The cost of property management / lease only varies between management firms but there is an average price range. Bear in mind that not all services are created equal and a company offering a very low rate may not be including a complete suite of services. It is important to pick the business that is right for your needs, which may not be the one with the lowest prices.
Identifying all the types of property management fees is important so you can adequately compare pricing between companies. If there are a lot of a la carte costs for “extra services” then an up-front lower rate may turn out to be higher. Remember that you can negotiate terms to get the best deal possible.
How much does Property Management cost?
Property Management Fee
The average monthly management fee ranges from 4%-12% of the monthly rent but there is often a minimum amount set of approximately $100 per month. The percentage you will pay depends on many factors such as the property’s city, the number of units you own, whether it’s a condo or a single family home and what services are included in the fee.
Set-up Fee
The setup fee covers the time invested to set up a new account and typically ranges from $0-$300. If you own more than one unit you should clarify if the fee is charged per unit or per property and if it makes a difference if the unit is occupied or not.
Vacancy Fee
This is not a standard fee but it is one to pay close attention. When you are between tenants, some management companies expect full payment of the property management fee and others charge a small vacancy fee such as $50. Ensure the language in the contract indicates management fees are to be paid out of “Collected rent” or “Rent collected” as opposed to “Scheduled rent” or “Rent due”. This language will also protect you from having to pay management fees in the event that a tenant stops paying rent.
Leasing Fee
In many cases the leasing fee is simply included in the management fee but essentially this fee is the expense of the time and effort associated with getting you a new tenant. If you choose to pursue only leasing assistance then you can expect to pay a high rate up front, typically 25-100% of first month’s rent or a flat fee of about $1,000. You may want to clarify if the leasing fee is waived if it takes an “unreasonably” long time to fill a vacancy and what refund would be provided for not finding a good tenant.
Advertising Fee
In many cases, the leasing fee would cover the cost of advertising but some firms charge an additional $100-$200 depending on the cost of the advertising they do for your property.
Lease renewals
Although this is not a complicated task, some property managers charge a lease fee to draw up the paperwork to renew a tenant’s lease. The fee typically ranges from $0-$200.
Reserve fund fee
A reserve fund fee of $200-$500 for a single family home is common for use in paying day-to-day operating expenses.
Maintenance Fees
You should clarify a few points when it comes to maintenance fees.
Will you be contacted with an estimate before work is performed? You may want to set a low approval limit of $200 worth of repair work until you get more comfortable with the company’s judgment.
Will notifications be waived in the event of any emergency?
Does the property management company employ their own repair crew and if so are their hourly rates on par with other firms? ($30-$40 per hour is average.)
Eviction Fee
An eviction fee is for items such as serving notices, dealing with attorneys, court appearances, evictions, etc. You will commonly be charged $25-$50 hourly or a flat fee of $500-$600 plus court costs. Find out if they typically use an attorney for evictions and what their billing rate is.
Unpaid Invoice Fee
Will you be charged a service fee (typically 1.5%) for past due invoices?
Bill Payment Fee
In many cases, bill payment is included in the management fee but other companies do not even offer this service. It includes making payments on the owner’s behalf such as the mortgage, insurance, home owners’ association dues, etc.
Other Income
Will a percentage of “other income” be charged?
Late fees
Returned check fees
Pet deposits
Lease violation fees
Interest on security deposits (may not be applicable depending on state laws) and owner funds held by manager
Income from laundry and vending machines
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