Property management fees
What a managing agent charges to run your rental — usually a percentage of rent plus assorted extras.
Management fees are typically quoted as a percentage of rent collected, commonly in the range of 5% to 9% depending on state and property type. That headline percentage is rarely the whole cost.
Additional charges usually include a letting fee when a new tenant is found, lease renewal fees, routine inspection fees, statement and administration fees, and the cost of advertising the property.
All of it is deductible against rental income. A good manager who keeps quality tenants and minimises vacancy usually costs less than the vacancies and disputes that self-management can produce.
The real percentage
On $31,200 of annual rent, a 7% fee is $2,184. Add a letting fee of one week's rent, inspection charges and advertising and the true cost is closer to $3,000, or around 9.6%.
The bit people get wrong
Compare the total annual cost, not the headline rate. An agent quoting 5.5% with high letting and administration fees can easily cost more than one quoting 7% all-inclusive.
Common questions
Are management fees tax deductible?
Yes, in full, along with letting fees, advertising for tenants, and inspection charges — all deductible against rental income in the year incurred.
Should I manage the property myself?
It saves the fee but exposes you to tenancy law, disputes, maintenance calls and vacancy risk. Self-management also often voids landlord insurance conditions.
Can I negotiate the rate?
Often yes, particularly with multiple properties or in a competitive local market. Negotiate the full fee schedule rather than only the headline percentage.