How much should property managers charge? Being a property manager is hard work. Flipping a property acquisition into a worthwhile investment is a skill most of us only dream of having. Setting a price for such an important skill set can be difficult.
Expertise, Experience & Track Record
When calculating your worth as a professional, there are a few things to consider. First, your individual level of expertise should be quantified. Second, all relevant aspects should be considered. These aspects should include schooling, degrees, certifications, work experience, and personal achievements. Third, your record should speak for itself when pitching yourself to property owners looking for a manager. Finally, you need to have data on how growth and increased profits were achieved under your management and to what degree that change could be measured.
Say you aren’t as experienced as you want to be. That’s ok for now. You’ve got to start somewhere. The best time to establish your reputation as a capable property manager is now. The first thing to do when you start managing a new property is to determine the state of the property before you make any changes. That way, you have a clear vantage point to monitor progression or regression.
Before asking how much property managers should charge for their services, property managers may be at the mercy of the property owners. They may remain in this position until they prove themselves worthy of setting their own rates. A possible payment method property owners might insist on is a commission-based payment system. Probably not a pure commission, but enough to encourage the property manager to run an efficient operation. Property management for apartment complexes tends to bring its own challenges. Find more on the challenges and the solutions to apartment management here.
Depending on the type of property being managed, the calculation of a commission-based payment could carry significantly. For example, a property manager might be given a commission for every vacancy filled in a residential property. However, aspects such as maintenance and keeping costs down would be more critical for commercial properties. In that instance, savings could be passed on to the manager as a bonus.
Say you are as experienced as you want to be and have an established track record of being an excellent property manager. Then, if you are the miracle worker your property owner is looking for, you very well may be inclined to set your own rates on your own terms.
Even though you might be calling more of the shots, there are still some things to consider. You may be a great property manager, but it’s unlikely that you will accomplish everything entirely on your own. If you bring along your own team to assist you with property management, their compensation is something to be considered when determining how much you will charge.
The size and complexity of the property being managed will also essentially play into how much property managers should charge. For example, apartments and hotels require constant maintenance and oversight. Imaginably these properties are quite demanding to manage for even the most skilled property manager, so the rates charged should reflect the inherent effort that will be involved.
The Bottom Line
Ultimately how much property managers should charge will vary from manager to manager. Managers should know how much their skills are worth and be able to convey that worth to property owners. Property managers’ pay rate should reflect their performance while managing properties. Property owners are looking to their managers to make sure their investments have been worthwhile and eventually begin to turn a profit. When a property manager has accomplished that, I feel they can start to set their own rates and answer the question of how much property managers should charge.