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You worked with an incredible real estate agent and scored the perfect rental property. Now you think you might want to work with a property management company to represent your property. This is a big deal. Not only are you giving up some of the control, but you're also sacrificing some of your income. So, is it worth it? Working with a property manager is a decision many encourage. Here is how much you can expect to pay in property management fees.

What do property managers charge?

Property management fees are generally charged as a commission based fee,flat fee, or billed per project. In general, expect to pay a residential property management company between 8-12 percent collected rent on the property, plus expenses. For example, if a fully occupied 10-unit apartment building brings in $20,000 per month, the property manager will receive approximately $1,000 in addition to other monthly fees.

There are many factors taken into account to determine the monthly fee, so you'll want to find out the typical local rates for your property type.

What do property manager fees cover?

Property managers keep your occupied by a reliable tenant, as well as handle some of the grunt work, like maintenance management or dealing with the eviction process. Every management company is different, so make sure you check that the fees they charge are detailed in a written contract with all terms agreed upon in advance.

The most common fees to expect are:

On-boarding Fee

A one-time onboarding fee may be charged to establish the partnership and open the account.

Vacancy Fee

Some property managers collect a vacancy fee, which can be a small flat fee or the regular monthly management fee for unoccupied units.

Late Fee

When tenant submits a late rent check and pays the fee, the property manager could collect a portion or all of the fees charged to the tenant, or pass the late payment amount over to you.

Maintenance Fee

The property managers may charge you a markup for the cost of repairs and property maintenance and keep the difference.

Lease Renewal Fee

If the tenant chooses to renew the lease, the management company may charge a flat fee per property, or a full month's rent.

Eviction Fee

This process can eat up a lot of time, especially if it goes to court. The amount of the eviction fee is decided by the amount of effort and time it took to fix the situation.

Miscellaneous Property Management Fees

Management companies may keep all, part of, or none of the income associated with returned check fees, rental income for pets, lease violation fees, unpaid invoice fees, bill payment fees — even income from laundry or vending machines!

Some owners may feel like they are overpaying for management services, especially when all the extra, unexpected fees stack up. Others see it see it as lost income altogether. However, when a manager handles time-consuming or stressful duties, such as late-night emergency calls and hunting down tenants for late rent, you won't feel like you're wasting money. Everything a property manager does for your investment promotes the success of the property. Appreciate and understand the cost of the service.

What to Watch For

Hiring a property manager doesn't mean you're off the hook with responsibilities, especially if the management company isn't measuring up. Watch for warning signs, like the property is behind on inspection or maintenance work gets overlooked, or you aren't getting a detailed report of your income and expenses related to the property. If you aren't getting a detailed report, ask for one. Are your units are full of less than stellar tenants? Asking your property manager how many clients they've had to evict — the number should be low — will give you an idea of their ability to screen new tenants.

Investing in real estate is smart. So is saving money on realtor commissions by using Clever. Clever helps keep your acquisition costs low so you can see your ROI skyrocket. Call us at 1-833-2-CLEVER or complete our online form to get connected a top-rated local agent that will list your home with a discounted commission rate.


Luke Babich

Luke Babich is the co-founder and Chief Strategy Officer of Clever Real Estate, the free online service that connects you with top agents to save money on commission. He's an active real estate investor and licensed agent in St. Louis, with 22 units currently. Luke graduated from Stanford University and subsequently ran a historic data-driven campaign for University City City Council. Luke's writing has been featured in Homeland Security Today, Mashvisor, Payments Journal, and Bigger Pockets.

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