Hiring a property manager to handle your properties can be smart if you are a landlord or a real estate investor. Property managers can help you with rent collection, tenant screening, maintenance and repairs, and even legal issues. However, one of the most common concerns of property owners when hiring a property manager is the cost. This post will discuss the percentage of rent property managers typically take.
The Standard Percentage Rate
The standard percentage rate that most property managers charge is between 8% and 12% of the monthly rent. For example, if your property generates $2,000 monthly in rental income, you can expect to pay between $160 and $240 monthly for property management services. This percentage can vary depending on several factors, such as the number of properties being managed, the location of the properties, and the services provided by the property manager.
In addition to the standard percentage rate, there may be additional fees that property managers charge. For example, some property managers may charge a flat fee for tenant placement, ranging from a few hundred dollars to a full month’s rent. Others may charge a fee for lease renewals or early termination of leases. Ensure you understand any additional fees the property manager may charge before signing a contract.
DIY Property Management
If you want to save money on property management fees, consider managing your properties yourself. While this can be a good option for some, it is important to understand the time commitment involved. Managing properties can be a full-time job, and it may only be worth the savings if you have the time or expertise to handle it yourself.
Benefits of Hiring a Property Manager
While property management fees may seem like an additional expense, the benefits of hiring a property manager often outweigh the costs. For example, a property manager can help you save time and reduce stress by handling rent collection, tenant screening, and maintenance and repairs. Additionally, a property manager can help you avoid legal issues by ensuring that your properties are in compliance with local and federal laws and regulations.
Another benefit of hiring a property manager is that they can help you maximize your rental income. Property managers have experience setting rental rates and can help you determine the optimal rent for your properties. Additionally, a property manager can help you attract and retain high-quality tenants, which can help reduce turnover and vacancy rates.
How to Choose a Property Manager
When choosing a property manager, it is important to research and chooses a reputable and experienced professional. Some factors to consider when choosing a property manager include:
- Experience: Look for a property manager with experience managing similar properties.
- Reputation: Check online reviews and ask for references to ensure the property manager has a good reputation.
- Services: Make sure that the property manager offers the services that you need, such as rent collection, tenant screening, and maintenance and repairs.
- Fees: Understand the property manager’s fees, including additional fees for services such as tenant placement or lease renewals.
Risks of DIY Property Management
While managing your properties yourself can help you save money on property management fees, there are also risks involved. For example, if you do not have experience in property management, you may make mistakes that can lead to legal issues or damage to your properties. Also, managing properties can be time-consuming and may not be worth the savings if you sacrifice your personal or professional life.
Property managers typically charge between 8% and 12% of the monthly rent for their services. This percentage can vary depending on several factors, and there may be additional fees charged by the property manager. If you are considering hiring a property manager, make sure you understand the costs involved and what services are included.