How to Estimate the Expense of Hiring a Property Manager

Professional Property Management
  • Author: Fazal Umer
  • Posted On: December 2, 2023
  • Updated On: December 4, 2023

Investing in real estate can be a rewarding venture, but managing properties can be a time-consuming and complex task. Hiring a professional property manager is a strategic move that can alleviate stress and streamline operations.

However, understanding the costs involved is crucial for effective financial planning. This guide will explore the key steps to estimate the expense of hiring a property manager.

Understanding the Basics 

Property management costs encompass a variety of fees and expenses. By breaking down these components, you can better understand what to expect. It’s also helpful to leverage tools like a property management cost calculator to streamline the estimation process by automatically factoring in key variables.

Management Fees

The initial cost associated with hiring a property manager is the management fee. It is typically a percentage of the property’s monthly rental income and covers various management tasks.

The industry standard ranges from 8% to 12%, but confirming the specific percentage charged by the property manager you’re considering is essential.

Leasing or Tenant Placement Fees

When a property manager secures a new tenant, they may charge a leasing or tenant placement fee. This one-time fee compensates the property manager for advertising the property, screening tenants, and finalizing the lease agreement. Leasing fees can vary, and it’s crucial to factor this cost into your overall estimation.

Maintenance and Repair Costs

Property managers handle maintenance and repairs on behalf of property owners. Some property management agreements include a percentage fee for these services, while others bill them separately. Understanding how maintenance costs are structured ensures you can anticipate and budget for unexpected property expenses.

Steps to Estimate Property Management Costs

Research Local Market Rates

Property management costs can vary based on location and market conditions. Researching local market rates will give you a baseline for estimating costs.

Contact multiple property management companies in your area to gather quotes and gain insights into the current pricing landscape. Additionally, explore online resources such as a property management cost calculator to refine your estimates further.

Evaluate Management Fee Structures

Understanding how property managers structure their management fees is crucial. Some may opt for a fixed percentage, and others may choose a tiered pricing structure, which is determined by factors such as the number of units or the property’s rental income. Evaluate these fee structures to determine which aligns best with your investment goals.

Inquire About Additional Fees

Beyond management and leasing fees, inquire about any additional charges that may apply. Some property managers charge fees for specific services, such as property inspections, legal services, or administrative tasks. Knowing these potential extras helps you create a more accurate cost estimate.

Consider Property Size and Type

The size and type of your property can impact management costs. Larger properties or those with unique features may require more extensive management efforts, potentially leading to higher fees. Consider the specifics of your property to ensure your cost estimate is tailored to its unique characteristics. – says Jasen Edwards, chair of the Agent Editor Board at Agent Advice.

Review Service Agreements Thoroughly

Before finalizing your decision, review the service agreement provided by the property manager. Pay close attention to the terms and conditions, fee structures, and any clauses related to additional charges. A thorough review ensures that you have a comprehensive understanding of the financial commitment involved.


Estimating the expense of hiring a property manager is a crucial step in making informed and strategic investment decisions.

By breaking down the various components of property management costs, conducting thorough research on local market rates, and carefully reviewing service agreements, you can develop a comprehensive estimate tailored to your property and financial goals.

Leveraging tools like a property management cost calculator can further enhance the accuracy and efficiency of your estimation process, setting the foundation for a successful and financially sound partnership with a professional property manager.

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Author: Fazal Umer

Fazal is a dedicated industry expert in the field of civil engineering. As an Editor at ConstructionHow, he leverages his experience as a civil engineer to enrich the readers looking to learn a thing or two in detail in the respective field. Over the years he has provided written verdicts to publications and exhibited a deep-seated value in providing informative pieces on infrastructure, construction, and design.