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How Much Do Property Managers Charge Per Month?

10/11/2022

5 Comments

 
Hiring a good property manager is more of an asset than an expense for successful real estate investors.

The best property management companies help you keep your rental property occupied year after year, increase your return on investment (ROI), and free up your valuable time.
How much do property managers charge per month?

How Property Management Charges Work

Typically, property management charges are structured in one of three ways:

 1. Percentage of Monthly Rent

Usually, property management companies charge a monthly fee ranging from 8% to 12% of the monthly rent collected. For example, if your monthly rent is ₹12,000, the property management fee would be ₹1200 based on a 10% average fee.

When a vacant property is leased to a new tenant, management companies typically charge a fixed fee or a fee equal to the anticipated monthly rent. Vacant properties may require additional management work, such as weekly inspections for potential break-ins or the presence of trespassers.

 2. Fixed Property Management Fee
​

Some property managers charge a flat fee rather than a percentage of the monthly rent. Usually, the fixed property management charges depend on the property type, square footage, and property management services provided.

The fixed property management charges will vary by market. While a flat fee structure may seem a good deal at first glance, management companies that collect a fixed fee may not be as motivated to maximize your property's rental income. 

 3. Sublet/Guaranteed Rent Model

In this model, the property management company will lease the property from you, and then sublease it to another tenant. The advantage is that you will get rent for your property even if your property is vacant.

While this may seem like an ideal arrangement, it comes with several disadvantages.  
The Property Management Company will ideally ask you to sign a sublease agreement with them where they will acquire the power to sub-let your property to preferred tenants. Here you will lose  control over your property. You would get lower rent than the market value, as clearly the management company would need to earn a profit, even after taking a hit of the vacancy loss. 
It is difficult to ensure monthly payments when your property is vacant, hence the chances of default are very high, as we have seen with almost all companies offering this model, during the pandemic. 

Additional Property Management Fees

Property management charges are not always all-inclusive. A management company may charge for additional services besides the monthly fee collected:

Contract Setup Fee

Most property management firms will charge a one-time setup fee for the following costs:

  • Creating your account for bookkeeping
  • Assisting with applying for any required tax or business licences
  • Initial property inspection
  • Inventory audit
  • Marketing materials. 
Overseeing Vacant Property

Because there are more potential problems, managing a vacant property can be more labour-intensive for a property management company than managing a tenanted property.

Because utilities must be left on for showings, security lights could burn out, or water leaks could unexpectedly occur. Even in the best neighbourhoods, the longer a rental property sits vacant, the greater the risk of it being broken into or vandalised. Therefore, the property manager will need to visit the property at least once a week to help minimise these risks.

Premium marketing charges

There are plenty of rental listing websites where you can list a vacant rental property and reach out to millions of potential tenants each month. Some of these charge a premium fee for a more prominent listing. 

While some property management companies do not charge this fee back to a customer, some others do. At PropertyAngel, we completely absorb this cost. It is not charged to the customer.

Repairs and Maintenance | property management charges

The best property management companies will have a well-established network of reliable vendors. Maintenance and repair costs should be lower than what you could find on your own because most vendors offer a property management company's preferred pricing in exchange for the business. Thus, when interviewing prospective property management companies, make sure to ask about any labour and supply cost markups. For example, at PropertyAngel we have standardised most maintenance costs and this is shared with the customers at the outset. 

Routine Inspection Fees

Generally, a residential rental property should be inspected every three to six months. Routine inspections help to catch and fix minor issues before they become big and expensive, as well as to ensure that the tenant is not causing damage to the property.

Like PropertyAngel, some property management companies will conduct a semi-annual inspection at no charge. Others may request that you pay for each inspection for a lower monthly property management fee. 

Evictions

Although it doesn't happen often, there may come a time when you must evict a tenant for nonpayment of rent, causing repeated disruption in the neighbourhood, or destroying your rental property. Big property management companies may have the expertise to handle evictions on their own, whereas others will hire a local law firm that specialises in residential evictions to handle the work, which leads to eviction fees.

Contract Termination Fee | property management charges

Unless the landlord breaches the property management contract "for cause," such as the manager failing to perform as agreed, breaking the property management agreement early will usually result in an early contract termination fee.

Termination fees can differ greatly and can range from one month's lost income to a landlord being sued for breach of contract. 

About PropertyAngel

PropertyAngel, a leading O2O (online-to-offline) property management company, headquartered in Bangalore, and founded to serve landlords with the best property management services. To make your real estate portfolio work for you, fill out our Inquiry Form or call us at (91-80-47095974) or (91-7406484455). 

Do visit our blog page for more property management updates.
5 Comments
cash for house link
14/8/2023 06:36:00 am

This article provides a comprehensive overview of property management charges, covering different pricing structures and additional fees. It highlights the importance of considering factors beyond just the monthly fee when choosing a property management company. An informative guide for property investors.

Reply
Sell my home link
17/8/2023 11:30:20 am

This article provides valuable insights into property management charges, offering options like percentage-based fees, fixed fees, and sublet models. It emphasizes the importance of understanding additional costs for services like inspections, maintenance, and evictions. PropertyAngel's approach seems customer-focused and comprehensive.

Reply
cash for house link
24/9/2023 12:36:53 pm

I appreciate this breakdown of property management charges. It's essential for property owners like me to understand the different fee structures and potential additional costs associated with hiring a property management company. The insight into the sublet/guaranteed rent model's pros and cons is particularly helpful in making an informed decision. Thanks for sharing this valuable information!

Reply
Harsha
29/12/2024 09:09:05 pm

I wanted to know the property management charges.one of my client I'd looking for his property. Please let us know the conditions and charges

Reply
Raj Properties link
2/6/2025 12:14:45 am

Intresting blog!! I really like this blog very much.
Thankou for sharing this to us.
https://www.rajproperties.com/apartments-for-rent-near-berkeley-ca.html

Reply



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