How Much Do Property Managers Charge? Our Complete Guide

How Much Do Property Managers Charge? Our Complete Guide

Last Updated: January 13, 2023 by Cameron Smith

If you’re a real estate investor, hiring a property manager could be an excellent decision. But you have to be prepared for property management fees, which can significantly affect your bottom line. Property management fees usually add up to 8%-12% of your monthly rental income.

There are many different property management fees you might encounter. This guide will break down:

  • What property management fees are
  • How property management fees are calculated
  • The types of property management fees

Property management companies usually charge a percentage of the monthly rent collected from the properties they oversee. The percentage of monthly rent is often between 8% and 12%. So, if you collect $1500 per month, the property management company’s fee would be between $120 and $180.

However, some property management companies charge fixed fees instead. Fixed fee structures mean you pay the exact same amount of money each month regardless of how much rent is collected. Both fee structures have their advantages.

Fixed Management Fees vs. Percentage-Based Management Fees

A fixed management fee stays the same no matter what. For example, if you collect $1500 in rent one month but $1200 in rent the next month due to a vacant property, you’ll still pay your property manager the same rate.

A fixed management fee structure can be advantageous in some circumstances, such as when you make more rental income than you do normally. However, fixed management fees may not incentivize management companies to collect rent from your properties as eagerly as otherwise. Furthermore, they can be expensive if you make less rental income than you do normally.

Percentage-based management fees are much more common than fixed fees. They are anywhere between 8% and 12% of the total collected monthly rent in most cases.

As a result, you may pay a property management company more or less money each month depending on how much money you bring in. If you collect $1500 in rent for one month with a 10% property management fee, you’ll owe the property manager $150.

But if you collect $1200 in rent another month, you’ll only owe them $120. A percentage-based management fee structure can be advantageous, as you pay less money when you make less as well.

However, most property management companies charge fixed vacancy fees (see more below) to cover the reduced income they earn. Read your property management contract carefully before signing on with any company so you fully understand the fee situation and aren’t taken advantage of.

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Management Fees – Rent Due vs. Rent Collected

Percentage-based management fees are calculated based on “rent due” or “rent collected.” Your contract should always state that the fee is calculated based on “rent collected.” Otherwise, you will have to pay the stated monthly percentage even if you don’t collect as much in rental income as you project.

Read through your property management contract carefully before signing it. Some low-quality property managers may take advantage of new investors by requiring their percentage-based management fees be calculated based on rent due. Rent due is the amount of money due each month from all of your tenants or the total projected rental income.

But there’s never any guarantee your tenants will pay that money. What if, for example, the rent due for your property is $2,000 for two units, but one of your tenants moves out suddenly and does not pay $1,000? You’re $1,000 in the hole. But if your contract requires you to pay your property manager 10% based on rent due, you owe them $200 even though you did not collect half of your month’s rent.

A good property management contract should base its percentage on rent collected instead. If the fee is based on rent collected, the property management company only charges you based on the money you take in. In the above example, you would only be charged $100 since you only collected $1,000 from your tenant.

If a property management company does not agree to charge you based on rent collected, do not hire them. Find and choose another property manager instead.

Average Management Fees & How They Can Differ

Most property management companies charge around 10% of rent collected from properties they oversee. But the exact monthly rent charged depends on the management company and the types of properties they oversee.

Property management companies that oversee properties with many units, such as 10 or more, may charge a lower percentage for their monthly rates. When they oversee such properties, each month’s rental payment is worth more money, so they earn enough to operate their businesses with lower percentage fees.

The reverse is true for management companies that oversee a few single-family homes. Say that you own a property and charge $2,000 in monthly rent to the tenant. A 5% fee would only net the property management company $100. That’s hardly enough to cover the cost of doing business.

Instead, such a company might charge a 10% fee or $200, which is much more reasonable. Keep in mind that these are only guidelines, and that each property management company (and its fee structure) is different.

But while 10% based on rent collected is the average monthly fee for a property management company, it’s not the only rate you’ll see in your search. Some companies, particularly large ones with many clients, may offer “discounted” or “low-cost rates” for new property owners or those with only one to a few rental units to manage.

Discounted or low-cost management fee packages may be cheaper than average (possibly even less than 10% per month). But they may lack some of the features you expect from a management company, such as:

  • Property maintenance services
  • Eviction services (which can be costly and time-consuming, so they’re not always included in low-cost management packages)
  • Tenant placement (which may still be available, albeit as one-time charges for each tenant placed

But you may also find large property management companies that offer discounts to landlords with many units for them to manage. This can be advantageous for management companies – if they get paid based on rent collected, the more units they oversee, the bigger their monthly rate is as well.

They’re incentivized to offer volume discounts to landlords with many units. Such discounts are usually a few percentage points off the monthly rate (for example, a monthly rate based on rent collected of 9% instead of 11%).

On the flipside, some property management companies offer premium service packages for higher-than-average rates. If you choose a high-quality, high-cost property management service package, you may benefit from additional services such as:

  • Tenant recycling services
  • Maintenance of advanced tenant amenities or facilities (i.e., pools, gyms, etc.)
  • Better or more aggressive marketing
  • HOA standard checks and maintenance

These high-cost packages can be good if you have the income for it and you think they’ll increase the value of your rental properties (thereby drawing more tenants to them and allowing you to make more money).

As you can see, you get what you pay for with your monthly property management fee. Consider the costs of different management companies – and what each monthly rate gets you in terms of services and perks – before signing any contract.

Property manager costs   on iPropertyManagement.com

What Kinds of Fees Do Property Managers Charge?

Property managers charge many kinds of fees. Added together, these fees comprise the total monthly charges you pay them each month or billing cycle. Property managers charge one-time fees, ongoing or regular fees, and occasional fees for less-frequent labor.

One-time property management fees are usually charged at the beginning or end of a contract. Regular fees are incurred more frequently and cover the cost of labor for daily operations or services. Other fees, such as those covering labor for eviction services, may be more or less frequent depending on your property and the quality of your tenants.

Regardless, most property management companies charge you all of these fees as one bill at the end of each billing cycle. For example, you should never receive a bill for a repair charge on the same day as the repair job. If a repair for a tenant’s appliance costs more than intended, you might see an extra fee added to that month’s total bill.

One-Time Property Management Fees

Some property management fees are charged only once. One-time fees are usually charged at the beginning or end of your contract with a given company. They include contract setup or onboarding fees and (avoidable) contract termination fees.

Ongoing/Regular Property Management Fees

Most property management fees include ongoing or regular charges. Regular property management fees cover the expected labor and expenses that are required to oversee and maintain properties, as well as manage tenants or tenant-related duties.

Regular property management fees include:

  • Late payment fees
  • Repair or maintenance fees
  • Reserve fund fees
  • Property update fees
  • Inspection fees
  • Eviction fees
  • Lease renewal fees
  • Services provided fees
  • Pet fees

Other Property Management Fees

While most property management fees are regular and therefore predictable, some are rare or only occasionally needed. Rarer property management fees cover less frequent labor or expenses incurred by your property manager in the course of their duties as stipulated by your contract.

Less common property management fees include:

  • Vacant property oversight fees
  • Tenant-occupied unit fees
  • Property leasing and/or advertising fees
  • Eviction or collection fees
  • Bill pay fees
  • Unpaid invoice fees
  • Property sale commissions
  • Lease violation fees
  • Returned check fees
  • Extra duties fees

Property manager costs   on iPropertyManagement.com

Contract Setup/Onboarding Fee

Contract setup or onboarding fees are common one-time fees that cover the cost of setting up a new account with a property management company. They are usually between $100 and $300. But investors should try to avoid onboarding fees whenever possible.

Most property management companies that charge contract setup fees are low-quality, and they may be trying to recoup the costs of their business through unnecessary fees like this. Such fees cover the cost of labor to set up an account, to handle paperwork, to perform an initial inspection of the property, to apply for required licenses, and to provide tenants with welcome packages.

But in reality, it’s an unnecessary fee. If a property management company looks good aside from a contract setup fee, try to negotiate this fee down to less than $300. Most paperwork filing for a new client doesn’t cost that much to handle.

Furthermore, make sure that the onboarding fee is not charged per rental tenant. If the clause states the onboarding fee is per tenant, look for a different management company, even if the fee is “low.” For example, if a property management company charges $25 per tenant for an onboarding fee, and you have 100 tenants, you could accidentally be roped into paying $2,500 just to start working with a new management firm.

Property Leasing/Tenant Placement Fees

Property leasing fees or tenant placement fees are common one-time or ongoing fees charged so property management companies can quickly lease and fill vacant rental units. Leasing fees can be flat fees of $300-$500 or between 25% and 75% of the first month’s rent for the unit.

Property leasing fees cover associated costs to market or advertise vacant units, as well as:

  • Screen tenants for the unit
  • Show prospective tenants the unit
  • Make lease paperwork for future tenants
  • Performing move-in inspections
  • Anything else associated with filling a vacant rental unit

Property leasing fees are only charged when the property manager has to fill a new unit. These fees are acceptable, but you should negotiate them and consider them carefully.

If they are too high, property managers have a financial incentive to constantly rotate your units through new tenants. After all, they get more money for filling a vacant unit than keeping a unit filled (especially when you consider extra fees like eviction fees, etc.).

To avoid being taken advantage of you should negotiate your property leasing fee to be:

  • The same no matter how long it takes to fill a vacant rental unit. You should not be monetarily penalized if the property management company advertises available units poorly or does a badge of marketing your properties
  • Only chargeable if the property management company finds a new tenant – if you find a new tenant, you don’t need to pay the fee

Lastly, have your attorney consider the possibility of incentive clauses. For example, you might include a clause in the management contract that gives you a full refund for the property lease fee if the new tenant breaks the lease or is evicted within one year of moving in.

Overall, leasing fees are fine, but they need to be carefully considered before you sign a management contract.

Standalone vs. Ongoing Placement Costs

As you seek to fill your rental properties, you may discover some property management companies that offer standalone tenant placement services. These companies don’t provide the ancillary services/duties of traditional management companies. Instead, they fill your empty rental units for one-time fees.

Other management companies only fill empty units with tenants if you contract for an ongoing business relationship with them. Depending on the rental market or how often you need new tenants, either type of service can work.

For example, if you only own two single-family houses and rent them both out, you only ever need two tenants paying rent. It might be advantageous to use a standalone tenant placement service from a property management company, then handle most of the other work yourself.

If you have many rental units, however, and tenant turnover is likely to be higher, an ongoing tenant placement service from an ongoing property management company is ideal.

Note that costs between both types of services are often different. Generally, standalone tenant placement fees from management companies are higher ($500 and up). In comparison, tenant placement fees for management companies whose services you contract continually are typically lower (closer to $300).

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Repair & Maintenance Fees/Reserve Funds

Repair or maintenance fees are common ongoing charges incurred by a property manager for repairing or maintaining your properties. Most property management companies have you maintain a reserve bank or escrow account with a pool of money they can dip into when needed to cover the cost of repairs or maintenance tasks. This repair reserve is usually around $1,000-$3,000, and it’s an acceptable fee type for almost all investors.

The majority of property management companies have a network of trusted contractors, such as plumbers, pest inspectors and specialists, carpenters, and more. They employ these contractors to fix damaged items in the properties they oversee, take care of pests like rodents or cockroaches, and more.

But property management companies do not pay for these contractors out-of-pocket. Instead, they pass most of the costs of maintenance or repairs on to you, the property owner. Such an arrangement is fair and acceptable, provided that the repair and maintenance reserve fund is actually used for those duties.

The repair and maintenance fee can be used for things like:

  • Keeping common areas clean
  • Picking up trash
  • Repairing basic household items in your units, like sinks and doors
  • Removing excess snow or leaves

The repair and maintenance fee is also used for hiring and paying contractors for more specialized or involved jobs, such as replacing a bad dishwasher with a new unit.

Generally, it’s a good idea to hold a certain amount of money in reserve (either in a normal bank or escrow account) for repairs. That way, the property manager always has some emergency funds on hand to cover repairs if you are on vacation or otherwise unreachable.

How Are Repair Fees Calculated or Decided?

Many property managers will markup the repair or maintenance costs they incur to turn a profit. This is typically at a rate of 10%-20% depending on the company and type of repair job. For example, if you have a repair job that costs $100, the company takes $110-$120 from the repair reserve.

Repair or maintenance invoice markups are okay so long as the markup rate is not too high. Be sure the contract doesn’t specify an exorbitant markup rate, like 50%.

Your property management contract may outline the repair and maintenance fees form in different ways:

  • Firstly, you (the investor) can opt to authorize every repair deduction from a shared account between you and the property manager. If you trust your property management company, this is not necessary.
  • Secondly, you can choose to only be notified for account withdrawals or repairs if they are over a certain cost, such as $1,000.
  • Thirdly, you can authorize the property manager to use the repair cash account as they please. This is obviously only acceptable if you trust the property manager explicitly.

Your contract might specify that a certain amount of money has to remain in the account at all times. Or it may not require an account at all. In the latter case, your property manager will simply bill you for the extra charges for necessary repairs that month at the end of each billing cycle.

If you maintain a repair and maintenance reserve cash pool or escrow account:

  • You won’t have to pay for any maintenance costs when they occur, so long as there’s still enough money in the reserve account to meet the minimum or cover those costs.
  • You will occasionally need to put more money in the escrow account as more repairs are made and as your property manager takes money from it.

Ultimately, the repair and maintenance fee section of a management contract can be complex and in-depth in and of itself. Be sure to review this section at length with your lawyer so you know how it works, what the property manager requires, and how much (and when) you need to pay when repairs are necessary.

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Contract Termination Fee

A contract termination fee is a common, one-time fee that’s only charged when you end your business relationship with a property management company. Termination fees can range anywhere from $50-$1,000 or more. You should never sign on with a management company that includes a contract termination fee.

It’s important to read a property management contract thoroughly before signing it. In particular, you should check for termination fee clauses with your attorney. Some property managers charge you money if you stop working with them. Contract termination fees are theoretically meant to reimburse managers for lost business if you turn around and cancel your contract with them right after starting your business relationship.

But in reality, such fees can trap real estate investors into predatory relationships with bad management companies. You should only accept a contract termination fee:

  • If it is temporary –If the fee is $300 if you terminate your contract within the first two months, it’s reasonable.
  • If it is very low, such as $25 – This may feasibly be used to cover the cost of filing end-of-business paperwork for your account. However, make sure such low fees are only charged once, not per tenant or per unit the management company oversees.

If a management company tries to push a termination fee or refuses to lower it to a reasonable amount, walk away from the deal immediately.

Vacant Property Oversight Fees

Vacant property oversight fees, also called vacancy fees, are ongoing charges that cover the cost of maintaining and protecting vacant units. Vacancy fees may cost anywhere from $100 per month of vacancy per unit to much more. Vacancy fees are more common if the property management company charges you based on a percentage of monthly collected rent. These fees are acceptable, provided they are not too costly.

Some property managers claim that keeping vacant properties in good condition is hard work. In many cases, they are right. Vacant properties can attract rodents or squatters and generally need to be maintained regardless.

But that extra work should be covered by property leasing fees (see more below). If a property management company insists on a vacancy fee, make sure you know how that money will be used. A minor vacancy fee can be acceptable if:

  • That money will be provably used to protect the vacant unit (i.e., by installing special locks or hiring pest inspectors).
  • That money will be used to upgrade the vacant units.
  • That money will only be used to repair damage from delinquent tenants in the past, so it will be collected and saved for that occasion.

That said, many property management companies don’t charge any money if a unit is vacant. This is the most desirable arrangement for you as an investor. After all, one of your property management company’s responsibilities is to fill the vacant units as quickly as possible, especially if the company relies on rent collected to earn money itself.

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Eviction or Collection Fees

Eviction or collection fees are one-time (per eviction) fees that cover the cost of all labor and charges associated with removing a tenant from an occupied unit. Eviction fees are typically between $200 and $500 per eviction. But the cost of eviction fees can vary depending on expertise, sheriff’s fees, and more. You should pay management companies’ eviction fee invoices if they do the work of evicting problematic tenants.

Eviction can be a messy and complicated process. Furthermore, all evictions have to go through local courts. If you and your property manager decide one tenant needs to be kicked out, the property manager will likely handle the eviction process.

This involves speaking to the tenant, providing them with several warnings, contacting the sheriff’s department, and filing paperwork with the court. The eviction or collection fee covers the cost of all this work, plus the court fees your property manager may face getting the job done.

Eviction fees are fine and necessary in most cases. Property managers have to work hard to make sure evictions go according to plan (and quickly so you can fill the unit with a responsible tenant afterward).

Eviction Insurance

Your management company might build an “eviction insurance” fee into their monthly rates. This is usually a small fee (typically between $50 and $100 per month) that’s intended to cover the larger costs of evicting a tenant later. In theory, this averages the cost of an eviction out over time instead of giving you an invoice with the full amount all at once.

Such an insurance policy is fine if you and your lawyer look it over and find the price acceptable. This may even be better for long-term budgeting since a single eviction (or several in a row) won’t result in a sudden shock to your finances.

Late Payment Fees

Your property management company may charge late payment fees when tenants do not pay their rent on time. These fees are common and intended to incentivize your tenants to pay rent on time in the future. Late payment fees are usually between $20 and $100 per late payment and are paid by tenants, not landlords.

Some contracts stipulate that late payments become more expensive with successive late payments. No matter how you structure your late payment fees, your property manager should only take a commission if they do the work of chasing down the tenant and securing the rental payment. If your landlord takes a commission from the late fees, that’s money you miss out on each time a tenant is late with a rental payment.

Furthermore, some late fees can be bad for long-term business. If your property manager receives money when your tenants don’t pay rent on time, they are incentivized to make it hard for tenants to pay rent. They are rewarded each time a tenant is late with their rent check/payment since they make more money in aggregate compared to when tenants make payments on time.

Plus, it rewards them for not managing your property’s tenants appropriately. Technically, if you don’t receive rent money on time, your property manager fails in their duties.

Still, some management companies consider late payments to be an eventuality to account for and they may insist on charging late fees to your tenants. They are acceptable if the management company does the work of getting the late payment from the delinquent tenant. If you do this labor instead, you should keep the money from the late fee.

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Inspection Fees

Inspection fees are one-time or ongoing fees that cover the cost of either labor or hiring certified inspectors or contractors to perform regular property inspections. They are common and acceptable in most circumstances. Inspection fees are usually less than $500 per inspection.

The average rental property must be inspected every three months to six months. Such inspections are important to detect any minor problems or maintenance issues before they become larger, more expensive, or potentially dangerous.

Some property management companies charge you independently for each inspection when it occurs. Therefore, you won’t see the above $500 charge each month. You’ll only have to pay that fee every quarter or every half year.

Other property management companies charge a smaller fee, such as $100 per month, to cover the cost of an inspection every five months. With this kind of setup, you don’t have to pay one large fee at once – you instead pay a smaller fee regularly to cover the same cost.

Note that many property managers perform free semiannual inspections as well. No matter what the case may be for your management company, read the fee requirements carefully so you know:

  • What you’re paying for
  • How often inspections are
  • Whether the inspections happen regularly enough for local real estate laws

Annual vs. Biannual vs. Monthly Inspections

Most properties only need to be inspected every three months to six months. But some property management companies may insist on performing monthly inspections. If they do this, read your contract carefully to see whether they charge you each time they inspect property units.

In some cases, low-quality property managers perform monthly inspections specifically to wring more money out of their investors/clients. You should not agree to these terms. It’s fine if a property manager wants to independently inspect units to ensure maintenance problems don’t get out of hand, but they shouldn’t charge you for this unnecessary labor.

Pet Fees

Pet fees cover the cost of labor and repairs incurred due to tenant pets. They are one-time fees (per incident) charged to you/the repair reserve fund and are acceptable in most circumstances. Pet fees are usually anywhere between $10 and $50 per month per pet.

Most property managers include pet fees in the monthly rates provided to tenants in their leases. This ensures the tenants are not surprised by these fees and know what to expect.

Technically, any repair or property maintenance charges you already pay to your property manager should cover the cost of pet-related repairs. But in some circumstances, pets cause other damages that require more intense repairs or material purchases – for example, a dog may tear up an apartment’s carpet, causing the property manager to pay for a replacement.

It’s up to you whether you want to contest pet fees or not. Some property management companies are fine with waiving pet fees (under the condition that you allow them to pay for repairs from the maintenance reserve or cover the cost yourself). Others may insist on a pet fee that they get to pocket.

Lease Renewal Fees

Lease renewal fees are cyclical charges that kick in whenever your property manager has to review existing tenant leases and possibly make changes to those leases (i.e., updating the year, the rental amount, etc.). Lease renewal fees are usually $200 or less per year/lease renewal cycle. They are acceptable fees if your landlord does enough work to justify them.

However, some property managers don’t charge lease renewal fees whatsoever. This is a great deal for you, the investor. Other property managers charge a percentage of monthly rent for each lease renewal. This is a bad deal, and you should avoid it or negotiate your way out of it at all costs.

Theoretically, a lease renewal fee pays for the paperwork labor needed to update existing leases, send that information to existing tenants, etc. This does take a bit of time, but not much. In general, lease renewal fees should be low and flat, if present at all. Aim for a lease renewal fee of less than $200 if you must pay it.

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Services Provided/Appliance Fees

Services provided or appliance fees cover the cost of various resources or labor your tenants use. These ongoing fees cover water used in larger machines, the electricity that runs the vending machines, etc. Services provided fees can be anywhere from $50 per month to several hundred dollars per month, and they are acceptable if your property manager pays for those services instead of you.

You should only agree to pay services provided or appliance fees if you are not the one paying for those services/appliances. For example, if you pay the electrical bill for your property, you don’t need to pay your property manager extra for the electricity needed to run coin-operated laundry machines.

Similarly, if you collect the coins from coin-operated laundry machines, your property manager shouldn’t get money for that labor. Read through this fee section of your management contract to ensure you only pay for what the property manager deserves.

Bill Pay Fees

Bill pay fees are repeating fees that cover the cost of paying various bills for your property. These tasks include making payments toward your property’s mortgage, paying your homeowner’s insurance, and paying homeowner’s association dues (if applicable). Bill pay fees are only acceptable if you don’t pay your own property bills. Bill pay fees are usually $50-$300 per month.

Bill pay fees are by no means required. If you, the property owner, take care of the above tasks, you should obviously not sign a contract with one of these fees. For example, if you only own one single-family home to rent, it shouldn’t be too difficult for you to pay the mortgage for that property (plus any other associated fees) in addition to your own home.

Bill pay fees become more common and necessary as you add properties to your portfolio. Read your contract carefully and ask the property manager whether you can strike this clause from the contract if you don’t need it. If the property manager insists on charging a bill pay fee, even if they won’t pay your rental property’s mortgage and make other payments, don’t hire them.

Lease Violation Fees

Tenants incur occasional lease violation fees whenever they violate or disobey a clause/provision on their leases. Lease violation fees can be anywhere from $25 to several hundred dollars, depending on the nature and severity of the lease violation. Your property manager should never receive any money from a lease violation fee. If they insist on a lease violation fee, walk away from the deal.

It doesn’t make any sense for a property manager to receive lease violation fees (or a commission of those fees) for the same reason it doesn’t make sense for them to make money from late payment fees: it actively incentivizes bad property management.

If a property manager gets money each time a tenant violates their lease, they are incentivized to:

  • Make leases with confusing languages or clauses, making it more likely tenants will accidentally violate their leases
  • Not manage property tenants properly, leading to more lease violations and more money for them

While you can charge a lease violation fee, you should receive the money, not your property manager. You cannot trust the work ethic or lease-writing abilities of a property manager that insists on including lease violation commissions or monetary penalties.

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Property Update Fees

Property update fees cover the extra labor associated with property improvement projects and are usually one-time per project. They can range from $50-$500 or more, depending on the project’s complexity. They are acceptable if your management company handles the labor for property updates/upgrades.

Some property management companies charge property update fees on a case-by-case basis. Therefore, you may not see the fee listed as a specific price in your contract. That’s okay, provided you feel you can trust the property manager to charge you a reasonable rate for any future projects/property updates.

In such arrangements, you’ll need to cover the cost of the update to your real estate investment once your property manager tells you how much it will be.

If your property management company charges a flat fee for property updates, consider whether the amount is reasonable. For example, a fee of $500 won’t cover the cost of any significant real estate improvement. Ask the manager where the extra money will come from – if they hesitate or can’t answer, it’s usually a red flag.

Returned Check Fees

Return check fees are occasional fees charged when a tenant’s check bounces, and the property manager has to do work to find the tenant and get a good check. They’re acceptable only if they do this work, not you. Returned check fees are usually between $25 and $50.

Be wary of property managers with contracts that demand you pay them a fee each time a check bounces. Technically, there’s little reason for a property manager to make any money from a bounced check – they aren’t losing any money since you pay them, not tenants directly.

However, an argument can be made that a property manager has to do a little extra work to take a check down to the bank, find out that it’s a bust, then do more legwork and track down the delinquent tenant to get a good check. But even in this case, they are not entitled to a large fee.

If anything, this extra work can be covered under an “extra duties fee.” If a property manager insists on having and profiting from a returned check fee, you may agree if the rest of the deal looks good.

Alternatively, you could make sure the contract specifies tenants pay the management company a returned check fee instead. In either case, you should probably not pay your management company if a check bounces – there’s no real good reason for you to do so.

Extra Duties Fee

Some property management contracts list miscellaneous or “extra duties” fees, which cover any extra labor not covered by other costs or that may not be explicitly listed in the contract. Extra duties fees can range from as little as $50 per month to several hundred dollars per month. They are acceptable if they are not too high but are not necessary.

It’s a good idea to make sure that any services not explicitly listed in a contract are still listed as “extra duties.” This clarity of understanding prevents property management companies from feeling obligated to do things they did not agree to and prevents you from being taken advantage of.

Given the subjective and unclear nature of this fee type, it may be wise to have your attorney look over and determine whether it is a fair fee. If a property management company tries to charge several hundred dollars with little justification aside from what it “might” need to do, don’t sign with them.