Is it Expensive to Hire a Rental Management Company?



Just like when dealing with anything for the first time that involves property management fees and contracts, working out the costs associated with hiring a rental property management company can seem intimidating. Certainly, you want to feel like you’re in control of your end of the deal and avoid committing to any confusing fees. You also want to make sure that you’re made fully aware of what any larger blanket fee is actually covering. So let’s look at what you can expect in terms of charges from a rental property management company and what they include.

Setup Fee

The first fee you may be subjected to is a setup fee (also known as an onboarding fee). This is a one-time fee that’s typically no more than $300 and pays for a property management company setting you up with an account. It also sometimes covers an inspection upon closing to evaluate the property’s current condition, along with your welcome materials that establish communication between you and the property manager.

Management Fee

This is the main fee that’s paid to the property management company each month. It covers your property’s day-to-day management, such as rent collection and processing, any communications with the property management company, conducting property inspections, replying to emergency maintenance calls, and coordinating repairs. The management fee is typically a percentage of the gross rent, but some property managers will also charge a flat monthly fee.

Leasing Fee

Most property managers charge a leasing fee, which covers leasing or re-leasing your property in the event that it becomes vacant. The fee is typically equal to one month’s rent, or at least a percentage of it. Some property management companies charge a flat fee instead, however. The leasing fee usually includes advertising costs, screening applications, showing prospective tenants around the property, preparing the document, and performing an inspection upon the tenant moving in.

Lease-Renewal Fee

This is the fee a property manager charges for renewing a current tenant’s lease. Not all property managers charge a fee for this, but some do charge a flat rate, while others charge a percentage of the rental cost. The fee includes the time taken to make any modifications, which covers a Comparative Market Analysis designed to recommend any rent charges, as well as to acquire the tenant’s signature. Whether a percentage or a set fee is charged, it’s usually no more than $200.


Maintenance Fees

You want to be prepared for any potential maintenance issues, and should budget for them accordingly. The cost of annual maintenance is around 1.5 times the monthly rent on average. So if you’re paying $1,000 per month in rent, you can expect to pay around $1,500 for repairs during the course of a one-year lease. You should speak with your property manager about what routine maintenance might be best for your property, taking its age into account, and make a plan to save 10% or more of your rent for any potential maintenance fees.

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