Summary
Professional property managers typically charge 8-12% of the monthly rent or $100 to $300, excluding additional costs, as of 2025. Costs vary depending on the property type, location, and scope of service. For many investors, these fees represent valuable investments in time savings, quality tenants, and legal compliance.
Managing an investment property can get time-consuming and overwhelming. A property management company can certainly help, but at a cost. However, the cost isn’t fixed as the charges depend on the types of services.
So, how much do property managers charge for their various services? That’s what we will cover below. You can review the property management company fees, the fee structure, common fees, factors that affect those fees, and more in this article.
What are Property Management Fees?
In simple terms, property management fees are the costs that a property owner pays to a company or individual. The fee covers the costs associated with managing the day-to-day operations of rental properties. It’s compensation for the expertise, time, and resources invested in maintaining the property.
These management fees typically apply on a recurring basis, for instance, monthly or weekly. However, they can also apply when specific services are provided, such as finding a new tenant.
Typically, property management company fees fall into two distinct categories. They are:
- Landlord Fees : Landlord-paid fees typically include ongoing management fees, leasing fees, maintenance coordination, and various administrative charges.
- Tenant Fees : Tenant-paid fees may include application fees, late payment penalties, lease violation charges, and certain maintenance costs. These may depend on the lease agreement and local regulations.
Typically, primary management fees are the landlord’s expense. However, some companies also charge tenant fees. That being said, the bulk of property management fees is typically paid directly by the property owner.
Types of Property Management Fee Structures
Property managers employ a range of fee structures to collect their fees. Before committing to a property manager or management company, review their fee structure carefully. Here’s a breakdown of the three most common fee structures.
Percentage of Monthly Rent
The most common fee structure used by property managers is a percentage of the monthly rent. There is no fixed percentage, but it typically ranges from 8% to 12%.
Fixed Monthly Fee
In the fixed monthly fee model, the company or individual typically charges a flat monthly rate. It can range from $100 to $ 300 for single-family homes and increase substantially for multi-unit properties. The issue with this structure is that you have to pay a fee even during property vacancies.
Per-Project/A La Carte Fees
Under the per-project structure, you pay the property managers for specific services they provide you. It’s perfect for owners who want to have some control over their property management, while getting some help where they need it.
Breakdown of Common Property Management Fees
If you are going for a property manager or a company, then it’s crucial to know the various management fees involved in the process. Here are some of the most common property management fees you will come across –
| Fee Name | Description | Typical Cost | When Charged |
|---|---|---|---|
| Contract Setup Fee | One-time charge for establishing a new management relationship | $300-500 per property | Upon signing the management agreement |
| Leasing/ Vacancy Fee | Fee for finding and placing new tenants when the property is vacant | 50-100% of one month's rent | After successful tenant placement |
| Marketing and Advertising Fee | Costs associated with promoting vacant properties | $100-200 per vacancy or included in leasing fee | During vacancy periods |
| Tenant Screening & Placement Fee | Background checks, credit reports, and tenant verification | $50-300 per applicant or included in leasing fee | During the tenant application process |
| Lease Preparation & Renewal Fees | Creating or extending lease agreements | $100-350 | At the lease signing or renewal |
| Rent Collection Fee | Processing monthly payments from tenants | Usually included in the base management fee | Monthly with rent collection |
| Maintenance & Repair Coordination Fee | Arranging for and overseeing property repairs | 10%–20% markup or $50–$150 per repair | With each maintenance event |
| Routine Inspection Fee | Regular property evaluations to assess condition | $100-$200 per inspection if not included in base fee | Quarterly, semi-annually, or annually |
| Eviction and Legal Handling Fee | Managing the eviction process and legal proceedings | $500 plus court costs (varies by location) | When eviction becomes necessary |
| Late Payment Processing Fee | Handling tenants who pay rent after the due date | 25% to 50% of the late fee is collected from the tenant | When rent is paid late |
| Early Termination/ Cancellation Fee | Penalty for ending the management contract before the agreed term | 1-month+ worth of management fees | Upon early contract termination |
| Reserve Fund Fee | Maintaining an emergency fund for unexpected expenses | $200–$500 or 6 months' worth of operating expenses | At contract start and as needed |
| Bill Payment & Returned Check Fees | Handling property-related bills and bounced checks | $15-35 per occurrence | As these situations arise |
Factors that Influence Property Management Costs
There’s no fixed amount for property management fees. Several factors influence the amount. It’s essential to consider all the factors when setting up your budget before approaching a property management company or a property manager. These include –
Property Type (single-family vs multi-unit)
If you have a single-family home, then it’s much simpler to manage, resulting in lower costs. But, a multi-unit property with multiple tenants to manage can be significantly more expensive.
Size and Age of the Property
The next major thing is the size and age of your property. A larger property will require more maintenance and supervision, resulting in higher costs. Also, the older your property is, the more it will need maintenance and upgrades, which also adds to the cost.
Location and Neighborhood Rating
A property in a desirable high-rent area will always command higher fees but lower percentage rates.
On the other hand, properties in challenging neighborhoods may incur a higher percentage rate, resulting in increased management fees. That’s because challenging neighborhoods require more effort, hence higher fees.
Local Supply and Demand
The local real estate market also plays a key role in determining the costs. Let’s say there are plenty of property managers available in your locality. As a result, you have more options to explore, and the fees are more competitive. Whereas, in the case of limited property managers, the fees are higher.
Full-service vs Partial Management
The kind of services you need for your property also impacts the management cost. For example, if you require full-service coverage, encompassing everything from tenant acquisition to maintenance and reporting, the cost will be higher.
However, if you opt for a partial arrangement, where you only select specific services, the cost will be significantly lower. It all depends on your necessity. You can also find service packages in many companies to suit your needs at affordable prices.
Is Hiring a Property Management Company Worth It?
When considering professional property management, owners must weigh both the benefits and drawbacks against their specific circumstances. Here’s how you find it out –
Time vs. Money Trade-off
Ask yourself how much your time is worth. If managing your property prevents you from earning a higher income elsewhere or impacts your quality of life, the cost of a manager might be justified.
However, if you prefer staying hands-on and want to handle the process yourself, learning how to manage short-term rentals effectively can help you save money while staying in control.
When It Makes Sense to Hire One
There are certain scenarios where you will find hiring a property manager makes sense. For instance
- If you live far from your property, such as out of state or out of the country
- If you have multiple properties to manage but can’t do it alone
- If you are a passive investor and don’t want any operational involvement
- Also, if you are a new landlord lacking knowledge of property management and legal requirements
In these cases, hiring a property manager will be more beneficial to you.
Tenant Quality
Experienced managers have refined screening processes. These help them find higher-quality and more reliable tenants. This ultimately reduces issues such as late payments, property damage, and lease violations. Being able to avoid all these is surely worth all the pennies.
Reduced Stress
One of the most underestimated yet valuable benefits of hiring a property manager is reduced stress. Whether it be handling middle-of-the-night emergencies or difficult tenant conversations, managers can do it all. And the best part is that you don’t have to worry about doing all that.
How to Find a Good Property Management Company
Choosing the right property management company is a critical decision impacting your experience as a property owner. A good manager can be an asset for you, whereas a bad one will be a huge liability.
Therefore, it is essential to employ a systematic and strategic approach when selecting a property management company.
Vetting Process
The vetting process begins with obtaining recommendations from other local property owners or real estate professionals.
You should also research online and check their websites for all the necessary information. Review the testimonials to see how well they perform their work. Then, you can move ahead with interviewing multiple companies and learn more about them.
Red Flags to Avoid
Make sure to watch out for warning signs that usually indicate future problems. Some of the most common ones are –
- Unusually low fees
- High staff turnover
- Unclear fee structures
- Poor online reviews and unresolved complaints
- No testimonials or references at all
- Not explaining the services and terms completely
- Poor communication
Licensing, Reviews, and Experience
Before you proceed with a company, you must ensure that it has all the necessary legalities in order. The key personnel of the company should hold proper licenses in accordance with local laws.
Additionally, ensure the company has reviews on various online platforms, such as Google, Yelp, or the Better Business Bureau (BBB). Check for their background and track record to assess their experience in the field.
Technology and Communication Standards
You have to ask about their technology. Do they use any property management software? How do they handle communication? Is it via email, phone calls, or an online system?
It’s crucial to go with a company who are in trend with technology as it makes both your and your tenants’ lives much easier.
Tips to Reduce Property Management Costs
Don’t worry, some strategies can help the landlords to reduce property management costs significantly. With the following tactics, you can easily maximize value and reduce expenses.
Bundle Services
Going for bundle services is a great way to reduce the property management costs. Companies usually provide a certain discount on fees for bundle services.
It works in two ways. You can take multiple services, or you can take services for multiple properties. Either way, you get a bundle of services resulting in discounted fees.
Automate Communication and Reporting
Automating communication and administrative tasks can significantly reduce the costs of property management. When you use digital tenant portals for communicating maintenance requests or rent payments, you can minimize a lot of manual work. This results in reducing the related fees.
Use Property Management Software
In case of self-managing specific tasks, opting for a property management software can help you save a lot of money. You can use the software to streamline some administrative tasks. Things like rent tracking, expense logging, and tenant communication won’t cost you anymore.
Consider Virtual Assistants for Admin Work
One of the most effective ways to save money is to hire a virtual assistant for administrative tasks. They are significantly more cost-effective than doing it yourself or hiring a company. If you can hire the right virtual assistant, they can get the job done for you.
Some common examples of virtual assistants for property management include –
- Real estate virtual assistants who understand the industry
- Administrative virtual assistants for general tasks
- Specialized short-term rental virtual assistants, such as Airbnb virtual assistants
Conclusion
Before signing any management contract, thoroughly evaluate what services you genuinely need versus what you can handle yourself. Consider both immediate costs and long-term value. Go through every factor and see whether it’s genuinely worth it for you or not.
Ultimately, it comes down to striking a balance between cost and value. The amount property managers charge and the value they provide are key to this. You need to determine if the amount you pay brings you more value than doing it yourself. If it does, then you have your choice; if it doesn’t, consider doing it yourself.
FAQs
1. Are property management fees tax-deductible?
In most cases, property management fees are considered ordinary and necessary business expenses for running a rental property and are therefore tax-deductible.
2. Can I negotiate property management fees?
Yes, negotiation is often possible. Especially if you have multiple properties, a high-value rental, or are signing a long-term contract.
3. Is it cheaper to hire a property manager or self-manage?
Self-management is generally cheaper in terms of direct cash outlay as you avoid management fees.
4. Do rental property managers charge during vacancies?
It depends on the agreement. If you are using a percentage-based rent model, then there should be no charges during vacancies. However, if you opt for a fixed fee structure, you may still need to pay the fees even during vacancies.
