Property Manager Fees

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Property Manager Fees

Michael SepePro Member

Member since 2019 · 7 posts · 6 votes

Finally purchased our first rental property!

Being a newbie, I just wanted to reach out to the BP community and ask if these fees are usual or customery?

100% of the first months rent.

10% of the montly rental.

3% of a yearly lease renewal. ex. 1100/mo x 12 = 13,200 x 3% = $396.

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Dave SpoonerPro Member

Rental Property Investor · Cincinnati, OH · Member since 2020 · 869 posts · 823 votes

@Michael Sepe Industry standard is charging a flat fee (see below) or a percentage (8-10%). If you don't feel like paying 8-10% you can always try to manage the properties on your own

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Soh Tanaka
Property Manager · Lindenhurst, IL · Member since 2016 · 854 posts · 506 votes
6y
What you may want to do is to reach out to a few different property management companies and see what they charge. Pick one that you think is the best PM company and see if you can still achieve what you are trying to achieve.
3 Reply
Tanner Forster
Rental Property Investor · Elgin, IL · Member since 2020 · 6 posts · 3 votes
6y
Congrats on the purchase! I don't have a ton of experience, and I imagine this varies from market to market, but that's a lot more than I pay.
Far Chicago burbs, 10% monthly, $250 listing fee, and $150 lease renewal.
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Theresa HarrisPro Member
Member since 2019 · 15k+ posts · 11k+ votes
6y
It really depends on the PM company. I have one for one of my properties and their fees are a lot less than that. When looking for a PM also look at their ratings-by tenants and owners.
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Jonathan KlemmBusiness Member
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Contractor · Chicago, IL · Member since 2016 · 4k+ posts · 2k+ votes
6y
@Michael Sepe - Like @Theresa Harris mentioned it all depends. I would say in general you can expect to pay from 8-10% for property management fees.
However, if you use some of the software out there you can avoid some of those fees and get a lot of the resources that come along with having a property manager.
Where is the property located?
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Dave SpoonerPro Member
Rental Property Investor · Cincinnati, OH · Member since 2020 · 869 posts · 823 votes
6y
@Michael Sepe Industry standard is charging a flat fee (see below) or a percentage (8-10%). If you don't feel like paying 8-10% you can always try to manage the properties on your own

[email protected]
6 Reply
Michael SepePro Member
OP
Member since 2019 · 7 posts · 6 votes
6y
Great info, Thanks Jonathan and Dave, Knowing the Industry standard is a key starting point.
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Brian Bagdasarian
Investor · ME · Member since 2020 · 40 posts · 32 votes
6y
In the Northeast I tend to see percentage of rent (5%-10% depending on market). There are usually some one-off fees as well, depending on the company. A lot of the variance has to do with the level of effort you're expecting from the management company. I also know of several landlords that started with a PM, and as they grew it made more sense to spin up their own PM company, for both themselves and others.
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Michael SepePro Member
OP
Member since 2019 · 7 posts · 6 votes
6y
Originally posted by @Theresa Harris:
It really depends on the PM company. I have one for one of my properties and their fees are a lot less than that. When looking for a PM also look at their ratings-by tenants and owners.

Thanks for your reply Theresa, since its an out of state proerty for me (Daytona Beach Fl. area) I definitely need to rely on a good PM. Now that I got my feet wet I will ask other Property managers in that area.
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Stone Saathoff
Investor · San Antonio, TX · Member since 2019 · 576 posts · 307 votes
6y
Those fees all sound within reason but it's definitely in your best interest to interview several property managers.
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Andy Camarda
Rental Property Investor · Chicago, IL · Member since 2020 · 15 posts · 10 votes
6y
@Dave Spooner
I haven't used property managers but am curious about this list. Do most PMs offer their services a la carte? Meaning I could pay for 24/7 emergency services but place my own tenants and collect rent?
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Jason Goretzki
Fort Lauderdale, FL · Member since 2016 · 214 posts · 95 votes
6y
Originally posted by @Michael Sepe:
100% of the first months rent.
10% of the montly rental.

Congratulations on your first purchase. These fees are in alignment with our property in Akron Ohio, minus the annual renewal.
1 Reply
Mel Nutter
San Diego, CA · Member since 2017 · 6 posts · 0 votes
6y
@Michael Sepe I pay 10% of rent.
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Dave SpoonerPro Member
Rental Property Investor · Cincinnati, OH · Member since 2020 · 869 posts · 823 votes
6y
@Andy Camarda you absolutely can! It's just a matter of finding a property manager or other vendor willing to do it a la carte. They certainly exist, but they're a bit harder to track down. I'd recommend connecting with local landlords, landlord associations, and reaching out to property managers.
A great combo can be managing leasing and payments yourself and hiring someone to handle maintenance. These days, automated rental management software can handle a lot of the tasks a property manager performs.
[email protected]
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Emily Powell
Investor · Houston, TX · Member since 2014 · 208 posts · 135 votes
6y
@Michael Sepe I would say that those rates are pretty standard. Also, know that everything is negotiable. I recently changed PMs for one of my properties and was able to negotiate a lower monthly fee (from 10% to 7%) and a lower lease renewal fee (from half a month's rent to $100) because the new PM wanted my business and I have several other properties that I could potentially move over as well. So yes, those are pretty standard, but you can both shop around and negotiate.
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Timmi Ryerson
Property Manager · Ketchum, ID · Member since 2016 · 277 posts · 132 votes
6y
I have a few rentals and use software to manage my properties. It costs me about $18.50 per month and it is automated. There are many software companies out there but I use Smart Property Systems. It automates most everything. But if you do use a property management company, I recommend that you ask about their software. If they don't use software, you are going to have issues.
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Kyle Wells
Realtor · Lake Stevens, WA · Member since 2018 · 122 posts · 91 votes
6y
Originally posted by @Michael Sepe:
Finally purchased our first rental property!
Being a newbie, I just wanted to reach out to the BP community and ask if these fees are usual or customery?
100% of the first months rent.
10% of the montly rental.
3% of a yearly lease renewal. ex. 1100/mo x 12 = 13,200 x 3% = $396.

My realtor is also my PM. He charges:
-50% first month's rent for placing a tenant.
-8% monthly management fee.
-$250 for lease renewal.
Everything is negotiable. Most standard is going to be 50% first month's rent, 10% management fee, and about 25% of one month's rent for lease renewal from my experience. The more properties you add, the more likely you can negotiate fees down. I think the fees you've been quoted are on the high end. I'd say negotiate or keep interviewing PMs.

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Jeff Bousquet
Rental Property Investor · RI · Member since 2017 · 94 posts · 52 votes
6y
@Michael Sepe
I just hired a property management company. They charge a flat rate $95 for singles and duplex. Then $50 per door above 2.
1 Reply
Dan DiFilippoBusiness Member
Real Estate Broker · Fayetteville, NC · Member since 2020 · 251 posts · 244 votes
6y
@Michael Sepe that's a little on the high side for me, but every market is different, so, as some have said, you'll just want to grab comps.
Like with sales agents, I think people misunderstand the operation of property management. At 10% management fee, if average unit is $900/month and there's 4% vacancy and 250 units, then they have $21,600 a month to work with. They have an office, marketing, software, they've gotta pay gas, license maintainence, and then everyone's gotta get paid and with employer share of payroll tax as well. The costs to operate are high, but the revenue is pretty stable. But as a result, management companies usually have to peel off extra somewhere else. Late fees, yes. Construction markups charges to the owner. Leasing commissions. Personally, I think renewal fees are the best because they're correlated to the success of the rental. The owner can underwrite for them much more efficiently.
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Lien VuongBusiness Member
Real Estate Agent · Boston, MA · Member since 2018 · 2k+ posts · 1k+ votes
6y
Depends on the area - you should make this post area specific. You can also structure the agreement as you see fit with your PM, whether it's % of gross rents, flat fee, and filing units (typically one month's rent). A 10% PM fee in my market would be in a C area, is that what you have? Number of units dictates the price also - economies of scale can be beneficial to the PM so they only need to stop by once.
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Peter Baudendistel
Rental Property Investor · Knoxville, TN · Member since 2018 · 36 posts · 36 votes
6y
@Michael Sepe
Quick comment before I answer. PMs provide a service, make sure you're getting good service. Good management results in better care through better tenants and vendor relationships. Sometimes you get what you pay for, so don't cheap out just to save a few bucks on the front end. Could cost you much more in the long run!
I am generally paying about 8% with 1/2 months placement charge that I roll into my monthly cash flow estimate. I.E., my PM costs about 12% of rent collected overall on annual basis, and has kept my time invested at a surprising minimum over multiple years, multiple homes.
2 Reply
David NilesBusiness Member
Property Manager · DeLand FL · Member since 2012 · 860 posts · 243 votes
6y
Couldnt agree with @Peter Baudendistel more. Fees arent the whole story.
I handled several hundred doors for a bunch of PM companies back in Buffalo before I made my recent move to sunny FL. Some had cheap fees but raked owners over the burner with maintenance repairs. Others had high fees and still racked up the repairs. It really made me realize how many bad PMs are out there, unfortunately I saw far more bad then good. With that I decided on my move to open up shop and use my skills to be one of the good guys.
Bottom line, take a look at as big a picture as you can, fees, reviews and any other info you can gather from talking to them etc and go with your gut feeling. Usually the more leg work you do upfront, the less it can cost you in the long run.
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Filipe Pereira
Property Manager · Windsor Locks, CT · Member since 2016 · 1k+ posts · 1k+ votes
6y
Great posts @Peter Baudendistel & @Soh Tanaka!

Mike - I operate a property management company in Connecticut. I don’t know where you are located, but maybe this will help give some perspective.

We charge 10% of the collected rent each month, and one month's rent to fill a vacant unit on a 12-month lease. We don't charge any other fees. None. Zilch. We don't up to charge any kind of maintenance items or repairs. No lease renewal fees.

Based off of what I have seen as a PM in CT, I think what you were quoted sounds about right. It's hard to know for sure though because we don't know what you are getting at that price. For example, we provide a monthly report, photos, and do a twice a year inspection included in our 10%. Just some food for thought and congrats on your purchase @Michael Sepe!

@Peter Baudendistel
1 Reply
Matthew Irish-JonesBusiness Member
Real Estate Agent · Buffalo, NY · Member since 2017 · 2k+ posts · 2k+ votes
6y
@Michael Sepe you can find more expensive and you can find less expensive. I would pick the company you feel will take the best care of your property and has the most honesty. Paying a legitimate, honest, well run PM company to manage your asset will save you money in the long run... Unless you can efficiently self manage.

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Don O'Grady
Investor · Miami, FL · Member since 2017 · 18 posts · 15 votes
6y
@Michael Sepe
Across 3 PM companies in different markets I am paying 10%, 8% and a flat fee, but the relationship and service are considerably more valuable than the 2% difference.

A few things to be cautious about.
- - Are you paying the management fee from the “get go”, or does it start at tenant placement?
- - Is there a contract termination fee?
- - Do they show your property in person, or do they give an access code to prospective tenants and hope the door is locked and everything is ok afterwards?
- - How do they handle payments for repairs? I’d caution “cost plus” contracts since there isn’t any incentive for the manager to look for lower rates.
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Josh Weber
Realtor · Orlando, FL · Member since 2020 · 12 posts · 4 votes
6y
@Jonathan Klemm Just curious, what kind of software are you referring to?
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