The cost of residential property management can vary depending on the size and complexity of the property, the services required, and the management company. However, most property managers charge a percentage of the rent collected each month, typically 4% to 10%.
Additional services such as advertising, showing properties, tenant screening, and lease signing may also be included in the overall cost. A tenant background check, criminal record check, and eviction report will increase the management fee by $35 to $65 per person. Checking criminal records helps avoid the damages caused by a tenant who may be a drug user, sexual offender, or convicted felon.
Some property managers don’t charge for advertising and showing availability. The management fee should include everything needed to manage the property, such as maintenance, repairs, lease execution and termination, collection of rent and other fees (such as late charges), marketing your vacant units, and handling deposits and move-in/move-out paperwork.
It is important to ask the property manager for a list of services that they provide and an estimate of the management fee. Be sure to get everything in writing so there are no surprises down the road.
When choosing a residential property management company, it is important to compare the level of service, the fees, and the responsiveness. Be sure you feel comfortable with your potential property manager’s knowledge and experience before signing an agreement.
On average, the total monthly fee for residential property management is 6% of the rent collected. This number is then divided into two separate fees: one that includes all expenses associated with managing the property and one that is simply a management fee. expenses associated with managing the property:
5% of monthly rent
management fee
1% of monthly rent
In this example, the total collected by the property manager would be 5% of collected rent plus 1% in management fees. This comes out to a total of 6%. Property managers may also split up the cost into a percentage for advertising versus an actual management fee. In this case, a property manager may charge 8% for all services rendered but only 2% for advertising.
Some services that are generally included in management fees:
- Rent collection
- Maintenance and repair coordination
- Vacant Marketing units
- Tenant screening
- Lease signing
- Eviction process
- Rent application and approvals
Some services that are not generally included in management fees:
- Advertising availability
- Showings of units for rent or sale by the owner/landlord
- Processing rental applications (if no fee is charged for showing availability)
- Collection of late rent payments
- Deposit returns
- Move-in/out coordination
- Lease renewals or terminations initiated by owner/landlord
It is important to ask the property manager for a list of services that they provide and an estimate of the management fee. This will help landlords and property owners understand what is included in the management fee and what services may incur additional costs. By having a clear understanding of the services included in the management fee, landlords can avoid any unexpected charges later on.
When choosing a property manager, it is important to compare the level of service, the fees, and the responsiveness. Be sure you feel comfortable with your potential property manager’s knowledge and experience before signing an agreement.
The general property management fee, typically 4% to 6% of the monthly rent collected on a particular property, can come out of the owner’s pocket if they do not itemize that expense separately on their personal tax return. On the other hand, a separate line may be added to claim this cost.
The cost of hiring a residential property manager can be worth the investment, as it can help to ensure timely rent payments, reduced vacancies, and minimized damage to the property. Property managers also take on the responsibility of dealing with difficult tenants and complex repairs, so landlords can focus on other aspects of their business.
Real estate website Trulia conducted a survey of property managers in 2015 and found that the average fee, based on median rent prices for each city, was 8.5% of monthly rent. Of these management fees, 5% covered expenses associated with managing a rental property, and 3.5% were simply a flat-rate management fee.
When choosing a property manager, it can be helpful to ask for references and talk to current clients in order to get a sense of the company’s quality of service. If you would like help finding a reputable property management company, contact one of our Business Development Managers today!
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