Property Management Fees

Melvin Scoville

One of the most Frequently Asked Questions we get from Members at MyPlatinumClub.com is:

"What should I expect to pay in Property Management Fees for my apartment property?"

This is a really great question and something that can be a big key to how profitable your property will ultimately be for you.  The short answer to this question is really, "It depends..."  Yeah, I know, this is about like hearing, "Go ask your father...or go ask your mother..." when you're a kid, but hear me out.... 

There are a number of different factors which can affect the fees charged for property management.  Just a handful of these include your market, the property size, management services included, and many other details.  In general, we prefer companies that charge fees based on a percent of rents received. 

The key word here being rents "received".  By doing this, it provides motivation for your management company to keep the property running as close as possible to full occupancy.  So the basic idea is that their pay is tied to the property performance.

So what percent should you expect to pay?

As I mentioned, this will depend on your market, property size, and other factors mentioned, but you will generally pay anywhere from 5 to 10 percent of rents received for property management. 

So what's included with the property management fees?

There are a number of common misconceptions on what's included in a property management agreement, so I'd like to cover some of these and hopefully clarify what's typically seen in the market.  Here's a list of what's included versus what's not included.  I go into further detail on these in my recent video on Property Management Fees -- see link at bottom of this page.

NOT INCLUDED:

• Advertising Expenses
• Property Maintenance -- Maintenance Labor and Materials
• Capital Expenditures
• Utilities
• Taxes
• Insurance

INCLUDED:

• Marketing & Leasing Activities (Not the Actual Advertising Expense)
• Maintenance Coordination and Management (Typically Not the Actual Labor & Materials, But Onsite Personnel May Be Included in Your Agreement)
• Rent Collection
• Paying Bills
• Bookkeeping and Reports for You, The Property Owner

There is a lot of great services included with a good property management company, and this is an integral part to your success as you scale up in number of units.  The key is that you look for a company that charges a percent of rents received for the above services. 

And be sure to stay on the "Asset Management" side versus becoming a "Property Manager", or as Michael Gerber says, "Work ON Your Business, Not IN It!".