There are many people (both tenants & landlords) who maintain their properties themselves. And you can do the same. However, it’s time-consuming, not so easy, and may not be worth your time. Lastly, you may not have the level of efficiency as the contractors have.
So you may need to hire a property maintenance company at a certain point. Before hiring a property maintenance contractor or company, the first question arises about the cost.
Aside from the property management fees, there are some other concerns about their reputation, expertise, hidden fees, communication style, availability, etc.
In this post, I will give you a clear overview & estimation of the property management cost, the main key points that you need to consider when calculating the fees. After reading this article/post, you will be able to calculate the cost of hiring a property management company throughout the USA.
Let’s get started.
Breakdown of property management fees
A property maintenance company typically charges in two ways:
- Based on the monthly rent
- Fixed price per month
The first method (based on the monthly rent) is mostly used and it’s convenient for most landlords and tenants. However, some people prefer the second method (fixed price) and they want to see their effectiveness, service quality, and other factors.
No matter which route you choose, you & the property management company have to consider some key factors when calculating the cost. Let’s see them below.
| Fee | Average monthly cost range |
|---|---|
| Initial account setup | $0 – $500 |
| Property management | $75 – $300 Or 7%-12% monthly rent |
| Tenant placement and leasing | 50% – 100% of the first month’s rent |
| Maintenance | 5% – 15% of maintenance cost |
| Lease renewal | $0 – $200 |
| Eviction | $200 – $1200 |
| Vacancy | 50% – 100% of monthly rent |
| Annual inspections | $100 – $250 per inspection |
| Early termination | 25% – 75% of monthly rent |
| Inspection | $0 – $150 per inspection |
The above table shows a rough estimate in the USA. However, as you already know the prices will change depending on the property location, property type, and the company itself.
If you need to get a clear idea about the cost in Rhode Island (including Providence, Pawtucket & Woonsocket), see the table at the very bottom of this post.
Okay, let’s move on and find more details about the fees.
Initial account setup
This fee is associated with the onboarding process when a tenant or landlord makes a contract for the first time. It’s a one-time fee.
It can include the following:
- Documentation and paperwork
- Property inspection
- Account configuration
- Financial setup
- Introduction to services
Property management
This is a monthly maintenance fee and it’s recurring. As you saw in the above table, it can be $75 to $300 per month (for a fixed price). It also can be 7% to 12% of your monthly rent.
Please note that if the monthly rent is higher then this fee is typically lower and vice versa. For example, if an apartment’s monthly rent is $1200, the monthly property maintenance fee could be 15%. If the rent is $3000, this fee could be 5%. You get the idea.
Tenant placement and leasing
This is a one-time fee when the company places a tenant in a vacant property. It’s usually a percentage of the first month’s rent. It helps the property management company cover the costs involved in getting a new tenant.
This fee covers the following:
- Advertising the property
- Screening potential tenants
- Showing the property
- Preparing the lease agreement
- Handling administrative tasks, etc.
Maintenance
This maintenance fee is different than the “Property Management Fee” that I mentioned earlier. This specific maintenance fee is one-time and the previous one is recurring.
Anyway, this maintenance fee is associated with emergency repairs, supplies needed for property maintenance, etc.
For example, if a tenant accidentally breaks a wash basin, the maintenance company will buy a new one and replace it. If the basin costs $30, the maintenance company may add 5% – 15% to it.
It’s mainly on-demand maintenance and a one-time cost if needed.
Lease renewal
It’s the process of extending the lease agreement or making a new contract for the next term. When an existing lease term is about to expire and if the tenant wants to stay on the property, both parties need to discuss, and negotiate the new price, terms & conditions, etc. When a property maintenance company handles this renewal, they could charge from 0 (zero) to $200.
Also, they can charge only the tenant or the landlord, and even both parties. This is something that should be mentioned in a contract.
This cost generally covers the following:
- Negotiation of terms
- Lease agreement update
- Rent adjustments
Eviction
It’s not obvious and happens very less. However, a good management company will also include this term in the contract.
It’s the legal process for removing a tenant from a property. It generally happens when a tenant keeps failing to pay the rent, violates terms & conditions repeatedly, etc.
The landlord pays for the evictions. As you saw in the above table, the range starts from $200 and up to $1200. However, in some cases, it can go higher than that.
As mentioned earlier, it’s very rare and this will not require most of the tenants and landlords.
However, this eviction cost covers the following:
- Legal fees
- Notice to vacate
- Filing for eviction
- Court proceedings
- Writ of possession
- Enforcement or hiring a sheriff or constable to carry out the eviction order, etc.
Vacancy
Property maintenance companies are experienced and excellent in finding new tenants. Moreover, they already have tenants waiting to get a suitable apartment. That’s why vacancy fees are very rare. However, it’s good to mention in the contract.
The landlords pay the vacancy fees. It’s typically equivalent to the 50% to 100% of the monthly rent price. This cost will cover the following:
- Marketing such as paid advertising, social media promotion, etc.
- Showing properties to potential tenants
- Maintenance and repairs to attract new tenants, etc.
Annual inspections
It’s the routine inspection of a rental property and it’s recurring (per year). The cost typically includes:
- Property condition check
- Appliance and system inspection
- Compliance with lease terms
- Safety and code compliance
- Documentation
Aside from the annual inspections, you can also have on-demand inspections at an additional cost.
Early termination
There are scenarios when a tenant may want to leave the property before the term ends. For example, job relocation or transfer to a different city from the office, personal circumstances, or dissatisfaction with the property.
On the other hand, a landlord may also want to vacant the property or doesn’t want the existing tenant to live in his property.
Either way, early termination refers to the closing of a lease agreement before the end date. Both parties carry out some additional & unwanted hassles when it happens. Also, there are some costs involved in this early termination.
A typical early termination generally costs from 25% to 75% of the monthly rent. In a few cases, we saw 100% and two months’ rent. So discussion between the tenant & landlord may solve this kind of issue more quickly and efficiently. And the maintenance contractor can play a vital role in this type of case. Because many tenants generally don’t have direct access to the landlords. Also, most landlords are habituated to seeing their tenants using the contractor’s eyes.
Inspection
Like the “Annual Inspection” that I mentioned earlier, this one is a bit different. Annual inspection is recurring (yearly). But this inspection is on-demand & one-time.
When you face a problem or want to renovate the property, you need to inspect it first. Typically, small inspections are free. However, complex and time-consuming inspections can cost you up to $150.
Our pricing in Providence, Pawtucket & Woonsocket (Rhode Island)
As I mentioned at first, the cost of hiring a property maintenance company varies. This table contains the fee that we as a property maintenance company charge throughout Rhode Island.
| Fee | Monthly cost |
|---|---|
| Initial account setup | Free |
| Property management | 8 – 10% of monthly rent |
| Tenant placement and leasing | 100% of the one month rent (one time) |
| Maintenance | $55 /man/hour maintenance cost |
| Lease renewal | Free |
| Eviction | Free (not including attorney fee) |
| Vacancy | Free |
| Quarterly inspections | Free |
| Early termination | (No penalties) |
| Inspection | Free |
If you’re not sure about the name of the fees or what it does or means, see above to find their definition and examples.
Wrap up
Property maintenance companies are experts and excellent at what they do. They reduce your headache and maintain your priorities smoothly. However, it costs money to hire a maintenance company.
The price is different based on the companies, locations, property types, value, monthly rent, and other factors. However, for a $3000 house or apartment, it generally costs $300 – $500 per month to hire a property maintenance company. There are some on-demand service and their charges. Also, there are yearly & one-time charges.
