Key Takeaways
- Property management can cost 20%–30% of your annual rental income, with fees for setup, leasing, maintenance, and more.
- Hiring a property manager reduces stress and saves time, handling everything from rent collection and legal compliance to tenant screening and repairs.
- Costs vary widely by location, property type, and company, so it’s essential to review what’s included in each service package to avoid hidden fees.
Managing a rental property is no walk in the park. In fact, it can be as stressful and time-consuming as a full-time job. After all, landlords have tons of responsibilities, from marketing their rentals and screening tenants to coordinating maintenance and ensuring legal compliance.
Even with a good schedule in place, responsibilities can quickly pile up. That’s why most landlords decide to partner with a property manager when renting out their home.
The right property manager will reduce your workload while helping you maximize your profits, however, their services don’t come for free. Property management fees can vary widely from state to state. Moreover, factors such as property size, location, and number of units can bring the price up.
To determine whether investing in a property manager is worth it, you should understand the usual fees they charge. In this guide, the team at Oklahoma Red Door Management will break down common property management fees so you can get a sense of how much you’ll have to pay. Let’s get started!
What Does Property Management Entail?
Before evaluating the costs, it’s worth understanding what you’d be paying for in the first place. A good property manager can help you with the following tasks:
- Pricing Your Rental: Property managers typically start by conducting a detailed market analysis of your rental. This ensures you’re not underpricing and leaving money on the table or overpricing and risking extended vacancies.
- Marketing Your Rental: From taking professional photos to writing compelling listings and advertising on high-traffic rental platforms, property managers help your property stand out. They also field inquiries, coordinate showings, and follow up with applicants, streamlining the leasing process.
- Screening Tenants: A good tenant means fewer issues, timely rent payments, and less turnover. Property managers help you find quality tenants by conducting thorough background checks, credit checks, income verification, and reference checks.
- Leasing and Legal Paperwork: Property managers can write legally sound lease agreements for your rental, as well as help you ensure compliance with local, state, and federal laws. They can also issue required disclosures and notices as needed.
- Collecting Rent: Most property managers offer access to an online payment portal, which makes it easier for tenants to pay rent on time. Moreover, they send timely reminders and enforce late fees to encourage tenants to always pay on time.
- Maintenance and Repairs: Whether it’s a leaky faucet or a broken HVAC system, property managers coordinate repairs quickly and efficiently, often at cheaper rates through preferred vendors or bulk service discounts.
- Regular Inspections: A good property manager will inspect your property regularly, whether on a monthly, quarterly, or semi-annual basis, to ensure it’s in good condition and tenants are complying with the lease terms.
- Accounting and Financial Reporting: Most companies provide bookkeeping services, helping you keep track of your income and expenses. Moreover, property managers often provide their clients with monthly and year-end financial statements, making it easier to file taxes and track your property's performance over the year.
A Breakdown of Common Property Management Fees
Property management fees can vary widely from company to company. Moreover, they can be affected by factors such as property size, location, and number of units to be managed. With this in mind, here is an estimate of the most common property management fees you’ll encounter:
- Setup Fee: This is a one-time charge for starting your account and setting up your property in their system. It typically costs between $200 and $500, but some managers may waive it or offer special discounts.
- Monthly Management Fee: Typically, managers charge 6% to 12% of the rent collected each month as an ongoing fee for their services. Others may charge a flat monthly rate, typically between $100 and $400 per property. This fee covers everyday tasks like rent collection, basic maintenance coordination, and property check-ins.
- Leasing or Tenant Placement Fee: When a tenant leaves, property managers often charge extra for advertising the property, showing it, handling applications, and screening tenants. This fee is usually 50% to 100% of one month’s rent or a flat rate between $500 and $1,000 per tenant.
- Lease Renewal Fee: If a current tenant wants to renew their lease, some managers charge a fee. Ranging from $100 to $400 or up to 30% of one month’s rent, this fee covers all the duties and paperwork involved in renewing a tenant’s lease.
- Maintenance Fees: Owners are responsible for paying for repairs and maintenance. However, some managers charge an extra 5% to 15% markup on repair bills or charge a fee for coordinating the work. Some may also charge for emergency services, inspections, or seasonal tasks.
- Vacancy Fees: When a property is empty, managers typically charge a reduced monthly fee or a flat rate ($50 to $200) to cover the time spent on inspections, maintenance, and advertising.
- Eviction Fees: If a tenant needs to be evicted, you should expect to pay $200 to $500 to the property manager, plus court and legal fees. Some managers offer optional eviction protection plans for $10–$30 per month.
- Additional Fees: Extra services like paying bills, inspecting the property more regularly, replacing the locks, or handling insurance claims may come with additional charges. Always ask for a full list of what’s included in the monthly fee to avoid surprises.
As you can see, you could spend anywhere from $4,000 to $6,000 a year on property management fees, which could be roughly 20% to 30% of your annual rental income. Keep in mind that fees tend to be higher in the first year, with lower costs in subsequent years if tenant turnover is low and no evictions occur.
Bottom Line
Managing a rental property can be incredibly challenging and time-consuming. But it doesn’t have to be this way! If you’re a first-time landlord struggling with your new responsibilities or an experienced investor with a growing portfolio, hiring a property manager can help you.
The right professional will manage the day-to-day operations of your rental and provide any needed guidance to improve its profits. To reap these benefits, you should be willing to spend 20% to 30% of your annual rental income on property management fees.
If you’re looking for a reliable property management company in the OKC metro area with no hidden fees, contact Oklahoma Red Door Management!