How to use the property management fee calculator
- Enter the monthly rent and the management fee as a percent of the rent collected.
- Enter the vacancy as a share of the year, the leasing fee as a percent of one month's rent and how many new tenants you expect each year.
- Enter the renewal fee and the renewals a year, the repairs and the manager's markup on them, and your other yearly costs.
- Optionally add the property value in the advanced options to see the yield. Read the yearly cost of the manager and the owner statement.
Formula
Rent collected = monthly rent x 12 x (1 - vacancy)
Fees = management % x rent collected + leasing % x one month of rent x new tenants + renewal fee x renewals + markup % x repairs
Net income = rent collected - fees - repairs - other costs. Yield = net income / property value
The management fee is on rent collected, so it is smaller in a vacant year. Leasing and renewal fees count by the events you enter.
A $2,400 rental with an 8% fee
With 5% vacancy the rent collected is $2,400 x 12 x 95% = $27,360. The 8% management fee is $2,188.80. A leasing fee of 75% of one month's rent for half a new tenant a year is $900, a renewal fee of $150 for half a renewal is $75, and a 10% markup on $1,800 of repairs is $180. The fees total $3,343.80, which is 12.2% of the rent collected.
After repairs of $1,800 and other costs of $5,200, the owner keeps $17,016.20. On a $360,000 property that is a net yield of 4.73%, compared with 5.66% if there were no manager. The tool shows what the manager costs in yield, not whether the manager is worth it.
The fees that surprise owners
The headline percentage is only part of the cost. Many managers also charge a leasing fee each time they place a tenant, a renewal fee when a tenant stays, a markup on repairs they arrange, and sometimes charges for inspections or for advertising. Putting every fee into one yearly number makes agreements easier to compare. A lower monthly percentage with high leasing and repair fees can cost more than a higher percentage with none.
Tenant turnover matters a lot. Each new tenant brings a leasing fee and vacancy, so a property that turns over every year costs more to manage than one where tenants stay for several years. Use the presets to see how turnover changes the cost.
Using the result
The net yield shows what the property earns after all costs, which you can compare with the cost of the loan. The Cash on Cash Return Calculator adds financing, the Rent Escalation and Lease Term Calculator projects rent over a lease, and the Price to Rent Ratio Calculator compares price with rent. For the mortgage payment, use the Mortgage Calculator. Read your management agreement for the fees your manager actually charges, because the percentages here are only examples.
Assumptions and limits
- The management fee applies to rent collected after vacancy.
- Leasing and renewal events happen as often as you enter, including fractions of a year.
- Repairs are paid by the owner and marked up by the manager.
- The rates and fees shown are examples. Use the terms of your own agreement.
Frequently asked questions
Why is the fee a share of rent collected?
Most agreements charge on the rent actually received, so a vacant month costs the manager nothing. Check your agreement in case yours uses a different base.
How do I enter a new tenant every three years?
Enter 0.33 in new tenants a year. The tool multiplies the leasing fee by that number.
Is a lower percentage always better?
No. Other fees can outweigh it. Compare the yearly total, not just the monthly percentage.
What does the yield without a manager include?
It uses the same rent, repairs and other costs but leaves out every manager fee. It does not count your own time.