How Much Do Property Managers Charge? Understanding The Process

Key Takeaways:

Property management fees generally range from the monthly rent.
Additional charges may apply for services like leasing, maintenance, or evictions.
It’s important to understand the total cost of services included in property management fees.

Introduction

Property management services play a crucial role in the real estate industry, especially for landlords who own multiple properties or who are looking to manage their investments more efficiently. PhillyLiving Management Group is here to help! But when it comes to hiring a property manager, a common question arises: How much do property managers charge?

Property management fees typically range from 5% to 10% of the monthly rent. This is dependent on the rent roll, portfolio size, and property condition. If you’re a landlord considering property management services, understanding the breakdown of these fees is essential for making an informed decision.

This article will dive into the different pricing models, services included in property management fees, and key factors that can affect how much you’ll pay. Keep reading to find out what you can expect when hiring a property manager.

What is Property Management and Why Do You Need It?

Definition of Property Management

Property management involves overseeing the daily operations of rental properties. Property managers handle everything from marketing the property, screening tenants, collecting rent, conducting maintenance, and addressing legal concerns. They help make the life of a landlord much easier by managing the day-to-day tasks that come with rental ownership.

Why You Might Need a Property Manager

If you’re a busy landlord, managing your property can be time-consuming, especially if you have multiple units or live far from the property. Property management companies can provide peace of mind by handling tenant issues, ensuring your property is well-maintained, and maximizing your rental income.

Types of Property Management Services and Their Costs

Full-Service Property Management

A full-service property management company handles all aspects of property management, including tenant placement, maintenance, rent collection, and tenant relations. These companies provide a comprehensive solution for landlords who want a hands-off experience.

What does a full-service property manager offer?
- Marketing your property, tenant screening, lease agreements, maintenance, rent collection, and more.
Costs for full-service property management:
- Full-service property management typically charges a percentage of the monthly rent, usually between 5% to 10%. However, this percentage can vary based on rent roll, portfolio size, and property condition.

Leasing Only Property Management

Leasing-only services are for landlords who prefer to manage the property themselves but need help with tenant placement and leasing.

What is leasing-only property management?
- Leasing-only services cover advertising, showing, and tenant screening. The landlord will handle the rest once a qualified tenant has signed a lease.
Cost breakdown for leasing-only services:
- Leasing fees typically range from 50% to 100% of the first month’s rent. This service is ideal for landlords who want to remain involved but need assistance with tenant placement.

Common Property Management Fee Structures

Percentage-Based Fees

The most common fee structure is based on a percentage of the monthly rent.

Percentage of monthly rent:
- Property management fees usually fall between 5% to 10% of monthly rent
Factors that influence rates:
- Property size, number of units, condition of the property, rent roll, and whether you require additional services

Flat Fees

Some property management companies charge a flat fee instead of a percentage of rent. This can work well for landlords who want predictable costs.

Flat-fee pricing structure:
- Typically, flat fees can range from $100 to $300 per month, depending on the services’ complexity.
Benefits and drawbacks of flat fees:
- The main advantage of flat fees is that you know exactly how much you’ll pay each month. However, they may not always be cost-effective for larger or more expensive properties.

Property Management for Apartments

Property management fees for apartments are usually based on the rent roll or the number of units in the building. Property managers often apply a sliding scale, where the higher the rent roll, the lower the percentage fee charged.

What to expect for apartments:
- The fee is typically calculated as a percentage of the total rent roll or based on the number of units in the building. In cases where the rent roll is large, property managers often offer lower fees to accommodate larger-scale operations.
Leasing Fees:
- Property managers typically charge one full month’s rent for apartment buildings for leasing services, especially if they need to co-broker with other agents to find tenants.
Why proximity and rent familiarity matter:
- Property managers first assess whether they are a good fit for apartment management by evaluating the local rental market. If they are familiar with the rental prices in the area, they are more likely to offer a competitive and effective service. Additionally, property managers prefer properties within a portfolio proximity for operational efficiency.

Property Management for Condos

Property management for condominiums can be slightly different than for other types of properties due to the specific dynamics of condo buildings. Several factors influence the pricing and the management approach for condos.

Number of Units:
- The number of units in a condo building is a key factor. Smaller buildings may have more personalized management, while larger buildings may require more administrative work.
Building Age and Type:
- Whether the building is new or old can affect management fees. New buildings often have fewer issues and may require less frequent maintenance, while older buildings may need more attention, impacting the cost.
Building Funding and Turnover:
- Property managers may charge a lower fee if the building is being funded properly and has a solid financial base as less risk is involved. However, if the building is still being turned over by the declarant (the person or entity selling the units), management fees may be higher due to increased responsibilities.

Additional Costs in Property Management

Maintenance and Repair Fees

Most property managers charge landlords for maintenance and repairs. These costs are often passed on to tenants, but landlords should be aware of potential out-of-pocket expenses.

How much do property managers charge for maintenance?
- Maintenance fees can vary based on the severity of repairs or services required. Some companies charge an additional 10% to 20% markup on maintenance bills.

Leasing and Advertising Fees

Property managers often charge additional fees for advertising your rental property and leasing services.

Are there extra fees for advertising or tenant placement?
- Leasing and advertising fees typically cost 50% to 100% of the first month’s rent, which can cover costs such as listing the property, showing the unit, and screening tenants.

Eviction Fees

If an eviction is necessary, the property manager typically handles the process, including court appearances and legal documentation.

What do property managers charge for eviction services?
- Eviction fees can range from $500 to $2,000 depending on the complexity and whether legal representation is involved.

How Property Management Companies in Philly Set Their Fees

Understanding Philadelphia Property Management Fees

Property management fees in Philadelphia tend to align with national averages but can be higher due to the city’s competitive rental market. Urban markets often see higher fees due to the increased demand for rental properties and additional regulations.

Comparison with other major cities:
- Property managers in cities like New York or Los Angeles may charge a higher percentage, but Philly remains competitive for property managers.

How to Choose the Right Property Management Company

What to Look for in a Property Manager

Choosing the right property manager is crucial to maximizing the value of your investment.

Key factors when choosing a property management company:
- Look for companies with experience, strong reviews, and a good reputation. A well-established property manager will likely offer more comprehensive services at competitive prices.

Questions to Ask About Property Management Fees

Before signing a contract with a property manager, ask these questions to ensure the fees are clear and transparent:

What services are included in the fee?
Are there any additional fees for maintenance, leasing, or evictions?
Is the fee percentage negotiable?

Video Resources on Property Management Costs

Frequently Asked Questions

1. What is the average property management fee in Philadelphia?

Property management fees in Philadelphia typically range from 5% to 10% of the monthly rent, depending on the property size and services offered.

2. Are property management fees tax-deductible?

Yes, property management fees are tax-deductible as a business expense, as long as they are necessary for the operation of your rental property.

3. Can I negotiate property management fees?

Yes, it is possible to negotiate fees with property management companies, especially if you are offering multiple properties or long-term contracts.

4. What is included in the management fee?

Most property management companies include tenant placement, rent collection, and maintenance coordination in their fees. Additional services like eviction handling or major repairs may incur extra costs.

Conclusion

At PhillyLiving Management Group, we aim to empower and support real estate investors and tenants through education and advocacy, reducing vacancies, optimizing portfolios, and cultivating long-term wealth. We provide clear, thorough, and honest communication with our customers and employees, resulting in peace of mind.

PhillyLiving Management Group is the property management division of PhillyLiving, led by Matt Bremner. It is a second-generation, family-owned business that began in 1982 when Bob Bremner started managing properties in Washington Square. Today, the company serves homeowners, individual investors, community associations, banks, municipalities, portfolio managers, and national institutions such as Freddie Mac and Fannie Mae. PhillyLiving Management Group has proven to turn around rental investments and solve operational problems. It has grown to 3,000 units under management around the Greater Philadelphia market.

For more information about property management in Philly, check out additional resources on PhillyLiving’s property management services.

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