Learn · Research

The Effective Fee Study: what property management actually costs.

Updated 2026-06-12 · computed from audited statements, not surveys

Ask a property manager what they charge and you will hear a single-digit percentage. Ask the statements and you get a different answer. We audited every owner statement in our founding portfolio, classified every PM-billed line, and computed the all-in cost of management as a share of collected rent. The advertised number was the floor. At one manager, the real number was nearly triple.

The headline numbers

Three property managers, anonymized below, all advertising management rates between 7.7 and 9.4 percent. The effective rate is everything the PM billed (management fees, inspections, lease placement, renewal charges, PM-billed labor) divided by the rent they collected, across every audited statement.

Effective = all PM-billed charges ÷ collected rent, per audited statement corpus. PM C’s window included a lease placement; see the caveats below.

What the spread is made of

None of the gap came from the management fee line itself. In our corpus that line was computed correctly almost every time. The spread came from charges that are fees in substance but not in name:

• Inspection fees: a per-visit charge at PM A that alone lifted the effective rate by more than half its advertised value over time.
• Lease placement: at PM C, one placement fee plus an inspection inside a three-statement window took 8.1 percent advertised to 22.3 percent effective.
• Renewal fees, admin charges, and maintenance coordination: individually small, structurally recurring.
• PM-billed labor: when the manager’s own crew does the work, the wage is PM revenue too. At statement level this is often invisible; it only surfaces when you match charges to invoices.

And the honest finding on the other side: PM B billed exactly what it advertised, every statement we audited. Clean managers exist. The point of measuring is that you cannot tell which kind you have from the contract; only the statements know.

Methodology

Every statement was extracted line by line and reconciled against its own arithmetic (beginning balance + receipts − disbursements = ending balance) before anything was counted; statements that fail that equation do not enter the data. Every line was categorized, and PM-billed charges were identified by payee, including self-billed maintenance where the manager is the vendor. Date-less annual rollup lines are excluded from per-charge statistics but included in totals. Dollar figures are integer cents throughout; no rounding until display.

Caveats, plainly: this corpus is one founding portfolio. Eleven statements, three managers, one state, audited completely. PM C’s 22.3 percent comes from a short window that included a lease placement, which overstates a steady-state rate; we publish it because owners pay in windows, not steady states, and flag it because honesty is the product. As the corpus grows, this page will update with cross-owner numbers, published only once enough independent owners contribute that no one can be singled out.

What to do with this

Compute your own effective rate. Total every PM-billed line on your last three statements, divide by collected rent, and compare it to the percentage you think you pay. The five-minute version of this check is in our statement guides. The zero-minute version is Blotter: drop a statement and the effective rate, the reconciliation, and every flag come back on their own.