Property management fees

2 Replies

Just got my first rental property and just realized that I totally missed on including the property management leasing fees on my numbers. This fee usually equals one month of rent which is a lot. I am still cash flowing but it seems like this could be a cash flow killer if not considered in the numbers. Just wanted to see if anyone had any feedback regarding these fees.

@Ben M. - the PM fees are often 8-12% of the monthly rent. That is what gets deducted of the rent monthly. But you often have a lease fee (which can be up to a whole month of rent, going in various percentages to your PM and to the tenant agent) and a renewal fee (which can be smaller or the same as the original lease fee). Then some PM charge a service fee every time they send someone to service the property or if they go to inspect the property - in other words, you might get nickel-dime'd with all kinds of other fees, that could easily raise the "PM fee" to 12%+ (we once got charged $45 service fee + $9 per battery to change the smoke detectors batteries at make-ready).

Regardless, you need to factor in at least 8% PM cost, even if you self manage (after all your time costs too) as there might be a time when you might want to (or be forced to, like sickness or old age, or desire complete passive participation) to be completely hands-off and you'll need a PM.