Property Management Fee Calculator

What property management costs

Property managers find tenants, collect rent, handle repairs and deal with legal notices. Most charge a monthly fee as a percentage of collected rent, commonly 8% to 12%, plus a leasing fee when a new tenant is placed.

The formula

Yearly cost = monthly rent × fee % × 12 + leasing fee

Worked example

At $2,000 rent and a 10% fee, management costs $200 a month, or $2,400 a year, before any leasing fee.

How to use this calculator

Enter the rent per unit, the number of units, and the management fee and leasing fee from the manager’s proposal. Add how many new tenants you expect per unit each year, your mortgage payment and your other expenses. The calculator shows the property manager cost per year, split into management fees and leasing fees, the cost per month and its share of rent, and your cash flow managing it yourself and with a manager. Run it once for each company you are comparing.

What the result means

The yearly cost is what property management takes out of your rental income before any other expense. The two cash flow figures subtract only the mortgage payment and the other expenses you entered, so they are only as complete as those inputs. Property tax, insurance and repairs belong in other expenses. Use the result to compare managers with each other and to compare hiring a manager with doing the work yourself.

More examples

The same $2,000 rent across the common fee range, with the unit rented all 12 months:

Adding a leasing fee

In a year when a new tenant is placed, add the leasing fee. With the 10% fee and a leasing fee of half a month’s rent ($1,000), the year costs $2,400 + $1,000 = $3,400. That is about 14.2% of the $24,000 rent, and you keep $20,600. With a full month’s rent as the leasing fee, the year costs $4,400 and you keep $19,600.

A year with a vacant month

If the unit sits empty for one month, you collect $22,000. A 10% fee on collected rent is $2,200 instead of $2,400.

What changes the result

• The fee percentage. Each point costs 1% of the rent. On $2,000 a month that is $20 a month, or $240 a year.
• The rent. A percentage fee rises with the rent, so the same manager costs more on a higher-rent unit.
• Tenant turnover. A leasing fee is charged each time a tenant is placed. A tenant who stays several years spreads that cost out.
• The fee base. A fee on collected rent falls when the unit is empty. A fee on scheduled rent does not.

Common mistakes

• Comparing only the percentage. A lower monthly fee with a higher leasing fee can cost more over the year.
• Skipping the other charges. Contracts can include lease renewal fees, markups on repairs, setup fees and charges for ending the contract early. List them all before you compare.
• Assuming no fee during a vacancy. Read whether the fee is based on collected rent or on a flat minimum.
• Treating the amount you keep as cash flow. It is rent after management only.

Related calculators

Put the management cost into a full analysis with the rental property calculator. The NOI calculator counts management as an operating expense, and the cash on cash return calculator shows how the fee changes the return on the cash you invested.

Frequently asked questions