The Anatomy of Property Management Service Fees and What To Expect

Table of Contents

Various fees come with hiring a property manager. These fees include:

  • Fixed management fees
  • Maintenance fees
  • Initial setup fees
  • Leasing vacant property fees
  • Overseeing vacant property fees

One way to make money is to invest. Real estate is one of the best ways to invest money since people will always need houses. On paper, it sounds simple to run a real estate business. You buy a house, get tenants, and start collecting money. However, that’s not always the case.

A rental property needs a lot of time and maintenance, regardless of the size of the unit or the structure. Property owners need to manage general upkeep, publicize the listing to locate renters, and maintain communication with the tenants to ensure that they are content throughout the duration of their lease. This could be a particularly inefficient use of time for someone who already has numerous rental properties or works full-time. That’s where property management comes in. Property management businesses supervise and manage the day-to-day commercial activities of real estate, which an independent third party often carries out.

Many real estate investors cannot manage one or more properties simultaneously and instead rely on property management businesses. When you employ a property manager, you are relieved of some heavy lifting. A property manager handles various responsibilities for a property owner, including following the owner’s laws and regulations, handling maintenance requests, showing vacant units, and collecting deposits and rent. They also make sure the property is clean and conducive for everyone. You might be asking yourself, what is the average property management fee for rental properties? Here is what to expect.

How Much Does Property Management Cost?

In most cases, the fees charged by property management businesses are structured in one of two primary ways: either as a percentage of the rent or as a flat monthly cost. The monthly fee charged by most property management businesses ranges from 8 to 12% of the monthly rent received. If your property’s monthly rent is $1,500, the property management cost would be $150, based on a 10% average fee. 

Property management companies typically charge a flat fee or a fee equal to the expected monthly rent once the property is leased to a prospective tenant. Vacant homes necessitate additional labor from the management business, such as weekly inspections for suspected break-ins and squatters. Therefore, a property company is likely to charge more.

A Guide to Property Management Fees

The cost of property management will vary from one property to another. The potential costs associated with hiring a property manager are outlined below.

Initial Setup Fee

Some property management companies require a one-time start-up fee; if they do, it’s typically no more than $500. The charge may also cover the price of conducting an inspection of the property and sending out notices to renters. Still, some companies will be happy to help you without an initial fee.

Fixed Property Management Fee

Some companies provide a fixed fee structure instead of charging a fee based on a percentage of a month’s rent. The fixed cost is determined by the type of property, the floor space, and the services rendered. Generally, the fixed property management charge for a single-family home may be approximately $100 per month; however, management prices vary from market to market. At first look, a flat fee structure may appear to be a good deal, but management companies that receive a flat amount may not be as driven to optimize your property’s rental income.

Maintenance Fee

Maintenance fees are often included in the monthly management fee. This may include keeping shared spaces clean, removing trash and snow, and raking leaves. If a specific repair is required, the amount will be withdrawn from the reserve repair fund, a separate fund where the property owner keeps the money for property repairs. There are multiple options for managing the account and handling the repair procedure. They include:

  • The property owner holds power to authorize the transaction or not.
  • The property owner gives the property manager the account details.
  • The property owner requests notification whenever there is a need for repair and makes decisions at that time.

A minimum amount must always be kept in the account to ensure no inconvenience for all parties involved.

Overseeing a Vacant Property

Property management can be more labor-intensive when managing a vacant property than when a renter occupies your home. This is because more potential issues could develop when your home is vacant. Unforeseen events such as water leaks or light security failures could take place. Even in the safest of communities, the length of time a rental property is unoccupied increases the likelihood that it will be broken into or vandalized. At least once each week, the property manager should go to the location to check on things. This will help reduce the potential dangers.

Leasing a Vacant Property

You can reach millions of potential renters every month by posting your unoccupied property on a rental listing website like Zillow, Zumper, Rentberry, or Rentals.com, all of which provide free listings. Still, if you’re an out-of-town property owner, you’ll need a local contact to show prospective tenants through your empty property.

Property management companies typically take a leasing fee equal to half a month’s rent for re-renting an empty unit. However, some do not charge any fee at all. Property owners might save money at renewal time by offering discounts to long-term tenants. If the tenant’s lease renewal doesn’t need extensive negotiations with the management company, the management company may charge a small fee or even waive the fee entirely.

Common Problems You Are Likely to Face Managing a Property 

Property management fees are likely to increase if you don’t curb the problems that arise from the word go. Here are a few problems you will likely face when running your property. 

  • Tenant antisocial behaviors
  • Problems at the property
  • Untrustworthy managers
  • Tenants trashing the property
  • Unexpected maintenance issues

If you stop these problems before it is too late, you could save a few bucks. 

Get Help From Professionals Today 

You’re busy, and managing your rental property cannot be easy. Hiring a property management company can ease the burden. The company will manage your property properly and ensure it has tenants. At Nomadic Real Estate, we provide top-notch property management services, and you can count on us.

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Enhanced Reporting

Your portal includes a selection of extremely useful reports. Reports are available in the “Reports” section, and are distinct from the financial statements. Unlike financial statements which are static records, Reports are dynamic real-time records that will update with current data every time you view them. 

Scroll down to learn more about Reports:

Navigate to the "Reports" module in your portal:

  • Keep in mind, these reports are dynamic records. They will refresh to display current information every time you view them. 

Enhanced Rent Roll Report:

  • The Enhanced Rent Roll Report will show the rent amount, last payment date, move-in date, lease expiration date, and security deposit amount for each of your tenants. 
  • It will also show a portfolio summary with occupancy percentage, vacancy loss, and more!

Unit Comparison Report:

  • If you own multiple units (or buildings) with Nomadic, you’ll get access to the Unit Comparison Report. 
  • This report enables you to quickly compare financial performance between your units at a glance without toggling between individual reports. 

Income Statement Month-Over-Month:

  • The Income Statement Detail – Monthly Report serves as a month-over-month record of portfolio performance. You’ll see itemized income and expense categories and can track monthly. This report will update with fresh data every time you view it. 

Financial Statements

Financial statements will be published to your portal on a monthly basis. The statements are found in your Documents library, and provide a historical record of all financial performance. The statements serve as a snapshot of financial performance over a given period, and are static documents (unlike Reports, the statements do not update/change in real-time). 

Scroll down for more info about the Financial Statements in your Documents library:

The Documents area contains monthly financial statements:

  • The statements in the Documents are are static documents. They are posted to the portal once a month to serve as a historical record of financial performance. 

Download a statement to see month and YTD financials:

You'll also find a month-over-month operating statement:

Portal Communication Tool

You can use your owner portal to communicate with our team. Any messages you send through the portal will go straight to your Account Manager. When we reply, you’ll get an email notification and you’ll also see the message in your portal next time you log in. 

Here’s an overview of using the communication platform:

Click "Communications" and navigate to "Conversations":

  • The communications module will contain a record of all messages that you create through the portal. 

Click the "New Message" button and send your message:

Responses will show up in the conversation ticket:

  • You’ll get an email notification whenever you get a response, and you’ll also see the message in your portal next time you log in. 

You can reply in-line using the comment box:

Each conversation will be logged in its entirety:

Understanding the Ledger

Your portal includes a ledger with all transactions. The ledger is populated with data in real-time as transactions flow through our accounting software. Much of this information is also available in the Reports area, as well as the Statements in your Documents library, but the ledger is the most comprehensive resource for diving into the details. 

Please scroll through the sections below to get a better understanding of how to interpret the ledger. 

By default, transactions are sorted chronologically:

  • The date reflected in the lefthand column is the actual transaction date, not the “bill date”. This is the date the transaction was actually processed. 

If you have multiple properties with Nomadic, you'll see the address for each transaction in the "Location" column:

  • You can filter the ledger to look at just one property, all properties, or specific sets of properties. 
  • If you only have one property with us, you’ll just see the ledger for that property. 

The Description column displays the transaction type:

  • BILL: this is an expense transaction, such as for repair costs or management fees.
  • CHARGE: this is a transaction  billed to the tenant, most typically a rent payment. 
  • NACHA EXPORT: this is a credit we processed to your distribution account. This type of transaction is how you get paid! 

The Amount column shows the dollar value of each transaction:

  • Positive Amounts: if an amount is positive, it reflects a transaction that is payable to you. Typically, this will be a rent payment that we collected from your tenants. On occasion, a positive number could also signify a journal entry or credit adjustment. 
  • Negative Amounts:  if an amount is negative, this is a transaction that is either payable to Nomadic or is an amount that has already been paid to you. Typically this will be for repair costs or management/leasing fees. Owner draws (net distributions into your checking/savings account) also reflect as negative amounts, since they have already been paid to you. 

The Account Balance column shows a sum of positive/negative transactions at a given point in time:

  • Account Balance should always equal zero after a net distribution has been processed. When the balance is zero, this means that all expenses have been paid and you’ve received the remainder as net operating income, leaving a balance of zero (meaning: no one is due any money, as all funds have been distributed appropriately). 

Navigating the Propertyware Owner Portal

Your portal includes some extremely useful features that help you understand your property’s financial performance at a new level, with real-time transparency into every transaction.

Scroll through the snapshots below for an overview of portal navigation! If you need more help or have specific questions about using the portal, you can reach out to your Account Manager any time for a screen share. 

You can filter all info by date range or property:

View a snapshot of income and expenses on your dashboard:

See every transaction in real-time on your ledger:

Statements and forms will be posted to your documents library:

View a suite of real-time financial reports:

See a running list of all bills, and drill down for more detail:

Under Bill Details, you'll find dates/descriptions/amounts and more:

You can also communicate with your Account Manager through the portal:

How do net distributions work?

Net distributions keep your accounting clean and simple. Each month we’ll collect rent from the tenants, deduct any repair expenses for the previous month and any management/leasing fees for the current month, and credit the remaining net operating income to your account. 

You’ll receive a statement via email each time a net distribution is processed, and can view all transaction details in your Propertyware owner portal.