Question Details

Lisa, Other/Just Looking in San Francisco, CA

What's standard in fair in property management agreements?

Asked by Lisa, San Francisco, CA Fri Mar 28, 2008

I just bought my first investment property and am a bit miffed at all of the fees the management company is trying to charge me. As the contract is written now, some of the things I question are 25% of moonthly rent on lease renewal (when it's 75% for new rental), them keeping the interest on my trust account, keeping any fees that the tenant pays (incl late fees), 10% of the cost of any repair etc as their service fee, lease termination fee, all out-of-pocket fees such as copies, mileage, photos. What is standard/normal??

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As Glen stated, there is a wide difference from company to company in terms of the fees that they charge. You always have to look at the big picture and this is why talking to more than one company is a must. There are so many different potential fee structures that unless you find out all the fees are ahead of time AND get quotes from multiple management companies it is very easy to end up unhappy in your arrangement with your MC.

Its hard to comment on your specific situation not knowing what the base fee is. Some companies attract owners with a low base but then stack lots of other fees on, others have a flat structure with a robust flat monthly management fee that is all almost all inclusive.

None of the fees that you mentioned are what I would call extraordinary as there are lots of companies that charge those things. Weather or not you are over paying would really depend on what your monthly management fees is. You can find more information about property management fees in the article listed here as the web reference.
0 votes Thank Flag Link Fri Feb 12, 2010
Lisa, every company is different. Have you interviewed a few? Some items like interest on trust account, the amount is so small that it isn't worth the time to figure and put a stamp on an envelope to get it to you. So I wouldn't worry about that one. I don't charge a lease renewal, but I know some companies do. In some ways the property manager might deserve a little bonus for keeping the tenant around another year. they may or may not have had to convince tenant to stay. 25% compared to a month of no rent is small. Going after tenants for late fees takes time so maybe they deserve to be paid for that. I also don't keep late fees. 10% for repairs seems a little excessive. They are getting a monthly fee correct? That monthly fee should be covering something. I know how to do a decent amount of handy man jobs, so if I like my clients and have time I sometimes do the work and charge minimal fee. Its a good way to get in the unit and see how the tenant is taking care of it :) check out some of my projects at
I grew up in a family that managed their own properties and now have my own in addition to clients. Where is your property located? Feel free to check in with me and see if its something I would be interested in taking on.

Glen Mitchell
Real Estate Broker
Licensed in California and Hawaii
Web Reference:
0 votes Thank Flag Link Tue Oct 21, 2008
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