Property Management

These 7 Hidden Property Manager Fees Are Costing Landlords Millions

Written By Melanie Kershaw

Last Updated Jan 16, 2024

A couple stand in a kitchen with a laptop and calculator, looking concerned over unplanned fees and charges. Uncover property management fees that are costing landlords a fortune.

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Comparison shopping for property management fees can be a minefield. You may think you’re getting a great deal with a low management fee, only to pay more as the add-ons mount up. This is because traditional property management companies often hide their fees or charge for items that feel essential.

Excessive fees in rental housing has become such a problem that the Biden-Harris administration is taking on the issue to lower costs impacting rental housing. From 2024, landlords and property managers that try to slug residents for exorbitant application fees, late fees, admin fees or costs for services that aren’t provided, could find themselves in hot water if their local jurisdiction outlaws it. As a homeowner, you should be cautious of fees that could be unlawful or are costing your residents more than they can afford. 

The best way to protect yourself (and your residents) is to rent your home with full transparency. Either as a self-managing landlord or by partnering with a modern alternative to property management such as Belong PRO

If you’re ready to scrutinize what you’re really paying for, here are 7 common property management fees that get hidden in the fine print. 

Key Takeaways

  • Cheap property management fees are often accompanied by a long list of extra charges

  • Lease renewal fees penalize homeowners for having reliable long-term tenants

  • Some eviction protection fees cost homeowners more but don’t cover much more than legal filing costs

  • The White House is calling for more transparency in rental housing costs — something Belong already offers all homeowners and residents

How much does property management really cost? 

Property management fee structures are usually a percentage of the monthly rent, between 4% and 15%. But low percentage costs or even flat-rate fees often come with a long list of service exclusions. Homeowners should be aware of common extras that disguise the true cost of property management.  

1. Account set-up fees 

Found a new property management company? Welcome, here’s your first invoice. Some property managers charge a one-time fee to cover your initial paperwork. This fee is also a disincentive to take your business elsewhere because you’ve already handed over cash before you’ve begun. It’s unlikely you’ll want to do the same again with someone else. 

Belong doesn’t charge setup or account fees because great customer service should keep you with us, not unnecessary fees. 

2. Placement fees and application fees

Homeowners who outsource property management should expect to pay a placement fee. This isn’t a hidden cost, but it’s a cost you should know upfront because it will vary, and as it can be up to 100% of the first month’s rent. 

In March 2023, the National Consumer Law Center found that 89% of renters surveyed were being charged application fees — anywhere from $25 to $350 — to cover the cost of processing and screening to apply for a property. This makes sense if you’re a self-managing landlord. But if your property management company is charging both you and your residents to screen them, this could be double-dipping and considered one of the “junk fees” that the White House is seeking to abolish. 

3. Advertising and online marketing fees 

Some property management companies charge fees for advertising and marketing your property. Or they include the cost of listing your home online, but charge for photography and video — even though your listing won’t get much attention without these basic essentials. Don’t assume these costs are in your placement fees without checking the fine print first.

A young woman sits on a sofa with her laptop, searching for a rental home

4. Lease renewal fees

Lease renewal can be similar in price to placement fees and are one of the more egregious types of hidden fees. It should be a goal to keep a great, reliable resident in place — not something that you’re penalized for financially. 

Discover Belong PRO: Learn how our modern, tech-enabled services are helping people ditch property management in cities across the US including Austin, San Antonio, Tampa, Raleigh/Durham, Dallas/Fort Worth, Houston, Miami and more.

5. Eviction fees or ‘protection’ add-ons 

Managing an eviction is a complicated and stressful process. It’s one of the big things that homeowners want to outsource. But evictions are rarely covered in standard property management fees.

‘Eviction protection’ upgrades can be misleading. Not only does eviction protection increase your costs, most still charge for overseeing the eviction process, especially if attending court on your behalf. When we ranked the top-rated property management companies in California, we found that many eviction protection packages only cover filing fees. Or they impose strict limitations that can leave you out of pocket. 

If you choose to partner with Belong PRO, you’ll have real peace of mind and support. If Belong ever needs to evict a resident that we have chosen (not existing leases or tenants), Belong will cover legal costs up to $15,000. 

6. Vacancy fees 

Vacancy fees penalize homeowners for having an empty home. Some property managers ask for one month's rent to compensate for their need to find a tenant for your property. Vacancy fees can also be a monthly cost charged to the homeowner for every month the unit does not have a tenant. In this case, that fee may start at $50 and can exceed $100. 

The empty room of a vacant rental home, with off-white walls and a window

7. Early termination fee 

Does your property management contract have a length? You could face an early termination fee if you want to leave. Some contracts have a notice period, making it harder to take your business elsewhere. Before signing a contract, find out what happens if you're unhappy with your services. 

A transparent solution for modern renting

Traditional property management works in a way where your profit comes at the expense of the people who occupy your home. It’s not good for you and it’s not good for your residents. Belong gives rental homeowners an alternative. A rental home management partner that offers innovative solutions that make renting lovable. Tell us about your rental home now to get started.

About the author

Melanie Kershaw

Mel Kershaw is a Content Lead at Belong. With an extensive background working with technology companies including Eventbrite and Yelp, she’s always looking for ways to create educational and informative articles that simplifies tech and solves problems for her audience.