Average Cost of Outsourcing Property Management

3 Replies

I was recently speaking to someone who owned a vacation condo in Hawaii and was quite shocked to hear that his property management company charges him 50% of his rental income. He was however very happy with the arrangement thanks to their excellent service and high occupancy. Moreover this is a condo in a prime location and I would expect the rental costs to be quite high. I have also noticed a proliferation of vacation houses along the Oregon coast, especially in the Lincoln City area.

I was wondering if folks on this board could provide some feedback about property management fees in their neck of the woods. I am interested in learning more about property management fees with regards to residential units, duplexes, multiplexes and vacation rentals.

In my area there are no vacation type rentals such as you would find on the beach. Around Cincinnati you would spend 8% to 12% of gross monthly rents on managment. Some companies would also charge a full months rent for every new tenant brought into the unit. This is much different types of management than what you are talking about with a vacation condo in Hawaii. 50% does seem pretty steep though.


In my areas rates range typically from 6-12%, with vacation and short term rentals (<6 months) around 20-25%. Rates go higher for very high-end executive lodging. But, most property managers will provide a portion of their services for a lower price, e.g. you only want them to do maintenance, not to collect rent or provide financial statements, and they'll do that for 4%. All depends on what you negotiate.

As a general rule of thumb if you use a property manager you will pay:
-1 month's rent for Managment fees (rent collection, maintenance, financial, etc)
-1 month's rent for Listing fees (advertising, screening tenants, lease signing)

So, the easy-sneezy solution will cost you 2 months (16%-24%) of your rental income each year for a normal propert under a one year lease. This is probably the easiest place (IMHO) to impact your margins and reduce costs / increase cash flows by doing it yourself with a few software tools.

Thanks for the feedback. These numbers are a whole lot less than I had imagined. I am sure the percentages vary by area and type of property management firm. The use of software to reduce costs also sounds like a good option.