1. Property management fee structures
- Percentage of the monthly rent
- Flat monthly fee
- Per-project fee
Percentage of monthly rent
In this arrangement, your property management company takes an agreed-upon percentage of the rent your vacation rental generates each month. The percentage is usually between 8% and 12% of rent collected. Many factors affect the percentage a company will charge. One advantage of this model is that the property manager is incentivized to keep your property booked for as many nights as possible. However, this means they may set limits on how many nights you are allowed to use the home since it is unavailable to rent during those times.| Pros | Cons |
| Property managers are incentivized to book guests | Limits the time you have access to the home |
| The property management fee can fluctuate | The more rental income you earn, the higher your fees are |
Flat fee
Also known as a fixed-rate fee model, in this arrangement, you pay a flat fee each month, no matter how many nights your property is booked. If your home is located in a destination with predictable high and low seasons, a fixed fee may help stabilize your monthly management expenses. Using this model, you may go through periods when your property management fee only makes up a small portion of your monthly earnings. When your rental isn’t generating much income, however, it may feel like a significant expense. If you don’t intend to rent out your vacation home, a property manager could charge a flat fee to look after your property while you’re away. This is especially helpful for homeowners who live in another state or country and need to budget an average monthly property management cost.The upside to a flat monthly fee arrangement is that it makes budgeting for your operating expenses more predictable. It’s important to note that some property management companies offering flat monthly fees have a wide range of surcharges for specific tasks, like responding to after-hours maintenance emergencies.| Pros | Cons |
| The property management fee is more predictable | Less flexibility when unforeseen issues arise |
| Pay the same fee despite high- and low-volume renter seasons | Subject to surcharges for additional work |
Guaranteed income fees
It’s also possible to customize the fee agreement between you and your property manager. One example is the guaranteed income arrangement. In this model, the management company guarantees the owner a consistent rental income each month, regardless of how many nights the home is rented out. The property management company will propose a rate based on how much income they think the short-term rental can generate, and keep any excess profits. So, if your property generates consistent year-round income, you might make more money with one of the other two models. If you do choose this model, make sure the wording of your contract is consistent with your goals.| Pros | Cons |
| Customize your property management contract | Homeowners unfamiliar with contracts have the potential to be overcharged |
| Benefits homeowners with multiple properties | May need to renegotiate prices often |
2. Type of property
3. Condition of the property
Older homes are generally subject to more repairs and maintenance. If your property is older, you may incur higher property management fees than you would with a newer home — even if it’s been renovated.4. Property size and amenities
In general, the larger your property, the higher the property management fees will be. This is because the more square footage you have, the more space the property manager will have to manage and maintain. If your property includes special amenities that require additional or specialized maintenance, you may be charged extra. This can include things like:- Pools
- Hot tubs
- Gardens
- Home gyms
- Accessory dwelling units (ADUs)
5. Location
Properties in high-traffic tourist areas or harsh weather environments may be subject to higher-than-average property management fees. For example, urban locations tend to have lower management fees than beach or mountain destinations because they’re usually easier to access and have less maintenance.6. Market climate
Similar to how rent prices reflect current market conditions, property manager costs can also increase depending on the state of the rental market and local economy. With this in mind, choose a fee structure tailored to your property’s expected income potential. If prices often rise in your area, consider a flat fee arrangement.7. Rent collected vs. rent due
An important distinction to bear in mind is the difference between property management fees based on rent collected vs. rent due. Here are the main differences:- Rent collected: You only compensate the property management company when they successfully collect rent payments.
- Rent due: You pay a property management cost based on the proposed rental income — even if your rental becomes vacant.
8. Other typical property management fees
When hiring for a property management company, look for a company that is straightforward about its fee structure and any additional setup costs or fees. Here are some additional fees property managers may charge depending on the property type..Account setup fee
When you first sign on with a property management company, they may charge a one-time $500 setup fee. This includes things like installing a digital lock, taking listing photos and taking inventory of what’s included in the home.- Can apply to: Short-term and long-term rentals
Advertising fee
The cost of advertising your property on social media or within the property management team’s network is an additional service that could result in an advertising fee. Although this isn’t necessary, it is a good option to consider if you’re struggling to find tenants or don’t live nearby.- Can apply to: Short-term and long-term rentals
Bill payment fee
Some property management companies may also charge a separate fee for the hours spent paying recurring bills like homeowners association (HOA) dues, utilities or even the property’s mortgage. This fee is typically around 4% of expected revenue and can increase when multiple properties’ bills are involved.- Can apply to: Short-term and long-term rentals
Early termination fee
This fee is only applicable when homeowners terminate their contract with a property management company earlier than expected.- Can apply to: Short-term and long-term rentals
Eviction fee
Evictions can result in court appearances and costly legal fees. The total amount of this fee may depend on how time-consuming the eviction process is on a case-by-case basis.- Can apply to: Long-term rentals
Late or unpaid service payment fee
When homeowners are late on their property management payments or don’t pay them at all, a property manager may charge an absence of payment fee.- Can apply to: Short-term and long-term rentals
Lease renewal fee
Since a lease renewal potentially reflects your property manager’s sound performance, some property management companies may charge a small fee for every lease they’re able to renew. A 2% fee may occur when extra negotiation is necessary to maintain the same tenant and keep the rental unit cash flowing.- Can apply to: Long-term rentals
Maintenance fee
Most contracts cover basic maintenance in their fees but often limit what they include. For example, you may have to pay extra for things like snow removal and landscaping. Or they may be specifically excluded, and you’ll need to schedule those services with your own vendors.- Can apply to: Short-term and long-term rentals
New tenant placement fee
Whenever a property manager secures a new tenant or lease, you may have to pay an additional fee equal to 2% of your rental’s revenue. Some management agreements also include the cost of cleaning the property between renters. Others separate this into a per-cleaning fee. If it’s the latter, you’ll likely want to pass this cost along to your renters.- Can apply to: Long-term rentals
Reserve fund fee
A reserve fund is what some property managers use when unexpected fees arise or when they need to pay recurring bills on your behalf. This may be an ongoing cost since you may need to refill the fund when it gets low.- Can apply to: Short-term and long-term rentals
Returned check fee
A property manager may charge anytime you or a renter provides a bounced check or invalid form of payment that results in an additional round of payment processing.- Can apply to: Short-term and long-term rentals
Vacancy fee
Depending on your agreed-upon fee structure, some property managers may make less when your property is vacant. In that case, a vacancy fee can give the property manager the funds to continue maintaining the property.- Can apply to: Short-term and long-term rentals
Frequently asked questions about how much property managers charge
01: Is hiring a property manager worth the cost?
Hiring a property manager can be worth the cost if you don’t have the bandwidth to communicate with tenants, manage paperwork or maintain your property. If you live nearby and can manage the property yourself, it may not warrant the costs.
02: Can property management fees be tax-deductible?
Since property management fees can be a necessary part of generating vacation rental income, they can be tax-deductible in many cases. However, the amount deducted will largely depend on local tax laws and how you use your property.
03: What question should I ask a prospective property manager?
Ask any questions that help clarify your agreement with a potential property manager. Here are some to get you started.
- What is your fee structure?
- What services are and aren’t included?
- Are there any setup or onboarding fees?
- Do you mark up maintenance and repair costs?
- Is there a contract, or can I cancel at any time?
- Can I tour some properties currently under your management?
- How many staff are available?
- How do you handle maintenance emergencies and renter requests?
- Where do you advertise your rental listings?
04: Where can I find a property manager near me?
You can find a property manager near you by searching online, contacting the real estate agent who sold your property or asking your HOA for referrals.
05: How can I negotiate property management fees with a prospective manager?
You can negotiate fees with a prospective property manager by reviewing a draft agreement and making a counteroffer or requesting an amendment to one or more price points. Be prepared to share the logic behind your suggestions.
06: Are there DIY property management options to save money?
Yes, you can DIY property management. However, instead of paying with cash, you will pay in the amount of time you spend managing and maintaining your property.
