Landlord 101: Property management fees explained

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No matter if you are a hands-on landlord, who manages their rental investments on their own, or an investor who employs a professional to do it for you, you no doubt wonder about property management company fees, and why property managers charge fees in order to administer your property. Property management fees differ widely depending on the company and property management plan that you choose, and you should always search for these when you sign your PMA. That being said, there are also fees that are common for most managers and plans. We will provide a property management fee breakdown so that you can understand what costs are associated with these most typical property management fees.

What does a property management company do?

First, let us try to understand what property management companies do. When you consider hiring a property manager, you certainly ask yourself what value do they bring for the cost associated with hiring them? Do I value my time or the cost more? To put it simply, a property manager takes care of your rental property investment when you lack the time, knowledge, and/or passion necessary to do it yourself. The property manager is a professional with expert knowledge of the market in which your property is located, that can find good tenants fast, who oftentimes can pay higher rent, and have at their disposal the most qualified vendors to take care of whatever maintenance issues might arise at your property. Moreover, they are your trusted adviser if you want to expand your portfolio, sell your property, or simply trade up. Property managers keep a close pulse on up and coming areas in the real estate market, therefore, your next investment could be in such a sought-after area.

What are the typical property management fees?

  • Monthly management fee

Most property managers will express their monthly management fees as a percent of the monthly rent, or as a flat fee.

When it comes to the percentage version,  it’s not useful to pinpoint an average management fee in any specific marketplace as they tend to vary based on business expense and regulatory restriction.

Other property management companies follow another model, in which they charge flat fees, or a hybrid that includes both a percentage and a flat fee. Whatever model you choose, make sure that it is clearly stipulated in the property management agreement.

It is worth mentioning here that property management costs may depend on the management plan you choose, the location and condition of the property, and what property management services are included in that plan. Nevertheless, the typical monthly management fee covers the property management com