Hidden Costs of Managing a Rental Property

Let’s say you have a client that’s looking to buy a second home to rent out. You might want to suggest to them that hiring a property management company can be a great way to help them get the most out of their rental property.

However, before you start calling around and making appointments to find the best product management company in the area, let’s talk about what it takes to work with one. 

First, there are three ways a property management company usually charges their clients:

  • A percentage of the monthly rent
  • A flat monthly rate
  • A rate that varies, depending on the services that were delivered that month

A break down of expenses

There’s a lot that goes into the cost of hiring a property management company, so let’s dive to the way that most companies break down their prices:

Setup fee

This is the price that property managers charge to set up a new account with them. It will vary by company, but it’s usually around $300.

New tenant fee

A great property management company will perform a thorough screening process when they bring in a new tenant. That process, in addition to the necessary paperwork, will come at a price that’s usually around 25% to 100% of a month’s rent.

Advertising fee

Your property management company will spend money advertising that there’s a unit, building, or home available for rent. They will likely charge for their advertising package. 

Lease renewal fee

Some properties management companies charge a fee when a tenant renews their lease. Others don’t!

Vacancy fee

You may be expected to pay a fee for every month your property is vacant. If it’s your property management company’s responsibility to find a tenant, they probably won’t charge this fee.

Reserve fund fee

Reserve funds are what property management companies use for emergencies and regular maintenance. They may have a minimum amount to have on hand at all times.

Eviction fee

Evictions are process that takes time and money. If attorneys have to get involved, you may be charged their hourly rate plus a fee.

Returned check fee

Most property managers will charge around $35 if a tenant’s check bounces. This is less common as electronic payments are becoming the norm. In the case of a missed e-payment or insufficient funds, there will likely be a late fee charged that accumulates day by day.


It’s very important to remind your clients that cheap property management companies are not going to be the best. More than likely, they want to know that their property is going to be well taken care of, so they don’t have to do much more than cash the checks. 

Still, property management companies can get pricey! Take the time to sit down with your clients and weigh the cost vs. the monthly rent and make sure it’s worth it to them.

Property management in Hartford and Central Maryland

Moon Ridge Property Management is the best property management in the area. We have competitive pricing, a team of managers that will take care of your client’s home as if it were their own, and an extensive network of professionals to call on when we need repairs, legal assistance, or regular maintenance. Give us a call!