How Much Do Property Managers Charge?

Most real estate investors spend between 8-10 percent of the monthly rent on property managers. BiggerPockets Forum users report that 10% tends to be the norm — and additional fees may increase that number. (Are you looking for a flat fee? Unfortunately, flat rates are pretty rare.)

Before signing on the dotted line, review your financial statements to make sure that hiring a property management company makes sense. Many landlords will find this to be the case, but if you only have one or two properties or your budget is tight, you might want to go alone.

Standard property management fees vary, so you'll want to compare their services to see which one is best suited to your needs and budget. For example, you may want the property management company to deal with all aspects of finding and retaining tenants, but you may want to do routine maintenance on your own. What you're paying, how much, and when it's different with each company, so do your homework.

Here are some examples of property management fees to be included in your budget.

1. Baseline Management Fee

Property management companies charge 6 to 10 percent of gross monthly rents. This range varies by location, type, and property size. They will draw this fee from the rent collected each month and pay you the balance, less any additional fees due. Basic charges typically include day-to-day management of your property, bill payment, rent collection, inspection, response to emergency calls, and coordination of repairs.

2. Leasing Fee

Leasing fees are typically equal to one month's rent or between 25% and 75% of the gross monthly rent. Example: Property Management Company X secures a tenant for your vacancy with a monthly rent of $1,500. Company X will charge you from $375 (25 percent) to $1,500 (one month rent). This fee is usually collected from the first or last month's rent after it has been collected from the tenant.

3. Repair Reserve Fund

Many property managers charge a repair reserve fee — usually about 1.5 per cent of the gross monthly rent. Property management companies may require you to advance all or part of these reserves upon signing an agreement that they will use for repairs as necessary. Some landlords are asking to be notified of repair costs in excess of $100. If the repair costs are higher than the reserve, you will also have to pay those costs, usually upon receipt of the bill.

4. Lease Renewals

Not all property management companies charge renewal fees for leases, but you can expect to pay up to $ 200 per unit if this fee is charged. The lease renewal fee includes an analysis of the rental market to ensure that tenants pay up-to - date market rental rates, create new leases and documents, and purchase tenant signatures. Lease renewal fees shall be levied on the first month of the rent of the new lease or billed after the new tenant has been secured.

5. Advertising Fee

Sometimes this fee is included in the leasing fee, so be sure to ask for it. If the property management company has an effective marketing strategy, you can expect to pay $100 to $200. Property managers will advertise your property in the local paper, on their website, and may list online apartment sites such as Craigslist, Apartments.com, Facebook and Zillow.

6. Eviction Fee

If you want the property manager to handle the evictions of the tenant, you 're going to have to pay for it. Expect to pay a few hundred dollars for each act of eviction, plus any associated court costs.

7. Early Termination Fee

If you break the property management contract early, you will often have to pay early termination fees. This fee will vary considerably on the basis of the terms of the contract. You may only be responsible for paying additional management fees for one month or you may be brought before the court for breach of contract.

8. Vacancy Fee

A property management contract may include a fee for vacancies. This could be a one-time one-month rental fee, or it could be a fee per vacant unit, such as $50 per unit.

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Do You Need a Property Management Company You Can Count On?

Sexton Group Real Estate Property Management in Berkeley and Lafayette, California is a boutique property management company specializing in residential sales as well as property management services for properties throughout the San Francisco Bay Area. We have 2 offices to serve you, one in the heart of Berkeley and the other in the heart of Lafayette, California. The Sexton Group understands that many of our clients buy properties for investment purposes. Our clients are the reason we come to work everyday, and we pride ourselves in delivering exceptional care to them, their properties, and their tenants. Our focus is on maintaining the economic health of our clients’ properties and creating the perfect combination of tenants and properties. We go above and beyond qualifying our tenants; we make sure that we meet the needs of both tenants and property owners to ensure a high-quality, respectful, honest, and long-term relationship. We anticipate both our tenants and our property owners’ needs and work 24/7 to select the perfect pairing. Contact us today for your free consultation!

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