Property management is a necessary part of real estate investing, but not all landlords also want to be property managers. Hiring a property manager can save you time and money while helping you increase your return on investment.
But how much does a property manager cost? Property managers usually charge between 8% and 12% of rent collected for their services, which include tenant communications, property inspections, maintenance coordination, financial reporting, emergency response, and lease administration. However, the average cost of a property manager varies based on factors like the property type and condition.
Keep reading to understand how much property managers charge, what affects those prices, and what to expect in 2025.
Key takeaways:
- Property managers usually charge around 10% of rent collected from your properties.
- Investment property size, location and the local real estate market all influence management costs, with specific fees adjusted for services required.
- Landlord software like Baselane offers tools to simplify property management for investors with smaller portfolios who prefer a more hands-on approach.
How do property manager fees work?
Property manager fees are assessed as either a percentage of the monthly rent or a fixed monthly amount, depending on your property management agreement. Whether a property manager charges a fixed or percentage-based amount, their fees may increase alongside rent since rent is expected to rise in 2025, particularly for single-family homes.
When hiring a property manager, it’s important to understand the difference between rent due and rent collected:
- Rent collected means you pay the manager only when they collect rent from your tenants.
- Rent due means if the tenant doesn’t pay, you still owe the manager their fee.
Rent collected is typically the better financial option, so review the wording in your contract that explains how property managers get paid to ensure it reflects the right choice for your investment.
Percentage of monthly rent
This is the most common way property manager rates are collected. Typically, property managers charge between 8% and 12% of the property’s monthly rent with this model.
So, for example, if the rent on your property is $1,500 per month and you both agree on a 10% fee, you’d pay your property manager $150 each month. If you have a vacant property with no rent coming in, some property managers may still charge a fee. Vacant properties require just as much work (and sometimes more).
Fixed property management fee
A fixed fee is based on factors like the property’s size and type as opposed to how much the rent on the property is. For example, this fee might be $100 per month for a single-family home, but a larger property with multiple units would be more.
At first glance, this model might seem attractive. However, property managers may not be as inspired to maximize the earning potential of your property’s rental income with a fixed fee.
Other types of property management fees
Let’s break down some of the common property management service fees for rentals and what they entail:
Contract setup fee
Some property management companies charge a setup fee at the start of your working relationship. The average property manager fee for this is typically between $300 to $500 and goes toward setting up your accounting ledger for bookkeeping, assisting with necessary business or tax licenses and any initial property inspections.
Repairs and maintenance fee
Property management companies will often charge a 5-15% markup on all maintenance costs for the property. For example, if a plumbing problem costs $500, it’ll be forwarded to you at $550 with a 10% markup.
Some property management companies have a property maintenance services list with trusted vendors or in-house teams. These teams usually offer preferred pricing, ensuring repair costs are lower than what an individual might get.
Repairs and Maintenance Fee
Property management companies will often (but not always) charge a 5-15% markup on all maintenance costs for the property. So, for example, if a plumbing problem costs $500, it will be forwarded to you at $550 with a 10% markup.
Some property management companies have trusted vendors or in-house teams. These teams usually offer preferred pricing, ensuring repair costs are lower than what an individual might get.
Inspection fees
Regular inspections are a good idea to detect minor issues and get them fixed before they become major ones. Some property managers include regular inspections as part of their costs, while others will expect you to foot the bill.
You’ll receive inspection reports alerting you to any general wear and tear or property damage tenants may need you to address. Either way, regular inspections can save you money in the long run.
Advertising and marketing fee
You’ll need to know where to advertise rental properties to fill vacancies as soon as possible. While there are free listing websites like Zillow and Rentberry, you still need local representation to reach the right markets.
Some property management companies charge a one-time fee for advertising (typically $100 to $200), while others include it in the leasing fee.
Leasing fee
Property managers often charge a leasing fee, also called a “tenant placement fee,” to fill a vacant property. This fee can be equivalent to a half or full month’s rent and covers showing the property, screening potential tenants, and setting up the lease. The cost may be worth it if you’re not sure how to write a lease agreement.
Tenant selection fee
A property manager can handle selecting tenants for your properties, from reviewing applications to interviewing potential tenants to lease signing. How much should a property manager charge for tenant selection fees? It depends. They can take a flat fee per screening, usually somewhere between $50 and $300. Or, it can be a percentage of the tenant’s first month’s rent. So, if rent is $1,200, they might take a 50% fee of $600 from the first month.
They’ll handle the tenant background checks and credit score evaluations. They can also address any other items that may arise, like pet screening and renter’s insurance verification.
Lease renewal fee
When a tenant’s lease is up, there might be a renewal fee. This fee should be smaller than the initial leasing fee, especially if the renewal process is smooth and doesn’t require extensive negotiations.
Some rental property managers charge a flat rate or percentage of the rent, and the amount is typically between $150 – $350 for lease renewal.
Eviction and collection fees
Evictions aren’t pleasant, but they sometimes happen. If a property manager handles an eviction, you can expect to pay around $500 plus any legal costs. If a judgment is awarded in court, collections agencies and attorneys typically charge about 50% of the collected amount.
Another layer of complexity arises if the eviction involves squatters. This makes the eviction process more complicated and often costlier for you.
Vacancy fee
Managing a vacant property requires more attention due to potential issues like unexpected leaks or security concerns. Regular weekly visits to the property are needed to minimize risks at $50 – $100 per month.
Some firms charge an upfront fee equal to a month’s rent if you engage them while the property is vacant.
Late payment fees
You should consider charging a late fee if you don’t receive rent on time. Property managers may ask for a percentage of late rent payments (typically 25% to 50%) since they’ll be securing the rent payments.
Early termination fee
If you end your contract with the property management company earlier than agreed, you might incur an early termination fee. This fee varies but could range from a month’s worth of lost income for the company to more severe penalties for breach of contract.
Factors that affect property management costs and fees
Several things can affect the average cost of a property manager. Here’s a simple breakdown:
- Type of Property: Different properties have different needs. For example, multifamily properties require more attention than single-family homes, and commercial properties cost more to manage than residential properties. Even without tenants, vacant properties need care and can have separate fees.
- Property Size: Larger properties with more square footage or rooms can be more work to manage. If your property has more units or a big yard, it might need more attention, which could mean higher fees.
- Property Location: If your property is in a state with high rents (e.g., Los Angeles, New York, etc.), the fees might be higher, too. Property management costs also differ based on city and suburb properties. A city property might have unique challenges, like limited parking or strict building rules, which can change fees.
- Property Condition: Newer or recently renovated properties usually have fewer problems and typically cost less to manage.
- Local Real Estate Market: The overall housing market in your area can affect property management costs. If there are many property managers available, they might offer competitive prices. But the general state of the real estate market can also play a role. If it’s a busy time for rentals, fees could be different than during slower times.
- Neighborhood: Beyond the real estate market, the neighborhood where your property is located affects property management costs, too. For example, a neighborhood known for its good schools and walkability is more attractive than one without those amenities.
- Services Offered: If you opt for a few select services instead of the full service, the overall property management cost per month will likely be less. Some companies may also offer a property manager hourly rate for certain services.
Is hiring a property management company worth it?
There are several considerations when deciding whether to manage on your own or hire a property management company. The decision comes down to your needs and availability.
Determine your property management needs
Before you hire a property management company or opt to do it yourself, make sure you truly understand what a property manager does.
Maybe you’re handy and could easily deal with property repairs and maintenance but have no clue about marketing to help attract the right tenants. Property managers can often fill vacancies faster because they have experience setting the right rental price, listing the property effectively and handling showings to maximize occupancy rates.
Additionally, you may not be familiar with all state and local laws regarding property management, but a property management company knows how to navigate and comply with those ordinances on your behalf.
Weigh the cost of hiring a property manager
Comparing the cost per month of property management fees with the potential time, energy and resources you’d spend managing the property yourself is essential. Property managers already have the infrastructure for hiring contractors and dealing with tenants, so the monthly fee might be worth the time and stress saved.
If you don’t want to pay a property manager, using property management software can be a cost-effective alternative. The software offers tools that make managing properties on your own more straightforward and efficient.
Consider the time commitment
If you live near your rental, handling maintenance and tenant meetings is easier. But traveling can take up a lot of time if your property is far away or you own multiple units that are spread out.
A property management company that’s more local to your properties can help alleviate the day-to-day management burden, especially if you’re a remote investor. From handling tenant inquiries to addressing emergencies, property managers can mean less stress and more time saved.
It’s worth comparing services to a landlord’s property manager software platform. If software can handle the same tasks as a property manager, you’ll still save time without the extra fees.
Tips for finding a property management company
Landlords can find property managers in several ways to ensure they pick the right company for their needs. Here are some ideas to help you find a property management company:
- Tap into your network: Ask fellow real estate investors and landlords which property management company they prefer and why. Be specific about what you need. For example, are you looking for help with single-family homes or vacation rental property management?
- Check with local real estate professionals: If you’re a remote investor, contact some local real estate agents or inspectors to see who they recommend for property managers in the area. A property manager near your rental can be a huge plus (e.g., repair contacts and a finger on the pulse of the local real estate market).
- Browse online: You can easily search for property managers by checking legitimate sources like the National Association of Residential Property Managers (NARPM), Yelp, Google, and the Better Business Bureau.
- Review contracts carefully: Examine the management contract for any hidden fees, notice periods, and service terms.
- Ask about their tenant screening process: Question how they screen tenants to ensure quality occupants, which is key for minimizing issues and maintaining property value.
- Meet face-to-face: Scheduling a meeting with the property manager in person or virtually can help you gauge their compatibility with your management style as well as their responsiveness.
- Verify licenses and credentials: Ensure the company holds appropriate property management licenses and is accredited by associations like the NARPM.
- Evaluate the range of services offered: Confirm the company’s services align with your needs, from tenant screening and maintenance to rent collection and evictions.
- Evaluate their technology: Opt for a company that uses digital tools to make communication more transparent and convenient.
Use property management software for landlords like Baselane
Hiring a property management company can help ease some of the time and energy you invest in your properties, especially if you have multiple properties in different locations. These companies charge fees, which will likely increase in 2025, but property managers handle many of the tough jobs for you, like repairs and finding tenants.
But what if you’re a remote investor or like being hands-on with your rental properties? Well, there’s a middle ground. Property management software like Baselane can help landlords manage properties more efficiently.
With Baselane, you can:
- Easily collect online rent payments and charge late fees
- Screen tenants and e-sign leases
- Automate bookkeeping and accounting
- Pay bills, manage expenses, and more with built-in banking
- Track cash flow and generate financial reports
Want to see how Baselane can help you save time and money? Watch our demo or sign up for a free account.
