Property Management Fees & Their Place in My Analysis

[Eric Telese]

Hi BP community,

I have always accounted for 10% property management when analyzing deals. I have learned this through @Brandon Turner webinars, podcasts, etc.

Now that I have seen other fees involved with hiring a property management company, it seems like that 10% will be much more. I added in leasing, renewal, and setup fees, in addition to the actual 6-10% management fee. Now after calculating, my entire property management costs are coming out to 15%-22.5% of rent, varying by company. 

Leasing fees are varying from 50-100% one month rent. Renewal fees from 35-75% one month rent and some charged every six months. Management from 6-10% and some companies charging setup fees. 

These are all expenses I will incur to have property management, therefore I feel I absolutely need to calculate these numbers into my analysis. This cuts the margins I was thinking I’d get or requires me to offer lower. 

Am I missing something? Is this usual and do people use these numbers when running their analysis? I have asked some who have said they do not include these fees in analysis. If not, why would’t you?