[Updated June 17th, 2020]

If you have a house or unit for rent and need property management, you probably have wondered if you can negotiate property management fees. Each company you speak with may have a set percentage or flat rate, but do you know if they can do any better?

In short, the answer is yes. Negotiating your property management fees is allowed, but there are a few things you need to consider when doing so.

Looking to calculate your property manager fees?  Check out this Property Manager Cost Calculator.


Can you negotiate property management fees 

How to get better property management fees

Like any other negotiation, you need to start from a position of power. What does this look like in the real estate investing world? Well, you need to have units that the management company wants. The company needs to make money, after all.

You have a better chance of getting lower property management fees if you have one or more of the following.

Multiple properties

Nothing is better for a manager than a new client with a large portfolio. The firm stands to make much more money when they are collecting rent on many properties. If you have a handful of units, tell your prospective manager that their rate is too high. They will see the value in your properties and may reduce their 10% fee to a more amicable rate like 8% or even 5%.

High rent property

If you have a property in a highly desirable area, you can likely rent it out for a large amount. This rent check may be double the amount collected from similar properties in nearby areas. If you can see the property manager’s mouth watering at the prospect of managing your cash cow, don’t be afraid to ask for a reduced fee. You may only get 1-2% knocked off your monthly charge, but you’ll be saving cash nonetheless!

Multifamily Unit

Much like owning multiple properties, having a single multifamily unit puts you in a strong position. Once again, you are collecting two or more rent checks per month. This increases your manager’s income, especially as you start increasing the number of units in your building. If you have a two-unit property, try to get 1-2% reduced. If you have three or more units, push for up to a 4% reduction. The worst thing they’ll do is only give you a slight discount on the property management fees.


Property Management Fees


Negotiating other rental management fees

Aside from negotiating the monthly property management fee, you will be charged for various items throughout your term with the company. Here a few fees that you can try to reduce or eliminate altogether.

Setup Fees

Taking on a new property is usually a blessing for a property manager.

They are getting more income and can now expect a larger check at the end of the month. However, some new units can bring along some headache or trouble. The fee can cover this portion of chasing down the new tenant or getting a vacant unit listed.

If your unit is rented and the tenant pays on time, try to get out of the setup fee. The property manager does not have to do any extra work in this case, so you can make a clear argument that there is nothing to “set up.”

Maintenance Fees

Maintenance fees can be confusing for a new real estate investor. The firm might have in-house maintenance or find vendors to service your property.

If they outsource the work, they might tack on a 10%-15% fee. Try to find a property manager who does not markup these fees.

If they do, ask them to show you the value in doing so. While you may not be able to have these fees reduced you can 1) perform the repairs yourself or 2) hire maintenance on your own.

Lease Renewal Fee

When your tenants sign their lease for another term, the management company may include a lease renewal fee.

This is supposed to cover contacting the tenants, processing the new lease, and getting everything in order. If you have one property, this might be a flat rate or even the full month’s rent. If you have multiple units, then this will be a big hit.

Try to negotiate your lease renewal charges since your portfolio is bringing a good chunk of business to your property manager.


How to compare property management fees

When it comes to seeing which firm has the best offer, you have two choices.

The first route is to find companies who provide rental management near you. You can ask friends for referrals or search the web for firms.  Reviews on Yelp or Google are skewed because tenants provide a lot of negativity. Next, you need to call each property manager and see what type of service they provide and review their fees. Once you have all this information, you can compare each firm to find the one that looks best.

The second option is much simpler, more effective, and takes less time. Create a Request For Proposal on Burbz and tell managers what type of service you need. Property managers in your area will send you proposals that outline their services and property management fees. You can compare all offers right from your dashboard and ask more questions if needed. It is the best way to compare property managers for free.

Looking for more affordable rental management?  Consider Co-Management

Landlords that want more transparency on their rental property.  Or, perhaps have dealt with bad property managers previously.  Consider Co-Management.

Burbz is the only software platform that allows landlords to hire a manager and provide a software solution to lower expenses and provide a safer option.  By using Burbz, landlords can negotiate all fees with property managers or co-managers.

Look up property managers and co-managers in your area.

Burbz is free software for landlords