It’s not surprising that property management fees are one of the first things property owners consider when hiring a property management company. These fees can be more complex than property owners initially think. But if you’re looking for assistance managing your rental property, it’s important to understand the various fees and factors that come into play.
In this blog, we’re explaining everything you need to know about property management fees. With this knowledge, you’ll be able to determine which Orange County property management company best fits your needs while keeping cost in mind.
What are Property Management Fees
Property management fees are the amounts property owners pay to a company for managing their property(s). These payments cover the costs of the day-to-day operations at the rental properties managed by the property management company. These fees vary depending on the services provided by the property manager, the type of property, rent, location, and other factors.
How Property Management Fees are Structured in Orange County
Orange County property management companies commonly use a variety of fee structures. The most common are:
- Percentage-based management
- Flat fee management
The third type you might encounter is what industry experts call the “here today, gone tomorrow” management company. They charge a low fee, and you wonder if it’s too good to be true. Sadly, the answer is often that, yes, it is too good to be true—they’re hard to get a hold of, never respond to your messages, and cause more issues than they solve.
Let’s learn more about the three most common fee structures investors in Orange County can expect to see.
Percentage-based management
A percentage-based management fee is when a company charges a fee by taking a set percentage of the monthly rent. In Orange County, you can expect to pay anywhere from 6% to 12% of the monthly rent to a professional property management company. If the rent on your property is $2,200 per month, you can expect to pay $132-$164 in property management fees.
A percentage-based management fee is generally a good option for property owners because it gives property managers an added incentive to keep rents competitive and avoid vacancies.
Some property management companies, like Good Life, don’t charge a management fee if the property is vacant. Others charge a fixed vacancy fee or a fee equal to the monthly rent regardless of whether the property is vacant. It’s important to know a company’s stance on vacancies before signing.
Flat fee management
A fixed-rate management fee is when you pay a monthly fee for a property management company’s services. This fee is usually based on the property type, square footage, property condition, and the nature of the services being provided.
Property management companies’ charges vary depending on these factors, but in Orange County, fixed rates typically start at $60 per unit for any property over five units and go up to $150+ for a single unit.
If a company charges based on a fixed rate, request a detailed list of services provided to ensure the management meets your standards. Remember, a cheaper property management company isn’t always the best choice—without proper compensation, they may be less motivated to keep the property full or maintained.
| Orange County Property Management Fee Structures | ||
|---|---|---|
| Percentage-based | Fixed-rate | |
| What it is: | A fee based on a percentage of your monthly rent. | A set fee you pay each month. |
| What you’ll pay: | 6%-12% of your rent per month. | $60-$150 per month. |
Typical Property Management Fees in Orange County
In addition to the management fee we discussed above when breaking down the fee structures, there are other fees you may see when researching property management companies. Understanding these fees can give you a better understanding of how much you’ll be paying and what exactly you’ll be paying for.
Here are ten fees you may run into and what they mean:
- Set-up fee—While this is becoming less popular in the digital age, some property management companies charge a small fee to set up an account in their system. This is typically more common in multi-family where the new manager has to review all the financials and leases of the current tenants.
- Monthly management fee — As discussed before, a management fee is the monthly charge for the services provided by the property management company. You can expect to pay 6%-12% of the monthly rent if you’re on a percentage-based fee structure or $60-$150+ per month on a fixed-rate fee structure.
- Supervisory fee—A supervisory fee is charged when large repairs outside normal maintenance require a property manager to step in to supervise contractors on an ongoing basis. Expect to pay 5%- 20% of the cost of the repairs to the property management company. This can also occur during the make-ready process.
- Advertising fee — While advertising your property when vacant is a typical task for property managers, many companies keep their management fees low by charging additional advertising fees. These fees can vary, but you can expect to pay $30-$60. For example, a premium listing on Zillow for 90 days costs $29.99.
- Lease renewal fee — Another common fee is the renewal fee, which is what you’ll pay for tenant retention. In Orange County, you can expect to pay between $150 and $350 for lease renewal.
- Tenant placement fee — A tenant placement fee can be charged to cover the costs associated with placing a tenant in a rental property. It can be charged as a flat fee or a percentage of the monthly rent.
- Inspection/annual walkthrough fee — The property manager should conduct a yearly inspection or walkthrough of the property to check for visible signs of damage, safety issues that can affect habitability, or issues that need to be repaired and to test smoke detectors. Typically, you can expect to pay an annual fee of $99-$199 for the inspection.
- Administration fee — This is a less common fee, but it can show up as a postage fee or an accounting fee.
- Maintenance surcharge — When a maintenance fee is charged, the company gets a percentage of every maintenance item that needs to be completed. So, on a $100 repair, they may keep 10 percent, or $10. This can be applied to every work order, so be sure to keep an eye on these charges to ensure they’re not being abused.
- Cancellation fee — Some property managers will charge you a cancellation fee when you want to be released from your contract. Like Good Life, more and more companies are removing this fee and instead require owners to give a 30-day notice period to cancel their contracts.
See how Good Life Property Management’s fees stack up against the competition.
Be mindful of how many fees a company charges—this can signify a fee-heavy company. In the long run, these companies can be more expensive even if their monthly management fee is lower than other property management companies.
Factors that Impact Property Management Fees
Type of property
Property managers can manage all types of properties, from single-family units to 50+-unit apartment buildings. The management fees will range depending on the type of property. For a single-family unit, the management fee will be on the higher side—think closer to 10%- 12% per month. For a 2-20-unit property, you can expect to pay closer to 6%, and if the property is 50+ units, it could be as low as 4%.
When there are more units, the management fee is often lower because the property management company is responsible for a larger number of units.
Rent
Property condition
Location
Depending on your location, you may pay higher property management fees. While some companies may charge more based on location, it’s often a result of certain Orange County neighborhoods commanding higher rents.
Extent of property management services
The services provided by property management companies impact their charges. If the company manages every aspect of your property, you can expect to pay more than a company that only collects rent.
Is Hiring a Property Manager Right for You?
You might not expect to hear this from a property management company, but not everyone should use a property manager. If you want complete control of your property, it’s best to be the manager instead of trying to micromanage a professional. If you live next to the unit or on the same property, having a manager is usually not a good idea, as the tenant will circumvent the manager and go straight to you. If you are interested in property management, learning the ins and outs of managing your property is worthwhile.
However, there are many reasons why hiring a property manager can benefit property owners.
- Save time — When you hire a property management company, they will take care of the time-consuming tasks like advertising, tenant screening, lease agreements, and maintenance requests. This gives you more time to focus on other aspects of your life and also gives you more flexibility with your time.
- Maximize your rental income — One of the most important benefits of hiring a property management company is maximizing your rental income. Thanks to industry experience, property managers can help you find the right tenants, collect rent payments, and manage the tenant relationship to ensure everyone is happy. They can help reduce vacancy rates through effective marketing strategies, competitive pricing, and quick response times. Property managers help manage the lease renewal process, ensuring a high rate of tenant retention and competitive rent increases to maximize profitability.
- Ensure you’re legally compliant — Landlords must know many local, federal, and state laws and regulations and stay on top of any changes in those laws. A Property manager is responsible for ensuring legal compliance to reduce risk, staying informed of new or updated laws, and ensuring that your property is in accordance with the FHAA standards.
Finding the Right Property Management Company
Choosing a property management company is important for real estate investors and property owners. A good property manager can protect your investment, free up your time, and give you peace of mind. But there are a lot of property management companies in Orange County—how do you know which is the best fit for you?
Start by looking at their services and ensuring they’ll be able to meet your needs. Here are some common tasks that a property management company should be responsible for:
- Marketing your property to find new tenants
- Screening tenants
- Managing lease agreements
- Overseeing maintenance and repairs
- Collecting rent and dispersing funds to you
- Handling the day-to-day tasks of managing a rental property
You can also spend some time looking into the company’s reputation. Here are some ways to evaluate a company’s credibility:
- Read reviews on platforms like Google Review, Yelp, and Trustpilot.
- See how many years they’ve been in business. Companies with over five years in business have stood the test of time.
- Evaluate their pricing—is it readily available? Are they known for hidden fees? The answers to these questions provide a lot of information.
- Are they easy to reach? If you call or email and wait days for a response, this is not a good sign for a business built on being responsive to tenants’ needs.
Why Choose Good Life Property Management?
At Good Life Property Management, we believe life should be enjoyed, not spent sweating the small stuff. That’s why we set out to make property management easy. We care about you, your property, and your tenant. And we do it all so you can Live the Good Life.
Schedule a call to speak with one of our Good Life experts.
Frequently Asked Questions
How much do property managers charge in Orange County?
Is a property manager worth it?
What is covered in property management fees?
Depending on what property management company you hire, a variety of services are covered by property management fees. Some of the most common tasks include:
- Screening tenants
- Managing lease agreements
- Overseeing maintenance and repairs
- Collecting rent and dispersing funds to you
- Marketing your property to find new tenants
- Handling the day-to-day tasks of managing a rental property
Steve Welty
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