rates, property managers will charge more for their services.
Management companies may ask property owners to provide reserve funds to help cover expenses for minor repairs, so that managers don’t need to contact the owner every time a small repair is needed. This fund is generally maintained at an ongoing set amount, often equivalent to one month’s rent. A contract should specify the maximum amount that a property manager can spend on a repair (for example, $200) without first obtaining approval from the owner. The owner should receive the total of this reserve fund (minus any repair deductions made) when they terminate the contract with the property manager.
Some property managers may charge additional fees if they are required to evict an existing tenant.
- Be wary of hidden fees such as inspection fees or setup fees. Always be sure that the language in the contract you’re signing is clear so that you’re not overpaying for services.