I have three single home rentals. I have been managing myself. For the most part there has been only minor issues. However, going forward with more properties. What does property management typically cost and what does that cost get you? Thanks in advance.
PM costs vary by each market. And you must remember that everything is negotiable. And as you grow bigger in your market, you should remind them of that - unless you are absolutely happy with your PM (there are some great ones that are worth every penny. Unfortunately, that’s not always the case.)
1. Monthly fees: 7-10% of the collected gross rent. It may get you just the collection of rent and repair calls. Some will do a semi-annual inspection at no additional cost (these PMs are gems - they get it.)
2. Tenant placement: Some firms charge 1/2 to one full month’s worth to place a new tenant.
3. Existing tenant renewal: I’ve seen this as low as a flat $200 fee to as high as one full month.
4. Maintenance/repair requests: I’ve seen this from no additional fee to a 10% charge on top of the contractor’s costs (“why would they get you the cheapest contractor?” would be my suspicion.) I’ve also seen PMs claim that they have pre-negotiated (lower) rates with their contractors - and will still do from no additional cost to charging another 10%.
That’s as far typical fees go.
Some of my pet peeves with PM contracts:
1. I’ve seen PM firms have you agree that all legal costs in a lawsuit (with a tenant) would be your responsibility - that’s a non-starter for me. I can leave this in - if I must - but stipulate that any explicit violation of laws by the PM is not my responsibility.
I’ve heard an excuse like, “If we get sued, you get sued.” Sure, but sometimes you get sued because you - only you - actually did something stupid/illegal. I refuse to be blanketly on the hook for that - and protection of my own interests does not always coincide with the PM’s. Why should I pay their legal costs?
2. Some want a minimum of a 12-month contract. If they expect me to pay them one full month to place a tenant to begin with, that absolutely has to be negotiated to a 30-day notice.
A good PM is typically ok with negotiating anything reasonable. Sometimes I may go overboard. Maybe. But these are issues I’ve learned over time to deal with.
Again, costs and details will vary by market. I still manage majority of my properties - even in other states - myself. I use local and trusted RE agents just to place the tenants into those - and I still retain the final approval right.
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