How Much Do Property Managers Charge
Property Management Software Solutions
Having a rental property and wondering how much property managers charge? This is the most common question landlords wonder. Most landlords usually struggle with handling tenants and managing the different rental operations on their own.
The rental process becomes more frustrating for landlords when they have multiple rental properties to manage. In such scenarios, hiring a property manager proves to be a relieving solution. However, the real confusion starts when you find that property management costs vary widely.
It becomes challenging to know the actual cost to hire a property manager. But this blog will clear all your confusions as it will give you a detailed glimpse of how much do property managers charge.
What do Property Managers Do?
Property managers are the ones who handle the day-to-day operations of rental properties that usually involve:
Marketing rentals and finding reliable tenants
Screening tenant applicants
Collecting rent and handling tenant communication
Coordinating with tenants for property repairs and maintenance
Managing legal issues, lease agreements, and evictions
So, property managers simplify the management of rental properties for landlords, especially for those who have multiple rentals to look after.
Related: Should You Hire a Professional Property Manager?
Factors Affecting the Cost of Property Managers
Property managers handle several essential rental operations, like finding tenants and maintaining the property. Because of this, how much a property manager costs depends on varied factors, which include:
1. Type of Rental Property
The type of rental property you own significantly impacts how much a property manager will cost. Usually, single-family homes cost slightly more than multi-unit complexes. This is because single-family rentals generate less rental income, which means that property managers are able to charge a bit more.
Also, property managers charge higher fees to manage vacation rentals as they need more hands-on management, like handling check-ins and check-outs, and adjusting pricing based on seasonal demand.
2. Rental Location
The location of your rental unit also impacts the property management costs. For instance, as urban areas have high rental demands, property managers charge low percentage-based fees to lead the competition.
On the contrary, they will charge higher fees in suburban or rural areas, as such areas will be in less demand. Also, competition will be much less for property managers in such areas.
3. Number of Rental Units
It is very obvious that managing multiple rentals located in the same building will be much easier compared to managing the same number of single-family homes located in different locations.
The number of your rental properties affects how much a property manager charges. That’s why you will find several property managers offering special discounts for larger portfolios located in the same area, because it reduces travel efforts and also administrative workload.
4. Level of Service
The scope of service is another factor that greatly impacts the property management costs.
For instance, full-service property management, which involves rental marketing, tenant screening, maintenance coordination, and more, usually costs more. While managing simple rental operations like collecting rent, on the other hand, costs are low.
How Much Does a Property Manager Cost?
Now that we know what factors affect the property management costs, here’s the breakdown of how much it costs to hire a property manager.
1. Monthly Management Fees
This is the most common type of fee that every property manager charges. It is usually charged as the percentage of rent that is collected each month. On average, it ranges between 8 to 12% of the monthly rent.
For instance, if your property earns $2,000 per month in rent and your property manager charges 10% management fees, then you will have to pay $200 every month.
You will find the percentage of management fees varying based on various factors like rental property type, its location, and the number of properties.
2. Leasing Fees
Besides managing your rentals, another important task of property managers is to find a new tenant for your rental every time it becomes vacant. This involves various management operations like listing your property, tenant screening, and creating lease agreements.
For this, property managers usually charge 50-100% of one month's rent. Property managers can even charge more leasing fees if they are offering premium services like extensive advertising of your rental and more.
3. Maintenance and Repair Costs
Property managers conduct timely repairs and maintenance on their own to keep our rentals in good condition. For this, every property manager charges in different ways.
Some property managers will include basic maintenance oversight in their monthly fees. At the same time, some would apply a 10-20% markup on repair bills. This markup helps them in covering the overall cost they went through in the repair process, from hiring contractors to ensuring timely completion.
4. Additional Fees
Besides charging fees for basic management operations, property managers also charge additional fees for unusual situations. This basically involves:
Eviction fees range from $200 to $500, which covers legal paperwork and court coordination.
Lease renewal fees range between $100 $300, which involve preparing updates to the lease and handling paperwork.
Inspection fees that range from $50 to $150 per inspection are required to conduct property checks on a timely basis.
So, basically, property managers charge a monthly fee based on the percentage of rent collected, usually ranging from 8 to 12%. However, they charge extra for additional services like lease renewal, eviction, and property inspection.
Is Hiring a Property Manager Worthy?
After knowing what a property manager does and how much it costs to hire a property manager, you might wonder: Should I really hire a property manager? Well, this question does not have a definite answer.
Although hiring a property manager adds an additional expense, it becomes worthwhile as they simplify the entire rental management process from finding the tenants to maintaining your rental on a regular basis.
However, in today’s digital era, you will find several online rental listing and management platforms like TenantDen that help you list your property online and also help you manage rental operations with ease, and that too without hiring a property manager.
Final Say
So, usually a property manager charges 8-12% of the total monthly rent. However, the property management costs prove to be likely profitable for landlords with multiple properties to rent.
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Frequently Asked Questions
How much does it cost to hire a property manager?
On average, property managers charge 8-12% of the monthly rent as their fees. In addition, they charge extra for different services like lease renewals, maintenance oversight, and rental inspections.
Can we negotiate property management costs?
Absolutely. You can negotiate property management fees based on the number of rental units you own, location, and the level of service you require. Most property managers usually offer special discounts to landlords with multiple properties.
Do property managers charge even if my property is vacant?
It usually depends on the property management company. Some property managers will continue to charge the fees even if the place is vacant, while others will charge only when the rent is collected.
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