What property managers typically charge
The ongoing monthly management fee is usually 8-12% of collected gross rent. On top of that, expect: a tenant placement or leasing fee (typically 50-100% of one month's rent each time a new tenant is placed), a lease renewal fee (often one to two weeks' rent per renewal), and maintenance coordination markups (commonly 5-10% added to contractor invoices). Over a full year with one tenant turnover, total management-related costs often reach 15-20% of gross annual rent.
Impact on cash-on-cash return
If your property collects $2,000/month in rent and you pay a 10% monthly management fee, that is $200/month or $2,400/year off the top before any other expense. On a deal projecting $6,000 in annual pre-management cash flow, management fees could cut it nearly in half. Run numbers with management costs included even if you plan to self-manage — it quantifies exactly how much you are working for 'free' and helps you evaluate the trade-off objectively.
When professional management makes sense
Self-managing saves money but costs time and requires local presence. Professional management is worth considering when you live out of state, own multiple properties, have a high personal hourly rate, or strongly value freedom from tenant calls. Model both scenarios and compare the after-management cash-on-cash return. A well-run manager who reduces vacancy and handles maintenance efficiently may partly offset their fee through better performance.
Frequently asked questions
What is a typical property management fee?
8-12% of monthly collected rent for the ongoing fee, plus leasing fees and maintenance markups. Total effective annual cost is often 15-20% of gross rent.
Should I factor in management fees even if I self-manage?
Yes — it shows the true cost of your time and lets you compare properties on an equal basis, especially when evaluating deals in distant markets.
Sources
Educational information and estimates only. Not tax advice. Tax rules change and vary by situation; consult a qualified tax professional before acting.