If you are an independent landlord like us, you have probably considered hiring a property manager for your rentals. How much does a property management company charge? More importantly, how much property management fees should you expect to pay? Rates vary from location to location, and you may have received different information from some property managers. To find out how your expected property management fees, simply enter a few details into our property management fees calculator below.
Property Management Fees Calculator:
How Are Property Management Fees Calculated?
Annual property management fees are calculated by multiplying your annual rent by the percentage management fee charged by property managers. We then add the lease-up fees when your property manager finds a new tenant for your rental. Finally, we multiply the property manager’s maintenance and repair markup fees by your estimated annual repairs and add them your total. This shows how much property management fees you will pay. Our calculator also indicates how much these fees are as a percentage of your total income. The result might surprise you.
What Is The Average Cost Of A Property Manager?
The average cost of a property manager varies, depending on your location. However, we find that property managers often charge between 8-12% of monthly rental income. Some charge this regardless of whether your rental property is occupied or not. For a $1500/month rental, this property management fee would be between $120-$180/month.
Many property managers also charge a lease-up fee whenever they find a new tenant for your rental. This often ranges between half month to one full month of rent. Using our example $1500/month rental property, the lease-up fee comes to $750-$1500.
Property managers will usually charge a fee for managing maintenance repairs or capital improvements on your property. This is normally a markup on repair costs of 10% or more. There are a number of ways to budget for annual maintenance costs. One common method is the “5X Rule” where annual maintenance costs average 1.5 times the monthly rental rate. So for our $1500/month property, you might plan for $2250 in annual maintenance costs. Your property manager’s markup on those repairs would cost you $225.
Change the inputs in the property management fees calculator to see how they affect the average cost of a property manager for your property. For reference, you can also see what percentage of your total rental income your property manager charges.
In the above example, your average cost of a property manager would add up to between $2415-$3885 per year. This would mean roughly 13-22% of your annual income goes to your property manager.
Property Management Fees – Our Takeaway
Property management fees are one of a landlord’s largest expenses. As a result, these fees can quickly take a large portion your cash flow and income. We suggest you enter your specific rental income, maintenance expenses and markups into our property management fees calculator to find out how much you should expect to pay. This will help determine whether you should hire a property manager for your rentals or manage your property yourself.
If you choose to self-manage your rentals, we have a number of property management software tools and recommendations to make your job easier. You can also download our free landlord guides to learn more about topics such as online rent collection and how to advertise rental property. And finally, feel free to ask specific questions about our property manager fees calculator in the comments section below.
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