Investing in real estate is an incredibly lucrative path. Landlords
can earn over $35,000 more than the median household each year and typically receive an average of $10,000 annually per rental property. It’s no surprise that numerous people are becoming interested in this profitable lifestyle—but it comes with its challenges. From dealing with difficult tenants to constantly repairing minor issues at your property, maintaining a rental can quickly become tedious and time-consuming. That’s why countless real estate investors partner with property managers to handle the day-to-day property management tasks.
Hiring a property manager can save you time, energy, and money in the long run. But is it worth the potentially hefty price tag? And what exactly is the cost of property management services these days? In this article, we’ll provide a complete breakdown of the fees property managers charge, including the hidden ones you may not be aware of. Keep reading to learn how much property management costs and if it’s the right next step for you!
How Much Do Property Management Companies Charge?
Property managers often structure their fees into 3 categories:
Percentage of Monthly Rent: 8–12%
The majority of property management companies charge 8–12% per month of the monthly rent collected. For example, if your rental is priced at $2,000 per month, the property manager will take $160–$240 from the rent.
Some property managers won’t charge their monthly fee if the property is vacant. However, they may charge a fixed vacant unit fee or a fee equal to the monthly rent with or without a renter. Why do property management companies still charge even if the property is vacant? A rental property that’s sitting vacant means more attention from the management company, particularly if they need to run weekly inspections for potential break-ins or damage.
Fixed Management Fee: $100 Per Month
Another way property management companies charge landlords is by billing a flat fee per month based on the property type, square footage, and condition of the rental. Fixed management fees usually start at $100 for a single-family home but vary depending on the agency and housing market. When signing with a management company that charges a flat fee, ensure you receive all the services you need for a profitable rental experience. Additionally, be cautious of property managers who charge a fixed fee as they tend not to be as motivated to help you succeed as those who cost more.
Per-Project Charges: Varies
On the rare occasion, property management companies can also charge on a per-project basis. In this case, you can select which responsibilities the management company wants to cover, such as tenant screening and placement or property marketing. If you decide to go down this route, you’ll pay individually for each project the management company performs. Fees can vary and will most likely be more expensive per project compared to what you’d pay with a flat fee or percentage-based charge.
8 Additional Fees Property Managers May Charge
Suppose you sign with a full-service property management company. In that case, your manager will be responsible for marketing the property, screening tenants, handling leasing and evictions, collecting rent on time, performing general maintenance tasks, and more. However, there may be additional fees that incur above and beyond the monthly fee collected:
- Account Setup Fee: Property management companies usually charge a one-time setup fee of about $300. This contract fee covers creating your account, opening a bank account in your name (if needed), an initial property inspection, assistance applying for any business or tax licenses, and more.
- Late Payment Service Charge: It’s essential to include a note about late fees for tenants in the lease if the rent isn’t received on time. However, some property managers will keep about 25%–50% of the late charge as compensation for having to communicate with the tenant about the unpaid rent.
- Repairs and Maintenance: Most property management companies will have established connections with trusted vendors that provide maintenance and repairs for landlords. It’s important to ask whether the maintenance fee is included in the monthly rate or not. Also, when signing an agreement with the management company, it should outline a limit for specific charges like labor rates. Labor rates can usually be around $25 to $50 per hour, per person, in addition to materials.
- Advertising Fee: If you have a vacant property, the management company may charge you about $100–200 for advertising costs. This is usually a one-time fee, but discussing it with the property manager before signing with them is essential.
- New Tenant Placement Cost: Property management companies sometimes charge a new tenant placement fee to get a fresh renter on the lease. It could be anywhere from 25% to 100% of the first month’s rent, but you shouldn’t have to pay for multiple up-front fees. Property managers frequently charge a first-month rental fee, an upfront fee, or a high percentage of the first month’s rent.
- Vacancy Charge: Some property management companies charge one month’s rent upfront as a vacancy fee, which helps them pay for advertising and preparing the lease papers. Other managers charge about $50 monthly for a vacant property rather than a one-time payment upfront.
- Eviction Fee: In the unfortunate event of an eviction, property managers will charge for the eviction notice, dealing with lawyers, and any additional court appearance. This usually costs $25–$50 an hour or a one-time charge of $200—$500 per eviction and court costs.
- Late Service Payment Fee: If landlords fail to pay for property management services on time, they could be charged a late fee of 25%–50% of the amount owed. If your check bounces, they may charge you $35 or more for the inconvenience.
Is the Cost of Property Management Worth It?
Hiring a property manager can be worthwhile for many landlords for various reasons. Property management companies save you time, reduce the stress of maintaining your property independently, provide legal expertise as needed, give you access to top-rated maintenance vendors, help increase your rental income, and more.
High-quality property management companies provide valuable expertise about the market and help you maximize your property’s potential with little hassle on your end. When deciding who to hire for property management, check out different companies’ reviews online, ask friends and family for references, and create a list of questions you’d like the management company to answer before signing on with them.
3 FAQs About Property Management & Fees
Here are 3 common questions about property management and the costs associated with these services, with a particular focus on Utah companies:
1. What is the average property management fee for rental properties?
The average property management fee for residential properties is about 8%–12% of the monthly rent. However, that range changes to 4%–12% for commercial properties, and short-term rentals usually hit about 20%–50%.
2. What is the average property management fee in Utah?
Utah's average property management company charges about 8.55% of the monthly rent. However, this number varies depending on the agency, property type, and other factors.
3. What are the basic functions of a property manager?
The primary roles of a property manager include:
- Finding and screening potential tenants
- Drafting and renewing leases for property owners
- Collecting rent
- Property maintenance and repairs
- Understanding state, national, and federal landlord-tenant laws
- Marketing properties
- Handling taxes and accounting records
Hire a Reputable Property Manager in Northern Utah
If you’re interested in quickly generating wealth, partner with a top-rated property management company in Northern Utah. We offer competitive pricing and all-encompassing management services, from diligent tenant screening to consistent property maintenance. Our property managers are known for their expertise, ongoing communication, and commitment to ensuring you receive the highest ROI on your rental property.
Integrity Place Realty & Property Management specializes in
commercial and
residential management in
Utah and
Salt Lake counties. Don’t try to manage your property alone—partner with Utah’s trusted property managers at Integrity Place for excellent service and increased passive income.
Contact our professionals today for an affordable property management experience.
