Being a landlord is hard work. Managing maintenance calls at 2 AM, handling awkward rent collections, and keeping up with changing legal regulations can make it feel like your rental income isn't worth the effort.
Hiring a property manager is the best way to protect your time and your asset, but it brings up an important question: “How much is this going to cost me?”
It’s frustrating when property management websites hide their pricing structures or force you to jump through hoops to get a straight answer. At BTS Properties, we believe in complete transparency. Below, we break down the typical property management fee structures in Peoria and what extra charges you need to look out for when interviewing a management company.
1. The Management Fee Structure (Fixed vs. Percentage)
In the property management industry, the ongoing monthly fee is typically structured in one of two ways: a flat fixed fee or a percentage of the collected rent. While flat fees might seem predictable, they do not always motivate the manager to maximize your rental income. When interviewing companies, you will find that percentage-based fees can vary widely across the market based on the level of service provided.
What to ask: Do you still charge your management fee if the resident fails to pay rent that month? (Ideally, your manager should only get paid when you get paid).
2. Vacancy Fees
Depending on the contract, some property managers will charge you an extra fee to oversee your property while it is empty, or they will continue to charge their standard base management fee even when you have no rental income coming in.
What to ask: How do you handle billing when my property is sitting vacant?
3. Tenant Placement (Leasing) Fees
Whenever your property manager finds a new resident, you can expect to pay a placement fee to cover the marketing and administration. This is a critical service; a rigorous screening process is your absolute best defense against future headaches. This fee typically covers professional media, marketing, showings, intensive applicant screening, lease preparation, and move-in inspections.
What to ask: Do you offer any guarantees on your tenant placement? What happens if the resident breaks their lease after only a few months?
4. Lease Renewal Fees
When a great resident decides to stay, it saves you thousands in turnover costs. Property managers typically charge a fee (either a flat rate or a percentage) to negotiate the new lease, run a new market rent analysis to maximize your ROI, and handle the updated paperwork.
What to ask: Do you charge a fee for lease renewals, and does it include a fresh market rent analysis?
5. Setup and Onboarding Fees
Some companies charge a one-time setup fee to cover the administration of opening your new account, performing initial property inspections, and setting up your bookkeeping.
What to ask: Do you charge an onboarding fee for new properties? If I am bringing over a property that already has a resident living in it, is there a "takeover fee" to audit the existing lease?
6. Repairs and Maintenance Coordination
Routine maintenance is vital for maintaining the appeal and value of your investment property, but handling it properly is time-consuming. Coordinating with residents, vetting insured vendors, and verifying the work is a massive undertaking. Many managers charge a maintenance coordination fee based on the invoice amount to handle this logistics process.
A Note on Transparency: If a property manager does not explicitly list a maintenance coordination fee, you should ask how they are getting paid for that work. Often, companies will quietly mark up vendor invoices on the back end, or they make a profit by using their own in-house maintenance technicians. While there is nothing inherently wrong with those models, it is crucial that you know exactly how maintenance is being billed so you aren't hit with surprise charges.
7. Property Inspections
Routine inspections provide an opportunity to check that your home still meets habitability standards and that residents are complying with their lease. Our team recommends stopping by annually to check in on the interior and exterior condition of the home, catching small issues before they turn into expensive disasters.
What to ask: How often do you inspect the interior of the property, and is there an extra charge for these inspection reports?
8. Risk Mitigation: Who Pays for Evictions and Pet Damage?
When evaluating the true cost of a property manager, you also have to factor in the risks they absorb for you. Evictions and pet damage can decimate your cash flow.
What to ask: Do you offer any financial protection or guarantees for legal/eviction costs and pet damage, or am I 100% responsible for those out of pocket?
Is It Worth It?
Whether paying for property management makes sense depends entirely on your goals. If you want to scale your portfolio, a professional team is an invaluable asset. When weighing the costs, consider these three hidden factors that often make professional management pay for itself:
The Cost of Your Time: Managing a rental property effectively means being on-call 24/7. Whether it's a midnight plumbing emergency, coordinating with contractors during your workday, or tracking down late rent on a holiday weekend, your time is your most valuable asset. A good manager gives you your free time back.
Compliance and Legal Risk: The rental industry is heavily regulated, and the laws are constantly changing. A single mistake regarding Fair Housing guidelines, strict security deposit return timelines, or proper eviction procedures can result in lawsuits costing thousands of dollars. A professional manager acts as a shield, keeping your property compliant and protecting you from expensive legal liability.
The Hidden Cost of Turnover: Vacancy days, deep cleaning, and finding new residents are a landlord's biggest expenses. A high-quality property manager reduces these costs by placing great residents who stay longer, proactively handling maintenance, and keeping your property occupied and cash-flowing.
When you make your choice, look for a manager who is willing to earn your business every month rather than locking you into an iron-clad, long-term trap.
And remember, you get what you pay for. A quality property manager can save you money down the road, but a bad one will cost you. Do your due diligence, and properly vet who will be managing your property.
Want to see our current fee schedule and find out exactly what your cash flow would look like with us? Visit our pricing page here or contact the BTS Properties team today! We would be happy to discuss our pricing, explain our guarantees, and run a customized rental analysis for your specific property
