How Much Do You Pay Your Property Manager?

Residential Real Estate Agent · Costa Mesa, CA · Member since 2008 · 1k+ posts · 380 votes

Pretty simple question... but:

1) I know that some/many of you self-manage. You don't need to tell me "ZERO" and elaborate on how great you are. I get it.

2) I'm sure someone out there still uses a PM or PM company for onesie/twosie type deals. This is more what I'm looking for, not the guy who manages your 96 unit apartment building or condo complex.

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Mike McKinzie

Investor · Westminster, CO · Member since 2009 · 1k+ posts · 1k+ votes

15y

Orange County, CA Property Manager - 6%
Los Angeles County, CA Property Manager - 8%
Tulare County, CA Property Manger $50 per unit (when rented)
Fresno County, CA Property Manager - 6%
Dallas/Fort Worth Property Manager - 7%
Phoenix, AZ Property Manager - 7%
Durango, CO Property Manager - 8%
Tulsa, OK Property Manager - 7%

The companies that charge me 8% manage only one property, the rest manage multiple properties, giving me more negotiating room.

Property Management Companies can go bad, so stay on top of them. They can be good for ten years and then go south, just be ready to FIRE them immediately. I fired one we had for over 15 years.

I also make regular calls on them, via phone, email, certified mail and the occasional "WALK IN" to their office. I keep them on their toes!!

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Mike McKinzie
Investor · Westminster, CO · Member since 2009 · 1k+ posts · 1k+ votes
15y
Let me add to my previous post. The Companies in Texas, Oklahoma and Arizona do charge for getting a new tenant and renewing the lease. The companies in California, Colorado do not. The reason that the Texas companies charge a leasing fee is that they put the vacancies on the MLS and give a commission to the agent who finds the tenant. I think it costs $25.00 just to put the listing on the MLS and they give 50% of the first months rent as a commission to the procurring Broker. In California, rentals are not put in the MLS or are commissions paid. When someone wants to rent in California, they do not go see a Realtor but in Texas, I guess they do.
1 Reply
Mitch Kronowit
SFR Investor · Orange County, CA · Member since 2009 · 1k+ posts · 1k+ votes
15y
Originally posted by Steve Babiak:
In some areas, a property manager is required to have a real estate license. I believe there are some exemptions to this such as employees (like buildings with lots of units under one roof). A property owner can always serve as property manager of course.

Good advice. In California, you have to have a real estate license to manage somebody else's property, but what if they're a family member?

My parents are thinking of renting their house and scaling down. They would like me to take care of their house for them since they don't trust anybody else. Would I need a RE license in California to manage my parent's property? The house is held in a living trust with me as the successor trustee if that makes any difference.

Thanks BP team.

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Steve M.
Realtor · Gallatin, TN · Member since 2009 · 292 posts · 164 votes
15y
The three units I have in memphis, the PM company charges 9% .... with that said, I don't like my PM company and would never recommend them.
0 Reply
Jordan L.
Investor · Newbury Park, CA · Member since 2010 · 80 posts · 19 votes
15y
Have 3 properties in Tacoma, WA. PM is 10%. If I get a fourth they'll drop it down to 8%. I have no complaints.
0 Reply
Brandon Kamm
Commercial Real Estate Broker · Memphis, TN · Member since 2010 · 151 posts · 82 votes
15y
Steve, I saw you had properties in Memphis and were unhappy with your company. We operate in Memphis, I am curious, don't realty care to know who you are using, but what are your concerns? Always interested to hear of issues related to our area.
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Steve M.
Realtor · Gallatin, TN · Member since 2009 · 292 posts · 164 votes
15y
Originally posted by Brandon Kamm:
Steve, I saw you had properties in Memphis and were unhappy with your company. We operate in Memphis, I am curious, don't realty care to know who you are using, but what are your concerns? Always interested to hear of issues related to our area.

The turnover and quality of tenant in Memphis is horrible. Outside of Sec 8 tenants, I don't find investing in Memphis worth it anymore.
1 Reply
Harry M.
Real Estate Investor · Dallas, TX · Member since 2010 · 449 posts · 173 votes
15y
8-10% of collected rent, plus half a month's rent for filling a vacancy is typical around here.
I pay 8% for the property that I have a manager for, the other we manage ourselves.
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Franklin C.
Member since 2009 · 2 posts · 1 vote
15y
After reading you guys replies, I'm relieved and disappointed at the same time. I thought it was just my property managers that were becoming losers, but evidently its a global problem and reinforces the fact that no one cares as much about your wealth growing as you do. I see why so many do it themselves, but seems difficult when investing 6+ hours away.

I pay a prop manager in one small college town about 7% a month flat for two condos, which includes everything from A to Z (placement, repairs, rents, etc) and another in a large city 10% a month + they charge a full month's rent for placement.
1 Reply
Rachel H.
San Antonio, TX · Member since 2009 · 3k+ posts · 1k+ votes
15y
In many cases, it depends on volume. If it's a lower volume of units, it's usually around 8%-10% of gross rents. With a higher volume of units, it can be around 6%-7% of gross rents. One thing I will add, it's best to work with a property manager with a team oriented approach. Hope that helps!
2 Reply
Chris ClothierBusiness Member
Rental Property Investor · memphis, TN · Member since 2009 · 2k+ posts · 3k+ votes
15y
Originally posted by J Scott:
Originally posted by Jake Kucheck:
To summarize- it sounds like people pay between 6.55% and 11% to their PM and are generally unhappy with the level of service received.
Correct?

I was under the impression that a lot of the professional companies also charged other fees, like taking 50% of a month's gross rent each time they place a tenant, a flat fee for managing repairs, etc.

Is this not the case with you guys?

2 quick impressions on this forum:

1. Property management as we all know is a tough and sometimes absolutely thankless business which can and often does lead to crummy service.

2. Like any other business, you get exactly what you pay for.

We started a property management company 4 years ago, because we couldn't find a 3rd party provider that would actually perform the way we wanted them to perform.

The service is only for our clients (we occasionally take properties for others) so we are not operating as a property management company but more as a value added service for out of state clients. Here is our breakdown on costs:

1. 9% of collected rents
2. 1st months rent placement fee
3. 10% charge on maintenance

This is comparable with most other Memphis companies, with the better companies charging a little higher and the smaller shops charging a little lower.

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Joe Delia
Involved In Real Estate · Rochester Hills, MI · Member since 2010 · 812 posts · 178 votes
15y
LV i'm paying $100/m on $850 rents. It's a 10% or $100 whichever is greater with placement fee's.

PHX i'm paying 10% of $1350 with placement fee's

I run real living's property management division in Cincinnati / Dayton. We charge $45/unit and have placement fee's.
0 Reply
Jason Miller
Investor · Aurora, CO · Member since 2009 · 200 posts · 74 votes
15y
I realize this is an older thread, but there is good info here. I pay 10% to two different companies in the Denver area. One charges 50% lease up, the other charges 75%.

When I do my cost calculations prior to purchase, I calculate 14% PM fee. This assumes the 10% fee plus 1 lease up. It may be extremely conservative for others, but works for me.
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Townsend Derick
Real Estate Agent · Fort Worth, TX · Member since 2011 · 53 posts · 23 votes
15y
If you're paying more than 10% for sfh's then you might want to do a little homework. Also that whole $200-$300 or half of the first month's rent for advertising and acquiring a tenant is no good for me. Putting it on the MLS and waiting for someone to bring you a tenant is not worth that kind of money for me. In my area we call those "junk fees". I have a great property manager in the Hampton Roads area in Virginia that charges 10% and she does charge a small re-lease fee but they are worth it in the service they provide.
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Andrew Jones
Investor · Los Angeles, CA · Member since 2011 · 242 posts · 61 votes
14y
I pay a flat fee of $50 a door. For tenant replacement I only pay advertisement costs that are usually under $50.
1 Reply
Karen MargraveBusiness Member
Moderator
Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes
14y
Jake, just out of curiosity, I see you're an agent, are you looking for a property manager for one of your clients? Also, if you or anyone have need of any type of home services in Orange County (construction, repairs, rehab, etc.) we service Orange County. [url]www.thebrokersconcierge.com I am considering adding property management too.
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Old man Rivers
Involved In Real Estate · Johnson city , TN · Member since 2012 · 1 post · 0 votes
14y
Our PM charges 10% of collected rents per month. One thing to remember is that it is in their best interest to keep the place rented cause that's how they get paid. So IMO if they're not they either 1) hate money or 2) are overworked.
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Joel OwensBusiness Member
Moderator
Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
14y
What you charge is based on how much of a headache you will manage.

Many out of state investors want to pursue these 10,000 to 15,000 properties in war zones that rent for 400 and 500 a month.

I try to advise investors to stay away from these properties.A manager will only make 40 a month based on gross rents collected based off of 10%.It is a loss leader for a property manager to take on such properties. These units have high turnover and massive damage each time for reconditioning.These properties in the city of Atlanta have high property taxes as well.

You buy for 15,000 and rent for 400.

400 times 12 is 4,800
Back down 480 for management fee and 200 for lease up
Tenant turnover can cost a few thousand or more each time.Say from eviction the property turns 3 times a year.

At a minimum 1,000 is spent each time plus 1 month in lost times 3 is 1,200.

3,000 in reconditioning costs plus lost rent of 1,200 ( 3 months) plus 40 management fee times 9 months collected rent is 360,plus yearly taxes of say 500 is around 5,060 in annual costs IF you have no big ticket items go out.

In Fulton county where the inner city is the court room is packed with evictions. They party when being evicted and run these properties in war zones into the ground.

The smarter investors go for properties in NICE areas that are around Atlanta (not in the war zones).The property might be listed for 55,000.Buyer pays 45,000 cash and puts in 10,000 to 15,000 for 55,000 to 60,000 total to get rent ready.These properties rent for 900 to 1,000 a month as 3 bed 2 bath.Low to zero tenant turnover and more cash flow and appreciation when the market turns.

These are much better buys. I have yet massive success stories of investors buying in war zones and making out awesome with no problems.If you are a full time investor doing that it might make sense but if an investor from another state it does not.

Just my take on things.
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Justin SilverioPro Member
Developer · Andover, MA · Member since 2008 · 1k+ posts · 489 votes
14y
The goal is that by the time I need to hire a PM company, I'll have enough rentals that I can just hire another part-time person to manage them all, as that will provide more control than a larger company where I don't have constant communication.

J Scott - Would you hire someone as an employee or independent contractor? What are the incremental costs of hiring someone in GA?
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Justin SilverioPro Member
Developer · Andover, MA · Member since 2008 · 1k+ posts · 489 votes
14y
Originally posted by J Scott:

The goal is that by the time I need to hire a PM company, I'll have enough rentals that I can just hire another part-time person to manage them all, as that will provide more control than a larger company where I don't have constant communication.

J Scott - Would you hire someone as an employee or independent contractor? If hiring as an employee, what are the incremental costs of doing so in GA?
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Richard Chang
Renter · Alhambra, CA · Member since 2009 · 133 posts · 5 votes
13y
Hi Mike,

Saw that
Coldwell Banker Platinum Properties - Property Management Division in OC is advertising only 5%. They have a website

oc property managers dot com ( no spaces ).

I guess I need to understand all the costs and issues since I do it myself now.

Anyone have any comments on how to assess their services ?

Get a schedule of estimated repairs , painting , lock changes etc ?

Not sure why LA rate is 8% and OC rate is 6% ( rental rates higher in OC ? )

Best, Rich C

Originally posted by Mike M:
Orange County, CA Property Manager - 6%
Los Angeles County, CA Property Manager - 8%
Tulare County, CA Property Manger $50 per unit (when rented)
Fresno County, CA Property Manager - 6%
Dallas/Fort Worth Property Manager - 7%
Phoenix, AZ Property Manager - 7%
Durango, CO Property Manager - 8%
Tulsa, OK Property Manager - 7%
The companies that charge me 8% manage only one property, the rest manage multiple properties, giving me more negotiating room.

1 Reply
David Campbell
Real Estate Investor · Benicia, CA · Member since 2011 · 9 posts · 14 votes
13y
Assuming that you're talking about managing a single-family house, what's normal in the property management industry is between 7 and 10 percent of the gross monthly rents collected. Also, property managers will charge a leasing fee when they place a brand new tenant in the property. That fee is above and beyond the management fee. It is usually between fifty and one hundred percent of the gross first month's rent and often times your property manager will split that fee with the cooperating broker. So they'll use that fee to incentivize other brokers to bring them new tenants. Property managers also can make fees from repairs on the property. Sometimes the manager has their own in-house construction team and this way they can make some profit by doing repairs. Other times the property manager will hire third-party vendors to do repairs on your property but in that case they may or may not charge you an additional fee for coordinating the vendors. When you are shopping for property managers, cost is not the most important thing. When you are looking at the cashflow performa for your property, one to three percent difference in your property management fee should not really make or break your deal. If it does, you've got the wrong deal. When you are looking for property managers, you want to make sure they are providing an excellent service. If they are a member of NARPM (national association of residential property managers) that's a great sign. If they are responsive on the telephone, or if they've got great internet marketing and you like the way their ads look on Realtor.com and Craigslist, that's a great sign as well. If they are using property management software to help you manage your income and expenses, that's good as well. All of these things can be more important than the cost.
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William Bannister
Commercial Landlord · Oshkosh, WI · Member since 2013 · 299 posts · 88 votes
13y
1st I want to thank Mike M for posting the numbers for all those metro areas its interesting to see what others are charging nationwide.
I generally pay between 9 and 10% and let them keep half the 1st months rent after they have paid rent for 90 days. Its extra motivation for them to do a good job screening. This 10% I am paying in southern Indiana Ohio river valley area. so many aspects to management as to what your people do. i had a a guy manage my stuff while i was outta town 2 years on other projects and came back to a mess. A few of my properties in sad shape full of deferred maintenance and several poor choices made selecting tenants. I was fed up with paying 35 and hour for sub par construction work during turn overs after I had fired the 1st manager. I let one unit stay empty rather then pay 35 and hour to turn it over. Once I rolled in town I rolled up my sleeves and found a good carpenter at 12 an hour to work part time. The problems come when your outta town and all of a sudden you have to fire someone or say no I am not paying $500 to install a sink when you know darn well a good maintenance guy can do it at 12 per hour and have it done in 4 hours. this is the challenges I have had, they never happen when your there lol. As soon as you go to Florida and try to rehab a house you just bought thats when the stuff hits the fan in Indiana on your apts.
Now I have gotten smart I have 3 sets of keys for apts and I leave a set with a friend and he can deliver the set to a new manager on 1 phone call. When I leave town I have at least 2 good carpenters on call so if one drops the ball they are fired. I hate to be draconian but customers demand service so I dont have a choice. If you pay these managers 10% I would say to make sure you regularly inspect as I have been shocked how little they do to try to get 10% if your not on top of them. Over time its been easier for me to use an employee then have companies and I am probably sticking to that formula. I have wanted to ask other investors if anyone has ever found any good carpenters using angies list? I have had conversation with other landlords about craigslist and we used to say rent a drunk but I suspect Im being politically incorrect here. My average manager on smaller apt buildings under 4units lasts about 3 years. On our large project we are lucky she has been with us 11 years!
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Ty Wesley
Philadelphia , PA · Member since 2010 · 80 posts · 1 vote
13y
Hey again BP,

I realize this is an old thread, but I'm currently trying to figure out around how much I can expect to pay for property management in center city Philadelphia. The property would be a 410 sq. ft. condo (1 bed 1 bath).

Will I have to pay by percentage of the rent I chrage, or are there flat rates available I'm the area??

Anybody familiar with condo investing in center city Philly??
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Curtis N.
Northern, VA · Member since 2013 · 141 posts · 29 votes
13y
I had looked into several property managers in the DC Metro area, upstate NY, and south-central PA and the average was 8-9% of collected rent. Collected is the key word. If they don't have tenants or if the tenant doesn't pay - you don't pay them.
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Brandon Eleazer
Real Estate Agent · Philadelphia, PA · Member since 2010 · 166 posts · 23 votes
13y
Ty, @Curtis N. is right in line with what our team currently charges to manage a 1BR 1BA unit near the Philly Art Museum. This client had one of our buyers agents represent him during the purchase process (it was a foreclosure) and then we coordinated the repairs to get the unit ready for a tenant directly after settlement.
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