Property Management
Property Management Fees: How Much Do Property Managers Charge?
Last Updated Nov 30, 2022
Whether you’re a first time investor or simply tired of the headaches of self-managing your rental home, hiring a property manager or an alternative like Belong can go a long way in buying back your time and peace of mind. But how much do property managers charge? And how do the fees compare to a full-service experience like what Belong provides?
To get the answers on the cost of property management and its alternatives, we’re going to break down the common costs that property managers charge and how we do things differently.
Typical property management fees and common markups
Property management companies charge a percentage of the rent collected from your home. Most property management fees are in the range of 6 - 12% of your monthly rental price. So if you’re renting your home at $2,000 per month, you’re likely to pay between $120 - $240 a month.
It sounds pretty straightforward, however there’s a huge discrepancy in what property management companies offer for that price. Many property managers that offer lower percentage rates make up their costs in other ways, so check the fine print before high-fiving yourself over getting a bargain. For example, a lower fee may mean that the property manager charges additional fees for a number of essential services such as marketing, inspections, lease renewals, and support if you need to evict a bad tenant.
If your property manager fees are based on ‘rent due’, this also means they can continue to collect fees during vacancies or when tenants are late with their rent, so you’re paying fees even when you’re not earning any income. If the fee is based on ‘rent collected’, you are paying a fee out of what your tenants have paid — a much safer option for you and will motivate your property manager to handle issues quickly in order to get paid. Property management companies that charge vacancy fees to manage the home when empty will usually cost up to one month’s rent.
Common property management fees additional to the monthly rate include:
- Placement fee: Up to 100% of the first months rent
- Communication after hours or during holiday periods: 25% surcharge on rates
- Initial setup fee: $250 - $500
- Inspection fees: $0 - $150
- Pricing analysis fees: $0 - $100
- Photoshoots: $100 - $500+
- 3D and/or virtual tours: $1,000+
- Advertising fees for online listings: $150
- Lease renewal fee: $200+
There are also strict limitations on what many provide, especially when it comes to things like communication with your tenants or eviction support. Some property management companies will advertise that they offer free eviction support or charge a premium for eviction protection, only to limit the support to basic legal fees of around $500. That’s all well and good if things run smoothly, but additional legal support can quickly escalate costs, leaving homeowners without adequate financial coverage.
The other thing to watch out for in the fine print is the fees for terminating a contract or including a commitment to sell. Some property management companies formalize this in their rental contracts, limiting your options if you choose to sell the home.
What it costs to work with Belong
Belong isn’t a traditional property management company, offering a fully transparent, people-first approach to managing rental homes that feels more like a hospitality experience. We look after our homeowners and residents so well that you won’t need to lift a finger.
Belong charges a home management fee (unlock pricing for your city here) and placement fee (around 50 - 75% of the first month's rent).
Once you’ve calculated how much this will cost, that is all you’ll pay. We are proud to be full-service and don’t believe in surcharges or hiding fees. There's no setup costs and we don't sneak in surcharges like lease renewal fees or must-have inclusions like video marketing and eviction protection.
Belong’s monthly management fee rate includes:
- Guaranteed Rent: Receive your rent on time, every month, regardless of when it’s paid by residents
- 24/7 Concierge Support: Both homeowners and residents have access to real-time support, going beyond emergency maintenance requests.
- Modern-day marketing: Virtual tours and video marketing is included in listings
- User-friendly app: Belong's app provides convenient access to documentation, cash flow insights, and financial and insurance solutions.
- Long-term residents: Belong takes a personalized approach to match the right people, so they stay longer and feel at home.
- Market-driven insights: Belong utilizes market data and real-time interest to maximize the value of your home.
- Eviction protection: Owners are shielded from legal costs if we ever place the wrong people
- Extensive vendor network: Belong connects homeowners with a vetted network of over 10,000 professionals for repairs and renovations.
Belong also offers the option of:
- Comprehensive insurance solutions: Belong offers insurance options that protect homeowners, their properties, and residents.
- Innovative financial solutions: Homeowners can manage cash flow effectively, even splitting the cost of maintenance and placement fees.
We want all of our homeowners to be cash flow positive, so we don’t charge you when your home is vacant. We don’t lock you in a commitment to sell your home with us either.
What about a fixed property management fee?
It’s uncommon, but there are some property management companies that offer a fixed monthly rate structure, rather than a percentage of your rent. These offers typically exist in markets with below-average rates, so the cost tends to be similar to a percentage rate rather than any massive discount.
Before accepting a fixed-fee, consider that there are likely still many add-ons to this cost and that your property manager may be less motivated to get the best price for your home without a financial incentive to do so.
Are property management fees tax deductible? What about Belong’s fees?
In short, yes, property management fees for a rental property are tax-deductible. A property you don't use for yourself or family is seen as an investment or business, so the cost of managing the property is tax deductible.
This also means you can claim fees from Belong. Belong takes on all of the responsibility of looking after your home and residents, so you can include fees and maintenance from our professional tradespeople as a deduction in your tax return.
Ready to make the switch to reimagined Property Management?
We've got you covered. Belong is simplifying the rental experience across the US and helping more homeowners reach their financial goals with the most hassle-free property management service; BelongPro.
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