A good property management company can help both real estate investors and/or real estate agents in marketing to fill vacant property units with new tenants.
Since this topic has at least some indirect relevance to real estate marketing, I decided to look into it a bit further and find out what property managers charge across different states and U.S. cities.
I cross-checked different numbers from different sources to get a better and more reliable picture of the situation.
Therefore, you will find different cost and fee ranges based on which I calculated averages that will be summarized in a final overview table towards the end of this article.
Nevertheless, prices and fees are never set in stone, and you are encouraged to negotiate to your benefit.
Later in this article, I will mention a book that may help you in this context and get your negotiation skills to the next level.
What Do Property Managers Do? – 7 Responsibilities
The ideal end result of using the services of a property manager is a steady monthly passive income from a rental property without or with a minimum time investment on behalf of the property owner or investor.
As you know, to get to this result, there is some active work involved that needs to be taken care of, such as:
- Monitoring daily operations
- Managing maintenance work and repairs
- Representing out-of-town owners
- Following overseeing individual property rules set by property owners
- Collecting and depositing rent
- Marketing and filling vacant rental properties (e.g., showing the property, screening tenants, signing lease contracts, etc.)
- Getting rid of tenants from hell (with or without evictions)
A property manager can be a small business operated by just one person as an individual, or it could be an entity such as a corporation operated by small and large teams.
Do Property Managers Pay for Repairs?
Strictly speaking, property managers don’t cover the costs for repairs.
However, they manage the maintenance work and repairs and pay the respective vendors using funds from rent payments or the minimum reserves they agreed upon in the property management agreement.
If it is not handled that way, the third option is that the owner first pays the amount quoted from the vendor to the property manager, and then the property manager pays the vendor.
This last option is not optimal since it may delay critical repairs for tenants.
How Much Do Commercial Property Managers Charge?
According to this source, the range of what commercial property managers charge goes from 4% to 12% and sometimes from 3% to 15% of the monthly rent.
Calculating the averages of the different percentages above results in an average of 7.25% that commercial property managers charge.
A lot depends on the different services included and the overall property size, the location, and the condition.
On top of the general property management fee, some companies add other fees, such as termination fees, eviction fees, lease renewal fees, and/or late payment fees.
How Much Do Condo and Apartment Building Property Managers Charge?
The same already-mentioned additional fees may be applied, such as termination fees, eviction fees, lease renewal fees, and/or late payment fees.
How Much Do HOA Property Managers Charge?
Compared to general condo property management fees, more information sources are available for HOA property manager fees. These are basically for the same type of property (condos) but are organized via a homeowner association (HOA).
There are also several red flags you may want to look out for because some HOA fees (such as meeting fees, fees per instance, newsletter printing costs, etc.) can leave you with a bitter aftertaste.
So, the average HOA fee property manager charges are $15 per unit per month.
How Much Do Property Managers Charge for Airbnb Vacation Rentals?
Airbnbs, as you may well know, already fall into the category of short-term or vacation rentals.
The property management companies on the market specializing in Airbnb rentals often use one of two fee types. The first one is a percentage-based fee per booked night, and the other is a monthly flat fee no matter how many nights are booked.
Based on different sources from property management companies, Airbnb forums, and other professionals in the industry, the following percentage-based property management fees for Airbnb vacation rentals are mentioned:
Based on the above numbers, the average for percentage-based Airbnb property management fees is 28.5% per booked night.
I couldn’t investigate much about fixed rates since these rates are likely based on individual negotiations that depend on the location, property size, and other factors.
How Much Do Property Management Companies Charge to Find a Tenant?
Property management companies usually charge the so-called tenant placement fee to find and place a new tenant into a property. This fee is based on 50 to 100% of the monthly rent the new tenant will pay.
Although many different sources agree on these fees and prices, this now appears to be a rule set in stone. But this is only a psychological bias that happens when many agree on something, and it shouldn’t be perceived that way.
If you are a real estate investor or another real estate professional, you always want to negotiate these tenant placement fees.
You can negotiate almost everything. I learned this from my own experience, especially from the book Never Split the Difference by Chris Voss.
Property Management Fees According Property Type, and On State and City Level at a Glance
The property management fees of different states and cities in the table below come from the research I did in each state and city.
I researched different property management companies in these geographic locations and calculated an average. These are the averages you find in the table.
The sources I used for this research are worked into two additional tables where I included the state-level fees from real estate websites and property management companies. The latter I collected from different counties.
In the table, with property management fees at the city level, I only used local property management companies and, from them, only the ones that disclosed their pricing information on their websites.
|Rental Type||Average Property Manager Fee|
|Condos and apartment building||10% or $20-$60 per unit per month|
|Airbnb||28.5% per booked night|
|State||Average Property Manager Fee||City/Region||Average Property Manager Fee|
How Much Do Property Managers Typically Charge per Month?
Property managers typically charge 8.78% of the monthly rent for their ongoing management fee.
This average percentage is based on the researched numbers from the table above and excludes short-term vacation rentals, such as Airbnbs.
To get to this result, I summarized this data. I calculated the average property management fees across different property types, on the state level and at the city and regional levels.
Based on this data, property managers in the U.S. typically charge 8.78% of the monthly rent for their ongoing management fee.
But remember that additional costs may likely occur (e.g., tenant placement fees, etc.) on top of the management fee either on a month-by-month or case-by-case basis.
This article has been reviewed by our editorial team. It has been approved for publication in accordance with our editorial policy.