Average property management cost for a single-family rental

---

If you're looking to invest in single-family rental properties, you may be considering a property manager to handle the day to day aspects of running your property (or portfolio of properties). By hiring a property manager you'll certainly save yourself some time by delegating tasks such as:

• Finding quality tenants
• Handling property maintenance and repairs
• Producing lease agreements
• Maintaining familiarity with and helping you abide by state and local landlord-tenant laws

However, this convenience comes at a cost, so you'll want to compare the trade offs and ensure the property manager you pick (provided you decide to hire one) falls within your budget and is providing the value you expect for the cost.

What is the standard assumption for rental property management cost?

The cost of hiring a property manager will vary significantly depending on the scope of their responsibility and the market you're investing in, but in general 8 to 12% of monthly rent is a good starting assumption for the cost. Flat fees (e.g. $X / month are rare -- typically fees are framed as a % of the rent). To drill down and obtain a more accurate cost, you'll want to better understand the property management firm's fee structure along with what services are / are not included.

Common fees for single-family rental property management

Below is a breakdown of the key costs of property managers. By learning more about the responsibilities and associated costs you can better determine for yourself (in conjunction with your projected budget / cash flow) what makes the most sense in terms of property management for your rental.

• General management fee
• Typically, each property manager will charge a base rate (expressed as a % of rent) just to manage your property. We've found this to be somewhere in the 6-8% range
• Finding a new tenant
  • Beyond the base fee, it's common to be charged incrementally for the property manager to find a new tenant. One month's rent is a common assumption here
• Lease renewal
  • If the same tenant is renewing their lease, you'll still likely be charged a smaller fee from your property manager to handle the lease renewal / paperwork. Costs here can range from a flat rate of a couple hundred dollars to 20% of one month's rent
• Handling property maintenance and repairs
  • The property manager will charge you the cost of any maintenance / repairs, and may also charge you incrementally for their time spent coordinating them. This line item can be more unpredictable and costly, so we find it's important to monitor closely (and even set up approval thresholds where they need your OK before spending $X on a repair)
  • It's also worth noting that if you have any inclination to DIY some of the smaller repairs (say, removing hair from a clogged drain or winterizing sprinklers) then you may want to route maintenance / repairs through you rather than your property manager. In general, they won't be structurally as incentivized as you to find competitive prices and it can be frustrating to spend meaningful money on something that you could easily do yourself
• Eviction fee
  • If you find yourself needing to evict a tenant, the property manager will typically charge a flat fee of a few hundred dollars, plus court / legal costs to deal with this

The bottom line

Depending on the scale of your investments, managing properties can range from quite reasonable up to a full-time job. It will be important to factor in what responsibilities you're planning to assume across what properties when projecting out cash flow / returns and ensuring any property management costs are fully included in your budget. As you scale, you may also find it cheaper to retain your own employee to handle property management (as well as one to handle common maintenance / repair requests) -- this is worth considering early in your investment journey since geographical proximity of your properties will play a key role in the affordability of this.