Understanding Property Management Fees and Costs

As a property owner, have you ever asked yourself: What’s the cost of hiring a property manager? Understanding fees and expenses of working with a professional property manager is essential for making informed decisions about hiring a third party company to handle your investment. We want to enlighten readers on the typical costs associated with working with a property manager whether it be ProActive Real Estate Services or another firm.

Let's dive in!

Typical Property Manager Fees

While we encourage all owners to view hiring us as an investment rather than an expense, we understand the importance of being able to predict your property’s financials and optimize costs. Here are a few things to consider:

Monthly Management Fees

Property management companies typically charge a percentage of the monthly rent, ranging from 8% to 12%. These are withheld from rent collected each month. In some instances, property managers will charge a flat monthly rate that is typically a few hundred dollars. Note that some managers will charge monthly management fees regardless of whether rent has been collected from the tenant.

ProActive charges 10% of rent collected (we only get paid, when you get paid).

Leasing Fees

It is common for property managers to charge a leasing fee for finding and placing tenants. This fee can be a flat amount or a percentage of the first month’s rent. Generally, this ranges from 25% to 100% of the first month’s rent with an average of about 50%.

ProActive has an initial onboarding fee that is equal to ½ of the first month’s rent. Once we have a property in the system, all subsequent leases are billed at 10% of the new monthly rent.

Lease Renewal Fees

Similar to leasing fees, some companies will charge a lease renewal fee to compensate the manager for time spent on extending the lease term with an existing tenant. This fee can be a flat amount of $150 to $500 or a percentage of the rent, normally between 25% to 50% of the monthly rent.

ProActive handles all lease renewals for free (yes, you read that right!).

Maintenance and Repair Costs

It is fairly common for property managers to mark up maintenance costs or charge a small 5% to 10% project management fee for fulfilling maintenance requests. Typically, this is calculated based on the cost of the work being completed.

At ProActive, we utilize our internal maintenance company, ProActive Home Services, for the majority of repairs. This helps us streamline communications, minimize scheduling time, and ensure our team has a continual relationship with your rental.

We consistently shop prices, suppliers, and contractors to guarantee that repairs and maintenance costs are at or below market prices.

Vacancy Fees

While it is somewhat less common, certain property management companies will charge owners monthly management fees associated with vacancies. In this instance, owners will be responsible for paying for any expenses or repairs needed to make the rental ready in addition to a vacancy fee and other financial obligations while the property is unoccupied.

ProActive does not charge any vacancy fees. We only get paid when our owners get paid and do not charge management fees for vacant units.

Comparing ProActive’s Fees to Hampton Roads

ProActive’s management fee allows our company to balance investing in high quality talent and resources necessary to manage your property with affordability. If you were to compare us to an airline, some might say we’re like Southwest - our goal is to be transparent and clear on exactly what you are paying for when working with us. We do not nickel and dime our owners around the edges.

We are happy to discuss all of our pricing upfront so that property owners can make informed decisions and ensure they are getting value for their investment.

If you want to learn more, simply fill out our website contact form, give us a call at (757) 383-9510, or send an email to AskUs@callproactive.com. We look forward to speaking with you!