What if someone could make your life as an investor a hundred times easier?

Ideally, this is what a property manager can do for you. But their exact role is a mystery that leaves many investors with more questions than answers.

Wondering what properties managers do? Asking yourself “how much do property managers charge?” Keep reading to learn the answers!

Role of a Property Manager

We’ve put together a guide to help you determine how much property managers charge. First, though, we must answer a more basic question: what does a property manager do?

One basic responsibility is that property managers give tours of the property. This helps them attract new tenants while weeding out bad prospects.

A major responsibility is collecting and managing rental payments. This keeps you from having to personally shakedown tenants for money.

Good property managers also handle general property upkeep. This includes maintenance, repair, and pest control.

Property managers can also represent your property and interests in court. And whether in front of a judge or out in your community, they serve as a powerful ambassador for your brand.

Now that you know more about what property managers do, it’s time to learn more about how much they charge.

The Initial Fee

Once you decide on a property manager, you’ll be hit with a fee right away. This is sometimes referred to as a “setup fee” or an “onboarding fee.”

This fee is typically no more than a few hundred dollars. Exactly what this fee covers varies from manager to manager.

For example, some property managers will charge a fee simply to set up an account. Others may use some or all of the amount to conduct an inspection of the property.

Monthly Fees

Once you are set up with a property manager, you’ll begin paying a regular monthly fee. This is often referred to as a “management fee.”

The exact cost of this fee may vary, but an industry standard is to charge about 10% of the monthly rent for any given property. As the owner of the property, you can adjust the rental price accordingly to help absorb the cost of the manager.

Most of the day-to-day managing responsibilities should be covered by this cost. A handful of additional responsibilities (listed below) may have additional fees. However, some managers offer an all-inclusive fee that covers any and all tasks they perform within the month.

A Leasing Fee

In some ways, finding a new tenant is the most important job that a property manager has. This is why many of them will charge a leasing fee.

When they land a new tenant, most property managers will charge a portion of the monthly rent as a leasing fee. The exact amount varies wildly: some managers charge as low as 25%, but others charge far more.

What are you getting for this money? This is payment for services such as showing the home, screening applicants and preparing paperwork. For many managers, this money also goes to marketing, though some charge separately for this.

Expect to pay a smaller fee (typically no more than $200-$300) when a tenant renews their lease as well. While less work goes into keeping existing tenants, it’s important to keep rental income steady.

Marketing Fee

If it is not built into the leasing fee, a property manager may charge for advertising your home. The exact amount they charge is commensurate with the marketing services performed, but this is usually no more than $200.

That cost covers assorted forms of advertising, including free listings on social media and Craigslist. But it can also cover paid social media advertisements, Zillow listings, and so on.

While it’s better to have the marketing fee built-in, good advertisements will quickly pay for themselves in the form of new leases.

Assorted Maintenance Fees

Another major responsibility of a property manager is to handle repairs and maintenance. While you must pay the direct cost for these things, most managers will charge an additional 10%-20% of that amount.

This fee covers the time they will spend overseeing any maintenance. You are also paying for their expertise in finding the most efficient and cost-effective professionals to handle repairs.

Unfortunately, repairs and maintenance are a regular reality for investors. Make sure to budget for these things so they do not catch you unawares.

Who Should Hire a Property Manager?

That brings us to the big question: who, exactly, needs a property manager? Not every investor is going to need one.

First, property managers are a great choice if you don’t have a lot of spare time. Without a manager, you’ll personally be handling every aspect of rent collection, maintenance, and repair.

Second, property managers work well with those who want a “hands-off” approach to managing their properties. If you like to be seriously involved in the day-to-day operations, you don’t really need a manager.

Finally, property managers are great for those who have money to spare. If you are just starting out as an investor, you may not have the spare cash to pay someone else and may prefer to pocket all profits for yourself.

Is It Worth It?

So, is it worth it to hire a property manager? It all depends on your perspective.

Many investors have a lot of experience in maintenance and repair. And many investors are also good at working with people, which helps them to deal directly with tenants. To such investors, a property manager is unnecessary.

Other investors, though, don’t know the first thing about fixing a toilet or repairing a garage door. And they may not love working closely with strange tenants. To these investors, it’s worth it to have someone else handle all the little stuff.

How Much Do Property Managers Charge? The Bottom Line

Now you have an answer to “how much do property managers charge?” But do you know where to find your next investment property?

We specialize in helping buyers and sellers make all their housing dreams come true. To see how we can help you make a profit as an investor, contact us today!