Management proposals are hard to compare because they are structured differently. One firm quotes a low monthly percentage and charges separately for most activity. Another quotes higher and includes more. The headline number tells you very little.
Here is what the components usually are, and how to compare them properly.
The common fee components
Monthly management fee. Usually a percentage of collected rent, sometimes a flat amount, sometimes with a stated minimum. Percentages typically fall as unit count rises. Note whether it is charged on collected or scheduled rent — the difference matters during a vacancy or a non-payment.
Leasing or tenant placement fee. Charged when a new resident is placed, often expressed as a percentage of one month’s rent or a flat amount. This covers marketing, showings, screening and lease execution.
Lease renewal fee. Charged when an existing resident renews. Some firms charge nothing; some charge a meaningful amount. Over a long tenancy this compounds.
Setup or onboarding fee. A one-time charge for bringing a property under management: records audit, resident notification, inspection, portal setup.
Inspection fee. Sometimes included in the monthly fee, sometimes billed per inspection.
Maintenance coordination. This is the one to examine most carefully. Some firms include coordination in the monthly fee. Some add a percentage markup on vendor invoices. Some own an affiliated maintenance company. Each is legitimate if disclosed; the problem is when it is not.
Optional services. Project management for capital work, eviction coordination, court appearances, annual statements, additional reporting.
Cancellation terms. Notice period, and whether any fee applies on termination.
How to compare two proposals
Do not compare percentages. Model a year.
Take your property’s actual numbers — rent, expected turnover, likely maintenance spend — and run both fee structures through it. Include a vacancy in the model, because that is where structures diverge most.
A 6% fee with a full month’s leasing fee and a renewal charge can cost more over three years than an 8% fee with neither. Whether it does depends on your turnover rate, which is itself partly a function of how well the property is managed.
What the fee is actually buying
Two things, mostly: a system, and someone accountable.
The system is the unglamorous half — a single maintenance intake channel, screening criteria applied consistently, notices that are correct, deadlines on a calendar, statements that reconcile, trust accounting handled properly. Owners rarely value these until one of them fails.
The accountability half is having someone whose job it is to notice. A vacancy that has been sitting three weeks should generate a conversation without you asking. A recurring drain complaint should generate a camera inspection, not a fourth snake.
Where cheap management gets expensive
The costs of poor management do not appear as fees. They appear as vacant days, as a turnover that took eleven weeks, as a $9,000 water intrusion that started as a $180 valve, as a rent increase that had to be unwound, as a deposit dispute lost for want of a move-in report.
Any one of those can exceed a year of the fee difference between a cheap manager and a good one.
Questions to ask before signing
- Is the monthly fee on collected or scheduled rent?
- Is there a minimum monthly fee?
- What is the leasing fee, and is there a renewal fee?
- Is there a markup on maintenance invoices, and is there an affiliated vendor relationship?
- What is included in the monthly fee versus billed separately?
- What are the cancellation terms and notice period?
- What happens if the property is vacant for an extended period?
Get the answers in writing. A firm that is comfortable with its fee structure will have no difficulty putting it on paper.
Our own fee structure is built per property rather than from a fixed schedule, and you receive the complete structure in writing before signing anything. See our pricing page or ask during a consultation.