How Much Does Property Management Cost?

Written by: Staff

A property manager or management company will oversee the rental and maintenance aspects of a property and effectively take care of various issues that may arise instead of the owner of the property.

With property management, property owners can save their time and will not need to worry about stressing out over the daily management of the property.

The costs of a property manager will depend on where you live,

How much does property management cost?

Depending on the property management company, you will see two types of fees.  One way can be a certain percentage of the rent while others may charge a flat monthly fee.  Usually, the percentage method tends to be the most popular, with some offering a maximum cap.  On average, prepare to budget 6% to 13% of the property’s value each month for property management.

Before the property management company charges this percentage or flat fee, however, most will charge a leasing fee, a fee charged in order to find a prospective tenant.  This fee typically will be anywhere from 50 to 75 percent of the first month’s rent.

For example, aside from the tenant placement fees, let’s say that your monthly rent is going to be $1,000.  If the company charged 10% for their monthly fees, they would take $100 from your monthly rent.

At Desert Wide, a property management company we had found online, for example, the minimum monthly fee for its property management services is $85 or 8% of the rental amount, whichever is higher.  An additional $495 is also required to pay for each new tenant for advertising, lease-up referral commissions, photo tours, and move-in/move-out home inspections.  An optional charge is the use of Multiple Listing Service (MLS), which costs anywhere from $100 to 3% of the total gross lease amount.

According to Property Management Direct, property management fees can be as low as 8% to 15% of the monthly rent.  Flat monthly property management fees may also be charged instead of a commission-based arrangement.  Charges included are lease setup fee, lease renewal fee, the fee for advertising, maintenance markup fees, and cancellation fees.

Most of the responses on this thread said you should be prepared to spend about 5 to 10 percent of the monthly rent.

Property management overview

A property manager can oversee anywhere from a single unit to hundreds of units, depending on the size of the company.  In most cases, these managers can oversee residential homes, condos, apartments, condos and even commercial spaces.

Property managers will assist with finding a qualified tenant, collecting the rent, taking care of collections, coordinating any repairs and making sure the home stays in working order.

In most cases, a property manager will ask you to sign a one or two-year commitment lease.

What are the extra costs?

To cover minor repair expenses that may arise during the month, most property managers will ask for $250 to $500 to place inside of a reserve fund to cover these repairs.  This way, if a small repair were needed, the company wouldn’t have to contact you every time.  Instead, they could take the money from the fund and perform the repair on their own.  A contact, before you sign it, should specify how large this reserve is and when a property manager should contact you to confirm a repair.

Some managers may charge an additional fee if they have to evict a tenant.

A lease renewal fee, even if the same tenants were staying, may be charged.  In most cases, this will be anywhere from $50 to $150, but again, some property managers won’t charge this fee.

In the case of an empty household, the company may charge a small fee, usually a bit lower than what they would normally charge.  This fee is often a certain percentage of what the monthly rent would usually be.  This is done because the company will still need to monitor your property.

If they have to collect late payments, a small percentage may be applied.

Of course, you will be responsible for all repair fees associated with your rental property.

Tips to know:

Pay close attention to the contract before signing it.  You’re going to want to look at how you’re paying the manager, how the rent is going to be collect and pay extra close attention to the extra fees that can be charged.

How can I save money?

Some companies may offer a small discount if they manage more than one of your properties.

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