What is the standard management fee? Well, it varies according to the type of property you have. I've found that if it's a single family home, management fees tend to run 8-11% of the monthly rate. For multifamily, they seem to run from 5-8%, depending on the size of the building. Again, make sure you ask for a full fee sheet because typically, there are so many additional fees for example when there is tenant turnover or even when there's rehab.
However, it's still nice to ask if they use a management system that allows you to do so (like Appfolio). Many tenants would even rather pay online than dropping checks in the mail. It's a convenience thing, and the more convenient you make it for the tenant to pay their rent, the better.
Do you self-manage your properties or do you hire property management? Comment below!
Great article! You absolutely have it spot on when it comes to making money in real estate the two most important factors are buying it right and property management. I also use professional management cos. I knew going in that I didn't have the time or interest in doing my own management and I don't regret it. Some landlords I know are too much into control to let a management co. do it but I just manage the managers. You have to be ready to fire a company if they aren't doing the job and I have done that. Real estate is my retirement income and it keeps me active. Best investment decision I've made.
Great article. I've never owned a rental property, but having lived in a couple rentals (and been active in a big rental market here), I can see how your choice of PM can make or break you. I can tell you how companies have lost good tenants like me (too difficult to get through their rigid screening process, first come first serve vs right fit) and how they've lost their owners a ton of cash with revolving door properties, tons of damage, and even fraud.
I know the point of a PM is to keep a layer between you and the tenants, but the best experiences I had as a renter were when I talked directly to the owner. Some were horrified to hear what their PM was doing and how unfairly they were treating their tenants. Being at the mercy of a PM as a *renter* was a large reason I felt the urge to buy even though I did not have much cash to put down. I would recommend making available your contact info to all tenants (at least e-mail), and consider even asking to be cc'd on any concerning interactions. I am certain if the owners of some of the properties I lived in knew what their PMs were doing, they would have stepped in, to save their property from damage, to avoid losing a tenant, and to avoid legal risks.
For example, consider when tenants complain about something, under what circumstances should the PM get the item checked out, and what is the policy if there isn't something needing immediate repair. Something that does not result in immediate failure can be a sign that a part should be replaced before the entire system blows (an expensive outcome for one of the owners we had, and involved urgent calls all over during a frigid Thanksgiving holiday). If you let your PM hire your own maintenance people, make sure they're doing a good job to maintain the long term appearance/integrity of the home (my PM would not listen when I said their gardeners were trashing the property, caused long term damage, another "handyman" said the only fix for the microwave table was replacement, but when I insisted they bring out an actual appliance guy was actually just a $5 plastic part). If a tenant is afraid to report something because they will be charged for a visit when "nothing is broken", expect to find tenants trying to fix stuff themselves and/or let things go since it's not a permanent home for them anyway. I could have sued my landlords for a bunch of things that they cost me while I was a tenant, all because of PM behavior.
And tell your PM when they do move-out checks, you want photos/video of whatever they find that is not in the appropriate condition. I left one property in way better condition than I got it, but they tried to charge me. I pushed back and offered video footage of move-out condition and they let it go. Later I came to find out that they charged their owner thousands in "repairs" which I know were not needed. The PM represents the owner, so if they are trying to defraud the tenants, that's your liability too.
Bottom line, even apparently reputable PMs who seem to be serving YOU, may actually screw you by screwing your tenants. Revolving door tenants are expensive (not just the lost income, but they tend to treat your property worse so need to do repairs/replacements much more frequently) — much better to pay a couple hundred here and there to keep your property filled and drama-free.