How Much Do Property Managers Charge? Property Management Fees

Property management fees can take a big chunk out of your rental property cash flow. However, by leveraging the expertise of a good property management company you will be able to run a more professional operation, minimize vacancies, and importantly, save yourself time so you can scale your business and focus on what matters.

In this article, take a look at how much property managers charge, as well as how you can utilize software like Landlord Studio to reduce your management costs.

How Much Do Property Managers Charge? Property Management Fee Structures

There are two ways that property management companies generally structure their fees. Either as a percentage of the rent collected, or a flat monthly fee.

Property Management Fees as a Percentage of Monthly Rent

Most property management companies use this fee structure. They charge a monthly fee equal to about 8-12% of the rent collected. For example, if your property’s rent is $1,000 per month, you can expect to pay about $100 per month.

If a property is empty the property management will often charge a fixed fee equal to what they anticipate the rent amount to be. Vacant properties can mean more work for property management companies as they will need to conduct viewings, screen applicants, etc. Because of this, they may charge a separate fee for finding tenants and filling the property.

Property Management Fees as a Fixed Fee

Some property management companies offer a fixed fee structure. Generally, you can expect this to cost about $100 per month. The exact fee though will likely depend on the property type, square footage, and the services that are required. While a flat fee may look like a good deal at first glance, a management company that does collect a fixed fee may not be motivated to maximize the rental revenue.

So, How Much Do Property Managers Charge?

Property management fees can vary based on the type of property and fee structure used. For a 1-bedroom apartment, you might expect to pay $80 to $150 per month, while a 2-bedroom single-family home (SFH) could range from $100 to $200 per month. A duplex may cost around $160 to $300 per month. These fees typically fall within the 8-12% range of the monthly rent, which is the most common structure property managers use.

For example, if the rent is $1,000, you can expect to pay roughly $100 per month in management fees.

Alternatively, some property management companies charge a flat fee, which may range around $100 for a small unit but can vary based on property type, size, and services provided. Keep in mind that additional fees may apply for services such as tenant placement, maintenance, lease renewals, and evictions, adding to the overall cost - see these broken down below. For example, leasing fees could cost half to a full month’s rent, and eviction management might run $200-$500 plus legal fees.

Understanding both the basic monthly fee structure and the potential for extra costs is crucial when evaluating property management options.

Additional Property Management Fees

Contract Setup Fee: Most property management companies charge a one-time fee of $250-$350 for setting up services. This covers tasks like opening a bank account, applying for business licenses, conducting a property inspection, transitioning from another company, and preparing legal documents.

Filling and Managing Vacant Properties: Managing vacancies, including listing, viewings, tenant screening, and lease drafting, often incurs a leasing fee equivalent to half to a full month’s rent.

Late Payment Fees: Companies typically retain up to 50% of late fees collected from tenants.

Repairs and Maintenance: Minor repairs are usually handled by in-house crews or vendors. For smaller and routine maintenance jobs labor charges may range from $20 to $45 per hour, plus materials. However, larger projects may involve a 10% fee of the total repair cost.

Routine Inspections: Some companies provide free semi-annual inspections, while others charge per inspection. Ensure they provide detailed reports, including photos or videos.

Evictions and Collections: Eviction management usually costs in the region of $500 plus court costs. If a case goes to collections, agencies may keep as much as 50% of the recovered amount.

Contract Termination Fee: Early termination may result in fees unless due to a breach of contract.

Lease Renewal Fee: You may be charged up to $200 for a tenant lease renewal, though some companies charge less or nothing.

Vacancy Fee: Some companies charge one month’s rent upfront for vacancy management, while others charge around $50 per month for vacant properties.

Reserve Fund Fee: A reserve fund of $200–$500 is typically required for maintenance and recurring expenses

Unpaid Management Fee: Late payment of management invoices typically incurs a 1.5% monthly fee until paid.

Late Service Payment Fee: Late payments to the property management company may result in a fee of 25%–50% of the amount owed.

Bill Payment Fee: Companies may charge a fee to handle bills like mortgage, insurance, HOA, utilities, and other regular expenses.

Returned Check Fee: A bounced check from the tenant or landlord may incur a fee of $35 or more.

What Factors Affect How Much Property Managers Charge

The end amount of a property management fee is, in one way or another, determined by how much work the property management company has to put in. As such, factors that may affect how much you end up paying a property management company include:

Type of property: single-family home, multi-unit, short-term rental
Size of the property: bigger properties take more work, as do properties with more tenants.
Property condition/ age: a run down or older property will likely require more maintenance work than one that is newly renovated.
Neighborhood: better, more expensive neighborhoods attract better tenants often with fewer problems.
Full service or custom: you might only need someone to manage maintenance requests but are quite happy finding tenants, collecting rent, etc. In which case you might be able to reduce property management fees with an a la carte service.
Market: as always the market will determine exactly how much a company is likely to charge you. Look to pay more in more competitive markets.

Is Hiring a Property Manager Worth It?

For many real estate investors, hiring a property manager can be worth the expense, but it's not the right choice for everyone. Before making a decision, it’s important to define your goals and understand what a property manager actually does. Asking the right questions can help determine if hiring one aligns with your needs.

What Does a Property Manager Do?

If you're unsure whether hiring a property manager makes financial sense, consider a few "what-if" scenarios. Think about how you'd handle rental advertising, tenant screening, lease signing, and dealing with tenant issues. Without a property manager, you may face higher contractor fees and slower responses to repair needs, as you can’t offer consistent business.

Additionally, property managers are experts in local, state, and federal landlord-tenant laws. Failing to follow the proper legal steps for rent collection, property entry, or habitability can quickly land you in legal trouble.

What Do You Need from a Property Manager?

Start by identifying your specific property management needs. If you're a remote investor, a local management company is essential for handling tenants and day-to-day tasks. However, if your rental property is nearby, you might consider managing it yourself.

In either case, property management software like Landlord Studio can help. You can link your bank accounts and generate financial reports directly from your dashboard, reducing the need to rely on a property manager for reporting.

Time vs Money: Which Is More Important To You?

Don’t underestimate the time commitment involved in managing a property or overestimate the quality of tenants you'll attract. Good property management companies have networks of contractors offering preferred pricing, passing those savings directly to you.

The location of your rental and the type of tenants it attracts also affect whether hiring a property manager is worth it. For instance, properties in lower-income areas or Section 8 housing can provide strong cash flow but often require more time and effort in managing tenants and handling repairs.

How to Find a Good Property Management Company

By hiring a property manager to handle the day-to-day tasks of your rental, you can focus on more strategic priorities, like growing your real estate business and expanding your portfolio.

Here are some of the top strategies to help you in your search:

Ask for Referrals: Start by asking friends, family, and colleagues for recommendations. Expand your search by consulting realtors and property owners in your network or on forums like BiggerPockets and Facebook Groups.
Do Online Research: Search online for property managers in your area. Review their websites, social media presence, customer reviews, and any complaints filed with the Better Business Bureau.
Compare Multiple Companies Gather information on a few companies and compare their fees, experience, portfolios, and values. Weigh what’s most important to you, such as experience versus tenant retention, and trust your instincts when spotting red flags.
Check Licenses and Certifications Verify they hold an active real estate broker or property management license. Look for certifications from organizations like The Institute of Real Estate Management or The National Association of Residential Property Managers.
Interview Managers: Ask about their experience, services, fee structure, and knowledge of local laws. And find out about their average vacancy rate and how it compares to the local market. High vacancy rates could indicate mismanagement, inefficient rental processes, or overpriced units. As part of this process, you also want to find out a bit about their customer service.
Evaluate Their Client Base Review their existing clients and vendors. Ensure they manage properties similar to yours and maintain good relationships with trusted vendors. A large, satisfied client base is a strong indicator of success.
Ensure Contracts Are Clear: Review the terms of their management agreements carefully. These contracts should cover services, fees, performance benchmarks, and termination rights. Negotiate for terms that best protect and grow your investment. Consider having a lawyer review the contract to ensure transparency and protection for both parties.

Self-managing your Properties vs Hiring A Property Manager

Whether or not you use a property manager or self-manage your rentals really comes down to how much time you’re willing to put in and whether you’re willing to make yourself available.

For busy property investors, hiring a reliable property management company can be a strategic solution. They manage property maintenance and keep your rental in excellent condition, helping to minimize vacancies. Top-notch property managers closely monitor local rental markets to capitalize on rent increases, ensuring you get the most out of your investment and the property retains its value and appreciates in line with comparable listings.

Of course, it doesn’t have to be an all-or-nothing scenario either. Some landlords choose to manage certain aspects of their properties themselves while outsourcing specific tasks, such as tenant screening and evictions or maintenance management, to a property management company. In this arrangement, where the management company handles limited responsibilities, you can keep costs down while simultaneously taking some of the more labor-intensive work off your plate.

That being said, the more you do yourself the less you’ll have to pay others. A property manager might charge you upwards of $1500 per unit in any given year. These costs quickly stack and after maintenance expenses, mortgage payments, and taxes this might not leave very much. By taking some or all of the management costs on yourself you can dramatically reduce your overheads and increase cash flow.

And, even if you choose to self-manage, there are tools on the market that can help reduce your workload and run a profitable, scalable operation. Landlord Studio, for example, is an all-in-one platform for rental property management, providing tools for creating listings and applications, screening tenants, tracking leases, collecting rent, and managing finances.

Self-managing your properties with Landlord Studio

Streamline your rental property operations, reduce vacancies, and maximize ROI with property management and accounting software designed for you.

Landlord Studio offers several essential accounting and property management features that can be used alongside a property management service or independently to allow you to run an efficient rental business.

Property management features

Accounting features

Plus, use Landlord Studio to automate rent reminder emails and late fees, manage your leases and track occupancy, and store all of your important documents in one place.‍Save time, money, and stress with powerful property management tools designed for self-managing landlords.

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How Much Do Property Managers Charge? Property Management Fees