When looking for a property management company the property management fees are important, there’s no doubt about it, but they aren’t the most important thing. You could find the cheapest property manager ever and end up with the worst service ever. Your tenants would be upset and either not pay rent, trash the place, and definitely not renew their lease. On top of that the company might not be doing proper maintenance on your rental properties, costing you even more money. Property manager fees should always come secondary to a property management company that has a good reputation and a nice set of references that you can call. Don’t just look at the reference sheet, actually call. You’d be surprised how many people are satisfied by just seeing a references sheet. Not paying attention to details is what turns the best investments into money pits. I’m speaking from experience here, I work at a company that has a property management division and I’ve seen way to many people come in after using a discount company to manager their properties. They looked like their were going to rip their hair out.

Now that I’ve warned you that property manager fees aren’t everything, lets actually get to the fees. Below is a list of fees for residential properties only. Commercial properties are a whole different ball game and will be the focus of another article all together.

Rental Property Management Fees

• 1 -4 Unit Properties – 10% of monthly rent
• 4+ Unit Properties – 8% of monthly rent
• Vacant Units – 0% of monthly rent

There are some other costs that are pretty typical for property management companies to charge.  One is a placement fee for new tenants that they place in each unit.  This price is 50% of first months rent, assuming a 12 month lease.  So for example if you had a rental property that you wanted to rent for $750 per month, that first month the property management fees would be $375.  Most companies won’t take the 10% and the 50% in the same month, so the next month you would start paying the 10% fee.  If a tenant decides to stay after that first year, companies will charge around 10% to renew a lease which is a great savings to you and should be some incentive for you to keep your units nice and your tenants happy which falls back on the property management company and why you need a good one.

Property Management Fees - Maintenance

The going rate is currently $25 per hour and that doesn’t include any of the supplies or materials needed to repair whatever is broken.  Most companies will give you the option of having your own guy for repairs, but most of the time it’s easier to use the property managers guy even though his fees might be a touch higher than you could get if you handled it yourself.  Convenience has it’s price and that’s especially true when it comes to 24 hour maintenance calls and not having to deal with those at 2:00AM.

That’s pretty much all there is to property management fees.  They aren’t near as complicated or as confusing and some investors make them out to be.  If you have properties that are over 8 units in size most companies will begin to give you a greater discount and lower that 8% of monthly rent.  As I mentioned in the beginning, these are only residential property management fees and we’ll cover commercial fees in an upcoming article.

Tags: Property Management, property management fees, property manager fees, rental property management fees, residential property management fees