Are you one of the over 7 million real estate investors in the United States?
Whether you have invested in residential or commercial real estate or both, there’s no doubt that you’re made a sound investment. In a country where the stock market has been the go-to investment market for decades, it’s refreshing to see an increasing number of people turning to real estate.
However, to maximize your real estate income, you might be wondering whether to hire a property manager. But how much do property managers charge? Are they worth the money?
Continue reading to learn more about the costs involved in hiring these managers.
How Much Do Property Managers Charge?
Right off the bat, you need to know that there’s no fixed property management charge. There isn’t a federal or state law that regulates how much property managers can charge their clients.
However, there are industry averages.
In general, after hiring a property manager, you’ll pay between 7 and 10 percent of your properties’ monthly rental income.
This is to say, if you earn $50,000 a month from your properties, you’ll pay your property manager between $3,500 and $5,0000.
If your rental income reduces, maybe because a tenant left and the unit has been vacant through the month, the amount you’ll pay them will reduce accordingly.
However, according to the experts at probayway.com, it’s possible to find a property manager who charges below 7 percent, and it’s possible to find another who charges well over 10 percent. It depends on a couple of factors, as fleshed out below.
The Size of Your Real Estate Properties
How small or large your properties are, as well as the number of properties you want to place under the care of the manager, will affect the property management charge.
For example, if you own just one rental unit within an establishment, a property manager can charge you as low as 5 percent of the monthly rental income. One rental unit means one tenant, which also means the property manager won’t have much work to do. In fact, it’s possible that the only thing the manager does in several months is to collect the rent.
On the other hand, if your property is large, such as an apartment complex with tens of units, or you own several rental units in different units, expect the charge to edge closer to 10 percent. A large property calls for a lot of work, and this will reflect in the property management charge.
Type and Location of the Property
Commercial properties typically attract a bigger management fee compared to residential properties. This is because, in most cases, commercial properties need a lot of management work and they’re often more profitable than residential units.
In real estate, location is a big factor.
In big cities where the cost of living is high, property managers will charge a higher percentage. In suburban and rural areas, the charge will be lower.
Hiring a Property Manager Is Worth It
Having read this guide, you now have an answer to your question: how much do property managers charge? But to recap, it is usually percentage-based, it can be anywhere from 7 to 10 percent. Hiring a property manager is the right thing to do, you just need to find a competent and experienced manager.
Keep reading our blog for more real estate investing tips and insights.